As filed with the Securities and Exchange Commission on May 17, 2024
Registration No. 333-279079        
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Southern States Bancshares, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Alabama602226-2518085
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
615 Quintard Ave.
Anniston, AL 36201
(256) 241-1092
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Mark A. Chambers
Chief Executive Officer and President
Southern States Bancshares, Inc.
615 Quintard Ave.
Anniston, AL 36201
(256) 241-1092
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Michael D. Waters
Clinton H. Smith
Giles D. Beal, IV
Jones Walker LLP
420 20th Street North, Suite 1100
Birmingham, AL 35203
(205) 244-5210
Richard E. Drews Jr.
Chief Executive Officer
CBB Bancorp
215 E Main Street
Cartersville, Georgia 30120
(770) 387-1922
James W. Stevens
William L. Mayo
Caitlin E. Oh
Troutman Pepper Hamilton Sanders LLP
600 Peachtree Street, N.E., Suite 3000
Atlanta, GA 30308
(404) 885-3000
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box  ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company


Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)             ☐
Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer)   ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.



The information in this proxy statement/prospectus is not complete and may be changed. Southern States may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY – SUBJECT TO COMPLETION, DATED MAY 17, 2024
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PROPOSED MERGER – YOUR VOTE IS VERY IMPORTANT
To CBB Bancorp Shareholders:
The board of directors of CBB Bancorp (“CBB”) has approved an Agreement and Plan of Merger dated as of February 27, 2024 (the “merger agreement”) between Southern States Bancshares, Inc. (“Southern States”) and CBB, pursuant to which CBB will be merged with and into Southern States with Southern States as the surviving corporation (the “merger”) and, as soon as practicable thereafter, Century Bank of Georgia, a subsidiary of CBB (“Century Bank”), will be merged with and into Southern States Bank, a subsidiary of Southern States, with Southern States Bank as the surviving corporation (the “subsidiary bank merger”). Before CBB can complete the merger, the approval of the shareholders of CBB must be obtained. CBB is sending you this document to ask for your approval of the merger agreement at a special shareholder meeting of CBB, which will be held on Tuesday, July 9, 2024 at 2:00 p.m., local time. The merger agreement, which is attached as Annex A to the accompanying proxy statement/prospectus, sets forth the terms of the merger.
Under the terms and subject to the conditions of the merger agreement, upon the consummation of the merger (the “effective date”), holders of CBB common stock will have the right to elect to receive either 1.550 shares of Southern States common stock (the “stock consideration”) or $45.63 in cash for each share of CBB common stock they hold (the “cash consideration” and together with the stock consideration, the “merger consideration”). Shareholder elections for cash consideration are subject to proration such that no more than 10.0% of the outstanding shares of CBB common stock will receive the cash consideration, including cash that may be paid pursuant to dissenters’ rights of appraisal. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option.
Based on the closing price of Southern States common stock on February 27, 2024, the last trading day prior to the public announcement of the merger, and assuming no merger consideration adjustments, the merger consideration represented a value of $38.38 per share of CBB common stock. Based upon the closing price of Southern States common stock on May 16, 2024, and assuming no merger consideration adjustments, the merger consideration represented a value of $42.00 per share of CBB common stock. The dollar value of the stock consideration that CBB shareholders may receive will change depending on fluctuations in the market price of Southern States common stock and will not be known at the time you vote on the merger. You should obtain current stock quotations for Southern States common stock, which is listed on the NASDAQ Stock Market under the symbol “SSBK.
Giving effect to the merger, we expect CBB shareholders would hold, in the aggregate, approximately 10.0% of Southern States outstanding common stock following the merger.
The merger is subject to the receipt of the required approval by the shareholders of CBB and all regulatory approvals, and the satisfaction or waiver of all other conditions to closing as described in the accompanying proxy statement/prospectus.
The accompanying proxy statement/prospectus contains a more complete description of the special meeting and the terms of the merger agreement and the merger. We urge you to review it carefully. In particular, you should read the “Risk Factors” section beginning on page 10 of the proxy statement/prospectus for a discussion of the risks you should consider in evaluating the proposed merger and how they will affect you. You may also obtain information about Southern States from documents that Southern States has filed with the Securities and Exchange Commission.
CBB will hold a special shareholders’ meeting to vote on the merger agreement and the other proposals set forth herein on Tuesday, July 9, 2024 at Home2 Suites, 1320 E. Main Street, Cartersville, Georgia 30120, at 2:00 p.m., local time. Detailed instructions for participation can be found in the notice of special shareholder meeting that accompanies this proxy statement/prospectus.
Your vote is very important. After careful consideration, the CBB board of directors unanimously recommends that the shareholders of CBB vote “FOR” approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger and “FOR” the grant of discretionary authority to adjourn the special meeting as necessary or appropriate.
Whether or not you plan to attend the special meeting, please take the time to submit your proxy in accordance with the voting instructions contained in this document. If you do not vote, abstain from voting or do not instruct your broker how to vote any shares held by you in “street name,” the effect will be a vote “AGAINST” the merger.
We enthusiastically support the merger and believe it to be in the best interests of the CBB shareholders.
Richard E. Drews Jr.
Chief Executive Officer
CBB Bancorp
The securities to be issued in connection with the merger are not savings accounts, deposits or other obligations of Southern States Bank and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank or savings association.
Neither the Securities and Exchange Commission, nor any state securities commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System nor any other regulatory body has approved or disapproved of the merger, the issuance of Southern States common stock in connection with the merger or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated [_____________], 2024 and is first being mailed to shareholders of CBB on or about [_____________], 2024.



WHERE YOU CAN FIND ADDITIONAL INFORMATION
Southern States is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and it files annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (the “SEC”). Southern States’ SEC filings are available to the public on the SEC’s website at www.sec.gov. Southern States also maintains a website at www.southernstatesbank.net. The reference to Southern States’ website is not intended to be an active link and the information on, or that can be accessed through, our website is not, and you must not consider the information to be, a part of this proxy statement/prospectus or any other filings Southern States makes with the SEC.
Southern States has filed a registration statement on Form S-4 of which this document forms a part. As permitted by SEC rules, this document does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement. You may read and copy the registration statement, including any amendments, schedules and exhibits, at the address set forth below. Statements contained in this document as to the contents of any contract or other documents referred to in this document are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement. This document incorporates by reference documents that Southern States has previously filed with the SEC. They contain important information about Southern States and its financial condition. For more information, please see the section entitled “Incorporation of Certain Information by Reference.” These documents are available without charge to you upon written or oral request to Southern States’ principal executive office, which is listed below
Southern States Bancshares, Inc.
Attention: Corporate Secretary
615 Quintard Avenue
Anniston, AL 36201
(256) 241-1092
If you would like to request any Southern States documents, your request should be sent in time to be received by Southern States no later than Tuesday, July 2, 2024 in order for you to receive the documents before the special meeting.
CBB does not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” is not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act and accordingly does not file documents or reports with the SEC.
If you are a CBB shareholder and have questions about the merger or submitting your proxy, or if you need additional copies of this proxy statement/prospectus or proxy card, you should contact CBB’s proxy solicitor:
Alliance Advisors, LLC
844-874-6165
CBB@allianceadvisors.com
Southern States common stock is traded on the NASDAQ Stock Market under the symbol “SSBK.”



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215 E Main Street, Cartersville, Georgia 30120
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
CBB BANCORP
To Be Held July 9, 2024
To the Shareholders of CBB Bancorp:
Notice is hereby given that, pursuant to the terms of its bylaws and the call of its board of directors, the special meeting of shareholders (the “special meeting”) of CBB Bancorp (“CBB”) will be held at Home2 Suites, 1320 E. Main Street, Cartersville, Georgia 30120, on Tuesday, July 9, 2024. The special meeting will convene at 2:00 p.m., local time for the following purposes:
1.Approval of Merger Agreement. To approve the Agreement and Plan of Merger, dated as of February 27, 2024, by and between Southern States Bancshares, Inc. (“Southern States”) and CBB (the “merger agreement”) and the transactions contemplated by the merger agreement, including the merger of CBB with and into Southern States (the “merger”), with Southern States surviving the merger, and the cancellation of each outstanding shares of CBB common stock, par value $0.01 per share (“CBB common stock”) other than any dissenting shares and excluded shares, in exchange for the right to receive 1.550 shares of Southern States common stock, par value $5.00 per share, or $45.63 per share in cash, subject to certain limitations and any adjustments set forth in the merger agreement.
2.Grant of Discretionary Authority to Adjourn Meeting. To consider and vote upon a proposal to grant discretionary authority to adjourn the special meeting if necessary or appropriate in the judgment of our board of directors to solicit additional proxies or votes in favor of the approval of the merger agreement and the transactions contemplated thereby, including the merger.
As of the date of this proxy statement/prospectus, management of CBB was unaware of any other matters to be brought before the special meeting other than those set forth herein. However, if any other matters are properly brought before the special meeting, the persons named in the enclosed form of proxy for CBB will have discretionary authority to vote all proxies with respect to such matters in accordance with their best judgment.
The merger agreement, which is attached as Annex A to the accompanying proxy statement/prospectus, sets forth the terms of the merger. The merger is also more fully described in the enclosed proxy statement/prospectus. You are urged to read these documents carefully and in their entirety. In particular, see “Risk Factorsbeginning on page 10 of the accompanying proxy statement/prospectus.
Only shareholders of record at the close of business on Monday, May 13, 2024 will be entitled to notice of and to vote at the special meeting or at any postponement or adjournment thereof. The proposals to approve the merger agreement and the transactions contemplated thereby, including the merger, requires the affirmative vote of at least a majority of the shares of CBB common stock outstanding as of the record date for the special meeting. The proposal to grant discretionary authority to adjourn the special meeting, if necessary, to solicit additional proxies or votes requires the affirmative vote of at least a majority of the shares of CBB common stock present in person or represented by proxy and voting at the special meeting.



CBB shareholders will be given the opportunity to exercise dissenters’ rights in accordance with certain procedures specified in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code, which sections are attached as Annex B to the attached proxy statement/prospectus and incorporated herein by reference. CBB shareholders who do not vote in favor of the merger may demand that CBB acquire their shares of CBB common stock for cash at their fair market value as of February 27, 2024, the day of, and immediately prior to, the first public announcement of the terms of the merger, excluding any appreciation or depreciation in consequence of the merger. CBB shareholders dissenting must file written demands that CBB acquire their shares of CBB common stock for cash and comply with the other procedural requirements set forth in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code. For additional details about dissenters’ rights, please refer to “The Merger—Dissenters’ Rights in the Mergerbeginning on page 41 and Annex B to the accompanying proxy statement/prospectus.
The CBB board of directors unanimously recommends that you vote in favor of approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, and the grant of discretionary authority to adjourn the special meeting, as described in the proxy statement/prospectus.
Whether or not you plan to attend the special meeting, please sign, date and return the enclosed proxy card in the postage prepaid envelope provided, or cast your vote by telephone or Internet by following the instructions on your proxy card, as soon as you can. The vote of every shareholder is important, and we appreciate your cooperation in returning your executed proxy promptly. If you do not vote, abstain from voting or do not instruct your broker how to vote any shares held by you in “street name,” the effect will be a vote “AGAINST” the merger.
Your proxy, or your telephone or Internet vote, is revocable and will not affect your right to vote in person if you attend the special meeting. If your shares are registered in your name and you attend the special meeting, you may simply revoke your previously submitted proxy by voting your shares at that time. If you receive more than one set of proxy materials because your shares are registered in different names or addresses, you will need to follow the instructions in each set of proxy materials that you receive to ensure that all your shares will be voted at the special meeting. If your shares are held by a broker or other nominee holder, and are not registered in your name, you will need additional documentation from your broker or other record holder to vote your shares in person at the special meeting.
We appreciate your continuing support and look forward to seeing you at the special meeting.
By Order of the Board of Directors
William P. Taylor
Dated: [__________], 2024Corporate Secretary
Cartersville, Georgia



TABLE OF CONTENTS
Page

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND SPECIAL MEETING
The following are some questions that you may have about the merger and the CBB special meeting, and brief answers to those questions. Southern States and CBB Bancorp urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger or the CBB special meeting. Additional important information is also contained in the documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
In this proxy statement/prospectus, unless the context otherwise requires:
“CBB” refers to CBB Bancorp, a Georgia corporation;
“Century Bank” refers to Century Bank of Georgia, a state chartered bank and a wholly owned subsidiary of CBB;
“CBB bylaws” refers to the bylaws of CBB;
“CBB certificate of incorporation” refers to the certificate of incorporation of CBB;
“CBB common stock” refers to the common stock of CBB, par value $0.01 per share;
“CBB preferred stock” refers to the preferred stock of CBB, par value $0.01 per share, 2,644 shares of which are designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series A”, 132 shares of which are designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series B”, and 1,753 shares of which are designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series C”;
“CBB shareholders” or “holders” refers to holders of the common stock of CBB;
“Southern States” refers to Southern States Bancshares, Inc., an Alabama corporation;
“Southern States Bank” refers to Southern States Bank, an Alabama state chartered bank and a wholly owned subsidiary of Southern States;
“Southern States bylaws” refers to the amended and restated bylaws of Southern States;
“Southern States certificate of incorporation” refers to the restated certificate of incorporation of Southern States, as amended;
“Southern States common stock” refers to the common stock of Southern States, par value $5.00 per share; and
“Southern States shareholders” or “holders” refers to holders of the common stock of Southern States.
Q:    Why am I receiving this proxy statement/prospectus?
A:    You are receiving this proxy statement/prospectus because Southern States and CBB entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”), pursuant to which CBB will merge with and into Southern States, with Southern States as the surviving entity (the “merger”), and as soon as reasonably practicable following the merger, Century Bank will merge with and into Southern States Bank, with Southern States Bank as the surviving bank (the “subsidiary bank merger”). A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus and is incorporated by reference herein. In this proxy statement/prospectus, Southern States and CBB refer to the closing of the transactions contemplated by the merger agreement as the “closing,” the date the closing occurs as the “closing date” and the time the merger will occur as the “effective date.”
In order to complete the merger, among other things, CBB’s shareholders must approve the merger agreement (the “CBB merger proposal”).
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CBB is holding a special meeting of CBB shareholders (the “special meeting”) to obtain approval of the CBB merger proposal.
CBB shareholders will also be asked to approve the proposal to adjourn the special meeting to solicit additional proxies (i) if there are insufficient votes at the time of the special meeting to approve the CBB merger proposal or (ii) if adjournment is necessary or appropriate, to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to holders of CBB common stock (the “CBB adjournment proposal”).
This document is also a prospectus that is being delivered to holders of CBB common stock because, pursuant to the merger agreement, Southern States is offering shares of Southern States common stock to CBB shareholders.
This proxy statement/prospectus contains important information about the CBB merger proposal and the adjournment proposal being voted on at the special meeting. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important, and Southern States and CBB encourage you to submit your proxy as soon as possible.
Q:    What will happen in the merger?
A:    In the merger, CBB will merge with and into Southern States, with Southern States as the surviving entity. In the subsidiary bank merger, which will occur as soon as practicable following the merger, Century Bank will merge with and into Southern States Bank, with Southern States Bank as the surviving bank.
Under the terms and subject to the conditions of the merger agreement, upon the effective date, holders of CBB common stock will have the right to elect to receive either 1.550 shares of Southern States common stock (the “stock consideration”) or $45.63 in cash for each share of CBB common stock they hold (the “cash consideration” and together with the stock consideration, the “merger consideration”). CBB shareholder elections for cash consideration are subject to proration such that no more than 10.0% of the shares outstanding of CBB common stock will receive the cash consideration, including any shares subject to dissenters’ rights of appraisal. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option. After completion of the merger, both CBB and Century Bank will cease to exist. Holders of Southern States common stock will continue to own their existing shares of Southern States common stock. See the information provided in the section entitled “The Merger Agreement” beginning on page 42 and the merger agreement for more information about the merger.
Q:    When and where will the special meeting take place?
A:    The special meeting will be held on Tuesday, July 9, 2024, at Homes2 Suites, 1320 E. Main Street, Cartersville, Georgia 30120 at 2:00 p.m., local time.
Even if you plan to attend CBB’s special meeting, CBB recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the special meeting.
Q:    What matters will be considered at the special meeting?
A:    At the special meeting, CBB shareholders will be asked to consider and vote on the following proposals:
CBB Proposal 1: The CBB merger proposal; and
CBB Proposal 2: The CBB adjournment proposal.
In order to complete the merger, among other things, CBB shareholders must approve the CBB merger proposal. The CBB adjournment proposal is not a condition to the obligation of CBB to complete the merger.
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Q:    What will CBB shareholders receive in the merger?
A:    Under the terms and subject to the conditions of the merger agreement, upon the effective date, holders of CBB common stock will have the right to elect to receive either 1.550 shares of Southern States common stock or $45.63 in cash for each share of CBB common stock they hold. CBB shareholder elections for cash consideration are subject to proration such that no more than 10.0% of the shares outstanding of CBB common stock will receive the cash consideration. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option.
Q:    What will Southern States shareholders receive in the merger?
A:    In the merger, Southern States shareholders will not receive any consideration, and their shares of Southern States common stock will remain outstanding and will constitute shares of Southern States following the merger. Following the merger, shares of Southern States common stock will continue to be traded on the NASDAQ.
Q:    Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the merger is completed?
A:    Yes. Although the number of shares of Southern States common stock that CBB shareholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for Southern States common stock. Any fluctuation in the market price of Southern States common stock will change the value of the shares of Southern States common stock that CBB shareholders will receive. Neither Southern States nor CBB is permitted to terminate the merger agreement as a result of any increase or decrease in the market price of Southern States common stock or CBB common stock.
Q:    How will the merger affect CBB stock option awards?
A:    The merger agreement provides that, at the effective date, each option granted by CBB to purchase shares of CBB common stock under the CBB Amended and Restated 2009 Stock Option and Incentive Plan (the “CBB stock plan”), whether vested or unvested, that is outstanding and unexercised immediately prior to the effective date (a “CBB option”) shall be canceled and extinguished at the effective date and automatically exchanged into the right to receive an amount of cash (without interest) equal to the product of (i) the aggregate number of shares of CBB common stock issuable upon exercise of such CBB option multiplied by (ii) the excess, if any, of (A) $45.63 over (B) the per-share exercise price of such CBB option, payable through the payroll of CBB or its affiliates (less applicable tax withholdings) as promptly as practicable following the effective date. CBB will be entitled to deduct and withhold such amounts as may be required to be deducted and withheld under the Internal Revenue Code and any applicable state or local tax laws as allowed under the CBB stock plan and the applicable grant agreement.
Q:    How does the CBB board of directors recommend that I vote at the special meeting?
A:    The CBB board of directors unanimously recommends that you vote “FOR” the CBB merger proposal and “FOR” the CBB adjournment proposal.
In considering the recommendations of the CBB board of directors, CBB shareholders should be aware that CBB directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of CBB shareholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of Certain CBB Directors and Executive Officers in the Merger” beginning on page 36.
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Q:    Who is entitled to vote at the special meeting?
A:    The record date for the special meeting is May 13, 2024. All CBB shareholders who held shares at the close of business on the record date for the special meeting are entitled to receive notice of, and to vote at, the special meeting.
Each holder of CBB common stock is entitled to cast one (1) vote on each matter properly brought before the special meeting for each share of CBB common stock that such holder owned of record as of the record date. As of May 13, 2024, there were 689,598 outstanding shares of CBB common stock.
Attendance at the special meeting is not required to vote. See below and the section entitled “The CBB Special Meeting—Proxies” beginning on page 18 for instructions on how to vote your shares of CBB common stock without attending the special meeting.
Q:    What constitutes a quorum for the special meeting?
A:    The presence at the special meeting, in attendance physically or by proxy, of the holders of a majority of the outstanding shares of CBB common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business at the special meeting. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.
Q:    What vote is required for the approval of each proposal at the special meeting?
A:    CBB Proposal 1: CBB merger proposal. Approval of the CBB merger proposal requires the affirmative vote of a majority of the outstanding shares of CBB common stock. Accordingly, an abstention or a broker non-vote or other failure to vote will have the same effect as a vote cast “AGAINST” the CBB merger proposal.
CBB Proposal 2: CBB adjournment proposal. Whether or not a quorum will be present at the meeting, approval of the CBB adjournment proposal requires the affirmative vote of a majority of the votes cast by CBB shareholders. Accordingly, an abstention or a broker non-vote or other failure to vote will have no effect on the outcome of the CBB adjournment proposal.
Q: How can I attend, vote and ask questions at the special meeting?
A:    Record Holders. If you hold shares directly in your name as the holder of record of CBB common stock you are a “record holder” and your shares may be voted prior to or at the special meeting by you. If you are a record holder, you will be able to attend the special meeting, ask questions and vote during the meeting.
Beneficial Owners. If you hold shares in the name of a bank, broker, trustee or other nominee (e.g., in a brokerage or other account in “street name”), then you are a “beneficial owner” of such shares. Please follow the instructions on the voting instruction card furnished by such bank, broker, trustee or other nominee in order to vote such shares. If you are a beneficial owner, you will also be able to attend the special meeting, ask questions and vote during the meeting.
If you are a holder of record of CBB common stock on the record date, you will be able to attend the special meeting, ask questions and vote during the meeting. Each person attending must present a valid, government issued form of identification in order to be admitted to the special meeting. Each shareholder attending also must provide proof of ownership of shares of CBB common stock as of the record date. If you are a record holder, proof of ownership will be established by CBB’s verification of your name against CBB’s list of record holders as of the record date. If you hold your shares through a bank, broker, trustee or other nominee, you must provide one of the following as proof of ownership: (i) account statement showing share ownership as of the record date; (ii) a copy of an email or letter that you received with instructions containing a link to the website where the CBB’s proxy materials are available and a valid control number; (iii) a valid legal proxy containing a valid control number or a letter from a record holder naming you as proxy; or (iv) a letter from the bank, broker, trustee or other nominee through which you hold your shares confirming your ownership as of the record date.
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Even if you plan to attend the special meeting, CBB recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the special meeting.
Additional information on attending the special meeting can be found under the section entitled “The CBB Special Meeting—Attending the Special meeting” on page 19.
Q:    How can I vote my shares without attending the special meeting?
A:    Whether you hold your shares directly as the holder of record of CBB or beneficially in “street name,” you may direct your vote by proxy without attending the special meeting.
If you are a record holder CBB common stock, you can vote your shares by proxy over the internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name” as a beneficial owner of CBB common stock, you should follow the voting instructions provided by your bank, broker, trustee or other nominee.
Additional information on voting procedures can be found under the section entitled “The CBB Special Meeting” on page 17.
Q:    What do I need to do now?
A:    After carefully reading and considering the information contained in this document, please vote as soon as possible. If you hold shares of CBB common stock, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the internet, as soon as possible so that your shares may be represented at your meeting. Please note that if you are a beneficial owner with shares held in “street name,” you should follow the voting instructions provided by your bank, broker, trustee or other nominee.
Q:    If I am a beneficial owner with my shares held in “street name” by a bank, broker, trustee or other nominee, will my bank, broker, trustee or other nominee vote my shares for me?
A:    No. Your bank, broker, trustee or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker, trustee or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instruction form used by your bank, broker, trustee or other nominee.
Q:    What is a “broker non-vote”?
A:    A “broker non-vote” occurs on an item when a nominee or intermediary is not permitted to vote on that item without instructions from the beneficial owner of the shares, and the beneficial owner fails to provide the nominee or intermediary with such instructions.
Q:    Why is my vote important?
A:    If you do not vote, it will be more difficult for CBB to obtain the necessary quorum to hold its special meeting. Your failure to submit a proxy or vote at your respective special meeting, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” the CBB merger proposal.
The CBB board of directors unanimously recommend that you vote “FOR” the CBB merger proposal and “FOR” the adjournment proposal to be considered at the special meeting.
Q:    What will happen if I return my proxy card without indicating how to vote?
A:    If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of CBB common stock represented by your proxy will be voted as recommended by the CBB board of directors with respect to such proposal or proposals as the case may be, which is “FOR” the merger proposal and “FOR” the CBB adjournment proposal.
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Q:    Can I change my vote after I have delivered my proxy or voting instruction card?
A:    If you directly hold shares of CBB common stock in your name as a record holder, you can change or revoke your vote at any time before your proxy is voted at your meeting. You can do this by:
submitting a written statement that you would like to change your vote or revoke your proxy to the corporate secretary of CBB;
signing and returning a proxy card with a later date;
attending the special meeting and voting by ballot at the special meeting; or
voting by telephone or the internet at a later time.
If you are a beneficial owner and your shares are held by a bank, broker, trustee or other nominee, you may change or revoke your vote by:
contacting your bank, broker, trustee or other nominee; or
attending the special meeting and voting by ballot at the special meeting, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions.
Q:    Will CBB be required to submit the CBB merger proposal to its shareholders even if the CBB board of directors has withdrawn, modified or qualified its recommendation?
A:    Yes. Unless the merger agreement is terminated before the special meeting, CBB is required to submit the CBB merger proposal to its shareholders even if the CBB board of directors has withdrawn, modified or qualified its recommendation.
Q:    Are holders of CBB common stock entitled to dissenters rights?
A:    Yes. CBB shareholders will be given the opportunity to exercise dissenters’ rights in accordance with certain procedures specified in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code, which sections are attached as Annex B to the attached proxy statement/prospectus and incorporated herein by reference. CBB shareholders who do not vote in favor of the merger may demand that CBB acquire their shares of CBB common stock for cash at their fair market value as of February 27, 2024, the day of, and immediately prior to, the first public announcement of the terms of the merger, excluding any appreciation or depreciation in consequence of the merger. CBB shareholders dissenting must file written demands that CBB acquire their shares of CBB common stock for cash and comply with the other procedural requirements set forth in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code. The cash, if any, paid for appraisal rights will be counted towards the 10.0% limit of total cash to be paid in the merger. For additional details about dissenters’ rights, please refer to “Dissenters’ Rights in the Merger” beginning on page 41 and Annex B to the accompanying proxy statement/prospectus.
Q:    Are there any risks that I should consider in deciding whether to vote for the approval of the CBB merger proposal, or the adjournment proposal to be considered at the special meeting?
A:    Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 10. You also should read and carefully consider the risk factors of Southern States contained in the documents that are incorporated by reference into this proxy statement/prospectus.
Q:    What are the material U.S. federal income tax consequences of the merger to holders of CBB common stock?
A:    The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to the obligation of Southern States to complete the merger that Southern States receives a legal opinion to that effect. Assuming the receipt and accuracy of such opinion, a holder of CBB common stock who
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receives solely shares of Southern States common stock (or receives Southern States common stock and cash solely in lieu of a fractional share) in exchange for shares of CBB common stock in the merger generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of CBB common stock. If you receive only cash in exchange for your shares of CBB common stock, you will generally recognize a gain or loss in an amount equal to the difference between the amount of cash received and your tax basis in your shares of CBB common stock exchanged. If you receive a combination of Southern States common stock and cash in exchange for your shares of CBB common stock, you will generally recognize a gain (but not loss) in an amount equal to the lesser of:
(i)the excess, if any of:
(A)the sum of the cash and the fair market value of the Southern States common stock you receive, over
(B)your tax basis in CBB common stock exchanged in the merger; or
(ii)the cash that you receive in the merger.
The United States federal income tax consequences described above may not apply to all holders of CBB common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 52.
Q:    When is the merger expected to be completed?
A:    Neither Southern States nor CBB can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion of the merger is subject to conditions and factors outside the control of both companies. CBB must first obtain the approval of CBB shareholders for the CBB merger proposal. Southern States and CBB must also obtain necessary regulatory approvals and satisfy certain other closing conditions. Southern States and CBB expect the merger to be completed promptly once Southern States and CBB have obtained their respective shareholders’ and shareholders’ approvals noted above, have obtained necessary regulatory approvals, and have satisfied certain other closing conditions. Southern States and CBB currently expect these conditions to be satisfied and the merger to close in the third or fourth quarter of 2024.
Q:    What are the conditions to complete the merger?
A:    The obligations of Southern States and CBB to complete the merger are subject to the satisfaction or waiver of certain customary closing conditions contained in the merger agreement, including, among others, (i) approval of the merger agreement and merger by CBB shareholders, (ii) receipt of required regulatory approvals without the imposition of a condition that, in the reasonable good faith judgment of the board of directors of Southern States s or the board of directors of CBB, would so materially adversely impact the economic benefits of the transaction as contemplated by the merger agreement so as to render inadvisable the consummation of the merger, and receipt of all other requisite consents or approvals, (iii) the absence of any law or order preventing or prohibiting the consummation of the transactions contemplated by the merger agreement (including the merger), (iv) the effectiveness of the registration statement for the Southern States common stock to be issued in the merger, (v) receipt by Southern States of opinion to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, (vi) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (vii) the performance in all material respects by the other party of its obligations under the merger agreement, (viii) the absence of any material adverse effect with respect to the other party and (ix) the number of shares as to which shareholders of CBB have exercised dissenters’ rights of appraisal under the merger agreement does not exceed 7.5% of the outstanding shares of CBB common stock. For more information, see “The Merger Agreement—Conditions to Complete the Merger” beginning on page 49.
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Q:    What happens if the merger is not completed?
A:    If the merger is not completed, holders of CBB common stock will not receive any consideration for their shares of CBB common stock in connection with the merger. Instead, CBB will remain an independent private company, and Southern States will not complete the issuance of shares of Southern States common stock pursuant to the merger agreement. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $1.2 million will be payable by CBB to Southern States. See “The Merger Agreement—Termination Fee” beginning on page 50 for a more detailed discussion of the circumstances under which a termination fee will be required to be paid.
Q:    What happens if I sell my shares after the applicable record date but before the special meeting?
A:    The CBB record date is earlier than the date of the special meeting and earlier than the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of CBB common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting (provided that such shares remain outstanding on the date of such special meeting), but, with respect to CBB common stock, you will not have the right to receive the merger consideration to be received by CBB shareholders in connection with the merger. In order to receive the merger consideration, you must hold your shares of CBB common stock through the completion of the merger.
Q:    Should I send in my stock certificates now?
A:    No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent designated by Southern States and reasonably acceptable to CBB (the “exchange agent”) will send you instructions for exchanging CBB stock certificates for the consideration to be received in the merger. See “The Merger Agreement—Exchange of Shares” beginning on page 43.
Q:    What should I do if I receive more than one set of voting materials for the same special meeting?
A:    If you are a beneficial owner and hold shares of CBB common stock in “street name” and also are a record holder and hold shares directly in your name or otherwise or if you hold shares of CBB common stock in more than one (1) brokerage account, you may receive more than one (1) set of voting materials relating to the same special meeting.
Record Holders. For shares held directly, please complete, sign, date and return each proxy card (or cast your vote by telephone or internet as provided on each proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your shares of CBB common stock are voted.
Beneficial Owners. For shares held in “street name” through a bank, broker, trustee or other nominee, you should follow the procedures provided by your bank, broker, trustee or other nominee in order to vote your shares.
Q:    Who can help answer my questions?
A:    CBB shareholders: If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this document or the enclosed proxy card or voting instruction card, you should contact CBB’s proxy solicitor, Alliance Advisors, LLC, by calling toll free at 844-874-6165 or emailing at CBB@allianceadvisors.com.
Q:    Where can I find more information about Southern States and CBB?
A:    You can find more information about Southern States and CBB from the various sources described under “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
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SUMMARY
This summary highlights selected information contained in this proxy statement/prospectus. It may not contain all of the information that is important to you in deciding how to vote on the matters that will be voted on at the special meeting. You should carefully read this entire document and the other documents referred to in this proxy statement/prospectus for a more complete understanding of the merger and the other matters that will be considered and voted on at the special meeting. In addition, Southern States incorporates important business and financial information about Southern States by reference into this proxy statement/prospectus. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
INFORMATION ABOUT THE COMPANIES
Southern States Bancshares Inc. and Southern States Bank
Southern States is a bank holding company headquartered in Anniston, Alabama. As of March 31, 2024, Southern States had consolidated total assets of approximately $2.5 billion, total net loans of approximately $1.9 billion, total deposits of approximately $2.1 billion, and total shareholders’ equity of approximately $223 million. Southern States had 182 full-time equivalent employees as of March 31, 2024.
Southern States operates primarily through its wholly-owned subsidiary, Southern States Bank, an Alabama banking corporation formed in 2007. Southern States provides banking services from 13 offices in Alabama and Georgia and two loan production offices in Georgia. Southern States Bank is a full-service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. Southern States’ franchise is focused on personalized, relationship-driven service combined with local market management and expertise to serve small and medium size businesses and individuals.
For further information, see “Information About Southern States” beginning on page 55. Southern States’ principal office is located at 615 Quintard Ave., Anniston, Alabama 36201, and its telephone number is (256) 241-1092. Southern States’ website can be accessed at https://www.southernstatesbank.net. Information contained on Southern States’ website does not constitute part of, and is not incorporated into, this proxy statement/prospectus.
CBB Bancorp and Century Bank of Georgia
CBB is a privately held bank holding company. CBB’s wholly owned subsidiary, Century Bank, was incorporated under the laws of the State of Georgia in 1999. Century Bank’s main office is located in Cartersville, Georgia, and it has an additional branch located in Rockmart, Georgia. Century Bank primarily serves Bartow County and Polk County, Georgia.
Century Bank engages in general commercial and consumer banking, providing a full range of banking services, including credit and deposit products for commercial and industrial, small business and personal customers, treasury solutions and other personal banking products including residential mortgages. As of March 31, 2024, CBB had total assets of $355.9 million, total loans of $132.6 million (excluding mortgage loans held for sale), total deposits of $296.9 million and total shareholders’ equity of $21.5 million.
CBB common stock is not listed or traded on any established securities exchange or quotation system.
The principal executive offices of CBB are located at 215 East Main Street, Cartersville, Georgia 30120, and its telephone number is (770) 387-1922. CBB’s website can be accessed at https://www.centurybanknet.com. Information contained on CBB’s website does not constitute part of, and is not incorporated into, this proxy statement/prospectus.
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THE MERGER AND THE MERGER AGREEMENT
The Merger and the Merger Agreement
The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the merger.
Each of Southern States’ and CBB’s respective board of directors have unanimously approved the merger agreement. The merger agreement provides that, pursuant to the terms and subject to the conditions set forth in the merger agreement, CBB will be merged with and into Southern States, with Southern States as the surviving entity, and, as soon as practicable thereafter, Century Bank will be merged with and into Southern States Bank, with Southern States Bank as the surviving entity.
Merger Consideration
Under the terms and subject to the conditions of the merger agreement, upon the consummation of the merger, holders of CBB common stock will have the right to elect to receive either 1.550 shares of Southern States common stock or $45.63 in cash for each share of CBB common stock they hold. Shareholder elections for cash are subject to proration such that no more than 10.0% of the shares outstanding of CBB common stock will receive the cash consideration, including cash that may be paid pursuant to dissenters’ rights of appraisal.. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option.
CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors
For the reasons set forth under “The Merger—CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors,” CBB’s board of directors determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of CBB and its shareholders and unanimously adopted and approved the merger agreement and the transactions contemplated by it. CBB’s board of directors unanimously recommends that its shareholders vote “FOR” the CBB merger proposal.
CBB’s board of directors did not assign relative weights to the factors described in that section or the other factors considered by it. In addition, CBB’s board of directors did not reach any specific conclusion on each factor considered, but conducted an overall analysis of these factors. Individual members of CBB’s board of directors may have given different weights to different factors.
Opinion of CBB’s Financial Advisor
At the February 27, 2024 meeting of CBB’s board of directors, representatives of Performance Trust Capital Partners, LLC (“Performance Trust”) rendered Performance Trust’s oral opinion, which was subsequently confirmed by delivery of a written opinion to the board of directors, dated February 27, 2024 (the “Performance Trust opinion”), that as of such date, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in the Performance Trust opinion, the merger consideration consisting of for each one (1) share of common stock, par value $0.01 per share, of CBB, the right to receive from Southern States, 1.550 shares of Southern States common stock or, at the election of such shareholder and subject to no more than 10.0% of the shares of CBB common stock outstanding at the effective date shall receive the cash consideration (the “Maximum Cash Consideration”), $45.63 in cash for each share of CBB Common Stock was fair, from a financial point of view, to the holders of CBB common stock entitled to receive such consideration. Performance Trust’s opinion did not, and Performance Trust otherwise has not and does not, express any opinion on the fairness, from a financial point of view, to the holder of CBB common stock of the merger consideration, whether to the extent set forth in this proxy statement/prospectus or otherwise. CBB shareholders are advised to review the summary of Performance Trust’s fairness opinion set forth herein keeping in mind that the opinion is limited to the fairness, from a financial point of view, of the merger consideration as of February 27, 2024.
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The full text of the written opinion of Performance Trust, dated February 27, 2024, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex C to this document and is incorporated by reference in its entirety into this document. You are urged to read this opinion carefully and in its entirety. Performance Trust’s opinion was addressed to, and provided for the information and benefit of, the CBB board of directors (in its capacity as such) in connection with its evaluation of the fairness of the merger consideration from a financial point of view, and did not address any other aspects or implications of the merger. The opinion does not constitute a recommendation to the CBB board of directors or to any other persons in respect of the merger, including as to how any holder CBB common stock should vote at any shareholders’ meeting held in connection with the merger or take, or not to take, any action in respect of the merger. Performance Trust’s opinion does not address the relative merits of the merger as compared to any other business or financial strategies that might be available to CBB, nor does it address the underlying business decision of CBB to engage in the merger.
Southern States’ Reasons for the Merger; Approval by Southern States’ Board of Directors
Southern States believes that the acquisition of other banks is an efficient and productive way to expand Southern State’s markets, grow its assets and capital, and improve its loan to deposit ratio to support future loan growth. In particular, the acquisition of Century Bank by the subsidiary bank merger with Southern States Bank is an efficient and effective way to increase Southern States Bank’s presence in the Atlanta metro market.
For the reasons set forth under “The Merger—Southern States’ Reasons for the Merger; Approval by Southern States’ Board of Directors,” the Southern States board of directors determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Southern States and its shareholders and adopted and approved the merger agreement and the transactions contemplated by it.
Interests of Certain CBB Directors and Executive Officers in the Merger
Directors and executive officers of CBB have interests in the merger that are different from, or are in addition to, the interests of the shareholders of CBB. These interests include:
each of Messrs. David H. Caswell and Richard E. Drews, Jr. has accepted a job offer from Southern States granting them an annual base salary, restricted stock of Southern States subject to vesting and stock options for the purchase of Southern States common stock subject to vesting;
each of Messrs. David H. Caswell and Richard E. Drews, Jr. has entered into a Non-Competition and Non-Solicitation Agreement with Southern States (each, a “Restrictive Covenant Agreement”), which provides for a lump-sum payment to be made on the effective date, subject to continued compliance with non-competition and non-solicitation covenants;
each of Messrs. David H. Caswell and Richard E. Drews, Jr. has entered into a Settlement Agreement with Southern States (each, a “Settlement Agreement”), which provides for a lump-sum payment, the grant of restricted stock of Southern States subject to vesting, and stock options for the purchase of Southern States common stock subject to vesting;
pursuant to the terms of each of their Supplemental Executive Retirement Plans with Century Bank (each, a “SERP”), each of Messrs. Drews’ and Caswell’s normal retirement benefit will vest in full upon a change in control and requires Century Bank to establish a rabbi trust (if not already established) and contribute a source of funds sufficient to satisfy all obligations under the SERP, in each case as described therein;
each of Messrs. William P. Taylor, Senior Vice President, Secretary and Chief Financial Officer, and Jay Slaughter, Senior Vice President, and Ms. Tamera Ray, Vice President, will have options cashed out in connection with the merger;
pursuant to the terms of his employment agreement with CBB and Century Bank, Mr. Taylor is entitled to a lump sum payment upon the termination of his employment following the change in control of CBB;
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pursuant to the terms of the merger agreement, CBB’s directors and executive officers are entitled to continued indemnification and insurance coverage for a period of six years following the effective date; and
following the effective date, certain of CBB’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company, and certain directors will be invited to serve as members of an advisory board.
The board of directors of CBB was aware of the foregoing interests and considered them, among other matters, in approving the merger agreement and the merger. For a more complete description of the interests of CBB’s directors and executive officers in the merger, see “The Merger—Interests of Certain CBB Directors and Executive Officers in the Mergerbeginning on page 36.
Governance of the Combined Company After the Merger
The merger agreement provides, that prior to the effective date, the board of directors of Southern States shall take all actions necessary to appoint Richard E. Drews, Jr. (or another individual mutually agreeable to the parties) (the “new SSB director”) effective as of the effective date to serve on the board of directors of Southern States and Southern States Bank following the merger until such time as his successor is duly elected and qualified. The nominating and corporate governance committee of the board of directors of Southern States and Southern States Bank (the “Nominating and Corporate Governance Committee”) shall cause the new SSB director that has been appointed to and is serving on the board of directors of Southern States and Southern States Bank to be nominated for re-election at the next annual meeting of Southern States and Southern States Bank to a full term.
The merger agreement also provides that Southern States and Southern States Bank will authorize the creation of an advisory board of directors of Southern States Bank (the “advisory board”). The advisory board will initially consist of the directors of Century Bank at the effective date, but may consist of other members as determined by the board of directors of Southern States Bank. The advisory board will not have management duties, but may offer advice to the board of directors of Southern States Bank, meet with, and recommend customers to, Southern States Bank and undertake other activities that the board of directors may recommend. Each member of the advisory board will be paid an amount equal to $250 per meeting.
Regulatory Approvals
To complete the merger, Southern States and CBB need to obtain approvals or consents from, or make filings with, a number of U.S. federal and state bank and other regulatory authorities. Subject to the terms of the merger agreement, Southern States and CBB have agreed to cooperate with each other and use reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals, use their reasonable best efforts to make such filings within twenty (20) days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties, regulatory agencies and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such regulatory agencies and governmental entities. The term “requisite regulatory approvals” means all regulatory authorizations, consents, orders and approvals (and the expiration or termination of all statutory waiting periods in respect thereof), or waivers of such regulatory authorizations, consents, orders and approvals from (i) the Federal Reserve Board (in respect of the merger), the Federal Deposit Insurance Corporation (“FDIC”), the Alabama State Banking Department (“ASBD”) and the Georgia Department of Banking and Finance (“GDBF”) or (ii) referred to in the merger agreement that are necessary to consummate the transactions contemplated by the merger agreement, except for any such authorizations, consents, orders or approvals the failure of which to be obtained would not reasonably be expected to have, either individually or in the aggregate, a material adverse effect on Southern States as the surviving entity in the merger.
The approval of an application means only that the regulatory criteria for approval have been satisfied or waived. It does not mean that the approving authority has determined that the consideration to be received by CBB’s shareholders in the merger is fair. Regulatory approval does not constitute an endorsement or recommendation of the merger.
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Southern States and CBB believe that the merger does not raise significant regulatory concerns and that they will be able to obtain all requisite regulatory approvals. However, there can be no assurance that all of the regulatory approvals described below will be obtained and, if obtained, there can be no assurances regarding the timing of the approvals, the companies’ ability to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. These approvals could be delayed or not obtained at all, including due to: an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals, including factors not known as of the date of this joint proxy statement/prospectus and factors that may arise in the future; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. In addition, there can be no assurance that such approvals will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of Southern States following the completion of the merger. There can likewise be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger or, if such a challenge is made, what the result of such challenge will be.
Expected Timing of the Merger
Neither Southern States nor CBB can predict the actual date the merger will be completed, or if the merger will be completed at all, because completion of the merger is subject to conditions and factors outside the control of both companies. CBB must first obtain the approval of CBB shareholders for the CBB merger proposal. Southern States and CBB must also obtain necessary regulatory approvals and satisfy certain other closing conditions. Southern States and CBB expect the merger to be completed promptly once CBB has obtained its shareholders’ approval and Southern States and CBB have obtained necessary regulatory approvals and have satisfied certain other closing conditions. Southern States and CBB currently expect these conditions to be satisfied and the merger to close in the third or fourth quarter of 2024.
The Support Agreements
All of CBB’s directors have entered into shareholder support agreements in favor of Southern States and CBB pursuant to which they have agreed, in their capacity as CBB shareholders, to vote all of their shares in favor of the approval of the merger proposal. As of the record date, these directors of CBB and their affiliates had the right to vote 207,817 shares of CBB common stock, or approximately 30.1% of the outstanding CBB shares entitled to vote at the special meeting. As of the record date, all directors and executive officers of CBB, including their affiliates, had the right to vote 209,903 shares of CBB common stock, or approximately 30.4% of the outstanding CBB shares entitled to vote at the special meeting, and held options to purchase 10,000 shares of CBB common stock.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to the obligation of Southern States to complete the merger that Southern States receives a legal opinion to that effect. Assuming the receipt and accuracy of such opinion, a holder of CBB common stock who receives solely shares of Southern States common stock (or receives Southern States common stock and cash solely in lieu of a fractional share) in exchange for shares of CBB common stock in the merger generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of CBB common stock. If you receive only cash in exchange for your shares of CBB common stock, you will generally recognize a taxable gain or loss in an amount equal to the difference between the amount of cash received and your tax basis in your shares of CBB common stock exchanged. If you receive a combination of Southern States common stock and cash in exchange for your shares of CBB common stock, you will generally recognize a taxable gain (but not loss) in an amount equal to the lesser of:
(i)the excess, if any of:
(A)the sum of the cash and the fair market value of the Southern States common stock you receive, over
(B)your tax basis in CBB common stock exchanged in the merger; or
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(ii)the cash that you receive in the merger.
The United States federal income tax consequences described above may not apply to all holders of CBB common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 52.
The United States federal income tax consequences described above may not apply to all holders of CBB common stock. Your tax consequences will depend on your individual situation. Accordingly, Southern States and CBB strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
RISK FACTORS
Before voting at the special meeting, you should carefully consider all of the information contained in or incorporated by reference into this proxy statement/prospectus, including the risk factors set forth in the section entitled “Risk Factorsbeginning on page 10, including, without limitation:
You may not receive the form of merger consideration that you elect;
Because the market price of Southern States common stock may fluctuate, CBB shareholders cannot be certain of the market value of the merger consideration they will receive;
Since the cash consideration per share of CBB common stock is fixed, CBB shareholders are at risk in the event that the market price of Southern States common stock increases prior to the consummation of the merger;
The market price of Southern States common stock after the merger may be affected by factors different from those currently affecting the price of shares of CBB common stock or Southern States common stock;
The opinion delivered by Performance Trust to CBB’s board of directors prior to the entry into the merger agreement will not reflect changes in circumstances that may have occurred since the dates of the opinion;
Combining Southern States and CBB may be more difficult, costly or time-consuming than expected, and Southern States and CBB may fail to realize the anticipated benefits of the merger;
Southern States may be unable to retain Southern States and/or CBB personnel successfully after the merger;
Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on Southern States following the merger;
Certain of CBB’s directors and executive officers may have interests in the merger that may differ from the interests of CBB shareholders;
The merger agreement may be terminated in accordance its terms and the merger may not be completed;
Failure to complete the merger could negatively impact Southern States or CBB;
Southern States and CBB will be subject to business uncertainties and contractual restrictions while the merger is pending;
The merger agreement limits CBB’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire CBB;
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The shares of Southern States common stock to be received by CBB shareholders as a result of the merger will have some rights that are different from the shares of CBB common stock;
Southern States and CBB are expected to incur significant costs related to the merger and integration;
Each current CBB shareholder will have a reduced ownership and voting interest in Southern States following the consummation of the merger than the holder’s current ownership and voting interest in CBB individually prior to the consummation of the merger and may exercise less influence over management;
Issuance of shares of Southern States common stock in connection with the merger may adversely affect the market price of Southern States common stock;
Litigation may be filed against Southern States or CBB (or their respective boards of directors) that could prevent or delay the completion of the merger or result in the payment of damages following the completion of the merger; and
The federal income tax consequences of the merger for CBB shareholders will be dependent upon the merger consideration received.
You should also carefully consider the risk factors described in Southern States’ Annual Report on Form 10-K for the year ended December 31, 2023 and other reports filed with the SEC, which are incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus, and any amendment thereto, may contain estimates, predictions, opinions, projections and other “forward-looking statements” as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements relating to the impact Southern States and CBB expect the merger to have on the combined entities operations, financial condition, and financial results, and Southern States’ expectations about its ability to successfully integrate the combined businesses and the amount of cost savings and other benefits Southern States expects to realize as a result of the merger.
Forward-looking statements also include, without limitation, predictions or expectations of future business or financial performance as well as its goals and objectives for future operations, financial and business trends, business prospects, and management’s outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations, and are subject to risks and uncertainties. These statements often, but not always, are preceded by, are followed by or otherwise include the words such as “may,” “can,” “should,” “could,” “to be,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “likely,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “target,” “project,” “would” and “outlook,” or the negative version of those words or other similar words or phrases of a future or forward-looking nature.
These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the banking industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. This may be especially true given recent events and trends in the banking industry and interest rate volatility. Although Southern States and CBB believe that the expectations reflected in such forward-looking statements are reasonable as of the dates made, they cannot give any assurance that such expectations will prove correct and actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or may be important factors that could cause Southern States’ and CBB’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:
the possibility that the proposed merger does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;
the delay in or failure to close for any other reason;
the outcome of any legal proceedings that may be instituted against Southern States or CBB;
the occurrence of any event, change or other circumstance that could give rise to the right of one or both parties to terminate the merger agreement;
the risk that the businesses of Southern States and CBB will not be integrated successfully;
the possibility that the cost savings and any synergies or other anticipated benefits from the proposed merger may not be fully realized or may take longer to realize than expected;
disruption from the proposed merger making it more difficult to maintain relationships with employees, customers or other parties with whom Southern States or CBB have business relationships;
diversion of management time on merger-related issues;
risks relating to the potential dilutive effect of the shares of Southern States common stock to be issued in the proposed merger;
the reaction to the proposed merger of the companies’ customers, employees and counterparties; and
other factors, many of which are beyond the control of Southern States and CBB.
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These are representative of the future factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which Southern States, CBB or their respective subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other future factors.
For any forward-looking statements made in this proxy statement/prospectus or in any documents incorporated by reference into this proxy statement/prospectus, Southern States and CBB claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on any such forward-looking statements. All forward-looking statements, expressed or implied, included herein are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Any forward-looking statement speaks only as of the date on which it is made, and Southern States and CBB do not undertake any obligation to publicly update or revise any forward-looking statement, whether written or oral, and whether as a result of new information, future developments or otherwise, except as specifically required by law.
For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that Southern States has filed with the SEC as described under “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
Southern States and CBB expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this proxy statement/prospectus.
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RISK FACTORS
In addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the section “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the following risks relating to the merger before deciding how to vote at the special meeting. You should also consider the risks relating to the business of Southern States because these risks will also affect the combined company. The risks relating to the business of Southern States can be found in Southern States’ Annual Report on Form 10-K for the year ended December 31, 2023, as amended or updated by any subsequent documents filed with the Securities and Exchange Commission, which are incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find Additional Information” and “Incorporation of Certain Information by Reference.”
You may not receive the form of merger consideration that you elect.
The merger agreement contains provisions that are designed to ensure that the maximum number of shares of CBB common stock that may be converted into cash consideration may not exceed 10.0% of the shares of CBB common stock outstanding at the effective date. If more than 10.0% of the shares of CBB common stock outstanding at the effective date would otherwise be converted into cash (including shares held by holders of CBB common stock who have properly exercised their right to dissent as described under the section entitled “The Merger—Dissenters’ Rights in the Merger” beginning on page 41), then the holders of CBB common stock electing cash consideration will receive a combination of cash and Southern States common stock with the cash consideration to be prorated on the basis of the number of shares of CBB common stock as to which holders of CBB have properly elected to receive cash consideration so that the maximum amount of shares of CBB common stock to receive cash shall not exceed 10.0%. Accordingly, there is a risk that you will receive a portion of the merger consideration in a form that you did not elect, which could result in, among other things, tax consequences that differ from those that would have resulted had you received the form of consideration you elected (including the recognition of taxable gain to the extent cash is received).
Because the market price of Southern States common stock may fluctuate, CBB shareholders cannot be certain of the market value of the merger consideration they will receive.
In the merger, each share of CBB common stock issued and outstanding immediately prior to the effective date will be exchanged, at the option of the holder of such CBB common stock, for either (i) 1.550 shares of Southern States common stock or (ii) $45.63 per share of CBB common stock; provided, that shareholder elections for cash are subject to proration such that no more than 10.0% of the outstanding shares of CBB common stock will receive the cash consideration. This exchange ratio is fixed and will not be adjusted for changes in the market price of either Southern States common stock or CBB common stock. Changes in the price of Southern States common stock between now and the time of the merger will affect the value that CBB shareholders will receive in the merger. Neither Southern States nor CBB is permitted to terminate the merger agreement as a result of any increase or decrease in the market price of Southern States common stock or CBB common stock.
Stock price changes may result from a variety of factors, including general market and economic conditions, changes in CBB’s and Southern States’ businesses, operations and prospects, the recent volatility in the prices of securities in global financial markets, including market prices of CBB, Southern States and other banking companies, and regulatory considerations, many of which are beyond CBB’s and Southern States’ control. Therefore, at the time of the special meeting, CBB shareholders will not know the market value of the consideration that CBB shareholders will receive at the effective date. You should obtain current market quotations for shares of Southern States common stock.
Since the cash consideration per share of CBB common stock is fixed, CBB shareholders are at risk in the event that the market price of Southern States common stock increases prior to the consummation of the merger.
Those CBB shareholders who receive cash consideration in exchange for their shares of CBB common stock will receive $45.63 in cash consideration for each such share, subject to adjustment as set forth in the merger agreement. If the market price of Southern States common stock increases, those CBB shareholders who receive cash consideration will receive less than the value of the Southern States common stock that they would have
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received if they had elected to receive Southern States common stock and had, in fact, received Southern States common stock in the merger. Southern States and CBB urge CBB shareholders to obtain current market quotations for Southern States common stock.
The market price of Southern States common stock after the merger may be affected by factors different from those currently affecting the price of shares of CBB common stock or Southern States common stock.
In the merger, CBB shareholders will become Southern States shareholders. Southern States’ business differs from that of CBB. Accordingly, the results of operations of Southern States and the market price of Southern States common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Southern States and CBB. For a discussion of the businesses of Southern States and CBB and of certain factors to consider in connection with those businesses, see the sections entitled “Information About Southern States” and “Information About CBB” beginning on pages 55 and 57, respectively, and the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find Additional Information.”
The opinion delivered by Performance Trust to CBB’s board of directors prior to the entry into the merger agreement will not reflect changes in circumstances that may have occurred since the dates of the opinion.
At the February 27, 2024 meeting of CBB’s board of directors, representatives of Performance Trust rendered Performance Trust’s oral opinion, which was subsequently confirmed by delivery of a written opinion to the board of directors, dated February 27, 2024. Changes in the operations and prospects of Southern States or CBB, general market and economic conditions and other factors that may be beyond the control of Southern States and CBB, may have altered the value of Southern States or CBB or the prices of shares of Southern States common stock and shares of CBB common stock as of the date of this proxy statement/prospectus, or may alter such values and prices by the time the merger is completed. The Performance Trust opinion does not speak as of the date of this proxy statement/prospectus or as of any other date subsequent to the dates of the Performance Trust opinion.
Combining Southern States and CBB may be more difficult, costly or time-consuming than expected, and Southern States and CBB may fail to realize the anticipated benefits of the merger.
The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of Southern States and CBB. To realize the anticipated benefits and cost savings from the merger, Southern States and CBB must integrate and combine their businesses in a manner that permits those cost savings to be realized, without adversely affecting current revenues and future growth. If Southern States and CBB are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses.
An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of Southern States following the completion of the merger, which may adversely affect the value of the common stock of Southern States following the completion of the merger.
Southern States and CBB have operated and, until the completion of the merger, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of Southern States and CBB during this transition period and on Southern States for an undetermined period after completion of the merger.
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Southern States may be unable to retain Southern States and/or CBB personnel successfully after the merger is completed.
The success of the merger will depend in part on Southern States’ ability to retain the talents and dedication of key employees currently employed by Southern States and CBB. It is possible that these employees may decide not to remain with Southern States or CBB, as applicable, while the merger is pending or with Southern States after the merger is completed. If Southern States and CBB are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, Southern States and CBB could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the merger, if key employees terminate their employment, Southern States’ business activities may be adversely affected, and management’s attention may be diverted from successfully integrating Southern States and CBB to hiring suitable replacements, all of which may cause Southern States’ business to suffer. In addition, Southern States and CBB may not be able to locate or retain suitable replacements for any key employees who leave either company.
Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on Southern States following the merger.
Before the merger may be completed, various approvals, consents and non-objections must be obtained from the Federal Reserve Board, the FDIC, the ASBD, the GDBF and other regulatory authorities. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party and the factors described under “The Merger—Regulatory Approvals” beginning on page 39. These approvals could be delayed or not obtained at all, including due to: an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals, including factors not known as of the date of this proxy statement/prospectus and factors that may arise in the future; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. The Federal Reserve Board has stated that if material weaknesses are identified by examiners before a banking organization applies to engage in expansionary activity, the Federal Reserve Board will expect the banking organization to resolve all such weaknesses before applying for such expansionary activity. The Federal Reserve Board has also stated that if issues arise during the processing of an application for expansionary activity, it will expect the applicant banking organization to withdraw its application pending resolution of any supervisory concerns.
The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of Southern States’ business or require changes to the terms of the transactions contemplated by the merger agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of Southern States following the merger or otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.
Certain of CBB’s directors and executive officers may have interests in the merger that may differ from the interests of CBB shareholders.
CBB shareholders should be aware that some of CBB’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of CBB shareholders. These interests and arrangements may create potential conflicts of interest. The CBB board of directors was aware of these respective interests and considered these interests, among other matters, when making its decisions to approve the merger agreement, and in recommending that CBB shareholders vote to approve the merger agreement. For a more
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complete description of these interests, please see “The Merger—Interests of Certain CBB Directors and Executive Officers in the Merger” beginning on page 36.
The merger agreement may be terminated in accordance with its terms and the merger may not be completed.
The merger agreement is subject to a number of conditions that must be fulfilled in order to complete the merger including, among others, (i) approval of the merger agreement and merger by CBB shareholders, (ii) receipt of required regulatory approvals without the imposition of a condition that, in the reasonable good faith judgment of the board of directors of Southern States s or the board of directors of CBB, would so materially adversely impact the economic benefits of the transaction as contemplated by the merger agreement so as to render inadvisable the consummation of the merger, and receipt of all other requisite consents or approvals, (iii) the absence of any law or order preventing or prohibiting the consummation of the transactions contemplated by the merger agreement (including the merger), (iv) the effectiveness of the registration statement for the Southern States common stock to be issued in the merger, (v) receipt by Southern States of opinion to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, (vi) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (vii) the performance in all material respects by the other party of its obligations under the merger agreement, (viii) the absence of any material adverse effect with respect to the other party and (ix) the number of shares as to which shareholders of CBB have exercised dissenters’ rights of appraisal under the merger agreement does not exceed 7.5% of the outstanding shares of CBB common stock.
These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after shareholder approval, or Southern States or CBB may elect to terminate the merger agreement in certain other circumstances. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 49.
Failure to complete the merger could negatively impact Southern States or CBB.
If the merger is not completed for any reason, including as a result of CBB shareholders failing to approve the merger, there may be various adverse consequences and Southern States and/or CBB may experience negative reactions from the financial markets and from their respective customers and employees. For example, Southern States’ or CBB’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Southern States common stock or CBB common stock could decline to the extent that current market prices reflect a market assumption that the merger will be beneficial and will be completed. Southern States and/or CBB also could be subject to litigation related to any failure to complete the merger or to proceedings commenced against Southern States or CBB to perform their respective obligations under the merger agreement. If the merger agreement is terminated under certain circumstances, CBB may be required to pay a termination fee of $1.2 million to Southern States.
Additionally, each of Southern States and CBB has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of preparing, filing, printing and mailing this proxy statement/prospectus, and all filing and other fees paid in connection with the merger. If the merger is not completed, Southern States and CBB would have to pay these expenses without realizing the expected benefits of the merger.
Southern States and CBB will be subject to business uncertainties and contractual restrictions while the merger is pending.
Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Southern States and CBB. These uncertainties may impair Southern States’ or CBB’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Southern States or CBB to seek to change existing business relationships with Southern States or CBB. In addition, subject to certain exceptions, CBB has agreed to operate its business in the ordinary course in all material respects and to refrain from
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taking certain actions that may adversely affect its ability to consummate the merger on a timely basis without Southern States’ consent, and Southern States has agreed to refrain from taking certain actions that may adversely affect its ability to consummate the merger on a timely basis without CBB’s consent. These restrictions may prevent Southern States and/or CBB from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements” beginning on page 44 for a description of the restrictive covenants applicable to Southern States and CBB.
The merger agreement limits CBB’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire CBB.
The merger agreement contains “no shop” covenants that restrict CBB’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by CBB’s board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any alternative acquisition proposals. These provisions, which include a $1.2 million termination fee payable under certain circumstances, may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of CBB from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share price to CBB shareholders than what is contemplated in the merger, or may result in a potential third-party acquirer proposing to pay a lower per share price to acquire CBB than it might otherwise have proposed to pay. For more information, see “The Merger Agreement—Termination of the Merger Agreement” beginning on page 49.
The shares of Southern States common stock to be received by CBB shareholders as a result of the merger will have rights that are different from the shares of CBB common stock.
In the merger, CBB shareholders will become Southern States shareholders and their rights as shareholders will be governed by Alabama law and the governing documents of Southern States following the merger. The rights associated with Southern States common stock are different from the rights associated with CBB common stock. See “Comparison of the Rights of Shareholders of Southern States and CBB” beginning on page 73 for a discussion of the different rights associated with Southern States common stock.
Southern States and CBB are expected to incur significant costs related to the merger and integration.
Southern States and CBB have incurred and expect to incur significant, non-recurring costs in connection with negotiating the merger agreement and closing the merger. In addition, Southern States will incur costs in connection with the completion of the merger as Southern States integrates the CBB business, including system consolidation costs, professional fees and employment-related costs. These expenses are currently estimated to be approximately $5.0 million pre-tax.
There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time. Southern States and CBB may also incur additional costs to maintain employee morale and to retain key employees. Southern States and CBB will also incur significant legal, financial advisory, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the merger. Some of these costs are payable regardless of whether the merger is completed. See “The Merger Agreement—Expenses and Fees” beginning on page 51.
Each current CBB shareholder will have a reduced ownership and voting interest in Southern States following the consummation of the merger than the holder’s current ownership and voting interest in CBB individually prior to the consummation of the merger and may exercise less influence over management.
CBB shareholders currently have the right to vote in the election of the board of directors and on other matters affecting CBB. When the merger is completed, each CBB shareholder will become a Southern States shareholder, with a percentage ownership of Southern States that is smaller than the holder’s percentage ownership of CBB prior to the consummation of the merger. Based on the number of shares of Southern States and CBB common stock outstanding as of the close of business on the CBB record date, and based on the number of shares of Southern
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States common stock expected to be issued in the merger, the former CBB shareholders, as a group, are estimated to own approximately 10.0% of the outstanding shares of Southern States immediately after the merger. Because of this, CBB shareholders may have less influence on the management and policies of Southern States than they now have on the management and policies of CBB.
Issuance of shares of Southern States common stock in connection with the merger may adversely affect the market price of Southern States common stock.
Based on the number of shares of CBB common stock outstanding as of May 13, 2024, Southern States expects to issue approximately 1.07 million shares of Southern States common stock to CBB shareholders. The issuance of these new shares of Southern States common stock may result in fluctuations in the market price of Southern States common stock, including a stock price decrease.
Litigation may be filed against Southern States or CBB (or their respective boards of directors) that could prevent or delay the completion of the merger or result in the payment of damages following completion of the merger.
In connection with the merger, it is possible that shareholders may file demands or putative class action lawsuits against Southern States or CBB (or their respective boards of directors). Among other remedies, these shareholders could seek damages or to enjoin the merger. The outcome of any such litigation is uncertain. If a dismissal is not granted or a settlement is not reached, such potential lawsuits could prevent or delay completion of the merger and result in substantial costs to Southern States and CBB, including any costs associated with indemnification obligations of Southern States or CBB. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is consummated may adversely affect the combined company’s business, financial condition, results of operations, cash flows and market price.
If the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the CBB shareholders may be required to pay substantial U.S. federal income taxes.
The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and Southern States and CBB intend to report the merger consistent with such qualification. It is a condition to Southern States’ obligation to complete the merger that Southern States receive an opinion from outside counsel to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. However, an opinion of counsel represents such counsel’s judgment and is not binding on the IRS or any court and the IRS or a court may disagree with the conclusion in the opinion of counsel. Southern States and CBB have not sought, and will not seek, any ruling from the IRS regarding any matters relating to the transactions, and as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to the treatment of the merger as a “reorganization” within the meaning of Section 368(a) of the Code. If the IRS or a court determines that the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. holder of CBB common stock generally would recognize gain or loss in an amount equal to the difference, if any, between the fair market value of the Southern States common stock received in the merger, and such U.S. holder’s aggregate tax basis in the corresponding CBB common stock surrendered in the merger. See “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 52.
The federal income tax consequences of the merger for CBB shareholders will be dependent upon the merger consideration received.
The federal income tax consequences of the merger to you will depend upon the merger consideration you receive. In general, if you exchange your shares of CBB common stock solely for cash, you will recognize gain or loss for federal income tax purposes in an amount equal to the difference between the cash you receive and your adjusted tax basis in your CBB common stock. If you receive solely Southern States common stock in exchange for your CBB common stock, you generally will not recognize any gain or loss for federal income tax purposes (except to the extent attributable to cash received in lieu of fractional shares of Southern States common stock). If you receive a combination of cash and Southern States common stock in the transaction, you generally will not recognize loss but will recognize gain, if any, to the extent attributable to the cash received. For a more detailed discussion of
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the federal income tax consequences of the transaction to you, see, “Material U.S. Federal Income Tax Consequences of the Mergeron page 52.
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THE CBB SPECIAL MEETING
This section contains information about the special meeting of CBB shareholders that has been called to consider and vote on the merger proposal and the adjournment proposal. Together with this proxy statement/prospectus, CBB is also sending its shareholders a notice of the special meeting and a form of proxy that the CBB board of directors is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.
On or about [_________], 2024, CBB commenced mailing or otherwise delivering this proxy statement/prospectus and the enclosed form of proxy card) to its shareholders entitled to vote at the special meeting.
Date, Time and Place of Meeting
The special meeting will be held on Tuesday, July 9, 2024, at Homes2 Suites, 1320 E. Main Street, Cartersville, Georgia 30120 at 2:00 p.m., local time.
Matters to Be Considered
The purpose of the special meeting is to vote on:
the CBB merger proposal; and
the CBB adjournment proposal; and
any other business properly brought before the special meeting or any adjournment or postponement thereof.
Record Date and Quorum
The close of business on Monday, May 13, 2024 has been fixed as the record date for determining the CBB shareholders entitled to receive notice of and to vote at the special meeting. At that time, 689,598 shares of CBB common stock were outstanding, held by approximately 334 holders of record.
In order to conduct voting at the special meeting, there must be a quorum, which is the number of shares that must be present at the meeting, either in person or by proxy. The presence at the meeting, in person or by proxy, of at least a majority of CBB common stock entitled to vote at the special meeting will constitute a quorum. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
Votes Required
Approval of the CBB merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of CBB common stock entitled to vote.
Approval of the CBB adjournment proposal requires the affirmative vote of a majority of the shares represented, in person or by proxy, at the special meeting and entitled to vote.
For each share of CBB common stock you hold as of the record date, you are entitled to one vote at the special meeting on each proposal to be considered. 
All of CBB’s directors have entered into shareholder support agreements in favor of Southern States and CBB pursuant to which they have agreed, in their capacity as CBB shareholders, to vote all of their shares in favor of the approval of the merger proposal. As of the record date, these directors of CBB and their affiliates had the right to vote 207,817 shares of CBB common stock, or approximately 30.1% of the outstanding CBB shares entitled to vote at the special meeting. As of the record date, all directors and executive officers of CBB, including their affiliates, had the right to vote 209,903 shares of CBB common stock, or approximately 30.4% of the outstanding CBB shares entitled to vote at the special meeting, and held options to purchase 10,000 shares of CBB common stock.
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Proxies
The form of proxy accompanying this proxy statement/prospectus contains instructions for voting CBB common stock. If you hold CBB common stock in your name as a shareholder of record and are voting, you should complete, sign, date and return the proxy card accompanying this proxy statement/prospectus in the enclosed postage-paid return envelope to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting. If you hold your CBB common stock in “street name” through a bank, broker or other holder of record, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.
All shares represented by valid proxies that CBB receives through this solicitation, and that are not revoked, will be voted in accordance with the instructions on the proxy card. If you make no specification on your proxy card how you want your CBB common stock voted before signing and returning it, your proxy will be voted “FOR” the approval of the CBB merger proposal.
If you are the registered holder of your CBB common stock or you obtain a broker representation letter from your bank, broker or other holder of record of your CBB common stock and in all cases you bring proof of identity, you may vote your CBB common stock in person by ballot at the special meeting. Votes properly cast at the special meeting, in person or by proxy, will be tallied by CBB’s inspector of elections.
Revocation of Proxies
If you hold CBB common stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to CBB’s Chief Executive Officer, or by attending the special meeting in person and voting by ballot at the special meeting. Any CBB shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence of a shareholder at the special meeting will not constitute revocation of a previously given proxy.
Written notices of revocation and other communications about revoking a CBB proxy should be addressed to:
CBB Bancorp
P.O. Box 580
Cartersville, Georgia 30120
Attn: Richard E. Drews, Jr.
CBB Bancorp
215 E Main Street
Cartersville, Georgia 30120
Attn: Richard E. Drews, Jr.
If your CBB common stock is held in “street name” by a bank, broker or other holder of record, you should follow the instructions of your bank, broker or other holder of record regarding the revocation of proxies.
Treatment of Abstentions and Failure to Vote
Approval of the CBB merger proposal requires the affirmative vote of a majority of all outstanding shares of CBB common stock. Therefore, an abstention or failure to vote your shares will have the same effect as a vote against the approval of the CBB merger proposal.
Approval of the CBB adjournment proposal by CBB shareholders requires only the affirmative vote of a majority of the shares represented, in person or by proxy, at the special meeting and entitled to vote. Accordingly, your failure to vote, an abstention or a broker non-vote will have no effect on the CBB adjournment proposal.
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The CBB board of directors urges you to promptly vote your CBB common stock by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope. If you hold your CBB common stock in “street name” through a bank, broker or other holder of record, please vote by following the voting instructions of your bank, broker or other holder of record.
Recommendation of the CBB Board of Directors
The CBB board of directors has unanimously adopted and approved the merger agreement and the transactions it contemplates, including the merger. The CBB board of directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of CBB and its shareholders.
Accordingly, the CBB board of directors unanimously recommends that you vote your CBB common stock “FOR” approval of the CBB merger proposal and “FOR” the CBB adjournment proposal.
See “The Merger—CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors” on page 23 for a more detailed discussion of the CBB board of directors’ recommendation.
Solicitation of Proxies
CBB is soliciting your proxy in conjunction with the merger. CBB will bear the entire cost of soliciting proxies from its shareholders. In addition to solicitation of proxies by mail, CBB will request that banks, brokers and other record holders send proxies and proxy materials to the beneficial owners of CBB common stock and secure their voting instructions. If necessary, CBB may use several of its regular employees, who will not be specially compensated, to solicit proxies from CBB shareholders, either personally or by telephone, facsimile, letter or other electronic means.
Dissenters’ Rights
Holders of CBB common stock who comply with Article 13 of the GBCC are entitled to exercise their dissenters’ rights and receive a cash payment equal to the “fair value” of the shares of CBB common stock owned by such shareholder, as determined by a Georgia court, in lieu of the right to receive the merger consideration, if the merger is consummated. A copy of Article 13 of the GBCC is attached as Annex B to this proxy statement/prospectus. Please see the section entitled “The Merger—Dissenters’ Rights in the Merger” beginning on page 41 for a summary of the procedures to be followed in asserting dissenters’ rights. Failure to take all of the steps required under Georgia law may result in the loss of dissenters’ rights by a CBB shareholder.
Attending the Special Meeting
All holders of CBB common stock, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. CBB reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification. Everyone who attends the special meeting must abide by the rules for the conduct of the meeting. These rules will be printed on the meeting agenda. Even if you plan to attend the special meeting, we encourage you to vote by proxy so your vote will be counted if you later decide not to attend the special meeting.
Other Matters
As of the date of this proxy statement/prospectus, management of CBB was unaware of any other matters to be brought before the special meeting other than those set forth herein. However, if any other matters are properly brought before the special meeting, the persons named in the enclosed form of proxy for CBB will have discretionary authority to vote all proxies with respect to such matters in accordance with their best judgment.
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THE CBB PROPOSALS
Proposal No. 1—Merger Proposal
CBB is asking its shareholders to approve the merger agreement and the transactions contemplated thereby. CBB urges CBB shareholders to read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger of CBB with and into Southern States. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.
After careful consideration, the CBB board of directors has unanimously adopted and approved the merger agreement and the transactions it contemplates, including the merger. The CBB board of directors determined that the merger, merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of CBB and its shareholders. See “The Merger—CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors” included elsewhere in this proxy statement/prospectus for a more detailed discussion of the CBB board recommendation.
CBB’s board of directors unanimously recommends a vote “FOR” the CBB merger proposal.
Proposal No. 2 — Adjournment Proposal
If there are insufficient votes at the time of the special meeting to approve the merger proposal, the special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies. If the number of shares of CBB common stock present in person or by proxy at the special meeting and voting in favor of the merger proposal is insufficient to adopt such proposal, CBB intends to move to adjourn the special meeting so that the CBB board of directors may solicit additional proxies for approval of the merger proposal. In that event, CBB will ask its shareholders to vote only upon the adjournment proposal and not the merger proposal.
In this proposal, CBB is asking its shareholders to authorize the holder of any proxy solicited by the CBB board of directors on a discretionary basis to vote in favor of adjourning the special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from CBB shareholders who have previously voted.
CBB’s board of directors unanimously recommends a vote “FOR” the CBB adjournment proposal.
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THE MERGER
This section of this proxy statement/prospectus describes material aspects of the proposed merger, including the merger agreement. This summary may not contain all of the information that is important to you. You should carefully read this entire document and the other documents referred to herein for a more complete understanding of the merger. In addition, Southern States incorporates important business and financial information about Southern States into this proxy statement/prospectus by reference. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus.
Terms of the Merger
Each of Southern States’ and CBB’s respective board of directors have approved the merger agreement. The merger agreement provides that, pursuant to the terms and subject to the conditions set forth in the merger agreement, CBB will be merged with and into Southern States, with Southern States as the surviving entity, and, as soon as practicable thereafter, Century Bank will be merged with and into Southern States Bank, with Southern States Bank as the surviving entity. The merger agreement, which is attached as Annex A to the accompanying proxy statement/prospectus, sets forth the terms of the merger.
Under the terms and subject to the conditions of the merger agreement, upon the consummation of the merger, holders of CBB common stock will have the right to elect to receive either 1.550 shares of Southern States common stock or $45.63 in cash for each share of CBB common stock they hold. Shareholder elections for cash consideration are subject to proration such that no more than 10.0% of the shares outstanding of CBB common stock will receive the cash consideration. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option.
Background of the Merger
Southern States’ business strategy focuses on organic growth, including new hires and facilities, and growth through acquisitions of financial institutions. Approximately 18 months ago in September of 2022, senior management of Southern States held a strategic planning meeting which was attended by representatives of various investment banks and, as part of that meeting, identified potential targets for acquisitions, including Century Bank.
Following this meeting, Southern States regularly evaluated acquisitions of other financial institutions, including institutions in the Atlanta metro area, as well as strategic combinations with other financial institutions as a means of growing asset size, enhancing competitiveness and delivering greater value for its shareholders.
In November 2022, Performance Trust, on behalf of CBB, contacted Southern States regarding a potential meeting between Southern States and CBB. On November 15, 2022, a meeting was held at the office of Performance Trust in Atlanta, Georgia. Steve Whatley, Mark Chambers, Lynn Joyce attended on behalf of Southern States and Rick Drews attended on behalf of CBB. Performance Trust, as advisor to CBB, was also present. While discussions on a potential transaction between the parties did not progress immediately following this meeting, each party gained more familiarity with the other party’s operations and financial condition.
As CBB’s financial advisor, Performance Trust from time to time made introductions between CBB executives and other prospective buyers to familiarize them with their possible partners. In May 2023, Performance Trust delivered a strategic planning presentation to CBB’s board of directors around the valuation landscape at the time and potential buyers. Sothern States was highlighted as a preferred buyer in the meeting.
On July 10, 2023, Southern States and CBB attended a meeting in Anniston, Alabama to resume preliminary discussion regarding a potential transaction. At this meeting, Mark Chambers, Lynn Joyce, Greg Smith, and Jack Swift attended on behalf of Southern States and Rick Drews and David Caswell attended on behalf of CBB. During this meeting, there was a general discussion of the customer base, credit philosophy, culture, deposit composition,
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and general future outlook of each party. Following the meeting, representatives from Southern States updated its board of directors on the possibility of a transaction with CBB.
On July 17, 2023, Southern States and CBB executed a Non-Disclosure Agreement to enable the parties to undertake further negotiations and exchange confidential information regarding a potential transaction.
In the months that followed, Southern States and CBB continued discussions and began to negotiate a potential transaction with the assistance of the parties’ respective financial advisors. During that time, Southern States’ board of directors and senior management continued to have regular meetings regarding a potential transaction between Southern States and CBB. During this period, Southern States also had exploratory conversations with a separate target. However, these discussions were brief and did not move forward.
During this period, CBB concurrently held preliminary discussions with another party that resulted in the submission of a letter of intent. The CBB board of directors ultimately decided to continue to pursue a partnership with Southern States instead of the other party due to the uncertainty around the post-transaction valuation of CBB and the other party based on their respective contributions, the valuation of the other party’s currency (the party was not publicly traded), and the party’s relative lack of transaction experience.
On December 13, 2023, Mark Chambers, Stacey Holmes, Jay Pumroy, Al Hayes, and Lynn Joyce as representatives of Southern States and Larry Pogue, David Caswell, and Rick Drews as representatives of CBB, met in Atlanta, Georgia. During that meeting, the parties discussed the potential benefits to each company and their respective shareholders of a potential transaction, including, without limitation, CBB’s liquidity, low-cost deposit base and relatively small number of branches for its asset size. The parties also discussed CBB’s culture, each party’s respective markets, and the general process for approval of any proposed transaction.
On December 18, 2023, representatives of Southern States delivered to CBB a draft of a non-binding letter of intent for an acquisition by Southern States of CBB (the “LOI”). CBB held a board meeting on December 19, 2023 to review the LOIs that had been submitted by Southern States and the other interested party. Ultimately, the decision was made to pursue the opportunity with Southern States.
CBB and Performance Trust also discussed whether to market Century Bank to other prospective acquirers but ultimately determined that Southern States was one of its best buyers and the pricing was attractive on a contribution basis. Additionally, the cultural fit, the potential financial benefits of the transaction, and the potential upside in Southern States stock relative to peers that it routinely outperforms were compelling additional reasons to enter exclusive negotiations with Southern States.
Following the meeting, the parties’ negotiations were primarily focused on the exchange ratio, the percentage of acquisition price that would be in cash, and the composition of Southern States’ management following any transaction. Southern States submitted a revised LOI on January 5, 2024 and both parties signed the new LOI that same day.
Following the execution of the LOI, the parties continued conducting additional due diligence and negotiating a definitive, binding agreement and plan of merger. Southern States, CBB and their respective legal counsel exchanged drafts and negotiated various provisions of the merger agreement along with the other merger-related transaction documents. Negotiations primarily focused on Southern States’s post-merger management composition, form of consideration in the transaction, cash proration requirements, the effect of the transaction on CBB stock options, and issues related to CBB’s existing employees.
On February 1, 2024, Mark Chambers, Greg Smith, Lynn Joyce and Jack Swift, as representatives of Southern States, and Rick Drews, David Caswell and Will Taylor, as representatives of CBB, met in Anniston, Alabama. Representatives from CBB’s legal counsel, Troutman Pepper, attended the meeting virtually. The purpose of the meeting was to conduct in person due diligence discussions. The parties discussed, among other things, credit and credit concentrations, public fund deposits, goodwill impairment, information technology, regulatory compliance, dividends, insured deposits, insurance and employee benefits. Representatives of Keefe, Bruyette & Woods, Inc. (“KBW”) and Performance Trust were also present.
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On February 27, 2024, a joint meeting of the boards of directors of Southern States and Southern States Bank was held, with representatives of KBW and Jones Walker LLP (“Jones Walker”) in attendance, to discuss the financial implications of the transaction, market conditions and outstanding legal issues. During the meeting, representatives of KBW discussed with the boards of directors an overview of Century Bank and its deposit base and the financial aspects and implications of the transaction, including, but not limited to, the potential pro forma impact on estimated earnings, book value, profitability and capital, and certain other pro forma metrics. On February 27, 2024, the boards of directors of Southern States and Southern States Bank approved the merger agreement.
On February 27, 2024, a joint meeting of the boards of directors of CBB and Century Bank was held, with representatives of Performance Trust and CBB’s legal counsel, Troutman Pepper, in attendance, to discuss the financial implications of the transaction, market conditions and outstanding legal issues. Performance Trust discussed the general financial implications of the transaction, including, but not limited to, an overview of Southern States Bank, Southern States Bank’s deposit base, terms of the transaction, including estimated earnings, book value, profitability and capital impacts, and certain other pro forma metrics. On February 27, 2024, the boards of directors of CBB and Century Bank approved the merger agreement.
The merger agreement was executed effective as of February 27, 2024.
CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors
After careful consideration, CBB’s board of directors, at a meeting held on February 27, 2024, determined that the merger agreement and the transactions contemplated thereby were in the best interests of CBB and its shareholders. Accordingly, CBB’s board of directors adopted and approved the merger agreement by unanimous vote and determined to recommend that CBB shareholders vote “FOR” the approval of the merger agreement.
In reaching its decision to adopt and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to recommend that its shareholders approve the merger, the CBB board of directors consulted with CBB management, as well as Performance Trust and Troutman Pepper, its outside legal counsel, and considered a number of factors, including the following material factors, which are not presented in any order of priority:
the board of directors’ knowledge of, and deliberation with respect to, the current and prospective business and economic environment of the markets served by CBB and by Southern States, including the competitive environment in CBB’s and Southern States’ markets, the continuing consolidation of the financial services industry, the increased regulatory burdens on financial institutions and the uncertainties in the regulatory climate going forward, and the likely effects of these factors on CBB’s and Southern States’ potential growth, development, productivity, profitability and strategic options, and the historical market price of Southern States common stock and the fact that CBB common stock is not publicly traded;
the board of directors’ knowledge of and deliberation with respect to CBB’s business, operations, financial condition, earnings and prospects, and of Southern States’ business, operations, financial condition, earnings and prospects, taking into account the results of CBB’s due diligence review of Southern States;
the board of directors’ views with respect to other potential CBB strategic alternatives, including remaining independent, competing for organic growth, making acquisitions, pursuing other strategic merger partners, or other strategies;
the results of CBB’s exploration of possible merger partners other than Southern States, and the board of directors’ views with respect to the likelihood of any such other merger occurring and providing greater value to CBB shareholders;
management succession alternatives for CBB;
the complementary aspects of CBB’s and Southern States’ businesses, including customer focus, geographic coverage, business orientation and compatibility of the parties’ respective management and operating styles;
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the board of directors’ understanding of Southern States’ commitment to enhancing its strategic position in the Southeast region;
the prospect of CBB’s shareholders becoming shareholders of a company with a much larger shareholder base, resulting in a much more liquid common stock and the tax deferred treatment of the shares of Southern States common stock to be received by CBB shareholders in the merger;
Southern States’ successful track record of acquisitions of bank holding companies and banks and the CBB board of directors’ belief that the combined enterprise would benefit from application of Southern States’ ability to take advantage of economies of scale and grow in the current economic environment while providing improved service to CBB’s customers and markets, making Southern States an attractive partner for CBB;
the consideration being offered in relation to the CBB board of directors’ then-current assessment of the fair market value of CBB’s stock;
that a portion of the value of the merger consideration would consist of shares of Southern States common stock, allowing CBB shareholders to participate in the future performance of the combined CBB and Southern States business and synergies resulting from the merger, and the value to CBB shareholders represented by the aggregate cash and stock merger consideration;
the CBB board of directors’ then-estimate of the future value of CBB as an independent entity;
the short-term and long-term social and economic effects on the employees, depositors, customers, shareholders and other constituents of CBB and on the communities within which CBB operates;
its review with Troutman Pepper regarding the terms of the merger agreement, and the presentation by Troutman Pepper regarding the merger and the merger agreement;
the oral opinion delivered to CBB by Performance Trust on February 27, 2024, which was subsequently confirmed in a written opinion delivered to CBB by Performance Trust, to the effect that, as of February 27, 2024, and based upon and subject to the factors, procedures, assumptions, qualifications, and limitations set forth in the opinion, the merger consideration was fair, from a financial point of view, to the holders of CBB common stock entitled to receive such consideration;
the financial terms of recent business combinations in the financial services industry reviewed by the CBB board of directors and a comparison of the multiples paid in such selected business combinations with the terms of the merger, including information that was included in the Performance Trust fairness opinion analysis; and
the regulatory and other approvals required in connection with the merger and the CBB board of directors’ determination as to the likelihood that the approvals needed to complete the merger would be obtained without unacceptable conditions.
The CBB board of directors also considered as a part of its process potential risks and potentially negative factors concerning the merger in connection with its deliberations of the proposed transaction, including the following material factors:
that the exchange ratio of the stock portion of the merger consideration is fixed, so that if the market price of Southern States common stock at the time of the closing of the merger is lower than the market price on the date of the merger agreement (February 27, 2024), the economic value of the per share merger consideration to be received by CBB’s shareholders in exchange for their shares of CBB common stock will also be lower;
the potential risk of diverting management focus and resources from other strategic opportunities and from operational matters while working to implement the merger;
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the provisions of the merger agreement restricting CBB’s solicitation of third-party acquisition proposals and providing for the payment of a termination fee in certain circumstances, which the CBB board of directors understood, while potentially limiting the willingness of a third party to propose a competing business combination transaction with CBB, were a condition to Southern States’ willingness to enter into the merger agreement;
the fact that members of the CBB board of directors and its executive officers have other interests in the merger that are different from, or in addition to, their interests as CBB shareholders. See “The Merger—Interests of Certain CBB Directors and Executive Officers in the Merger”;
the potential displacement of CBB’s employees and the adverse anticipated effect on those employees;
the potential risks associated with integrating CBB’s business, operations and workforce with those of Southern States, including the execution risk of data system conversion and the possible negative effect on customer relationships;
the possibility that the merger could be announced but not consummated, and the possibility that CBB could lose customers, business and employees as a result of announcing the transaction; and
the possibility that the required regulatory and other approvals might not be obtained.
The foregoing discussion of the information and factors considered by the CBB board of directors as part of its process is not intended to be exhaustive, but includes the material factors considered by the CBB board of directors. In view of the wide variety of the factors considered in connection with its evaluation of the merger and the complexity of these matters, the CBB board of directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, the individual members of the CBB board of directors may have given different weight to different factors. The CBB board of directors conducted an overall analysis of the factors described above and engaged in thorough discussions amongst themselves and had discussions with, and questioned, CBB’s management and legal and financial advisors, and considered the factors overall to be favorable to, and in support of, its determination.
It should be noted that this discussion of the information and factors considered by the CBB board of directors in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”
Opinion of CBB’s Financial Advisor
CBB retained Performance Trust to provide financial advisory services to CBB in connection with evaluating strategic and financial alternatives. On February 27, 2024, Performance Trust delivered to the CBB board of directors its written opinion that, as of such date, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the merger consideration for each one (1) share of CBB common stock, the right to receive from Southern States, 1.550 shares of Southern States common stock or, at the election of such shareholder and subject to the Maximum Cash Consideration, $45.63 in cash for each share of CBB common stock was fair, from a financial point of view, to the holders of CBB common stock entitled to receive such consideration. Performance Trust’s opinion did not, and Performance Trust otherwise has not and does not, express any opinion on the fairness, from a financial point of view, to the holder of CBB common stock of the merger consideration, whether to the extent set forth in this proxy statement/prospectus or otherwise. CBB shareholders are advised to review the summary of Performance Trust’s fairness opinion set forth herein keeping in mind that the opinion is limited to the fairness, from a financial point of view, of the merger consideration as of February 27, 2024.
Performance Trust’s opinion was directed to CBB’s board and only addressed the fairness, from a financial point of view, to the holders of CBB common stock of the merger consideration and did not address any other aspect or implication of the merger. The references to Performance Trust’s opinion in this proxy statement/prospectus are qualified in their entirety by reference to the full text of Performance Trust’s written opinion, which is included as Annex C to this proxy statement/prospectus and sets forth the procedures followed, assumptions made,
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qualifications and limitations on the review undertaken and other matters considered by Performance Trust in preparing its opinion. However, neither Performance Trust’s opinion, nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and they do not constitute, advice or a recommendation to CBB’s board or any shareholder of CBB as to how to act or vote with respect to any matter relating to the merger agreement or otherwise. Performance Trust’s opinion was furnished for the use and benefit of CBB’s board (in its capacity as such) in connection with its evaluation of the merger and should not be construed as creating, and Performance Trust will not be deemed to have, any fiduciary duty to CBB’s board, CBB, any security holder or creditor of CBB or any other person, regardless of any prior or ongoing advice or relationships.
In issuing its opinion, among other things, Performance Trust:
(i)reviewed a draft of the merger agreement, dated February 27, 2024;
(ii)reviewed certain publicly available business and financial information relating to CBB and Southern States;
(iii)reviewed certain other business, financial and operating information relating to CBB and Southern States provided to us by the management of CBB and the management of Southern States, including financial forecasts for CBB and Southern States for the 2024 fiscal year ending December 31, 2023;
(iv)met with, either by phone or in person, certain members of the management of CBB and Southern States to discuss the business and prospects of CBB and Southern States and the proposed merger;
(v)reviewed the price performance of Southern States common stock and compared that to the performance of selected companies and indexes;
(vi)reviewed certain financial terms of the proposed transaction and compared certain of those terms with the publicly available financial terms of certain transactions that have recently been effected or announced;
(vii)reviewed certain financial data of CBB and Southern States and compared that data with similar data for companies with publicly traded equity securities that Performance Trust deemed relevant; and
(viii)considered such other information, financial studies, analyses, investigations, economic data, and market criteria that Performance Trust deemed relevant.
In connection with its review, Performance Trust has not independently verified any of the foregoing information and Performance Trust has assumed and relied upon such information being complete and accurate in all material respects. With respect to the financial forecasts for CBB that Performance Trust used in its analyses, the management of CBB has advised Performance Trust, and it has assumed, that such forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of CBB as to the future financial performance of CBB and Performance Trust expresses no opinion with respect to such estimates or the assumptions on which they are based. Performance Trust has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of CBB and Southern States since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Performance Trust that would be material to its analyses or this opinion, and that there is no information or any facts that would make any of the information reviewed by Performance Trust incomplete or misleading. Performance Trust has also assumed, with CBB’s consent, that, in the course of obtaining any regulatory or third party consents, approvals or agreements in connection with the merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on CBB, Southern States or the contemplated benefits of the merger and that the merger will be consummated in accordance with the terms of the merger agreement without waiver, modification or amendment of any term, condition or provision thereof that would be material to Performance Trust’s analyses or this opinion. Performance Trust has assumed, with CBB’s consent, that the merger agreement, when executed by the parties thereto, conformed to the draft reviewed by Performance Trust in all respects material to its analyses.
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Performance Trust’s opinion only addresses the fairness, from a financial point of view, of the merger consideration to the holders of CBB common stock in the manner set forth in the full text of its opinion, which is included as Annex C, and the opinion does not address any other aspect or implication of the merger or any agreement, arrangement or understanding entered into in connection with the merger or otherwise, including, without limitation, the amount or nature of, or any other aspect relating to, any compensation to any officers, trustees, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration or otherwise.
The issuance of Performance Trust’s opinion was approved by an authorized internal committee of Performance Trust.
Performance Trust’s opinion was necessarily based upon information made available to it as of the date the opinion was delivered of February 27, 2024, and financial, economic, market and other conditions as they existed and could be evaluated on the date the opinion was delivered. Performance Trust has no obligation to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring after the date the opinion was delivered. Performance Trust’s opinion does not address the relative merits of the merger as compared to alternative transactions or strategies that might be available to CBB, nor does it address the underlying business decision of CBB or the board to approve, recommend or proceed with the merger. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Performance Trust has relied on, with CBB’s consent, advice of the outside counsel and the independent accountants of CBB, and on the assumptions of the management of CBB, as to all legal, regulatory, accounting, insurance and tax matters with respect to CBB, Southern States, and the merger.
In preparing its opinion to CBB’s board of directors, Performance Trust performed a variety of analyses, including those described below. The summary of Performance Trust’s analyses is not a complete description of the analyses underlying Performance Trust’s opinion. The preparation of a fairness opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of those methods to the unique facts and circumstances presented. As a consequence, neither Performance Trust’s opinion nor the analyses underlying its opinion are readily susceptible to partial analysis or summary description. Performance Trust arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. Accordingly, Performance Trust believes that its analyses must be considered as a whole and that selecting portions of its analyses, analytic methods and factors, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.
In performing its analyses, Performance Trust considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. While the results of each analysis were taken into account in reaching its overall conclusion with respect to fairness, Performance Trust did not make separate or quantifiable judgments regarding individual analyses. The implied value reference ranges indicated by Performance Trust’s analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond CBB’s control, Southern States’ control, and Performance Trust’s control. Much of the information used in, and accordingly the results of, Performance Trust’s analyses are inherently subject to substantial uncertainty.
Performance Trust’s opinion and analyses were provided to CBB’s board of directors in connection with its consideration of the proposed merger and were among many factors considered by CBB’s board of directors in evaluating the proposed merger. Neither Performance Trust’s opinion nor its analyses were determinative of the merger consideration or of the views of CBB’s board of directors with respect to the proposed merger.
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The following is a summary of the material financial analyses performed in connection with Performance Trust’s opinion rendered to CBB’s board of directors on February 27, 2024. No company or transaction used in the analyses described below is identical or directly comparable to CBB or the proposed transaction. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Performance Trust’s analyses.
Summary of Aggregate Merger Consideration and Implied Transaction Metrics
Performance Trust reviewed the financial terms of the proposed merger. At least 90.0% of CBB common stock issued and outstanding shall be converted into and exchanged for the right to receive 1.550 shares of Southern States common stock, and no more than 10.0% of CBB common stock issued and outstanding can elect to receive cash of $45.63 per CBB share subject to proration. This equates to a blended per share price of $40.36 as of February 26, 2024 with an aggregate transaction value of approximately $28.4 million. The blended per share price equates to the sum of (i) the implied value of the stock consideration of $39.77 based on Southern States’ one-month volume weighted average price of $25.66 as of February 26, 2024 multiplied by 90.0% and (ii) cash consideration of $45.63 multiplied by 10.0%. Based upon historical financial information for CBB as of or for the last twelve months (“LTM”) ended December 31, 2023, Performance Trust calculated the implied transaction metrics listed in the table below. Transaction Value / Adjusted Tangible Common Equity (A), Transaction Value / LTM Earnings Normalized (B), and Adjusted Premium to Core Deposits (D) are referenced in the CBB selected public companies analysis and transaction analyses.
Transaction Value / Tangible Common Equity136 %
Transaction Value / Adjusted Tangible Common Equity (A)
152 %
Transaction Value / LTM Earnings6.2x
Transaction Value / LTM Earnings Normalized (B)
6.9x
Premium to Core Deposits (C)
2.9 %
Adjusted Premium to Core Deposits (D)
3.7 %
___________________
(A)Adjusted for $2.3mm after tax HTM mark as of 12/31/23
(B)Normalized for one-time after tax $474k allowance reversal during Q3 2023
(C)Calculated as total deposits less time deposit accounts with balances over $100,000
(D)Premium calculated as aggregate merger consideration less adjustments to tangible common equity from note A
CBB Selected Public Companies Analysis
Performance Trust considered certain financial information for CBB and compared it with selected companies whose equity is publicly traded that Performance Trust deemed relevant. The selected public companies listed below include Southeast banks with total assets between $100 million and $800 million and a minimum 90-day average daily trading volume of 400 shares per day. Mutual holding companies and targets of announced mergers were excluded from the group. Southeast defined as the following states AL, AR, FL, GA, MS, NC, SC, TN, VA, and WV. The selected companies were selected because they were deemed similar to CBB in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected companies, and all criteria were evaluated in their entirety without application of definitive qualifications or limitations to individual criteria. Performance Trust identified a sufficient number of companies for purposes of its analysis but may not have included all publicly traded companies that might be deemed comparable to CBB. The 14 selected companies used in this analysis included:
OptimumBank Holdings, Inc. – Fort Lauderdale, FL
Bank of Botetourt – Buchanan, VA
Paragon Financial Solutions, Inc. – Memphis, TN
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Village Bank and Trust Financial Corp. – Midlothian, VA
Touchstone Bankshares, Inc. – Prince George, VA
Bank of South Carolina Corporation – Charleston, SC
Oak Ridge Financial Services, Inc. – Oak Ridge, NC
Southeastern Banking Corporation – Darien, GA
Citizens Bancorp of Virginia, Inc. – Blackstone, VA
Integrated Financial Holdings, Inc. – Raleigh, NC
Triad Business Bank – Greensboro, NC
M&F Bancorp, Inc. – Durham, NC
The Farmers Bank of Appomattox – Appomattox, VA
BankFLORIDA Bancorp, Inc. – Dade City, FL
Performance Trust reviewed financial data for the selected companies, including trading value to tangible book value and trading value to LTM earnings. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected companies to CBB’s corresponding tangible book value and LTM earnings as of December 31, 2023 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $28.4 million in the proposed transaction. The analysis was based on pricing data as of February 26, 2024. Trading value to tangible book value and LTM earnings for publicly traded banks based on December 31, 2023 LTM financials. The results of the CBB selected companies analysis are summarized below.
CBBSelected
Companies
Median
Selected
Companies
25th Percentile
Selected
Companies
75th Percentile
Trading Price / Tangible Book Value152 %86 %80 %100 %
Trading Price / LTM Earnings6.9x7.0x5.3x9.0x
Proposed
Consideration
($000s)
Implied Value
Median
($000s)
Implied Value
25th Percentile
($000s)
Implied Value
75th Percentile
($000s)
Trading Price / Tangible Book Value$28,430 $15,945 $14,850 $18,627 
Trading Price / LTM Earnings$28,430 $28,962 $21,966 $37,398 
Transactions Analysis — High Performing Return on Average Assets (ROAA) Transaction Group
Performance Trust analyzed publicly available financial information relating to selected nationwide business combinations and other transactions Performance Trust deemed relevant. Performance Trust considered transactions with publicly disclosed deal values announced between January 1, 2023 and February 26, 2024 involving targets with total assets less than $1 billion, last twelve months ended December 31, 2023 (LTM) return on average assets over 0.80%, transactions values of less than $100 million, and 100% of target equity ownership was acquired. Transactions with credit union acquirors were excluded. These transactions were selected because the target companies were deemed to be similar to CBB in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected transactions. Performance Trust identified a sufficient number of transactions for purposes of its analysis but may not have included all transactions that might be deemed comparable to the proposed merger. The 8 selected transactions used in this analysis included (buyer / seller – announce date):
First Busey Corporation / Merchants and Manufacturers Bank Corp. – November 27, 2023
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First Financial Corporation / Simply Bank – November 13, 2023
PB Financial Corporation / Coastal Bank & Trust – August 30, 2023
Wells Bancshares, Inc. / Connections Bancshares, Inc. – May 12, 2023
Bancorp 34, Inc. / CBOA Financial, Inc. – April 27, 2023
CrossFirst Bankshares, Inc. / Canyon Bancorporation, Inc. – April 21, 2023
CCFNB Bancorp, Inc. / Muncy Bank Financial, Inc. – April 18, 2023
Main Street Financial Services Corp. / Wayne Savings Bancshares, Inc. – February 23, 2023
Performance Trust reviewed financial data for the selected transactions, including transaction value to tangible book value, transaction value to LTM earnings, transaction value to total assets, and premium to core deposits, which were defined as total deposits excluding CDs greater than $100,000. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected transactions to CBB’s corresponding financial metrics as of December 31, 2023 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $28.4 million in the proposed transaction. The results of the selected transactions analysis are summarized below.
Proposed
Transaction
Multiples
Selected
Transactions
Median
Selected
Transactions
25th Percentile
Selected
Transactions
75th Percentile
Transaction Value / Tangible Book Value152 %127 %101 %150 %
Transaction Value / LTM Earnings6.9x9.7x7.9x11.2x
Core Deposit Premium3.7 %3.0 %0.1 %5.4 %
Proposed
Consideration
($000s)
Implied Value
Median
($000s)
Implied Value
25th percentile
($000s)
Implied Value
75th Percentile
($000s)
Transaction Value / Tangible Book Value$28,430 $23,717 $18,793 $27,896 
Transaction Value / LTM Earnings$28,430 $40,280 $32,810 $46,257 
Core Deposit Premium$28,430 $26,505 $18,851 $32,835 
Transactions Analysis — High Performing Return on Average Equity (ROAE) Transaction Group
Performance Trust analyzed publicly available financial information relating to selected nationwide business combinations and other transactions Performance Trust deemed relevant. Performance Trust considered transactions with publicly disclosed deal values announced between January 1, 2022 and February 26, 2024 involving targets with total assets less than $1 billion, last twelve months ended December 31, 2023 (LTM) return on average equity over 12.00%, transactions values of less than $100 million, and 100% of target equity ownership was acquired. Transactions with credit union acquirors were excluded. These transactions were selected because the target companies were deemed to be similar to CBB in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected transactions. Performance Trust identified a sufficient number of transactions for purposes of its analysis but may not have included all transactions that might be deemed comparable to the proposed merger. The 11 selected transactions used in this analysis included (buyer / seller – announce date):
First Busey Corporation / Merchants and Manufacturers Bank Corp. – November 27, 2023
First Financial Corporation / Simply Bank – November 13, 2023
CCFNB Bancorp, Inc. / Muncy Bank Financial, Inc. – April 18, 2023
Main Street Financial Services Corp. / Wayne Savings Bancshares, Inc. – February 23, 2023
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Republic Bancorp, Inc. / CBank – October 27, 2023
BankFirst Capital Corporation / Mechanics Banc Holding Company – September 01, 2022
HomeTrust Bancshares, Inc. / Quantum Capital Corp. – July 25, 2022
Ameri Financial Group, Inc. / Lake Area Bank – July 12, 2022
BankFirst Capital Corporation / Tate Financial Corporation – June 23, 2022
VersaBank / Stearns Bank of Holdingford, National Association – June 14, 2022
BAWAG Group AG / Peak Bancorp Inc. – February 02, 2022
Performance Trust reviewed financial data for the selected transactions, including transaction value to tangible book value, transaction value to LTM earnings, transaction value to total assets, and premium to core deposits, which were defined as total deposits excluding CDs greater than $100,000. Furthermore, Performance Trust applied the median, 25th percentile, and 75th percentile multiples of the selected transactions to CBB’s corresponding financial metrics as of December 31, 2023 to determine the implied aggregate deal value and then compared those implied aggregate deal values to the implied merger consideration of $28.4 million in the proposed transaction. The results of the selected transactions analysis are summarized below.
Proposed
Transaction
Multiples
Selected
Transactions
Median
Selected
Transactions
25th Percentile
Selected
Transactions
75th Percentile
Transaction Value / Tangible Book Value152 %151 %122 %158 %
Transaction Value / LTM Earnings 6.9x10.5x5.4x11.1x
Core Deposit Premium3.7 %4.5 %2.4 %6.2 %
Proposed
Consideration
($000s)
Implied Value
Median
($000s)
Implied Value
25th Percentile
($000s)
Implied Value
75th Percentile
($000s)
Transaction Value / Tangible Book Value$28,430 $28,181 $22,736 $29,496 
Transaction Value / LTM Earnings$28,430 $43,429 $22,419 $46,138 
Core Deposit Premium$28,430 $30,528 $24,998 $34,854 
CBB Dividend Discount Analysis
Performance Trust analyzed the discounted present value of CBB’s projected free cash flows to equity for the years ending December 31, 2024 through December 31, 2027 on a standalone basis. Performance Trust calculated cash flows assuming CBB would maintain an 8.00% tangible common equity to tangible assets ratio, and that it would retain sufficient earnings to maintain that ratio and dividend out any excess cash flows. This analysis was based on the financial forecasts for CBB prepared by CBB management and approved for use in this analysis by CBB management for 2024. Performance Trust assumed annual net income growth for 2025 to 2027 of 7.5%. Performance Trust also assumed annual asset growth of 1.2% for 2024 and approximately 3.7% thereafter.
Performance Trust applied price to tangible book value multiples, ranging from 90% to 110%, to CBB’s projected December 31, 2027 tangible book value and price to earnings multiples, ranging from 7.0x to 9.0x, to CBB’s projected calendar year 2027 net income in order to derive a range of projected terminal values for CBB at December 31, 2027. The projected cash flows and terminal values were discounted using a rate ranging from 15.45% to 17.45%, which reflected the cost of equity capital for CBB using a discount rate build-up method based on the sum of the risk-free free rate and industry equity risk premium multiplied by the industry beta for commercial banks, the subtotal of which is added to the size premium. Performance Trust reviewed the range of aggregate prices
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derived in the dividend discount analysis and compared them to the implied merger consideration of $28.4 million in the proposed transaction. The results of the dividend discount analysis are summarized below.
Proposed
Consideration
($000s)
Implied Value
Midpoint
($000s)
Implied Value
Low
($000s)
Implied Value
High
($000s)
Terminal Value Based on TBV Multiple$28,430 $20,325 $18,140 $22,644 
Terminal Value Based on P/E Multiple$28,430 $23,897 $20,788 $27,203 
CBB Relative Contribution Analysis
Performance Trust reviewed the relative contributions of CBB and Southern States to the pro forma combined company with respect to certain financial and operating measurements. This analysis was based on December 31, 2023 financials for both parties. Performance Trust then compared these contributions to the pro forma implied stock ownership interests of CBB and Southern States shareholders based on the merger agreement’s exchange ratio.
The following table shows CBB’s percentage contributions to the pro forma combined company, excluding merger synergies and merger accounting adjustments, in the categories listed:
CBB
Contribution
Total Assets 11.4 %
Total Deposits 12.4 %
Tangible Common Equity Adjusted (A)
8.6 %
2023 Net Income Normalized (B)
11.9 %
2024 Estimated Net Income 11.1 %
CBB Pro Forma Ownership – 90% Stock
9.8 %
CBB Pro Forma Ownership – Hypothetical 100% Stock
10.8 %
__________________
(A)Adjusted for $2.3mm after tax HTM mark as of 12/31/23
(B)CBB normalized for one-time after tax $474k allowance reversal during Q3 2023; Southern States aggregate of $1.17mm after tax of net income that Southern States management deemed nonrecurring
Southern States Selected Public Companies Analysis
Performance Trust considered certain financial information for Southern States and compared it with selected companies whose equity is publicly traded that Performance Trust deemed relevant. The selected major exchange traded public companies listed below include Southeast banks with total assets between $2 billion and $5 billion. Mutual holding companies and targets of announced mergers were excluded from the group. Major exchanges defined as NYSE, NYSEAM, and NADAQ. Southeast defined as the following states AL, AR, FL, GA, MS, NC, SC, TN, VA, and WV. The selected companies were selected because they were deemed similar to Southern States in one or more respects. Except as described above, no specific numeric or other similar criteria were used to select the selected companies, and all criteria were evaluated in their entirety without application of definitive qualifications or limitations to individual criteria. Performance Trust identified a sufficient number of companies for purposes of its analysis but may not have included all publicly traded companies that might be deemed comparable to Southern States. The 16 selected companies used in this analysis included:
SmartFinancial, Inc. – Knoxville, TN
HomeTrust Bancshares, Inc. – Asheville, NC
Carter Bankshares, Inc. – Martinsville, VA
Capital City Bank Group, Inc. – Tallahassee, FL
Southern First Bancshares, Inc. – Greenville, SC
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Primis Financial Corp. – McLean, VA
MetroCity Bankshares, Inc. – Doraville, GA
MVB Financial Corp. – Fairmont, WV
First Community Bankshares, Inc. – Bluefield, VA
Blue Ridge Bankshares, Inc. – Charlottesville, VA
Colony Bankcorp, Inc. – Fitzgerald, GA
C&F Financial Corporation – Toano, VA
USCB Financial Holdings, Inc. – Miami, FL
John Marshall Bancorp, Inc. – Reston, VA
FVCBankcorp, Inc. – Fairfax, VA
MainStreet Bancshares, Inc. – Fairfax, VA
Performance Trust reviewed financial data for the selected companies, including trading value to tangible book value and trading value to LTM earnings. Furthermore, Performance Trust compared the median, 25th percentile, and 75th percentile multiples of the selected companies to Southern States’ corresponding trading value to tangible book value and LTM earnings. The analysis was based on pricing data as of February 26, 2024. The results of the Southern States selected companies analysis are summarized below.
Southern StatesSelected
Companies
Median
Selected
Companies
25th Percentile
Selected
Companies
75th Percentile
Trading Price / Tangible Book Value107 %100 %89 %110 %
Trading Price / LTM Earnings6.8x9.1x8.8x12.8x
Southern States Comparative Stock Performance
Performance Trust reviewed the historical price performance of Southern States common stock from December 31, 2021 to February 26, 2024. Performance Trust then compared the relationship between the stock price performance of Southern States common stock to movements in the selected public companies peer group as well as certain stock indices. The selected public companies peer group includes the 16 companies previously outlined. The price performance as of each ending reference date is shown as a percentage of the price as of the starting date. The results of the Southern States comparative stock performance analysis are summarized below.
Stock Price Performance
Change Through February 26, 2024
Southern States
22 %
Selected Public Companies Peer Group(23)%
NASDAQ Bank Index(29)%
S&P United States BMI Banks(14)%
S&P 500 Index%
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Southern States Dividend Discount Analysis
Performance Trust analyzed the discounted present value of Southern States’ projected free cash flows to equity for the years ending December 31, 2024 through December 31, 2027 on a standalone basis. Performance Trust calculated cash flows assuming Southern States would maintain an 8.00% tangible common equity to tangible assets ratio, and that it would retain sufficient earnings to maintain that ratio and dividend out any excess cash flows. This analysis was based on consensus analyst earnings estimates as of February 26, 2024 for 2024. Performance Trust used assumptions derived in consultation with management with net income growth of approximately 4.0% for 2025 and 7.5% thereafter. Performance Trust also assumed annual asset growth of 6.0% for 2024, 6.8% for 2025, and 5.0% thereafter.
Performance Trust applied price to tangible book value multiples, ranging from 110% to 130%, to Southern States’ projected December 31, 2027 tangible book value and price to earnings multiples, ranging from 9.0x to 11.0x, to Southern States’ projected calendar year 2027 net income in order to derive a range of projected terminal values for Southern States at December 31, 2027. The projected cash flows and terminal values were discounted using a rate ranging from 12.74% to 14.74%, which reflected the cost of equity capital for Southern States using a discount rate build-up method based on the sum of the risk-free free rate and industry equity risk premium multiplied by the industry beta for commercial banks, the subtotal of which is added to the size premium. Performance Trust reviewed the range of aggregate prices derived in the dividend discount analysis and compared them to Southern States’ one-month volume weighted average price of $25.66 as of February 26, 2024. The results of the dividend discount analysis are summarized below.
Trading
Price
($000s)
Implied Value
Midpoint
($000s)
Implied Value
Low
($000s)
Implied Value
High
($000s)
Terminal Value Based on TBV Multiple$25.66 $26.36 $23.97 $28.90 
Terminal Value Based on P/E Multiple$25.66 $29.19 $26.11 $32.46 
Performance Trust Compensation and Other Relationships with CBB and Southern States
CBB engaged Performance Trust as financial advisor in connection with the potential merger based on Performance Trust’s experience, reputation, and familiarity with CBB’s business. Performance Trust has an investment banking division and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions. Performance Trust will receive customary investment banking fees for its services, a significant portion of which is contingent upon the consummation of the transaction. CBB has previously paid Performance Trust a $100,000 progress fee upon execution of the Agreement and Plan of Merger and the delivery of this Opinion. Upon closing of the transaction, CBB will pay Performance Trust a success fee equal to 3.00% of the merger consideration, less the progress fee. In addition, CBB has agreed to indemnify Performance Trust and certain related parties for certain liabilities arising out of or related to the engagement and to reimburse Performance Trust for certain expenses incurred in connection with its engagement.
Performance Trust is a broker-dealer engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Performance Trust and its affiliates may acquire, hold or sell, for its and its affiliates own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of CBB, Southern States and certain of their affiliates as well as provide investment banking and other financial services to such companies and entities.
Southern States’ Reasons for the Merger; Approval by Southern States’ Board of Directors
Southern States believes that the acquisition of other banks is an efficient and productive way to expand Southern State’s markets, grow its assets and capital, and improve its loan to deposit ratio to support future loan growth. In particular, the acquisition of Century Bank by the subsidiary bank merger with Southern States Bank is an efficient and effective way to increase Southern States Bank’s presence in the Atlanta metro market.
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In reaching its decision to adopt and approve the merger agreement, the merger, subsidiary bank merger and the other transactions contemplated by the merger agreement, the Southern States board of directors evaluated the merger, subsidiary bank merger and the other transactions contemplated by the merger agreement in consultation with Southern States management, as well as Southern States’ outside financial and legal advisors, and considered a number of factors, including the following material points:
each of Southern States’ and Century Bank’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing those factors, the Southern States board of directors considered its view that Century Bank’s business and operations complement those of Southern States and that the merger would result in a combined company with a diversified revenue stream, a well-balanced loan portfolio and an attractive funding base;
its understanding of the current and prospective environment in which Southern States and Century Bank operate, including national and local economic conditions, the competitive environment for financial institutions generally, and the likely effect of those components on Southern States both with and without the proposed transaction;
management’s expectation regarding cost synergies, accretion and internal rate of return;
its review of Southern States’ due diligence examination of Century Bank;
the complementary nature of the cultures of the two companies, which management believes should facilitate integration and implementation of the transaction;
the terms of the merger agreement, including the fixed exchange ratio, tax treatment and mutual deal protection and termination fee provisions, which it reviewed with its outside legal and financial advisors;
in particular, the total consideration to be paid consisting primarily of a maximum of approximately 1,068,877 shares of Southern States common Stock will increase the number of shares of common stock in the open market and should enhance marketability of Southern States outstanding shares;
the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Century Bank’s business, operations and workforce with those of Southern States;
the nature and amount of payments to be received by Century Bank management in connection with the merger and, thus, the overall costs;
the potential risk of diverting management attention and resources from the operation of Southern States’ business and towards the completion of the merger; and
the regulatory and other approvals required in connection with the merger and the expectation that such regulatory approvals will be received in a timely manner and without the imposition of unacceptable conditions.
The board of directors of Southern States also considered potential risks of the transaction, including:
the possibility of the potential benefits not being realized;
unanticipated difficulties with integrating the business and operations of the two companies after the merger;
the costs of the transaction exceeding expected expenses;
the possible loss of key employees of CBB;
the potential diversion of management of both companies during the pre-merger process;
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the risks that the fixed exchange ratio of the purchase price cannot be adjusted for market fluctuations which could mean that the increased value of Southern States common stock or decrease in value of CBB common stock (which is not traded publicly) could make the transaction more expensive for Southern States; and
other risks described in “Risk Factors.”
The foregoing discussion of the information and items considered by the Southern States board of directors is not intended to be exhaustive, but includes the material factors considered by the Southern States board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Southern States board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different items. The Southern States board of directors considered all these elements as a whole, including through discussions with, and questioning of, Southern States’ management and Southern States’ outside financial and legal advisors, and overall considered the factors to be favorable to and to support its determination.
For the reasons set forth above, the Southern States board of directors determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Southern States and its shareholders and adopted and approved the merger agreement and the transactions contemplated by it.
Interests of Certain CBB Directors and Executive Officers in the Merger
In considering the recommendation of CBB’s board of directors that you vote “FOR” the merger proposal, you should be aware that aside from their interests as CBB shareholders, CBB’s directors and executive officers have interests in the merger that are different from, or in addition to, those of CBB’s shareholders generally. Members of CBB’s board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the CBB shareholders vote in favor of the merger proposal. For more information, see “—Background of the Merger” beginning on page 21 and “—CBB’s Reasons for the Merger; Recommendation of CBB’s Board of Directors” beginning on page 23. These interests are described in more detail below.
Support Agreements
All of CBB’s directors have entered into shareholder support agreements in favor of Southern States and CBB pursuant to which they have agreed, in their capacity as CBB shareholders, to vote all of their shares in favor of the approval of the merger proposal. As of the record date, these directors of CBB and their affiliates had the right to vote 207,817 shares of CBB common stock, or approximately 30.1% of the outstanding CBB shares entitled to vote at the special meeting. As of the record date, all directors and executive officers of CBB, including their affiliates, had the right to vote 209,903 shares of CBB common stock, or approximately 30.4% of the outstanding CBB shares entitled to vote at the special meeting, and held options to purchase 10,000 shares of CBB common stock.
Offer Letter with Mr. Caswell
In connection with the merger agreement, Southern States Bank entered into an offer letter, dated as of February 26, 2024, with David H. Caswell. Pursuant to Mr. Caswell’s offer letter to join Southern States Bank as Bartow and Polk County President, his term begins on effective date and continues through the third anniversary of the effective date. During the three-year term of his employment, he will be entitled to receive a starting annual base salary of $241,089, $25,000 of Southern States restricted stock that will vest equally over three years and $25,000 in stock options for the purchase of Southern States common stock that will vest equally over three years. Mr. Caswell is entitled to participate in Southern States Bank’s performance incentive plan generally available to similarly situated employees. Mr. Caswell will also receive reimbursements for month country club dues, a $20,000 yearly car allowance and monthly cell phone usage reimbursement.
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Offer Letter with Mr. Drews
In connection with the merger agreement, Southern States Bank entered into an offer letter, dated as of February 26, 2024, with Richard E. Drews, Jr. Pursuant to Mr. Drews’ offer letter to join Southern States Bank, his term begins on effective date and continues through the six-month anniversary of the effective date. During the six-month term of his employment, he will be entitled to receive an annual base salary of $264,259.00, $12,500 of Southern States restricted stock that will vest equally over six months and $12,500 in stock options for the purchase of Southern States common stock that will vest equally over six months. Mr. Drews will also receive reimbursements for month country club dues, a $20,000 yearly car allowance and monthly cell phone usage reimbursement.
Restrictive Covenant Agreements
In connection with the merger agreement, Southern States also entered into Non-Competition and Non-Solicitation Agreements with each of David H. Caswell and Richard E. Drews, Jr. (each such agreement, a “restrictive covenant agreement”), to be effective from and after the effective date and for the benefit of Southern States following the effective date. Each restrictive covenant agreement includes: (i) a covenant by the applicable executive not to compete with Southern States or its subsidiaries for the 12-month period following the effective (the “restricted period”); (ii) a covenant by the applicable executive not to solicit on behalf of any competitor of Southern States or its subsidiaries former customers of Century Bank during the duration of the restricted period; (iii) a covenant by the applicable executive not to solicit any employees of Southern States or its subsidiaries to work for another person or entity; (iv) a covenant by the applicable executive not to disclose certain confidential information regarding Southern States and its subsidiaries; and (v) and a mutual non-disparagement clause applicable both to the applicable executive and Southern States. In consideration of the foregoing covenants, Southern States will pay Messrs. Caswell and Drews a lump-sum payment equal to $305,000 and $275,000, respectively, on the effective date. The restrictive covenant agreements contain a claw-back provision providing that Southern States may, in its sole discretion, require the applicable executive to repay the after-tax amount of such payment in the event of any breach of the foregoing covenants. The restrictive covenant agreements will not become effective, and no payments will be due thereunder, until the effective date.
Settlement Agreements
In connection with the merger agreement, Southern States also entered into the Settlement Agreements, to be effective from and after the effective date and for the benefit of Southern States following the effective date. Each Settlement Agreement serves to supersede and replace in its entirety the relevant executive’s existing employment agreement with CBB and Century Bank. Under the terms of the Settlement Agreements, each executive agreed to execute a general release in favor of Southern States and its subsidiaries forever releasing such parties from any and all claims arising prior to the effective date related to the relevant executive’s employment with CBB and Century Bank. In consideration of such release and pursuant to the terms of the applicable settlement agreement, (i) Mr. Caswell is entitled to (A) a $580,267 lump sum payment from Southern States Bank and (B) the restricted stock and option awards contemplated under his offer letter and described above and (ii) Mr. Drews is entitled to (A) a $700,777 lump sum payment from Southern States Bank and (B) the restricted stock and option awards contemplated under his offer letter and described above.
Stock Options
Pursuant to the terms of the merger agreement, each of Messrs. William P. Taylor, Senior Vice President, Secretary and Chief Financial Officer, and Jay Slaughter, Senior Vice President, and Ms. Tamera Ray, Vice President, will have options cashed out in connection with the merger. Such options shall be canceled and extinguished at the effective date and automatically exchanged into the right to receive an amount of cash (without interest) equal to the product of (i) the aggregate number of shares of CBB common stock issuable upon exercise of such option multiplied by (ii) the excess, if any, of (A) the cash consideration over (B) the per-share exercise price of such option.
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SERPs
Pursuant to the terms of their SERPs, each of Messrs. Drews’ and Caswell’s normal retirement benefit will vest in full upon a change in control and requires Century Bank to establish a rabbi trust (if not already established) and contribute a source of funds sufficient to satisfy all obligations under each SERP, in each case as described therein.
Employment Agreement with Mr. Taylor
Pursuant to the terms and conditions of his employment agreement, as amended, with CBB and Century Bank, in the event of his termination without Cause or with Good Reason (as such terms are defined in his employment agreement) within twelve months following the consummation of the merger, William P. Taylor is entitled to a lump sum cash payment equal to the sum of (i) Mr. Taylor’s current base salary plus (ii) the annual bonus paid to Mr. Taylor with respect to the calendar-year immediately preceding the consummation of the merger.
Indemnification and Insurance Coverage
The merger agreement provides that for a period of six (6) years after the effective date, Southern States as the surviving entity in the merger will indemnify and hold harmless all present and former directors, officers and employees of CBB and its subsidiaries against, and will advance expenses as incurred to such persons in respect of, all costs and liabilities arising out of the fact that such person is or was a director, officer or employee of CBB or its subsidiaries and pertaining to matters existing or occurring at or prior to the effective date of the merger, in each case to the fullest extent permitted by applicable law, the CBB certificate of incorporation, the CBB bylaws and the governing or organizational documents of any subsidiary of CBB; provided, that in the case of advancement of expenses, any such person provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. All rights to indemnification as provided in any indemnification agreement in existence on the date of the merger will survive the merger and be honored by Southern States as the surviving entity in the merger.
The merger agreement requires Southern States to maintain for a period of six (6) years after consummation of the merger CBB’s existing directors’ and officers’ liability insurance policy, or policies with a substantially comparable insurer of at least the same coverage and amounts and containing terms and conditions that are no less advantageous to the insured, with respect to claims arising from facts or events that occurred at or prior to the consummation of the merger. However, CBB is not required to spend annually more than two hundred percent (200%) of the current annual premium paid as of the date of the merger agreement by CBB for such insurance.
Governance of the Combined Company After the Merger
The merger agreement provides that prior to the effective date the board of directors of Southern States shall take all actions necessary to appoint Richard E. Drews, Jr. (or another individual mutually agreeable to the parties) (the “new SSB director”) effective as of the effective date to serve on the board of directors of Southern States and Southern States Bank following the merger until such time as his successor is duly elected and qualified. The Nominating and Corporate Governance Committee shall cause the new SSB director that has been appointed to and is serving on the board of directors of Southern States and Southern States Bank to be nominated for re-election at the next annual meeting of Southern States and Southern States Bank to a full term.
The merger agreement also provides that Southern States and Southern States Bank will authorize the creation of an advisory board of directors of Southern States Bank (the “advisory board”). The advisory board will initially consist of the directors of Century Bank at the effective date, but may consist of other members as determined by the board of directors of Southern States Bank. The advisory board will not have management duties, but may offer advice to the board of directors of Southern States Bank, meet with, and recommend customers to, Southern States Bank and undertake other activities that the board of directors may recommend. Each member of the advisory board will be paid an amount equal to $250 per meeting.
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Accounting Treatment
Southern States and CBB prepare their respective financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The merger will be accounted for as an acquisition of CBB by Southern States under the acquisition method of accounting, and Southern States will be treated as the acquirer for accounting purposes.
Regulatory Approvals
To complete the merger, Southern States and CBB must obtain approvals or consents from, or make filings with, a number of U.S. federal and state bank and other regulatory authorities. Subject to the terms of the merger agreement, Southern States and CBB have agreed to cooperate with each other and use reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals, use their reasonable best efforts to make such filings within twenty (20) days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties, regulatory agencies and governmental entities that are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such regulatory agencies and governmental entities. Such filings were made on March 14, 2024.
The term “requisite regulatory approvals” means all regulatory authorizations, consents, orders and approvals (and the expiration or termination of all statutory waiting periods in respect thereof), or waivers of such regulatory authorizations, consents, orders and approvals from (i) the Federal Reserve Board (in respect of the merger), the FDIC, the ASBD and the GDBF or (ii) referred to in the merger agreement that are necessary to consummate the transactions contemplated by the merger agreement, except for any such authorizations, consents, orders or approvals the failure of which to be obtained would not reasonably be expected to have, either individually or in the aggregate, a material adverse effect on Southern States as the surviving entity in the merger.
The approval of an application means only that the regulatory criteria for approval have been satisfied or waived. It does not mean that the approving authority has determined that the consideration to be received by CBB’s shareholders in the merger is fair. Regulatory approval does not constitute an endorsement or recommendation of the merger.
Southern States and CBB believe that the merger does not raise significant regulatory concerns and that they will be able to obtain all requisite regulatory approvals. However, there can be no assurance that all of the regulatory approvals described below will be obtained and, if obtained, there can be no assurances regarding the timing of the approvals, the companies’ ability to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. These approvals could be delayed or not obtained at all, including due to: an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals, including factors not known as of the date of this joint proxy statement/prospectus and factors that may arise in the future; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. In addition, there can be no assurance that such approvals will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of Southern States following the completion of the merger. There can likewise be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger or, if such a challenge is made, what the result of such challenge will be.
Federal Reserve Board
Unless a waiver is obtained, the transactions contemplated by the merger agreement are subject to approval by the Federal Reserve Board pursuant to section 3 of the BHC Act with respect to the merger of CBB with and into Southern States. The Federal Reserve Board takes into consideration a number of factors when acting on applications under section 3 of the BHC Act. These factors include the effect of the merger on competitiveness in affected banking markets, the financial and managerial resources (including consideration of the capital adequacy,
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liquidity, and earnings performance, as well as the competence, experience and integrity of the officers, directors and principal shareholders, and the records of compliance with applicable laws and regulations) and future prospects of the combined organization. The Federal Reserve Board also considers the effectiveness of the applicant in combatting money laundering, the convenience and needs of the communities to be served, the records of performance of the relevant insured depository institutions under the Community Reinvestment Act (the “CRA”), as well as the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. The Federal Reserve Board may not approve a proposal that would have significant adverse effects on competition or on the concentration of resources in any banking market.
A merger transaction meeting certain criteria is eligible for a waiver of the Section 3 application. The criteria includes (i) the holding company merger and bank merger occur simultaneously, (ii) the bank subsidiary merger requires approval of a federal bank regulatory agency, (iii) the transaction does not involve the acquisition of a nonbank company, (iv) the acquiring bank holding company is well capitalized, and (v) certain information is provided to the Federal Reserve. Southern States submitted a request seeking a waiver of the Section 3 application with the Federal Reserve Bank of Atlanta on March 14, 2024.
The Federal Reserve Board has stated that if material weaknesses are identified by examiners before a banking organization applies to engage in expansionary activity, the Federal Reserve Board will expect the banking organization to resolve all such weaknesses before applying for such expansionary activity. The Federal Reserve Board has also stated that if issues arise during the processing of an application for expansionary activity, it will expect the applicant banking organization to withdraw its application pending resolution of any supervisory concerns.
FDIC
The prior approval of the FDIC is required under section 18(c)(2)(C) of the Federal Deposit Insurance Act (the “Bank Merger Act”) with respect to the merger of Century Bank with and into Southern States Bank. In evaluating an application filed under the Bank Merger Act, the FDIC generally considers: (i) the competitive impact of the transaction, (ii) financial and managerial resources of the banks party to the bank merger, (iii) the convenience and needs of the community to be served and the record of the banks under the CRA, including their CRA ratings, (iv) the banks’ effectiveness in combating money-laundering activities, and (v) the extent to which the bank merger would result in greater or more concentrated risks to the stability of the U.S. banking or financial system.
In addition, in connection with an interstate bank merger transaction, the FDIC considers certain additional factors under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, as amended (the “Riegle-Neal Act”), including state laws regarding the minimum age of the bank to be acquired and the concentration of deposits on a nationwide and statewide basis. Under the Riegle-Neal Act, the FDIC may approve an interstate bank merger transaction only if each constituent bank is adequately capitalized at the time the application for such transaction is filed with the FDIC, and the FDIC determines that the resulting bank will be well capitalized and well managed upon the consummation of the transaction.
Furthermore, the Bank Merger Act require published notice of, and the opportunity for public comment on, the application to the FDIC. The FDIC takes into account the views of third-party commenters, particularly on the subject of the merging parties’ CRA performance and record of service to their communities. The FDIC is also authorized to hold one or more public hearings or meetings if it determines that such hearings or meetings would be appropriate. The receipt of written comments or any public meeting or hearing could prolong the period during which the applicable application is under review by the FDIC.
The initial submission of the application to the FDIC occurred on March 14, 2024.
ASBD
Under Alabama state law, Southern States Bank must file an application with the ASBD for approval of the subsidiary bank merger. Southern States Bank must also provide the ASBD with notice of the proposed merger of Southern States with CBB, as well as a copy of the application filed with the FDIC under the Bank Merger Act. Among other things, the ASBD will consider the financial strength, including capital, of Southern States Bank
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following the merger. The ASBD will consider criteria similar to the criteria considered by the FDIC as described above.
The initial submission of the application to the ASBD occurred on March 14, 2024.
GDBF
Under Georgia law, Southern States and Southern States Bank must provide prior notice to the GDBF with respect to each merger and a copy of the filings made with the Federal Reserve and FDIC. Southern States Bank must also provide the form of the Articles of Merger to the GDBF for its review and approval before being filed. Southern States provided copies of the filings made with the Federal Reserve and the FDIC to the GDBF on March 14, 2024.
Department of Justice
In addition to the FDIC, the Antitrust Division of the Department of Justice (the “DOJ”) conducts a concurrent competitive review of the merger to analyze the merger’s competitive effects and determine whether the merger would result in a violation of the antitrust laws. Transactions approved under section 3 of the BHC Act or the Bank Merger Act generally may not be completed until thirty (30) days after the approval of the applicable federal agency is received, during which time the DOJ may challenge the transaction on antitrust grounds. With the approval of the applicable federal agency and the concurrence of the DOJ, the waiting period may be reduced to no less than fifteen (15) days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger’s effect on competition differently than the Federal Reserve Board or the FDIC, and, thus, it is possible that the DOJ could reach a different conclusion than the Federal Reserve Board or FDIC regarding the merger’ effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general. There can be no assurance if and when DOJ clearance will be obtained, or as to the conditions or limitations that such DOJ approval may contain or impose.
Additional Regulatory Approvals and Notices
Additional notifications and/or applications requesting approval may be submitted to various other federal, state and non-U.S. regulatory authorities and self-regulatory organizations, including notifications and/or applications to certain state financial services and banking regulators with respect to Southern States maintaining the existing CBB and Century Bank offices in those states.
Stock Exchange Listings
Southern States common stock is listed for trading on the Nasdaq Stock Market under the symbol “SSBK.” In connection with the merger, Southern States will cause the shares of Southern States common stock to be issued in the merger to be approved for listing on the Nasdaq Stock Market, subject to official notice of issuance. Following the merger, shares of Southern States common stock will continue to be traded on the Nasdaq Stock Market.
Dissenters’ Rights in the Merger
CBB shareholders will be given the opportunity to exercise dissenters’ rights in accordance with certain procedures specified in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code, which sections are attached as Annex B to the proxy statement/prospectus and incorporated herein by reference. CBB shareholders who do not vote in favor of the merger may demand that CBB acquire their shares of CBB common stock for cash at their fair market value as of February 27, 2024, the day of, and immediately prior to, the first public announcement of the terms of the merger, excluding any appreciation or depreciation in consequence of the merger. CBB shareholders dissenting must file written demands that CBB acquire their shares of CBB common stock for cash and comply with the other procedural requirements set forth in Title 14, Chapter 2, Article 13 of the Georgia Business Corporations Code.
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THE MERGER AGREEMENT
The following section of this proxy statement/prospectus describes the material terms of the merger agreement. This summary is qualified in its entirety by reference to the complete text of the merger agreement, which is incorporated by reference and attached as Annex A to this proxy statement/prospectus. Southern States and CBB urge you to read the full text of the merger agreement since it, and not the following description, constitutes the agreement of Southern States and CBB.
Explanatory Note Regarding the Merger Agreement
The merger agreement is described in this proxy statement/prospectus, and a copy of it is included as Annex A to this proxy statement/prospectus, to provide you with important information regarding the proposed merger. The representations, warranties and covenants made in the merger agreement by Southern States and CBB are qualified by and subject to important limitations agreed to by the parties in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the merger agreement may have the right not to complete the merger if the representations and warranties of the other party prove to be untrue, whether due to a change in circumstances or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders or reports and documents filed with the SEC and in some cases are qualified by disclosures that were made by each party to the other, which disclosures were reflected in schedules to the merger agreement that have not been described or included in this proxy statement/prospectus, including Annex A. Factual disclosures about Southern States and CBB contained in the public reports filed by Southern States with the SEC may also supplement, update or modify the factual disclosures and representations about Southern States and CBB contained in the merger agreement. Further, information concerning the subject matter of the representations and warranties in the merger agreement, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement/prospectus.
Effects of the Merger
The merger agreement provides for the merger of CBB with and into Southern States, and the separate existence of CBB will cease and Southern States will continue as the surviving corporation immediately upon the closing of the merger. The merger agreement provides that the articles of incorporation and the bylaws of Southern States as in effect immediately prior to the merger will be the articles of incorporation and bylaws of the surviving corporation.
As a result of the merger, there will no longer be any shares of CBB common stock authorized, issued or outstanding. CBB shareholders who receive Southern States common stock will only participate in Southern States’ future earnings and potential growth through their ownership of Southern States common stock. All of the other incidents of direct ownership of CBB common stock, such as the right to vote on certain corporate decisions, to elect directors and to receive dividends and distributions from CBB, will be extinguished at the effective date of the merger. All of the property, rights, privileges and powers of CBB and Southern States will vest in the surviving corporation, and all claims, obligations, liabilities, debts and duties of CBB and Southern States will become the claims, obligations, liabilities, debts and duties of the surviving corporation.
Merger Consideration
Each share of Southern States common stock that is issued and outstanding immediately prior to the effective date shall remain issued and outstanding following the effective date and shall be unchanged by the merger.
Each share of CBB common stock owned directly by Southern States, CBB, or any of their respective wholly owned subsidiaries (other than shares in trust accounts, managed accounts, and the like for the benefit of customers or shares held as collateral for outstanding debt previously contracted) immediately prior to the effective date shall
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be cancelled and retired at the effective date without any conversion thereof, and no payment shall be made with respect thereto.
Under the terms and subject to the conditions of the merger agreement, upon the effective date, holders of CBB will have the right to elect to receive either 1.550 shares of Southern States Bancshares common stock or $45.63 in cash for each share of CBB common stock they hold. Shareholder elections for cash are subject to proration such that no more than 10.0% of the shares outstanding of CBB common stock will receive the cash consideration, including cash that may be paid pursuant to dissenters’ rights of appraisal. At the effective date, all options to purchase CBB common stock under the CBB amended and restated stock option and incentive plan, whether vested or unvested, will be cancelled and extinguished and exchanged into the right to receive cash equal to the product of the number of shares underlying the option by the excess, if any, of $45.63 over the exercise price of the option.
All shares of CBB’s common stock that are issued and outstanding immediately prior to the effective date and which are held by a shareholder who did not vote in favor of the merger (or consent thereto in writing) and who is entitled to demand and properly demands the fair value of such shares pursuant to, and who complies in all respects with, the provisions of Title 13 of the GBCC, shall not be converted into or be exchangeable for the right to receive the merger consideration (the “Dissenting Shares”), but instead the holder of such Dissenting Shares shall be entitled to payment of the fair value of such shares in accordance with the applicable provisions of the GBCC.
Fractional Shares
Southern States will not issue any fractional shares of Southern States common stock in the merger. Instead, Southern States shall pay or cause to be paid to each holder of a fractional share of Southern States common stock, rounded to the nearest one hundredth of a share, an amount of cash (without interest and rounded to the nearest whole cent) determined by multiplying the fractional share interest in Southern States common stock to which such holder would otherwise be entitled to receive.
Closing and Effective Date of the Merger
The merger will become effective at such date and time specified in the certificate of merger to be filed with the Secretary of State of the State of Alabama, or at such other date and time provided by applicable law. The closing will occur at the offices of Southern States in Anniston, Alabama, at 5:00 p.m. on a date specified by Southern States (and reasonably acceptable to CBB) that shall be as soon as reasonably practicable, after the later to occur of the CBB shareholders meeting or receipt of all regulatory approvals under as required under the merger agreement, and the expiration of any applicable waiting periods, or at such other place, time, and in such manner, that Southern States and CBB may mutually agree.
Exchange of Shares
Exchange Procedures
As promptly as practicable after the effective date, and in any event within five (5) business days thereafter, Southern States shall cause the exchange agent to mail or otherwise cause to be delivered to each shareholder appropriate and customary transmittal materials, which shall specify that delivery shall be effected, and risk of loss and title to the certificates or book-entry shares (if any) representing CBB common stock shall pass, only upon delivery of the certificates or book-entry shares to the exchange agent, as well as instructions for use in effecting the surrender of the certificates or book-entry shares in exchange for the merger consideration (including cash in lieu of fractional shares) as provided for in the merger agreement.
Withholding
Southern States or the exchange agent, as applicable, shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to the merger agreement to any shareholder such amounts as Southern States is required to deduct and withhold under the Internal Revenue Code or any provision of state, local, or foreign tax law. If any such amounts are withheld and paid over to the appropriate governmental authority, such amounts will be treated for all purposes of the merger agreement as having been paid to the holder from whom they were withheld.
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Representations and Warranties
The merger agreement contains representations and warranties made by Southern States to CBB and by CBB to Southern States relating to a number of matters, including, but not limited to, the following:
corporate matters, including due organization and qualification and subsidiaries;
capitalization;
authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;
required governmental and other regulatory and self-regulatory filings and consents and approvals in connection with the merger;
reports to regulatory authorities;
financial statements, internal controls, books and records, and absence of undisclosed liabilities;
broker’s fees payable in connection with the merger;
the absence of certain changes or events;
legal and regulatory proceedings;
tax matters;
employee benefit matters;
SEC reports;
compliance with applicable laws;
certain material contracts;
absence of agreements with regulatory authorities;
risk management instruments;
environmental matters;
investment securities and commodities;
title matters;
information technology;
related party transactions;
the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents; and
loan portfolio matters.
Covenants and Agreements
Operations
Southern States and CBB have agreed that each will conduct its business and the business of each Southern States and CBB company in a manner substantially consistent with its historic practice and will use its reasonable
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best efforts to maintain its relationships with its depositors, customers and employees. No Southern States or CBB company will engage in any material transaction outside the ordinary course of business and consistent with past practice or make any material change in its accounting policies or methods of operation, nor will Southern States or CBB permit the occurrence of any change or event which would render any of its representations and warranties untrue in any material respect at and as of the effective date with the same effect as though such representations and warranties had been made at and as of such effective date.
Prior to the effective date, no CBB company will (i) make, renew, renegotiate, increase, extend, or modify any (A) unsecured loan, if the amount of such unsecured loan, together with any other outstanding unsecured loans made by CBB or any of its subsidiaries to such borrower or its affiliates, would be in excess of $100,000, in the aggregate, (B) loan secured by other than a first lien in excess of $250,000, (C) loan in excess of FFIEC regulatory guidelines relating to loan to value ratios, (D) loan secured by a first lien residential mortgage and with no loan policy exceptions in excess of $500,000, (E) secured loan over $1,000,000, or (F) any loan that is not made in conformity with CBB’s ordinary course lending policies and guidelines in effect as of the date of the merger agreement, (ii) sell any loan or loan pools in excess of $500,000 in principal amount or sale price (other than residential mortgage loan pools sold in the ordinary course of business and consistent with past practice), (iii) acquire any servicing rights, or sell or otherwise transfer any loan where CBB or any of its subsidiaries retains any servicing rights, or (iv) purchase participation loans.
Securities Registration
Southern States covenants to and with CBB that the issue of the shares of Southern States common stock to be issued pursuant to the merger shall be registered under the Securities Act of 1933 pursuant to an effective Form S-4 Registration Statement and will be issued subject to exemptions under applicable state law.
Financial Statements
Prior to the effective date of the merger, Southern States shall furnish to CBB: (i) as soon as practicable, and in any event within forty-five (45) days after the end of each quarterly period (other than the last quarterly period) in each fiscal year, consolidated statements of operations of Southern States for such period and for the period beginning at the commencement of the fiscal year and ending at the end of such quarterly period, and a consolidated statement of financial condition of Southern States as of the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding periods ending in the preceding fiscal year, subject to changes resulting from year-end adjustments; (ii) promptly upon receipt thereof, copies of all audit reports submitted to Southern States by independent auditors in connection with each annual, interim or special audit of the books of Southern States made by such auditors; and (iii) as soon as practicable, copies of all such financial statements and reports as it shall send to its shareholders.
Employee Benefit Matters
Southern States Bank shall retain all employees of Century Bank at no less than their base salary or hourly rates, target bonus and benefits in each case as provided by Century Bank immediately prior to the effective date for a period of approximately two weeks following conversion and integration of Southern States and CBB (the “Integration Period”) which is projected to occur as soon as practicable after the effective date. Any employee who voluntarily terminates before end of the Integration Period will receive a lump sum severance payment from Southern States Bank in the gross amount equivalent to one month’s base salary or the equivalent thereof for an hourly employee within thirty (30) days after such employee’s severance from service. Century Bank employees will have the opportunity to interview for any open or newly created positions at all Southern States Bank locations. Any employee of Century Bank terminated by the Southern States or its subsidiaries on or within six (6) months after the end of the Integration Period (i) will continue to receive his or her current salary or base hourly rate for a period of four (4) months following the date of such employee’s termination of employment payable by Southern States Bank in accordance in accordance with normal payroll processes; provided, however, that any employee of Century Bank set forth on the disclosure letter delivered by CBB to Southern States prior to the execution of the merger agreement (the “CBB Disclosure Letter”) terminated by the Southern States or its subsidiaries on or within six (6) months after the end of the Integration Period (i) will continue to receive his or her current salary or base
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hourly rate for a period of eight (8) months following the date of such employee’s termination of employment payable by Southern States Bank in accordance in accordance with normal payroll processes, and (ii) Southern States will pay on employee’s behalf the full cost of COBRA premiums under all group health plans for which employee was enrolled for a period of four (4) months; provided, however, that for any employee of Century Bank set forth on the CBB Disclosure Letter, Southern States will pay on such employee’s behalf the full cost of COBRA premiums under all group health plans for which employee was enrolled for a period of eight (8) months.
All employees of any CBB company who become employees of the Southern States or its subsidiaries on the effective date (“Continuing Employees”) shall be entitled, to the extent permitted by applicable law, to participate in all employee benefit plans, policies, programs, and arrangements of Southern States and its subsidiaries to the same extent as similarly situated employees of Southern States and its subsidiaries and shall be given credit for all purposes (including accrual, vesting and eligibility) under each such employee benefit plan, policy, program and arrangement after the effective date for all their service with CBB or its subsidiaries (or any predecessor thereto) prior to the effective date as if it were service with the Southern States and its subsidiaries; provided, however, that the maximum hours of sick-leave that a CBB employee may be given credit for at the effective date shall not exceed 560 hours.
As of the effective date, Southern States or its subsidiaries shall provide Continuing Employees, while employed by Southern States or its subsidiaries after the effective date, health insurance coverage either under Southern States’ or Southern States Bank’s group health insurance plans as available to similar situated employees of Southern States and Southern States Bank or by continuing CBB’s group health insurance plans so that no Continuing Employee incurs a gap in coverage; provided that such coverage provided by Southern States will include “in network” coverage for the geographic locations covered by CBB’s group health insurance plans and, for the period commencing on the effective date and ending on the last day of the plan year (of the applicable CBB group health insurance plan) during which the effective date occurs, shall maintain the same percentage of premiums in effect and payable by each such Continuing Employee immediately prior to the effective date.
Consistent with the above, Southern States, Southern States Bank and CBB shall cooperate to develop, implement and communicate to key employees of CBB retention arrangements designed to retain the services of such key employees, as appropriate, through the effective date and thereafter until the date of CBB’s operating systems and branch conversions, as determined by Southern States; provided, however, that CBB and its subsidiaries shall not be required to incur any costs prior to the effective date in connection with any retention arrangements.
Effective as of the date immediately preceding the effective date (the “Termination Date”) and contingent upon the merger, CBB shall cause Century Bank to terminate the Century Bank of Georgia Section 401(k) Profit Sharing Plan (the “Terminated Plan”). CBB shall take (or cause to be taken) all actions that are necessary or appropriate to fully vest each participant in his or her account balance under the Terminated Plan effective as of the Termination Date and to adopt amendments required prior to termination. Prior to the effective date, CBB shall provide Southern States with resolutions adopted by Century Bank’s board of directors terminating the Terminated Plan and adopting the required amendments, the form and substance of which shall be subject to approval by Southern States, which will not be unreasonably withheld. CBB shall take (or cause to be taken) all actions that are necessary or appropriate to make, as soon as practicable following the effective date, all employer and employee contributions to the Terminated Plan on behalf of each participant in respect of all periods of service ending on or prior to the Termination Date. As soon as practicable following the effective date, with respect to the Terminated Plan, Southern States shall permit or cause its subsidiaries to permit Continuing Employees to roll over their account balances, notes and similar instruments reflecting outstanding loan balances under the Terminated Plan, if any, thereunder into an “eligible retirement plan” within the meaning of Section 402(c)(8)(B) of the Code maintained by the Southern States or its subsidiaries.
From and after the effective date, Southern States or its subsidiaries shall assume and honor all written bonus plans, employment agreements, supplemental executive retirement plan agreements, and split dollar agreements that CBB and its subsidiaries have with their current and former officers, directors and employees as listed the CBB Disclosure Letter and pay the conversion bonuses set forth therein.
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Director and Officer Indemnification and Insurance
The merger agreement provides that for a period of six (6) years after the effective date, Southern States as the surviving entity in the merger will indemnify and hold harmless all present and former directors, officers and employees of CBB and its subsidiaries against, and will advance expenses as incurred to such persons in respect of, all costs and liabilities arising out of the fact that such person is or was a director, officer or employee of CBB or its subsidiaries and pertaining to matters existing or occurring at or prior to the effective date of the merger, in each case to the fullest extent permitted by applicable law, the CBB certificate of incorporation, the CBB bylaws and the governing or organizational documents of any subsidiary of CBB; provided, that in the case of advancement of expenses, any such person provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. All rights to indemnification as provided in any indemnification agreement in existence on the date of the merger will survive the merger and be honored by Southern States as the surviving entity in the merger.
The merger agreement requires Southern States to maintain for a period of six (6) years after consummation of the merger CBB’s existing directors’ and officers’ liability insurance policy, or policies with a substantially comparable insurer of at least the same coverage and amounts and containing terms and conditions that are no less advantageous to the insured, with respect to claims arising from facts or events that occurred at or prior to the consummation of the merger. However, CBB is not required to spend annually more than two hundred percent (200%) of the current annual premium paid as of the date of the merger agreement by CBB for such insurance.
Corporate Governance
Prior to the effective date of the merger, the Southern States board of directors shall take all actions necessary to appoint Richard E. Drews, Jr. (or another individual mutually agreeable to the parties) effective as of the effective date to serve on the board of directors of the Southern States and Southern States Bank until such time as his successor is duly elected and qualified. The Nominating and Corporate Governance Committee shall cause the new SSB director that has been appointed to and is serving on the board of directors of the Southern States and Southern States Bank to be nominated for re-election at the next annual meeting of the Southern States and Southern States Bank to a full term.
Southern States and Southern States Bank will authorize the creation of an advisory board of directors of Southern States Bank (the “Advisory Board”). The Advisory Board will initially consist of the directors of Century Bank at the effective date, but may consist of other members as determined by the board of directors of Southern States Bank. The Advisory Board will not have management duties, but may offer advice to the board of directors of Southern States Bank, meet with, and recommend customers to, Southern States Bank and undertake other activities that the board of directors may recommend. Each member of the Advisory Board will be paid an amount equal to $250 per meeting.
Concurrent with the execution of the merger agreement, Southern States Bank will provide equity grant awards and offer letters for positions at Southern States Bank with each of Richard E. Drews, Jr. and David H. Caswell with such positions and duties mutually agreed upon between Southern States Bank and Messrs. Drews and Caswell.
Certain Additional Covenants
The merger agreement also contains additional covenants, including, among others, covenants relating to the filing of this proxy statement/prospectus, obtaining required consents, access to information of the other company, notice of adverse changes, and public announcements with respect to the transactions contemplated by the merger agreement.
Meeting; Recommendation of Southern States’ and CBB’s Boards of Directors
CBB will cause a CBB shareholders meeting to be held for the purpose of approving the merger (the “CBB Shareholders Meeting”) as soon as practicable, and will use its best efforts to bring about the transactions contemplated by the merger agreement, including shareholder approval of the merger agreement (to the extent
47


required by applicable law and the CBB articles of incorporation and bylaws), as soon as practicable unless the merger agreement is terminated as provided therein.
The board of directors of CBB shall recommend approval of the merger agreement by the shareholders of CBB (to the extent required by applicable law and the CBB articles of incorporation and bylaws) (the “CBB Recommendation”), and shall not withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to Southern States such recommendation or take any action or make any statement in connection with the CBB Shareholders Meeting inconsistent with such recommendation (collectively, a “Change in the CBB Recommendation”); provided the foregoing shall not prohibit accurate disclosure (and such disclosure shall not be deemed to be a Change in the CBB Recommendation) of factual information regarding the business, financial condition or results of operations of Southern States or CBB or the fact that an acquisition proposal has been made to CBB, the identity of the party making such proposal or the material terms of such proposal (provided, that the board of directors of CBB does not withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to Southern States its recommendation) in the proxy statement relating to the approval of the merger agreement or otherwise, to the extent such information, facts, identity or terms is required to be disclosed under applicable law; and, provided further, that the board of directors of CBB may make a Change in the CBB Recommendation (x) pursuant to the merger agreement prior to the CBB Shareholders Meeting if the board of directors of CBB determines in good faith that a material adverse effect has occurred with respect to Southern States. Notwithstanding any Change in the CBB Recommendation, the merger agreement shall be submitted to the shareholders of CBB at the CBB Shareholders Meeting for the purpose of approving the merger agreement and approving the merger, provided that the merger agreement shall not be required to be submitted to the shareholders of CBB at the CBB Shareholders Meeting if the merger agreement has been terminated in accordance with its terms and provisions.
Agreement Not to Solicit Other Offers
CBB agreed that it shall not and shall cause its officers, directors, agents, counsel, financial advisers, employees not to, and its subsidiaries officers, directors, agents, counsel, financial advisers and employees (collectively “Representatives”) not to, directly or indirectly, (i) solicit, initiate, endorse, or knowingly encourage or facilitate (including by way of furnishing non-public information) any inquiry, proposal or offer with respect to, or the making or completion of, any acquisition proposal, or any inquiry, proposal or offer (whether firm or hypothetical) that is reasonably likely to lead to any acquisition proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person or entity any non-public information or data with respect to, any acquisition proposal, (iii) approve or recommend any acquisition proposal, or (iv) approve or recommend, or propose publicly to approve or recommend, or execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement which directly or indirectly contains an acquisition proposal.
CBB agreed that it shall, and shall cause each of its subsidiaries and the Representatives of CBB and its subsidiaries to, (i) immediately cease and cause to be terminated all existing discussions or negotiations with any person conducted heretofore with respect to any acquisition proposal, (ii) request the prompt return or destruction of all confidential information previously furnished in connection therewith and (iii) not terminate, waive, amend, release or modify any provision of any confidentiality or standstill agreement relating to any acquisition proposal to which it or any of its affiliates or Representatives is a party, and shall enforce the provisions of any such agreement. Notwithstanding the foregoing, if at any time following the date of the merger agreement and prior to obtaining the CBB shareholder approval, (i) CBB receives an unsolicited written acquisition proposal that the CBB board of directors believes in good faith to be bona fide, (ii) such acquisition proposal was not the result of a violation of the merger agreement (after consultation with outside counsel and its financial advisor), (iii) the CBB board of directors determines in good faith (after consultation with outside counsel and its financial advisor) that such acquisition proposal constitutes or is reasonably likely to result in a superior proposal and (iv) the CBB board of directors determines in good faith (after consultation with outside counsel) that the failure to take the actions referred to in clauses (x) or (y) below would violate its fiduciary duties under applicable law, then CBB may (and may authorize its subsidiaries and its and their Representatives to) (x) furnish non-public information with respect to CBB and its subsidiaries to the person making such acquisition proposal (and its representatives) pursuant to a customary
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confidentiality agreement containing terms substantially similar to, and no less favorable to CBB than, those set forth in the confidentiality provisions of the Non-Disclosure Agreement entered into between CBB and Southern States dated July 17, 2023; provided, that any non-public information provided to any person given such access shall have previously been provided to Southern States or shall be provided to Southern States prior to or concurrently with the time it is provided to such person, (y) participate in discussions or negotiations with the person making such acquisition proposal (and such person’s representatives) regarding such acquisition proposal, and (z) terminate the merger agreement, pursuant to the terms of the merger agreement, to enter into a binding agreement with respect to such acquisition proposal that constitutes a superior proposal.
Conditions to Complete the Merger
Southern States’ and CBB’s respective obligations to complete the merger is subject to the satisfaction or, where legally permissible, waiver, at or prior to the effective date, of the following conditions:
the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement;
the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed;
CBB shall have received from Performance Trust prior to the approval of the merger by the board of directors of CBB a letter setting forth its opinion that the merger consideration to be received by the shareholders of CBB under the terms of the merger agreement is fair to them from a financial point of view;
CBB shall not have accepted a “superior proposal”, as defined in the merger agreement;
there shall have been furnished to such counsel for the other party certified copies of such corporate records of each party and copies of such other documents as such counsel may reasonably have requested for such purpose, including certificates of existence and good standing of each party and each subsidiary issued by the appropriate governmental agency dated within 15 days of the effective date;
the number of shares as to which shareholders of CBB have exercised dissenters’ rights of appraisal under the merger agreement does not exceed 7.5% of the outstanding shares of CBB’s common stock;
the delivery of a closing certificate executed by the Chief Executive Officer, President or a Vice President and from the Secretary or Assistant Secretary of Southern States certifying to customary matters; and
the delivery of a closing certificate executed by the Chief Executive Officer, President or a Vice President and from the Secretary or Assistant Secretary of CBB certifying to customary matters.
Termination of the Merger Agreement
The merger agreement can be terminated at any time prior to the effective date, whether before or after the receipt of the requisite CBB shareholder vote, in the following circumstances:
by the mutual written consent of CBB and Southern States;
by either party (provided that the terminating party is not then in material breach of any representation, warranty, covenant, or other agreement contained in the merger agreement) in the event of a material breach by the other party of any representation or warranty contained in the merger agreement that cannot be or has not been cured within thirty (30) days after the giving of written notice to the breaching party of such breach and that would provide the non-breaching party the ability to refuse to consummate the merger under the standard set forth in the merger agreement;
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by either party (provided that the terminating party is not then in material breach of any representation, warranty, covenant, or other agreement contained in the merger agreement) in the event of a material breach by the other party of any covenant or agreement contained in this merger agreement that cannot be or has not been cured within thirty (30) days after the giving of written notice to the breaching party of such breach, or if any of the conditions to the obligations of such party contained in this merger agreement shall not have been satisfied in full;
by either party if all transactions contemplated by the merger agreement shall not have been consummated on or prior to October 1, 2024 if the failure to consummate the transactions provided for in the merger agreement on or before such date is not caused by any breach of the merger agreement by the party electing to terminate, provided that if the only reason for failure to consummate the transactions is the lack of regulatory approval under the merger agreement, such date shall be January 1, 2025;
by CBB, if before the CBB shareholders meeting, the board of directors of CBB authorizes CBB to enter into a binding written agreement concerning a transaction that constitutes a superior proposal (a “superior proposal”), provided that, upon such termination pursuant hereto CBB shall pay promptly the sum of $1.2 million to Southern States to reimburse Southern States for its expenses, and not as damages, incurred in connection with the merger agreement;
by Southern States, if (i) the board of directors of CBB shall have recommended to the shareholders of CBB that they tender their shares in a tender or exchange offer commenced by an un-affiliated third party for more than 20.0% of the outstanding CBB common stock, (ii) the board of directors of CBB shall have effected a Change in CBB Recommendation or recommended to the CBB shareholders acceptance or approval of a superior proposal, (iii) CBB shall have notified Southern States in writing that CBB is prepared to accept a superior proposal, or (iv) the board of directors of CBB shall have resolved to do any of the foregoing, provided that, upon such termination pursuant hereto CBB shall pay promptly the sum of $1.2 million to Southern States to reimburse Southern States for its expenses, and not as damages, incurred in connection with the merger agreement;
by either party, if either of their respective boards of directors so determines by a vote of a majority of the members of its entire board, in the event any regulatory approval required for consummation of the transactions contemplated by the merger agreement shall have been denied by final, non-appealable action by such governmental authority or an application therefor shall have been permanently withdrawn at the request of a governmental authority; or
by either party (provided, in the case of CBB, that it shall not be in breach of any of its obligations under Section 6.2(b) of the merger agreement), if the requisite CBB shareholder approval at the shareholders meeting shall not have been obtained by reason of the failure to obtain the required vote or at any adjournment or postponement thereof.
Effect of Termination
If the merger agreement is terminated, it will become void and have no effect, except that (i) CBB and Southern States shall be liable for damages for any willful breach of warranty, representation, covenant or other agreement contained in the merger agreement if the breach is the cause or basis for termination, and (ii) designated provisions of the merger agreement will survive the termination, including those relating to payment of fees and expenses, the confidential treatment of information and the termination fee described below.
Termination Fee
As noted above in “—Termination of the Merger Agreement,” CBB will pay Southern States a termination fee equal to $1.2 million if the merger agreement is terminated as follows:
by CBB, if before the CBB shareholders meeting, the board of directors of CBB authorizes CBB, subject to complying with Section 6.2(c), to enter into a binding written agreement concerning a transaction that constitutes a superior proposal; or
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by Southern States, if (i) the board of directors of CBB shall have recommended to the shareholders of CBB that they tender their shares in a tender or exchange offer commenced by an un-affiliated third party for more than 20.0% of the outstanding CBB common stock, (ii) the board of directors of CBB shall have effected a change in CBB’s recommendation or recommended to the CBB shareholders acceptance or approval of a superior proposal, (iii) CBB shall have notified Southern States in writing that CBB is prepared to accept a superior proposal, or (iv) the board of directors of CBB shall have resolved to do any of the foregoing.
Expenses and Fees
Except as otherwise expressly provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such expense. The merger agreement provides that CBB shall pay the costs and expenses of printing and mailing this joint proxy statement/prospectus and Southern States shall pay the filing fee and other expenses paid to the SEC in connection with the filing of the Form S-4 Registration Statement.
Amendment of the Merger Agreement and Waiver
Subject to compliance with applicable law, the merger agreement may be amended by the written mutual consent of Southern States and CBB at any time before or after receipt of the requisite CBB shareholder vote.
Any waiver, permit, consent or approval of any kind or character on the part of any party of any provisions of the merger agreement must be in writing and be executed by the parties to the merger agreement and shall be effective only to the extent specifically set forth in such writing.
Governing Law
The merger agreement is governed by and will be construed in accordance with the laws of the State of Alabama.
Specific Performance
Southern States and CBB will be entitled to an injunction or injunctions to prevent breaches or threatened breaches of the merger agreement or to enforce specifically the performance of the terms and provisions of the merger agreement (including the parties’ obligations to consummate the merger), in addition to any other remedy to which they are entitled at law or in equity.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion sets forth the anticipated material United States federal income tax consequences of the merger to U.S. holders (as defined below) of CBB’s common stock that exchange their shares of CBB common stock for the merger consideration. This discussion does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any United States federal laws other than those pertaining to income tax. This discussion is based upon the Internal Revenue Code of 1986, as amended, the regulations promulgated under the Code and court and administrative rulings and decisions, all as in effect on the date of this proxy statement/prospectus. These laws may change, possibly retroactively, and any change could affect the accuracy of the statements and conclusions set forth in this discussion. To the extent this section consists of statements as to matters of U.S. federal income tax law, this section constitutes the opinion of Jones Walker.
This discussion addresses only those holders of CBB common stock that hold their shares of CBB common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not address all aspects of United States federal income taxation that may be relevant to you in light of your particular circumstances or that may be applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:
a bank, thrift, mutual fund or other financial institution;
a tax-exempt organization or government organization;
a partnership, S corporation or other pass-through entity (or an investor in a partnership, S corporation or other pass-through entity);
an insurance company;
a mutual fund;
a dealer or broker in stocks and securities, commodities or currencies;
a trader in securities that elects mark-to-market treatment;
a holder of shares of CBB’s common stock subject to the alternative minimum tax provisions of the Code;
an individual retirement or other tax deferred account;
a holder of CBB common stock that received CBB common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;
a person that is not a U.S. holder;
a person that has a functional currency other than the U.S. dollar;
a holder of shares of CBB common stock that is required to accelerate the recognition of any item of gross income with respect to CBB common stock as a result of such income being recognized on an applicable financial statement;
a real estate investment trust or real estate mortgage investment conduit;
a regulated investment company;
a holder of CBB common stock that holds CBB common stock as part of a hedge, straddle, constructive sale, wash sale, conversion or other integrated transaction; or
a former citizen or long-term resident of the United States.
In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare
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contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. Determining the actual tax consequences of the merger to you may be complex. They will depend on your specific situation and on factors that are not within the control of CBB or Southern States. You should consult with your own tax advisor as to the tax consequences of the merger in your particular circumstances.
For purposes of this discussion, the term “U.S. holder” means a beneficial owner of CBB common stock that is for United States federal income tax purposes (i) an individual citizen or resident of the United States, (ii) a corporation, or entity treated as a corporation, organized in or under the laws of the United States or any state thereof or the District of Columbia, (iii) a trust if either (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (B) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes, or (iv) an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source. Beneficial owners of CBB common stock that are not U.S. holders should consult their own tax advisors as to the U.S. federal income tax consequences of the merger.
The United States federal income tax consequences to a partner in an entity or arrangement that is treated as a partnership for United States federal income tax purposes and that holds CBB common stock generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership holding CBB common stock should consult their own tax advisors.
Tax Consequences of the Merger Generally
The parties intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to both Southern States’ and CBB’s obligation to complete the merger that Southern States receives an opinion from Jones Walker, dated the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. These opinions will be based on representation letters (the “Representation Letters”) provided by Southern States and CBB and on customary factual assumptions. Neither of the opinions described above will be binding on the IRS. Southern States and CBB have not sought and will not seek any ruling from the IRS regarding any matters relating to the merger, and, as a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. In addition, if any of the representations, warranties, covenants or assumptions upon which the opinions described above are based (the “Representations and Assumptions”) are inconsistent with the actual facts, or if any condition contained in the merger agreement and affecting these opinions is breached or is waived by any party, the U.S. federal income tax consequences of the merger could be adversely affected.
Based on the facts and representations set forth or referred to in the opinions included as exhibits to this proxy statement/prospectus filed with the SEC, and subject to the Representations and Assumptions (and the receipt of the Representation Letters) and the qualifications, assumptions and limitations stated in this proxy statement/prospectus, it is the opinion of Jones Walker that the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code. The foregoing opinions are filed as Exhibit 8.1 to this registration statement of which this proxy statement/prospectus forms a part.
On the basis of the opinion described above that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, the material U.S. federal income tax consequences of the merger to U.S. holders of CBB common stock are set forth in the remainder of this discussion:
a holder who receives solely shares of Southern States common stock (or receives Southern States common stock and cash solely in lieu of a fractional share) in exchange for shares of CBB common stock generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of Southern States common stock as described below;
a holder who receives solely cash in exchange for shares of CBB common stock will generally recognize gain or loss equal to the difference between the amount of cash received and such shareholder’s tax basis in CBB common stock surrendered in the exchange. This gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for the
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shares of CBB common stock is greater than one year. The deductibility of capital losses is subject to limitations;
the aggregate tax basis of the Southern States common stock received in the merger (including fractional share interests in Southern States common stock deemed received and exchanged for cash. as discuss below) will be equal to the holder’s aggregate tax basis in the CBB common stock for which it is exchanged, decreased by the amount of cash received in the merger, and increased by the amount of gain recognized on the exchange (regardless of whether such gain is classified as capital gain or as dividend income, as discussed below), but excluding any gain recognized with respect to fractional share interests in Southern States common stock for which cash is received, as discussed below; and
the holding period of Southern States common stock received in the merger (including any fractional shares deemed received and redeemed as described below) will include the holder’s holding period of the CBB common stock for which it is exchanged.
If holders acquired different blocks of CBB common stock at different times and at different prices, a holder’s tax basis and holding period in Southern States common stock may be determined separately with reference to each block of CBB common stock. Any such holder should consult its tax advisor regarding the determination of the tax basis and/or holding periods of the particular shares of Southern States common stock received in the merger.
Cash Instead of a Fractional Share
A holder of CBB common stock who receives cash instead of a fractional share of Southern States common stock will be treated as having received the fractional share of Southern States common stock pursuant to the merger and then as having sold that fractional share for cash. As a result, generally such a holder will recognize gain or loss equal to the difference between the amount of cash received and the basis allocable to such holder’s fractional share of Southern States common stock. This gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for the shares (including the holding period of CBB common stock surrendered therefor) is greater than one year. The deductibility of capital losses is subject to limitations.
Backup Withholding
Payments of cash to a non-corporate holder of CBB common stock in connection with the merger may be subject to information reporting and backup withholding (currently at a rate of twenty-four percent (24%)). Such holders of CBB common stock generally will not be subject to backup withholding, however, if the holder:
furnishes a correct taxpayer identification number, certifies that the holder is not subject to backup withholding on IRS form W-9 (or an applicable substitute or successor form) included in the election form/letter of transmittal the holder will receive and otherwise complies with all the applicable requirements of the backup withholding rules; or
provides proof of an applicable exemption from backup withholding.
Any amounts withheld under the backup withholding rules are not additional tax and will generally be allowed as a refund or credit against the holder’s United States federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.
This summary of certain material United States federal income tax consequences is for general information only and is not tax advice. You are urged to consult your tax advisor with respect to the application of United States federal income tax laws to your particular situation as well as any tax consequences arising under the United States federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction.
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INFORMATION ABOUT SOUTHERN STATES
Southern States is a bank holding company headquartered in Anniston, Alabama. As of March 31, 2024, Southern States had consolidated total assets of approximately $2.5 billion, total net loans of approximately $1.9 billion, total deposits of approximately $2.1 billion, and total shareholders’ equity of approximately $223 million. Southern States had 182 full-time equivalent employees as of March 31, 2024.
Headquartered in Anniston, Alabama, Southern States is a bank holding company that operates primarily through its wholly owned subsidiary, Southern States Bank. Southern States Bank is a full service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. The Bank operates 13 branches in Alabama and Georgia and two loan production offices in Atlanta. Southern States Bank is a full-service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. Southern States’ franchise is focused on personalized, relationship-driven service combined with local market management and expertise to serve small and medium size businesses and individuals.
Southern States is registered as a bank holding company with the Federal Reserve. Southern States is subject to examination, regulation and supervision by the Federal Reserve under the Bank Holding Company Act of 1956, as amended, as well as the ASBD. Southern States is required to file annual reports and such additional information as the Federal Reserve may require. Southern States Bank is chartered by the ASBD. Southern States Bank is also a member of the FDIC, and its deposits are insured, as provided by law, by the Deposit Insurance Fund. Southern States Bank is subject to supervision, regulation, and examination by the FDIC and ASBD.
Southern States’ principal office is located at 615 Quintard Ave., Anniston, Alabama 36201, telephone number: (256) 241-1092.
Southern States’ common stock is traded on the Nasdaq Stock Market under the symbol “SSBK”.
Consideration of Director Recommendations by ShareholdersIt is the policy of the Nominating and Corporate Governance Committee to consider director candidates nominated by shareholders who appear to be qualified to serve on the board on the same basis as other candidates. The Nominating and Corporate Governance Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the board. In order to avoid the unnecessary use of the Nominating and Corporate Governance Committee’s resources, the Nominating and Corporate Governance Committee will consider only those director candidates recommended in accordance with the procedures set forth below.
To submit a recommendation for a director candidate to the Nominating and Corporate Governance Committee for Southern States’ 2025 Annual Meeting, a shareholder should submit the following information in writing, addressed to the Chair of the Nominating and Corporate Governance Committee, care of the Corporate Secretary, Southern States Bancshares, Inc., 615 Quintard Avenue, Anniston, Alabama 36201:
the name, age, business address and residence address of nominee;
the principal occupation or employment of the nominee;
the class or series and number of all shares of stock of Southern States that are owned beneficially or of record by the nominee and any affiliates or associates of such person and certain other stock ownership matters; and
any other information relating to such nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder.
The shareholder making the nomination is required to provide information similar to that above for itself. Please see Southern States’ bylaws for a complete description of the information required for shareholders to submit a nomination. To be timely, a shareholder’s notice must be delivered to, or be mailed and received at, the address set forth above no earlier than February 14, 2025 and no later than March 16, 2025; provided, however, that in the event
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that the 2025 annual meeting (the “annual meeting”) is called for a date that is not within twenty-five (25) days before or after the anniversary date of the 2024 annual meeting, notice by the shareholder in order to be timely must be received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
Consideration of Other BusinessIf a shareholder desires the board to consider any other business at the 2025 Annual Meeting, the shareholder should submit the following information in writing, addressed to the Corporate Secretary, Southern States Bancshares, Inc., 615 Quintard Avenue, Anniston, Alabama 36201:
a brief description of each matter desired to be brought before the annual meeting (including the specific text of any resolutions);
the reasons for conducting such business at the annual meeting;
the class or series and number of all shares of stock of Southern States that are owned beneficially or of record by the nominee and any affiliates or associates of such person and certain other stock ownership matters;
a description of all agreements, arrangements, or understandings between the shareholder and other persons related to the proposal;
a representation that the shareholder giving notice intends to appear in person or by proxy at the annual meeting to bring such business before the meeting; and
any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the annual meeting.
Please see Southern States’ bylaws for a complete description of the information required for shareholders to submit in order to bring other business before an annual meeting. To be timely, a shareholder’s notice must be delivered to, or be mailed and received at, the address set forth above no earlier than February 14, 2025 and no later than March 16, 2025; provided, however, that in the event that the 2025 annual meeting is called for a date that is not within twenty-five (25) days before or after the anniversary date of the 2024 annual meeting, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
The foregoing information concerning Southern States does not purport to be complete. Certain additional information relating to Southern States’ business, management, executive officer and director compensation, voting securities and certain relationships is incorporated by reference in this proxy statement/prospectus from other documents filed by Southern States with the Securities and Exchange Commission and listed under “Where You Can Find Additional Information” appearing at the forepart of this proxy statement/prospectus. If you desire copies of any of these documents, you may contact Southern States at its address or telephone number indicated under “Where You Can Find Additional Information.”
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INFORMATION ABOUT CBB
Business of CBB
CBB is a privately held bank holding company. CBB’s wholly owned subsidiary, Century Bank, was incorporated under the laws of the State of Georgia in 1999. Century Bank’s main office is located in Cartersville, Georgia, and it has an additional branch located in Rockmart, Georgia. Century Bank primarily serves Bartow County and Polk County, Georgia.
Century Bank engages in general commercial and consumer banking, providing a full range of banking services, including credit and deposit products for commercial and industrial, small business and personal customers, treasury solutions and other personal banking products including residential mortgages. As of March 31, 2024, CBB had total assets of $355.9 million, total loans of $132.6 million (excluding mortgage loans held for sale), total deposits of $296.9 million and total shareholders’ equity of $21.5 million.
CBB common stock is not listed or traded on any established securities exchange or quotation system. Accordingly, there is no established public trading market for CBB common stock. Transactions in shares of CBB common stock are privately negotiated directly between the purchaser and the seller, and any sales that do occur are not subject to any reporting system.
Payment of dividends by CBB is subject to certain regulations that may limit or prevent the payment of dividends and is further subject to the discretion of CBB’s board of directors. Since January 1, 2022, CBB has paid the following dividends:
Dividends per Share of Common StockTotal Paid
2022
First Quarter
$
0.30 
$
207,433.50 
Second Quarter
$
0.30 
$
207,223.50 
Third Quarter
$
0.35 
$
241,760.75 
Fourth Quarter
$
0.35 
$
241,725.75 
2023
First Quarter
$
0.35 
$
242,759.30 
Second Quarter
$
0.35 
$
241,359.30 
Third Quarter
$
0.35 
$
241,359.30 
Fourth Quarter
$
0.35 
$
241,359.30 
2024
First Quarter
$
0.35 
$
241,359.30 
As of May 14, 2024, the last date prior to the printing of this proxy statement/prospectus for which it was practicable to obtain this information, there were 689,598 shares of CBB common stock issued and outstanding, and approximately 334 shareholders of record.
The principal executive offices of CBB are located at 215 East Main Street, Cartersville, Georgia 30120, and its telephone number is (770) 387-1922. CBB’s website can be accessed at https://www.centurybanknet.com. Information contained on CBB’s website does not constitute part of, and is not incorporated into, this proxy statement/prospectus.
Director Information
Richard E. Drews, Jr., 66, has served as the President and CEO of CBB Bancorp and Chief Executive Officer of Century Bank since 2005. Prior to joining Century Bank at its inception in 2000, he was a director at First National Bank of Northwest Georgia and President and COO of its subsidiary bank, Peoples First National Bank in Cartersville. Active in industry and civic affairs, Mr. Drews served as the 2016-2017 Chairman of the Georgia
57


Bankers Association (the “GBA”), was the 2017-2019 Georgia representative for the American Bankers Association Community Banking Council, is a past Trustee for the Southeastern School of Commercial Lending, past Chairman of the GBA Credit Committee, former board member of the Cartersville-Bartow Chamber of Commerce, past-President of the Cartersville Rotary Club, and is a board member of the GBA Retirement Services Trust. He received his education at the University of Florida, Florida School of Banking, and the Graduate School of Banking of the South at Louisiana State University.
Mr. Drews has no family relationship with any director, executive officer, or person nominated or chosen by Southern States to become a director or officer. Mr. Drews has not been involved in any legal proceedings that would be material to an evaluation of the ability or integrity as a director.
Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Years Ended December 31, 2023 and 2022
Critical Accounting Estimates and Policies
CBB prepares its consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires CBB to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Critical accounting estimates and policies are those CBB’s management believes are both most important to the portrayal of CBB’s financial condition and results, and require CBB’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. CBB’s management believes that the allowance for credit losses, other than temporary impairment of investments available-for-sale, income taxes and estimates of fair value represent particularly sensitive accounting estimates.
Financial Condition at December 31, 2023 and 2022
Overview. Total assets were $313,337,271 at December 31, 2023. Total assets were $348,362,685 at December 31, 2022. Outstanding gross loans increased to $131,292,995 at December 31, 2023 compared to $116,051,999 at December 31, 2022, resulting in an increase of $15,240,996, or 13.1%. Investment securities decreased $7,364,231, or 5.7%, from $128,174,397 at December 31, 2022, to $120,810,166 at December 31, 2023.
Total liabilities decreased $39,354,429 from $331,757,019 at December 31, 2022 to $292,402,590 at December 31, 2023. Total deposits decreased $38,901,052, or 12%, from $325,344,743 at December 31, 2022 to $286,443,691 at December 31, 2023. Noninterest-bearing deposits decreased $38,901,052, or 23.03%, at December 31, 2023, totaling $110,654,641 compared to $143,714,884 as of December 31, 2022. Interest-bearing deposits decreased $5,840,809, or 3.2%, which totaled $175,789,050 at December 31, 2023 compared to $181,629,859 at December 31, 2022. CBB had no advances from the Federal Home Loan Bank of Atlanta (the “FHLB”) at December 31, 2023 or December 31, 2022. Total shareholders’ equity increased $4,329,015, or 26.1%, during 2023 and totaled $20,934,681 at December 31, 2023 compared to $16,605,666 at December 31, 2022.
As of December 31, 2023, CBB had no nonperforming assets, decreasing from $12,499 at December 31, 2022. CBB’s ratio of nonperforming assets to regulatory Tier 1 capital plus the allowance for credit losses also improved during the year.
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The following table indicates the ratios for return on average assets, return on average equity and average equity to average assets in addition to earnings per common share and book value per common share as of and for the years ended December 31, 2023 and 2022:
As of and for the Year Ended
December 31,
20232022
Performance Ratios – Century Bank
Return on average assets
1.50 %1.14 %
Return on average equity
24.31 %21.12 %
Average equity to average assets
6.11 %5.52 %
Earnings per Common Share – CBB
Basic
$6.70 $5.36 
Diluted(1)
$6.45 $5.17 
Book Value per Common Share – CBB
Book value per common share
$30.36 $24.04 
__________________
(1)Includes 26,000 shares issuable upon exercise of outstanding options.
Loan Portfolio. The following table describes classifications of loans at December 31, 2023 and 2022, which are presented net of deferred loan fees and costs of $145,620 and $106,970, respectively (amounts in thousands):
Loan Portfolio Classification
20232022
Construction and land development
$3,808 $6,705 
Single-family residential
31,142 28,706 
Commercial
78,742 62,197 
Multifamily and farmland
4,149 4,834 
Commercial (not secured by real estate)
11,230 11,125 
Consumer (not secured by real estate)
2,219 2,474 
All other
11 
Total Loans
131,293 116,052 
Allowance for credit losses
(1,620)(2,459)
Total net loans
$129,673 $113,593 
Loans held for sale:
Mortgage
$— $— 
Other
— — 
Total loans held for sale
$— $— 
Commitments and contingencies:
Commitments to extend credit
$11,984 $22,139 
Mortgage loan commitments
— — 
Financial and performance letters of credit
1,952 1,734 
The following table sets forth loans, net of unearned income, outstanding at December 31, 2023, which, based on remaining scheduled repayments of principal, are due in the periods indicated (amounts in thousands). Loans with balloon payments and longer amortizations are often repriced and extended beyond the initial maturity when
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credit conditions remain satisfactory. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported below as due in one year or less.
One Year
or Less
After One
Year Through
Five Years
After Five
Years
Total
Construction and land development
$3,107 $636 $65 $3,808 
Single-family residential
3,301 5,849 21,992 31,142 
Commercial
2,140 28,286 48,316 78,742 
Multifamily and farmland
20 344 3,785 4,149 
Total real estate loans
8,568 35,115 74,158 117,841 
Commercial (not secured by real estate)
3,003 6,550 1,677 11,230 
Consumer (not secured by real estate)
314 1,659 246 2,219 
All other loans (not secured by real estate)
Total loans
$11,888 $43,324 $76,081 $131,293 
The following table sets forth the fixed and variable rate loans maturing or scheduled to reprice after one year as of December 31, 2023 (amounts in thousands):
Interest Sensitivity
Fixed RateVariable RateTotal
Due after one year through five years
$28,498 $39,049 $67,547 
Due after five years
33,408 3,093 36,501 
Total loans
$61,906 $42,142 $104,048 
Asset Quality
Nonperforming Assets. Nonperforming assets are comprised of nonaccrual loans held for investment, accruing loans which are past due 90 days or more, nonaccrual loans held for sale and other real estate owned. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. Accrual of interest is discontinued on a loan when management believes that, after considering economic conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured after a period of performance under the contractual terms of the borrowing agreement. Other real estate owned includes all real property received in full or partial satisfaction of a loan. For properties acquired through foreclosure or deed in lieu, fair values are based on independent appraisals.
Other Real Estate Owned. Other real estate owned is recorded at the lower of the related loan’s cost basis or its fair value less estimated selling costs; which establishes a cost basis in the property at the time of foreclosure. Any write-down at the time of foreclosure is charged to the allowance for credit losses. Costs of improvements to properties are capitalized, whereas costs relating to the holding of other real estate owned and subsequent adjustments to the value are expensed.
CBB had no non-performing assets as of December 31, 2023 compared to non-performing assets of $12,499 at December 31, 2022.
Nonaccrual loans held for investment as a percentage of gross loans were 0% as of December 31, 2023 compared to 0.01% as of December 31, 2022. At December 31, 2023, nonaccrual loans held for investment totaled $0 compared to $5,649 at December 31, 2022.
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Impaired Loans. At each reporting period, CBB determines which loans are impaired. Impaired loans are reviewed on a relationship basis. If one loan within a relationship is impaired, then the entire relationship is individually evaluated for impairment. Accordingly, CBB’s impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan, which is generally collateral dependent, is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals, and management considers factors such as the assumptions and techniques utilized by the appraiser. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, management will determine if a valuation allowance must be recorded as a component of the allowance for credit losses or if instead a charge-off of the collateral deficiency must be recorded. Impaired loans include loans classified as troubled debt restructurings (“TDRs”). A loan is classified as a TDR when, for economic or legal reasons that result in a debtor experiencing financial difficulties, CBB grants a concession through a modification of the original loan agreement that would not otherwise be considered. If a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, the accrual of interest at the restructured interest rate is continued and the loan is considered performing. If the borrower was materially delinquent on payments prior to the restructuring but shows the capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual and nonperforming until such time as continued performance has been demonstrated, which is typically a period of at least six consecutive payments. If the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.
Average outstanding impaired loans were $0 and $5,649 during the years ended December 31, 2023 and 2022, respectively. Impaired loans had related allowance for credit losses that totaled $0 at December 31, 2023 and $5,649 at December 31, 2022. The recorded investment in impaired loans as of December 31, 2023 and 2022 was $0 and $5,649, respectively. There were no TDRs restructured in 2023 or 2022. No interest income was recognized on nonaccrual loans and TDRs during 2023 or 2022. Interest income recognized on performing TDRs was immaterial for the years ended December 31, 2023 and 2022.
Allowance for Credit Losses and Summary of Loan Loss Experience. The allowance for credit losses reflects management’s assessment of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. CBB periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance for credit losses that management believes will be adequate in light of anticipated risks and credit losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are:
CBB’s loan loss experience;
the amount of past due and non-performing loans;
specific known risks;
the status and amount of other past due and non-performing assets;
underlying estimated values of collateral securing loans;
current and anticipated economic conditions; and
other factors that management believes affect the allowance for potential credit losses
The allowance for credit losses represents management’s estimate of an appropriate amount to provide for known and inherent losses in the loan portfolio in the normal course of business. The allowance for credit losses is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment based on the present value of expected future cash flows or the fair value of the collateral, if the loan is collateral dependent. When the measure of the impaired loan, as determined by either the expected future cash flows or collateral value, is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve or the loan is charged off. These specific reserves are determined on an individual loan basis based on management’s current evaluation of CBB’s loss
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exposure for each credit. Loans for which specific reserves are provided are excluded from the general allowance calculations described below.
The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the last two years’ experience. This charge-off experience is adjusted to reflect the effects of current conditions. CBB considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. Also, an independent loan review process further assists with evaluating credit quality and assessing potential credit risk inherent within the loan portfolio.
CBB utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis with grade 1 posing the least amount of credit risk to the bank. The scaling provides indicators of increased risk as risk rates increase, up to risk grade 8 that identifies loans that are considered uncollectable and classified as a loss until the appropriate authority to charge off the loan is obtained.
Because of the nature of CBB’s primary markets and business, a significant portion of the loan portfolio is secured by commercial real estate, including residential and commercial acquisition, development and construction properties. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower. Real estate values in many of CBB’s markets have continued to rise. CBB continues to thoroughly review and monitor its construction and commercial real estate concentrations and the associated allowance and sets limits by sector and region based on this internal review.
The unallocated allowance is determined through management’s assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management’s acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, this unallocated portion may fluctuate from period to period based on management’s evaluation of the factors affecting the assumptions used in calculating the allowance.
The allowance for credit losses at December 31, 2023 was $1,619,878, which represents 1.23% of total loans outstanding, compared to $2,458,795, or 2.12% of total loans outstanding, as of December 31, 2022. For the year ended December 31, 2023, net charge-offs were ($6,083) compared to $48,237 for the prior year.
Management considers the allowance for credit losses adequate to cover the estimated losses inherent in CBB’s loan portfolio as of December 31, 2023. Management believes it has established the allowance in accordance with GAAP and in consideration of the current economic environment. Although management uses the best information available to make evaluations, significant further additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of CBB. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review CBB’s allowance for credit losses. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Finally, there can be no assurance that the existing allowance for credit losses is adequate should there be deterioration in the quality of any loans or changes in any of the factors discussed above. Any increases in the provision for credit losses resulting from such deterioration or change in condition could adversely affect CBB’s financial condition and results of operations.
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The following table summarizes CBB’s credit loss experience for the years ending December 31, 2023 and 2022 (amounts in thousands, except ratios):
Allowance for Credit Losses
20232022
Balance at beginning of period
$2,459 $2,507 
Charge-offs:
Construction and land development
— — 
Single-family residential
— — 
Commercial
— 
Multifamily and farmland
— — 
Commercial (not secured by real estate)
— — 
Consumer (not secured by real estate)
40 
Other
— — 
Total charge-offs
49 
Recoveries:
Construction and land development
— — 
Single-family residential
— — 
Commercial
— 
Multifamily and farmland
— — 
Commercial (not secured by real estate)
— — 
Consumer (not secured by real estate)
— 
Other
— — 
Total recoveries
Net recoveries (charge-offs)
(48)
Provision for credit losses
(600)— 
Reallocation related to Current Expected Credit Losses
(245)— 
Balance at end of year
$1,620 $2,459 
Ratio of net charge-offs during the year to average gross loans outstanding during the year
(0.01)%0.04 %
The following table summarizes CBB’s allocation of the allowance for credit losses at December 31, 2023 and 2022 (amounts in thousands):
Allowance for Credit Losses by Loan Classification
20232022
Amount
% Total
Loans(1)
Amount
% Total
Loans(1)
Construction and land development
$46 2.90 %$97 5.77 %
Single-family residential
373 23.69 %422 24.72 %
Real Estate—Commercial
838 60.02 %856 53.64 %
Multifamily and farmland
3.16 %13 4.16 %
Commercial loans—not secured by real estate
59 8.55 %139 9.59 %
Consumer loans—not secured by real estate
39 1.68 %45 2.12 %
Unallocated Reserves
256 — %887 — %
Total
$1,620 100.00 %$2,459 100.00 %
__________________
(1)Represents total of all outstanding loans in each category as a percentage of total loans outstanding.
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Investment Portfolio.
Investment Securities. CBB’s investment securities as of December 31, 2023 consisted primarily of residential mortgage-backed securities, commercial mortgage-back securities and collateralized mortgage obligations, government sponsored enterprises, U.S. Treasury securities, state and political subdivisions, and corporate debt securities. In addition to economic and market conditions, CBB’s overall management strategy for its investment securities is determined by, among other factors, loan demand, deposit mix, liquidity and collateral needs, its interest rate risk position and the overall structure of its balance sheet.
As of December 31, 2023, CBB’s available-for-sale investment securities consisted of $25,849,087 of residential mortgage-backed securities, $10,542,043 of commercial mortgage-backed securities, $15,580,521 in collateralized mortgage obligations.
Held-to-maturity securities are carried at cost, adjusted for amortization or accretion of premiums or discounts, and consisted of $18,350,539 of U.S. Treasury securities, $16,604,222 of U.S. Government sponsored enterprises, $26,953,229 of state and political subdivisions, and $6,930,525 of corporate debt securities, each reported at amortized costs.
During 2023, total investments decreased $7,364,231, or 5.7%. Total investments were $120,810,166 at December 31, 2023 and $128,174,397 at December 31, 2022.
At December 31, 2023, there were $51,971,651 available-for-sale and $68,857,680 held-to-maturity securities that were in an unrealized loss position. CBB evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value of the security has been less than its cost, the financial condition and near-term prospects of the issuer, among other factors. In analyzing an issuer’s financial condition, CBB considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry reports. CBB does not intend to sell nor does it believe it will be required to sell securities in an unrealized loss position prior to recovery of their amortized cost basis or at maturity. A decline in the fair value of securities below cost that is deemed other than temporary is charged to earnings for the amount of such decline in value deemed to be credit-related and a new cost basis for the security is established. The amount of such decline in value attributed to non-credit-related factors is recognized in other comprehensive income. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities are included in operations and derived using the specific identification method for determining the cost of the securities sold. During 2023 and 2022, CBB did not record any impairment losses.
The valuations of investment securities, available-for-sale, at December 31, 2023 and 2022 were as follows (amounts in thousands):
Available for Sale
20232022
Amortized
cost
Estimated
fair value
Amortized
cost
Estimated
fair value
U.S. Government sponsored enterprises
$— $— $— $— 
State and political subdivisions
— — — — 
Residential mortgage-backed securities
30,105 25,849 33,704 29,067 
Collateralized mortgage obligations
18,960 15,581 20,756 17,337 
Commercial mortgage- backed securities
12,619 10,542 12,679 10,881 
Corporate debt securities
— — — — 
Total securities
$61,684 $51,972 $67,139 $57,285 
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The valuations of investment securities, held-to-maturity, at December 31, 2023 and 2022 were as follows (amounts in thousands):
Held to Maturity
20232022
Amortized
cost
Estimated
fair value
Amortized
cost
Estimated
fair value
U.S. Treasury securities
$18,351 $17,908 $20,030 $19,398 
U.S. Government sponsored enterprises
$16,604 $15,804 $17,401 $16,390 
State and political subdivisions
$26,953 $25,741 $26,559 $24,829 
Corporate debt securities
$6,931 $6,441 $6,900 $6,474 
Total securities
$68,839 $65,894 $70,890 $67,091 
At December 31, 2023 and 2022, securities with a carrying value of approximately $76,084,000 and $38,365,000, respectively, were pledged to secure public deposits and for other purposes.
Deposits. Deposits are the primary source of funds for CBB’s portfolio loans, loan pipeline and investments. CBB’s deposit strategy is to obtain deposit funds from within Century Bank’s market areas through relationship banking. The majority of Century Bank’s deposits are from individuals and entities located in the bank’s primary markets of Bartow and Polk counties. Century Bank is positioned to obtain wholesale deposits, including brokered deposits, from various sources in order to supplement CBB’s liquidity if needed. As of December 31, 2023, total deposits were $286,443,691, down from $325,344,743 at December 31, 2022.
Noninterest-bearing demand deposits and interest-bearing transaction accounts, which include interest checking, savings and money market, decreased $49,586,149, or 16.27%, from $304,694,819 at December 31, 2022 to $255,108,670 at December 31, 2023. Time deposits increased $10,663,130 from 2022 to $34,603,406 in 2023, a 44.54% increase from $23,940,276 at December 31, 2022. The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2023 and 2022 was $24,429,239 and $14,439,032, respectively.
At December 31, 2023 and December 31, 2022, Century Bank held no certificates of deposit obtained through the efforts of third party brokers.
Time certificates in denominations of $100,000 or more outstanding at December 31, 2023 and 2022 by maturity were as follows (amounts in thousands):
Time Certificates by Maturity
20232022
Three Months or Less
$2,945 $3,018 
Over Three through Six Months
8,087 1,636 
Over Six through Twelve Months
10,144 7,623 
Over 12 Months
3,253 2,162 
Total
$24,429 $14,439 
Borrowings. CBB borrows funds principally from the FHLB. CBB had no advances from the FHLB at December 31, 2023 or December 31, 2022.
CBB may purchase federal funds through secured federal funds lines of credit with various banks. These lines are intended for short-term borrowings and are payable on demand and bear interest based upon the daily federal funds rate. For 2023 and 2022, CBB purchased no federal funds except in conjunction with semi-annual testing of the borrowing lines available. At December 31, 2023 and 2022, CBB had no federal funds borrowings outstanding under these lines.
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Results of Operations for the Years Ended December 31, 2023 and 2022
Overview. Net income for the twelve months ended December 31, 2023 was $4,618,198, or $6.45 per diluted share (which includes 26,000 shares issuable upon exercise of outstanding options), compared to net income of $3,701,962, or $5.17 per diluted share, for the twelve months ended December 31, 2022.
The $916,236 increase in net income in 2023 compared to 2022 was driven by rising interest rate environment as well as a $600,000 credit provision to the allowance for credit losses, reversing most of the COVID-19 related provision expense from 2020.
Net interest revenue totaled $9,799,681 for the twelve months ended December 31, 2023 as compared to $8,999,785 for the same period in 2022, an increase of $799,896, or 8.89%. Net interest margin for the twelve months ended December 31, 2023 was 3.33 % compared to 2.89% for the same periods in 2022. The improvement in net interest revenue during 2023 compared to 2022 was largely due to the rising rate environment and being asset sensitive.
Interest expense on borrowings was flat when compared to 2022.
On average, CBB’s interest-earning assets increased $17,387,000 during 2023 from 2022 and the rate earned on these assets increased 105 basis points. The following table presents average balance sheet information for 2023 and 2022, along with related interest earned and average yields for interest-earning assets and the interest paid and average rates for interest-bearing liabilities (amounts in thousands, except for average rates). The increase in net interest revenue during 2023 compared to 2022 was largely due to the rising rate environment.
Average Daily Balances, Interest Income/Expense, Average Yield/Rate
For the Years Ended December 31,
20232022
Average
Balance
Interest
Income/
Expense
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Yield/
Rate
Assets
Interest-earnings assets:
Loans(1)(2)
$120,704 $7,188 5.96 %$109,598 $6,011 5.48 %
Mortgage loans held for sale
— — — — — — 
Securities:
Taxable
120,499 2,470 2.05 %117,221 2,120 1.81 %
Tax-exempt(2)
14,465 352 2.43 %13,292 309 2.32 %
Total securities
134,964 2,822 2.09 %130,513 2,429 1.86 %
Other interest-earning assets
45,423 2,430 5.35 %78,367 1,367 1.74 %
Total Earning Assets
301,091 12,440 4.13 %318,478 9,807 3.08 %
Other assets
19,730 22,177 
Total Assets
$320,821 $340,655 
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Average Daily Balances, Interest Income/Expense, Average Yield/Rate
For the Years Ended December 31,
20232022
Average
Balance
Interest
Income/
Expense
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Yield/
Rate
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand
$31,091 $72 0.23 %$32,869 $17 0.05 %
Savings
111,101 1,734 1.56 %127,183 401 0.32 %
Time
27,487 625 2.27 %25,394 181 0.71 %
Total interest-bearing deposits
169,679 2,431 1.43 %185,446 599 0.32 %
Borrowed funds
5,000 209 4.18 %5,000 208 4.16 %
Total interest-bearing liabilities
174,679 2,640 1.51 %190,446 807 0.42 %
Non-interest bearing deposits
126,196 131,400 
Other liabilities
1,175 1,111 
Shareholders’ Equity
18,771 17,708 
Total Liabilities and Shareholders’ Equity
$320,821 $340,665 
Net interest revenue
$9,800 $9,000 
Net interest-rate spread
2.62 %2.66 %
Net Interest Margin
3.25 %2.83 %
__________________
(1)Nonperforming loans are included in the respective average loan balances.
(2)Tax equivalent adjustments are not included as such amounts are not material.
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The following table shows changes in interest income and expense by category and rate/volume variances for the years ended December 31, 2023 and 2022. The changes due to rate and volume were allocated on their absolute values (amounts in thousands):
2023 Compared to 2022
VolumeRateNet
Interest Income:
Loans
$609 $568 $1,177 
Mortgage loans held for sale
Securities:
Taxable
59 291 350 
Tax-exempt
27 16 43 
Other interest-earning assets
(575)1,638 1,063 
Total interest-earning assets
$120 $2,513 $2,633 
Interest expense:
Interest-bearing demand
$(1)$56 $55 
Savings
(51)1,384 1,333 
Time
15 429 444 
Borrowed funds
Total interest-bearing liabilities
(37)1,870 1,833 
Change in net interest income
$157 $643 $