Starting a bank from scratch in his mid-50s wasn’t enough of a challenge for Stephen Whatley. Why not go public with a stock offering?
Whatley and his associates raised more than $31 million in capital to open Southern States Bank in Anniston in 2007. In July 2021, they announced an initial public offering of stock.
Embarking on an IPO is an expensive, slow and — like anything involving government oversight — cumbersome process. But the move has improved liquidity and positions Southern States to be even stronger in navigating any “economic headwinds” they may face, a bank executive says.
A veteran of nearly 50 years in banking, Whatley assembled a group of organizers to raise the initial funds to open Southern States with branches in Anniston and Opelika in August 2007. A Birmingham location followed in February 2008, then acquisition of a Sylacauga office in May 2012.
Southern States spread north to Huntsville and into Georgia with a location in Columbus by January 2015. By 2019 it had established offices in Carrollton, Dallas and Newnan in Georgia, and Wedowee, Roanoke, Ranburne and Heflin in Alabama.
Since starting in 2007, Southern States has grown to $1.9 billion in assets, with 15 branches in Alabama and Georgia and a loan production office in Atlanta.
Bank executives planned the stock sale to accommodate even bigger plans.
Its leadership announced at the time that the net proceeds from the sale would be used for “general corporate purposes, including capital and liquidity to support its growth, and potential acquisition of banks and closely related businesses.”
Whatley, who is chairman and CEO of Southern States Bancshares Inc., says the bank’s leadership doubled down on planning for growth in late 2016, “both of our balance sheet as well as geographical growth.
“The bank has been fortunate to realize strong growth since inception,” Whatley says. “After the initial capital was raised in 2007 to form the bank, additional capital was raised in a private offering to private equity to fund the continued growth.”
Discussions continued about going public in part to raise money for expansion.
The thinking was, Whatley says, that the public sale would “provide liquidity to the stockholders, and finally to have a currency that we could use for merger and acquisitions.”
But there are potential downsides to be factored in, Whatley advises anyone in a similar position — “the costs and adding another facet of regulatory reporting and compliance requirements.
“The overall FDIC and SEC scrutiny and more investor scrutiny are more intense,” Whatley notes.
Based on his experience, Whatley says any bank considering a public offering should seek out good advice. Because the process can be a little overwhelming, Whatley says, “it is critical to have good, experienced investment bankers and legal team.
“There are significant documents to prepare that must meet SEC requirements along with effective marketing materials,” he adds.
The investment bankers play a key role in finding potential investors and encouraging the management team to engage with them, Whatley says.
All that discussion and planning takes a while even under normal circumstances. The last couple of years, of course, have been anything but.
Lynn Joyce is chief financial officer of Southern States Bancshares Inc. and has been with the company since April 2013.
“We started the process in the first quarter of 2020 and unfortunately that did not go as expected because of COVID,” recalls Joyce.
Bank leadership temporarily shelved the idea, she says, but by August 2021 the timing was right.
It was a learning process to some degree for all of them.
“While some of the management team had been involved in reporting as a public company, none of us had taken a bank public,” Joyce recalls. “It did help that we had completed the private raise and had that experience of talking with potential investors.”
Many businesses, banks and consumers struggled during the pandemic but Southern States apparently weathered it well.
“We have had very strong loan growth and have a robust loan pipeline,” says Mark Chambers, president and CEO of Southern States Bank. “The additional equity also positions us to be able to take advantage of acquisition opportunities in the Southeast.”
Whatley has led the bank a long way from humble beginnings with two branches in small cities to visions of acquisitions across the South.
While some in their 50s might take up golf and plan for retirement, Whatley decided to start the community bank in 2007 in the hope that it would “grow into a Southeast regional bank.”
He believes there is a strong demand “for independent banks that are locally owned by the communities that they are in and serve,” he says.
Whatley was born and raised in Opelika and began working at Opelika National Bank while still in high school. He completed his bachelor’s degree in economics at Auburn University in 1973. He has worked at Security Pacific Bank and Trust Company of Georgia, AmSouth Bank in Opelika, First Federal Savings and Loan and Colonial Bank. He was head of commercial lending for the State of Georgia while working for Colonial in Atlanta.
By age 54, he was still feeling “somewhat unfulfilled,” he recalls.
He moved back to Anniston in 2006 and began to organize the new bank with roughly a half-dozen legacy founders.
Then, as now, leadership promises that Southern States is “The Common Sense Bank.” Their operating philosophy relies heavily on a warm relationship with customers.
“We know our customers by name, we cheer alongside our neighbors in the stands and we are active in the communities we serve,” the bank’s website says.
“Our hallmarks at Southern States Bank are how we value our 202 employees and our thousands of customers,” Whatley emphasizes.
“We provide the best benefits, directly and indirectly, to our employees and we stack up near the top in every way. We also provide a uniquely pleasant and conducive working environment to promote high efficiency,” he continues.
“We also provide outstanding personal service to all of our customers,” he adds. “Employees answer our phones. We greet you when you come into our lobby.”
That friendly neighborhood bank approach seems to be serving them well, even in today’s shaky financial atmosphere of high inflation, rising interest rates and stock volatility.
“The economy has not influenced our performance in a negative way thus far,” says Chambers, who has been with the bank since its inception. “Production has been very strong and our pipeline is very healthy.”
The bank’s leadership is cautious in underwriting and stays in touch with customers “to monitor their financials and outlook for the future with the present economic headwinds that we are experiencing,” he says.
Southern States trades on NASDAQ under stock symbol SSBK.
Deborah Storey and Art Meripol are freelance contributors to Business Alabama. She is based in Huntsville and he in Birmingham.
This article appears in the October 2022 issue of Business Alabama.