On Friday, Southern States Bancshares Inc stock(NASDAQ:SSBK) received an upgrade in its rating by Keefe, Bruyette & Woods from Market Perform to Outperform, with an increased price target set at $35.00, up from the previous $32.00. The upgrade comes following the announcement of Southern States Bancshares' acquisition of Century Bank, a Georgia-based financial institution.
The deal, a combination of cash and stock valued at $27 million, is expected to be significantly beneficial to Southern States Bancshares. Analysts estimate that the acquisition will add approximately $0.55 per share to the company's 2025 earnings, marking an 18% accretive impact. Despite an anticipated tangible book value (TBV) dilution of around 8%, the earn-back period is forecasted to be a reasonable 2.5 years.
The firm's outlook is positive, with revised EPS estimates for 2024 and 2025 increased to $3.50 and $3.70, respectively. This adjustment corresponds to an anticipated return on assets (ROA) of 1.2% and a return on tangible common equity (ROTCE) of 15%.
The acquisition is viewed as a low-risk strategic move that is expected to add scarcity value to Southern States Bancshares, enhance its presence in Georgia, and provide support for earnings per share in the event of interest rate reductions.
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