SmartBank to buy CapStone in Alabama for $84.8 million

Knoxville-based bank extends footprint

Billy Carroll, president and CEO of SmartFinancial, left, and Miller Welborn, chairman of SmartFinancial, speak during an interview in the offices of Cornerstone Bank onTuesday, Sept. 1, 2015, in Chattanooga, Tenn.
Billy Carroll, president and CEO of SmartFinancial, left, and Miller Welborn, chairman of SmartFinancial, speak during an interview in the offices of Cornerstone Bank onTuesday, Sept. 1, 2015, in Chattanooga, Tenn.
photo SmartBank bought Cornerstone Community Bank in 2015 and eliminated Cornerstone's branding in early 2016.

Less than two years after acquiring the former Cornerstone Bank in Chattanooga, the Knoxville-based SmartBank agreed Monday to buy one of the biggest community banks in Tuscaloosa, Ala., to help expand the East Tennessee bank into Alabama.

Smart Financial Corp., the parent company of SmartBank, will pay $84.8 million in cash and stock to buy Capstone Bank in Tuscaloosa, home of the University of Alabama. Upon the completion of the transaction, the combined bank will have asssets of more than $1.5 billion.

Miller Welborn, the Chattanooga businessman who chairs Smart Financial, said the purchase will help boost SmartBank's footprint in the Southeast and improve company profits in 2018. The purchase, which Welborn hopes to duplicate in the future with other acquisitions of community banks across the Southeast, continues the bank's strategy to grow in college towns and growing Southern markets.

photo Smart Financial Corp., the parent company of SmartBank, will pay $84.8 million in cash and stock to buy Capstone Bank in Tuscaloosa, home of the University of Alabama.

Banks at a glance

Capstone BankHeadquarters: Tuscaloosa, Ala.Started: 1978No. of offices: Eight in four Alabama countiesMarket presence: Capstone is the fourth biggest bank among 24 banks operating in metro Tuscaloosa, Ala.2016 assets: $487.1 million2016 bank net income: $3.7 millionStaff size: 99CEO: Robert KuhnSmartBankHeadquarters: KnoxvilleStarted: 2007No. of offices: 14 in three East Tennessee counties, two Florida counties and one George countyMarket presence: The third biggest bank in Sevier County and the eighth biggest bank in metro Chattanooga2016 assets: $1.06 billion2016 bank net income: $6.5 millionStaff size: 219CEO: Billy Carrroll

"As a graduate of the University of Alabama, I finally convinced all these people from UT in Knoxville that if Tennessee can't beat Alabama we might as well join them," Welborn quipped Monday after announcing the purchase.

Even Billy Carroll, the CEO of SmartBank and a University of Tennessee graduate, was enthused about expanding into the University of Alabama's home turf.

"As a UT alum, it's a little hard for me to say 'roll Tide roll,' but I'm going to start saying it today," Carroll said. "Capstone is a great community bank and we admire their leadership and the culture they've created. Much like our bank, Capstone has a strong history of service to both its customers and local communities and we look forward to building on that together."

Capstone Bank's President and CEO, Robert Kuhn, who is a long-time friend of Welborn who previously lived in Tuscaloosa, said the merger is a perfect fit.

"We could not have picked a better partner from a community banking perspective," Kuhn said in a statement Monday night. "SmartBank's core values align perfectly with Capstone's, with a strong emphasis on client service, culture and the communities we serve."

Established in 2007, SmartBank has more than $1 billion in assets and operates 14 branches and two loan production offices spanning East Tennessee and the Florida Panhandle. This marks the fourth acquisition in the bank's past five years.

Capstone Bank was formed in 2008 and has eight Alabama locations in Tuscaloosa, Washington and Clarke counties, including a new office in Fairhope, in the rapidly growing Baldwin County market.

The acquisition, which is subject to customary closing conditions including the approval of each party's shareholders and the receipt of all necessary regulatory approvals, is expected to be completed in the fourth quarter of 2017.

The SmartBank name will be added to the Tuscaloosa bank next year, Carroll said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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