SmartBank to buy FSG bank branch in Cleveland

The new FSG Bank branch is seen on Tuesday, Aug. 4, 2015, on Keith Street in Cleveland, Tenn.
The new FSG Bank branch is seen on Tuesday, Aug. 4, 2015, on Keith Street in Cleveland, Tenn.

Nine months after merging with Cornerstone Bank in Chattanooga, the Knoxville-based SmartBank agreed Friday to buy the Cleveland branch of FSG Bank next year to expand into Bradley County.

SmartFinancial Inc., the parent of SmartBank, said the purchase will add about $33 million in customer deposits and $32 million in loans and other assets affiliated with the Cleveland bank branch.

"When we merged these banks we knew that part of our strategy was to try to fill some of these markets between Knoxville and Chattanooga," said Miller Welborn, the former chairman of Cornerstone who is now chairman of SmartFinancial Inc. "So we have looked closely at the Cleveland/Bradley County market and knew it was a market we wanted to be in."

FSG, which opened the Keith Street office in Cleveland in 2005 and relocated and upgraded the branch in 2015 into one of its high-tech, drive-through facilities, is selling the branch as part of its strategy to focus on more business and private banking services in bigger markets.

FSG is preparing to adopt the name of its new owner, Atlantic Capital Bank, which acquired FSG last year. The Atlanta-based Atlantic Capital is targeting business customers and higher wealth clients in major markets in the Southeast and is offering its "high-touch, high- technology" services with fewer branches, Atlantic Capital President Mike Kramer said Friday.

"As we focus on being more of a corporate, private wealth-oriented bank, Bradley County - as great of a market as it is from a population growth standpoint - doesn't have the density there of larger businesses, which is really becoming more of our focus," Kramer said. "SmartBank brings a great understanding and knowledge of the East Tennessee community markets to our Cleveland client base."

FSG and SmartBank on Friday mailed out a jointly written letter to hundreds of customers who use the Keith Street bank branch, informing them of the coming change, which is expected to be completed in the first quarter of 2017, pending regulatory approval.

All five employees who work at the FSG bank in Cleveland will be absorbed by SmartBank, and Smart Financial CEO Billy Carroll said he hopes to expand that staff and the bank's presence in the Cleveland market over time.

"We think there may be room for one or two more branches in Bradley County for us," he said. "This acquisition provides an incredible opportunity to expand our presence in Tennessee and introduce our brand and excellent client service to Bradley County."

SmartBank is focused upon retail and small business services, Welborn said. In Bradley County, SmartBank will be one of 12 banks operating in the county with offices. As of June 30, the 12 banks collectely had more than $1.5 billion in deposits and operated a total of 29 branch offices.

Metropolitan Cleveland has been the fastest growing metro market in Tennessee for job growth in the past year, adding 4,430 jobs in the 12 months ended in October to lead the state with a robust 8.2 percent increase in employment.

But Atlantic Capital, which grew into a multi- billion-dollar bank in Atlanta with only a single office before buying FSG, has a different approach to serving its customers and building its business. Atlantic Capital completed its $160 million purchase of FSG in November 2015 and has realigned the East Tennesse operations of FSG since to sell some of its locations while beefing up corporate and wealth management operations.

FSG, which once had 37 branches across East Tennessee and Northwest Georgia, now has only 16. In February, FSG will change its name to Atlantic Capital and relocate its Chattanooga headquarters from its 36,000-square-foot Broad Street headquarters, which FSG recently sold, into about 27,000 square feet of leased space on the third floor of Warehouse Row.

Douglas Williams, chief executive of Atlantic Capital, said the sale of the Cleveland branch "will better position Atlantic Capital to continue to focus on our strategic objective of becoming a premier corporate, business and private bank serving metropolitan areas throughout the Southeast." In October, Atlantic Capital announced its intent to open a corporate office in Charlotte, N.C.

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

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