SmartBank to acquire Southern Community Bank

In its fifth acquisition in as many years, the parent company of SmartBank said Tuesday it will buy Southern Community Bank to create a combined bank with nearly $2 billion in assets.

SmartFinancial Inc., parent company of SmartBank, has agreed to pay the equivalent of $31.8 million in stock to acquire Tennessee Bancshares Inc., the parent company of Southern Community Bank.

Based in Tullahoma, Southern Community has grown since its start as the Bank of Tullahoma in 2005 to a nearly $250 million-asset institution with additional branch offices in Chattanooga, Murfreesboro, Tenn., and Huntsville, Ala.

"This is another big step for SmartBank in becoming the Southeast's next great community banking franchise," said Billy Carroll, president and CEO of SmartBank. "We are excited to partner with Southern Community and look forward to serving an expanded footprint in our newest markets in Murfreesboro, Huntsville and Tullahoma."

Billy Carroll, president and CEO of SmartFinancial, speaks during an interview in the offices of Cornerstone Bank onTuesday, Sept. 1, 2015, in Chattanooga, Tenn.

Southern Community expanded into Chattanooga in 2013 with a loan origination office and converted the local office into a full-service bank branch three years later. Robert Stahl, who has worked in banking for four decades and headed Southern Community operations in Chattanooga, will remain with the bank after the merger with SmartBank.

Southern Community Bank, which was known as the Bank of Tullahoma until 2011, is headed by former Chattanogan Bill Yoder, who will join the executive team of SmartBank after the merger.

"We could not have picked a better partner from a community banking perspective," Yoder said in a statement Tuesday night. "Because of our similar cultures, SmartBank's core values align perfectly with Southern Community's values, with a strong emphasis on client service and commitment to the communities we serve."

SmartBank, which began in Sevierville in 2007, has previously acquired banks or branches in the Florida Panhandle, Chattanooga, Cleveland, Tenn., and Tuscaloosa, Ala., in stock and cash deals. Like those deals, Carroll said he expects the latest purchase will add to bank earnings in the next year.

SmartBank

SmartBank became a publicly traded company when it merged with Cornerstone Bank in Chattanooga in 2015.

Miller Welborn, the former Cornerstone Bank chairman who now chairs the Smart Financial board, said the purchase of Southern Community continues the bank's strategy of acquiring banks in the Southeast in growing cities, often in university towns.

"We see real opportunities for growth with this expansion into Murfreesboro, where MTSU (Middle Tennessee State University) is, and in Huntsville, which has the highest income and educational achievement of any market in Alabama," Welborn said.

SmartBank completed its $84.8 million acquisition of Capstone Bank in Tuscaloosa, Ala., last month and will complete the name and operational changeover of Capstone to SmartBank in February.

If approved by shareholders and regulators, SmartBank's latest purchase of Southern Community is expected to be completed in the second quarter of next year. The name and operating systems of Southern Community will be changed in the third quarter of 2018.

Following the merger, Yoder will become chief banking officer for SmartBank and Clifton Miller, who currently serves on the Tennessee Bancshares and Southern Community boards of directors, will join the SmartFinancial and SmartBank boards of directors.

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