Parent company of SmartBank ends merger with North Carolina bank

Parent company of SmartBank ends merger with North Carolina bank

April 24th, 2019 by Dave Flessner in Breaking News

The parent company of SmartBank has terminated what would have been its biggest merger yet.

SmartFinancial, Inc. said Wednesday a proposed $158.2 million purchase of Entegra Financial Corp. in North Carolina broke apart after SmartFinancial decided not to match a competing offer for Entegra from First Citizens Bank in North Carolina.

Miller Welborn, chairman of SmartFinancial, speaks during an interview in the offices of Cornerstone Bank on Tuesday, Sept. 1, 2015, in Chattanooga, Tenn.

Miller Welborn, chairman of SmartFinancial, speaks during an...

Photo by Staff File Photo /Times Free Press.

The new deal with First Citizens Bank & Trust Co. in Raleigh, North Carolina will pay an estimated $219.8 million for Entegra.

"As a disciplined acquirer and having already completed a number of recent successful acquisitions, we simply felt it was in the best interest of our shareholders to not move forward with a matching offer," said SmartFinancial Chairman Miller Welborn.

The merger with Entegra would have been the seventh and biggest yet for SmartBank and would have doubled the size of SmartBank. But SmartBank officials said they will look for other, more attractive acquisitions in the market.

Under the terms of the merger agreement negotiated with Entegra in January, SmartFinancial has received a termination fee of $6.4 million.

"As a result of the additional capital obtained from the termination fee, we feel that we are in an even better position to continue to execute our business plan," said SmartFinancial President Billy Carroll. "Looking ahead, we are immediately refocusing on pursuing other potential acquisitions as part of our M&A strategy, further bolstering future growth and profitability of SmartFinancial."

SmartFinancial said it has a history of successfully completing acquisitions across the Southeast, including Foothills Bank & Trust in Maryville in 2018, Southern Community Bank in Tullahoma in 2018, Capstone Bank in Tuscaloosa, Alabama in 2017, and Cornerstone Community Bank in Chattanooga in 2015, among others.

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

Billy Carroll, president and CEO of SmartFinancial, speaks...

Photo by Staff File Photo /Times Free Press.

SmartFinancial also reported that it boosted its first quarter earnings by 39 percent over a year ago.

SmartBank earned $4.7 million, or 34 cents per share for the first three months of 2019, compared to $3.4 million, or 30 cents per share, a year ago.

"This quarter we had very strong organic loan growth of over $60 million and had outstanding growth in earnings compared to the same quarter last year," Carroll said "Demand deposits increased significantly, while we were able to keep the costs of those deposits at very reasonable levels.

Welborn said with the improved profits, "the opportunities we have for this company have never been greater."

After the announcement of the termination of the agreement with Entegra, shares of SmartFinancial rose Wednesday by 5.5 percent, or $1.09 per share, to close at $20.90 per share.