In its seventh and biggest acquisition so far, SmartBank is merging with Entegra Bank based in western North Carolina to nearly double in size and expand its footprint over a half dozen states in the Southeast.
The Knoxville-based Smart Financial, the parent company of SmartBank which merged with the former Cornerstone Bank in Chattanooga in 2015, announced Tuesday that it has agreed to merge with the Franklin, North Carolina-based Entegra Financial Corp., the parent company of Entegra Bank, later this year.
Smart Financial will offer about $160 million of its stock to acquire Entegra, which will ultimately adopt the SmartBank name. The bank combination, an all-stock transaction, will create a $4 billion-asset bank with 47 branches in six Southeastern states.
"This is a historic milestone for both companies, one which we believe lays the foundation for the Southeast's next great community banking franchise," said Billy Carroll, president and CEO of SmartFinancial who will remain head of the combined bank. "This partnership strengthens both organizations in all key areas and presents a compelling value proposition for each of our constituents."
Under the terms of the agreement, SmartFinancial shareholders will own 62 percent of the surviving company and Entegra shareholders will get the other 38 percent share. Carroll will be the CEO and Miller Welborn, the former Cornerstone CEO and bank chairman, will remain as chairman of the merged company.
"This merger really fits our approach of going to tier 2 towns with colleges and universities that are strong markets that we can lend into in and do well," Welborn said.
Entegra, which dates back nearly a century, operates in the Greenville, South Carolina, Asheville, North Carolina and Gainesville, Georgia markets.
"It puts us in a whole new league in size, footprint and the service offerings we can do," Carroll said in announcing the deal today. "It's going to be a great plus for us."
The merger is similar to SmartBank's merger with the former Cornerstone Bank in Chattanooga as a merger of relative equals and SmartBank being the surviving name.
"The success of the Cornerstone merger really propelled us to do the subsequent transactions that we have done in Alabama, in Middle Tennessee, Maryville and now in the Carolinas and Georgia," Carroll said. "Creating the culture and success that we have had is one of the things that has helped us attract other banks to us."
The merger is expected to close by mid year and the name and system conversion is likely in 2019.
Roger Plemens, the 63-year-old CEO of Entegra Bank, will become president of the Carolinas for the combined bank. Five Entera directors will join the Smart Financial board.
"We are thrilled to be joining forces with the SmartBank team and to combine these two strong, growing institutions," Plemens said.
Entegra converted from a thrift to a bank in 2011 and became a publicly traded company in 2014.
Entegra shareholders will receive 1.215 shares of SmartFinancial common stock for each of their shares. The transaction is projected to generate more than 20 percent earnings per share accretion in the first full year for SmartBank and tangible book value dilution is expected to be earned back in only two years.
"We think scale definitely matters in the banking industry for costs, efficiency and all the things you can do when you get a little bit bigger," Welborn said.
The board of both banks have approved the merger, which is still subject to regulatory approval and a vote of shareholders.
Contact Dave Flessner at dflessner@timesfrepress.com or at 757-6340.
Banks at a glance
Entegra FinancialBank name: Entegra BankHeadquarters: Franklin, North CarolinaNo. of branches: 18 in North and South Carolina and GeorgiaDominant markets: Cullowhee and Brevard, North CarolinaMarket value: $157 millionAssets: $1.7 billionFounded: 1922Ticker symbol: ENFC on the Nasdaq exchangeSmartFinancialBank name: SmartBankHeadquarters: KnoxvilleNo. of branches: 35 in Tennessee, Alabama, Florida and GeorgiaDominant markets: Chattanooga, Knoxville, Tuscaloosa, Panama CityMarket value: $257 millionAssets: $2 billionFounded: 2007Ticker symbol: SMBK on the Nasdaq exchange