The parent company of SmartBank is buying the fourth biggest bank in Sevier County to become that county's biggest bank and the fourth biggest banking firm headquartered in Tennessee.
In its eighth acquisition since its start in 2006, Smart Financial Inc. announced Wednesday it has agreed to buy Sevier County Bank in an all-stock purchase valued at $38.2 million. If approved by regulators and shareholders, the purchase should be completed in the third quarter of the year and boost SmartBank's assets to more than $3.7 billion.
The conversion and rebrand of Sevier County Bank under the SmartBank name is expected in the fourth quarter, including consolidating four of the six branches that Sevier County Bank has in its home county into existing SmartBank branches in the area.
"We are pleased to partner with Sevier County Bank, which has a multi-generational history within our legacy footprint in East Tennessee and is a company that we have known and admired for years," said Billy Carroll, SmartFinancial's president and CEO. "This merger is reflective of our philosophy of partnering with banks that hold core values similar to our own and have a commitment to serving their local communities."
Chattanoogan Miller Welborn, the chairman of SmartBank who helped engineer the merger of the former Cornerstone Bank in Chattanooga with SmartBank in 2014, said SmartBank expects to cut about 63% of annual non-interest expenses at Sevier County Bancshares, or $7.1 million.
"There is some overlap between our banks and we will consolidate some of the branches in the Sevierville, Pigeon Forge and Gatlinburg areas," Welborn said.
But the SmartBank president said the combined bank "will offer more convenience to Sevier County Bank customers through a large regional branch network and enhanced product offerings and services" with higher lending limits and more places to transact banking business.
While the merger will shut down some bank offices in Sevier County, the purchase will give SmartBank an entry into the Richmond, Virginia market area.
"We look forward to continued growth and new opportunities in this new market," Welborn said.
Founded in 1909, Sevier County Bancshares currently operates seven branches and reported $381 million of deposits and $243 million of loans.
Smart Financial said it will likely incur $8.7 million in merger-related expenses, including $1.4 million of restructuring expenses. The company said it expects the merger will boost SmartFinancial's per share earnings by 15% in 2022. But it will likely take two to three years for SmartFinancial to earn back an estimated 3.3% dilution to tangible book value.
Shares of SmartFinancial rose by more than 3.8% Wednesday in trading on the Nasdaq exchange, boosting the company's price by 81 cents a share to $22.06. SmartBank's stock is up nearly 22% so far in 2021 and is up by more than 78% from a year ago.
John Presley, executive chairman of Sevier County Bancshares, will join SmartFinancial's board.
"This partnership will provide us new opportunities to increase the depth of products and services we can offer to our customers, while providing significant value to our shareholders.," Presley said in an announcement the merger.
With the merger, Smart Financial will be Tennessee's fourth biggest bank holding company behind only First Horizon, Pinnacle and FirstBank.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.