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Business Combinations | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Combinations | Acquisition of Progressive Financial Group, Inc. On March 1, 2020 the Company completed its merger with Progressive Financial Group, Inc., a Tennessee corporation (“Progressive”), pursuant to an Agreement and Plan of Merger dated October 29, 2019 (the “Merger Agreement”). Pursuant to the Merger Agreement, each outstanding share of Progressive common stock was converted into and cancelled in exchange to the right to receive $474.82 in cash, and 62.3808 shares of SmartFinancial common stock. SmartFinancial issued 1,292,592 shares of SmartFinancial common stock and paid $9.8 million in cash as consideration for the Merger. Also in accordance with the terms of the Merger Agreement, Progressive also effected a distribution to its shareholders prior to March 1, 2020 of $4.8 million, which was the approximate balance of Progressive’s accumulated adjustment account. Acquisition of Foothills Bancorp, Inc. On November 1, 2018, the Company completed its merger with Foothills Bancorp, Inc., a Tennessee corporation ("Foothills Bancorp"), pursuant to an Agreement and Plan of Merger dated June 27, 2018 (the "Foothills Bancorp merger agreement"). Fair values were subject to refinement for up to one year after the closing date. The measurement period ended on September 30, 2019, with one change made before September 30, 2019 for $473 thousand to values initially recorded as part of the business combination. Pursuant to the Foothills Bancorp merger agreement, each outstanding share of Foothills Bancorp common stock was converted into and cancelled in exchange to the right to receive $1.75 in cash and 0.666 shares of SmartFinancial common stock. SmartFinancial issued 1,183,232 shares of SmartFinancial common stock and paid $3.1 million in cash as consideration for the merger plus $3.0 million in consideration for Foothills Bancorp Director and management stock options. In periods following the Foothills Bancorp merger, the financial statements of the combined entity will include the results attributable to Foothills Bank beginning on the date the merger was completed. In the twelve months period ended December 31, 2018, the revenues and net income attributable to Foothills Bank were approximately $1.5 million and $876 thousand, respectively. There were $2.3 million nonrecurring pro forma adjustments to expense included in the reported proforma earnings for twelve month period ending December 31, 2018. The pro-forma impact to 2018 revenues and net income if the merger had occurred on January 1, 2018 would have been $11.0 million and $1.6 million for the twelve months period ending December 31, 2018, respectively. The following table details the financial impact of the merger, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed, and goodwill recognized, as of acquisition date:
Calculation of Purchase Price |
Shares of SMBK common stock issued to Foothills Bancorp shareholders as of November 1, 2018 | 1,183,232 |
Market price of SMBK common stock on November 1, 2018 | $ | 20.34 |
Estimated fair value of SMBK common stock issued (in thousands) | 24,067 |
Cash consideration paid (in thousands) | 6,069 |
Total consideration (in thousands) | $ | 30,136 |
Allocation of Purchase Price (in thousands) |
Total consideration above | $ | 30,136 |
Fair value of assets acquired and liabilities assumed: |
Cash and cash equivalents | 4,882 |
Investment securities available-for-sale | 48,091 |
Restricted investments | 551 |
Loans | 153,692 |
Premises and equipment | 3,622 |
Core deposit intangible | 3,670 |
Prepaid and other assets | 3,944 |
Deposits | (185,259) |
FHLB advances and other borrowings | (10,257) |
Payables and other liabilities | (276) |
Total fair value of net assets acquired | 22,660 |
Goodwill | $ | 7,476 |
Acquisition of Tennessee Bancshares, Inc. On May 1, 2018, the Company completed its merger with Tennessee Bancshares, Inc., a Tennessee corporation (“Tennessee Bancshares”), pursuant to an Agreement and Plan of Merger dated December 12, 2017 (the “Tennessee Bancshares merger agreement”). The measurement period ended on April 30, 2019, with one change made during the year ended December 31, 2018 for $54 thousand to values initially recorded as part of the business combination. Pursuant to the Tennessee Bancshares merger agreement, each outstanding share of Tennessee Bancshares common stock was converted into and cancelled in exchange for 0.8065 shares of SmartFinancial common stock. SmartFinancial issued 1,458,981 shares of SmartFinancial common stock as consideration for the merger. In periods following the Tennessee Bancshares merger, the financial statements of the combined entity will include the results attributable to Southern Community Bank beginning on the date the merger was completed. In the twelve months period ended December 31, 2018, the revenues and net income attributable to Southern Community Bank were approximately $8.4 million and $3.5 million, respectively. There were $2.0 million nonrecurring pro forma adjustments to expense included in the reported proforma earnings for the twelve months period ending December 31, 2018. The pro-forma impact to 2018 revenues and net income if the merger had occurred on January 1, 2018 would have been $14.7 million and $3.6 million for the twelve months period ending December 31, 2018, respectively. The following table details the financial impact of the merger, including the calculation of the purchase price, the allocation of the purchase price to the fair values of net assets assumed, and goodwill recognized, as of acquisition date:
Calculation of Purchase Price |
Shares of SMBK common stock issued to TN Bancshares shareholders as of May 1, 2018 | 1,458,981 |
Market price of SMBK common stock on May 1, 2018 | $ | 23.85 |
Estimated fair value of SMBK common stock issued (in thousands) | 34,797 |
Cash consideration paid (in thousands) | 5 |
Total consideration (in thousands) | $ | 34,802 |
Allocation of Purchase Price (in thousands) |
Total consideration above | $ | 34,802 |
Fair value of assets acquired and liabilities assumed: |
Cash and cash equivalents | 5,723 |
Investment securities available-for-sale | 24,563 |
Restricted investments | 464 |
Loans | 180,490 |
Premises and equipment | 9,470 |
Core deposit intangible | 2,290 |
Other real estate owned | 674 |
Prepaid and other assets | 2,207 |
Deposits | (202,272) |
FHLB advances and other borrowings | (4,000) |
Payables and other liabilities | (586) |
Total fair value of net assets acquired | 19,023 |
Goodwill | $ | 15,779 |
Termination of Entegra Merger The Company elected to terminate, effective April 23, 2019, the Agreement and Plan of Merger dated January 15, 2019 (the “Merger Agreement”), among the Company, Entegra, and CT Merger Sub, Inc. Entegra elected to terminate the Merger Agreement in order to enter into a definitive merger agreement with a large North Carolina-based financial institution that made a competing offer to acquire Entegra, an offer that SmartFinancial chose not to match. Under the terms of the Merger Agreement, the Company received a termination fee of $6.4 million.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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