XML 84 R10.htm IDEA: XBRL DOCUMENT
v3.20.1

Business Combinations | 3 Months Ended
--- | ---
Mar. 31, 2020
Business Combinations [Abstract] |
Business Combinations | Business Combinations Acquisition of Progressive Financial Inc. On March 1, 2020, the Company completed the merger of Progressive Financial Group, Inc., a Tennessee corporation ("PFG"), pursuant to an Agreement and Plan of Merger dated October 29, 2019 (the "Merger Agreement"). In connection with the merger, the Company acquired $301 million of assets and assumed $272 million of liabilities. 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 1,292,578 shares of SmartFinancial common stock and paid $9.8 million in cash as consideration for the Merger. The fair value of consideration paid exceeded the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount of $8.3 million, representing the intangible value of Progressive's business and reputation within the markets it served. None of the goodwill recognized is expected to be deductible for income tax purposes. The Company is amortizing the related core deposit intangible of $1.4 million using the effective yield method over 120 months (10 years), which represents the expected useful life of the asset. The Company's operating results for the period ended March 31, 2020, include the operating results of the acquired business for the period subsequent to the merger date of March 1, 2020. The purchased assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below (in thousands).
|  | As recorded |  | Fair value |  | As recorded |
|  | by PFG |  | adjustments (1) |  | by the Company |
Assets: |  |  |  |  |  |  |
Cash & cash equivalents |  | $ | 55,971 |  |  | $ | — |  |  | $ | 55,971 |  |
Investment securities available-for-sale |  | 27,054 |  |  | 203 |  |  | 27,257 |  |
Restricted investments |  | 692 |  |  | — |  |  | 692 |  |
Loans |  | 191,672 |  |  | (3,691) |  |  | 187,981 |  |
Allowance for loan losses |  | (2,832) |  |  | 2,832 |  |  | — |  |
Premises and equipment, net |  | 15,681 |  |  | (2,919) |  |  | 12,762 |  |
Bank owned life insurance |  | 5,560 |  |  | — |  |  | 5,560 |  |
Deferred tax asset, net |  | — |  |  | 813 |  |  | 813 |  |
Intangibles |  | — |  |  | 1,370 |  |  | 1,370 |  |
Other real estate owned |  | 3,695 |  |  | (100) |  |  | 3,595 |  |
Interest Receivable |  | 1,061 |  |  | (280) |  |  | 781 |  |
Prepaids |  | 375 |  |  | (174) |  |  | 201 |  |
Goodwill |  | 231 |  |  | (231) |  |  | — |  |
Other assets |  | 1,881 |  |  | — |  |  | 1,881 |  |
Total assets acquired |  | $ | 301,041 |  |  | $ | (2,177) |  |  | $ | 298,864 |  |
Liabilities: |  |  |  |  |  |  |
Deposits |  | $ | 271,276 |  |  | $ | — |  |  | $ | 271,276 |  |
Time deposit premium |  | — |  |  | 729 |  |  | 729 |  |
Payables and other liabilities |  | 776 |  |  | — |  |  | 776 |  |
Total liabilities assumed |  | 272,052 |  |  | 729 |  |  | 272,781 |  |
Excess of assets assumed over liabilities assumed |  | $ | 28,989 |  |  |  |  |  |
Aggregate fair value adjustments |  |  |  | $ | (2,906) |  |  |  |
Total identifiable net assets |  |  |  |  |  | 26,083 |  |
Consideration transferred: |  |  |  |  |  |  |
Cash |  |  |  |  |  | 9,838 |  |
Common stock issued (1,292,578 shares) |  |  |  |  |  | 24,547 |  |
Total fair value of consideration transferred |  |  |  |  |  | 34,385 |  |
Goodwill |  |  |  |  |  | $ | 8,302 |  |
(1) Fair values are preliminary and are subject to refinement for a period of one year after the closing date of an acquisition as information relative to the closing date fair value becomes available. |  |  |  |  |  |  |
The following table presents additional information related to the acquired loan portfolio at the acquisition date (in thousands):
|  | March 1, 2020 |
Accounted for pursuant to ASC 310-30: |  |  |
Contractually required principal and interest |  | $ | 21,107 |  |
Non-accretable differences |  | 4,706 |  |
Cash flows expected to be collected |  | 16,401 |  |
Accretable yield |  | 2,515 |  |
Fair value |  | $ | 13,886 |  |
The following table discloses the impact of the merger with PFG since the acquisition date through March 31, 2020. The table also presents certain pro forma information (net interest income and noninterest income ("Revenue") and net income) as if the PFG acquisition had occurred on January 1, 2019. The pro-forma financial information is not necessarily indicative of the results of operations had the acquisitions been effective as of these dates. Merger-related cost from the PFG acquisition of $2.1 million have been excluded from the three months period of 2020 pro- forma information presented below and included in the three months period of 2019 pro-forma information below. The actual results and pro-forma information were as follows (in thousands):
|  | Three Months Ended March 31, |  |
|  | Revenue |  | Net Income
2020: |  |  |  |
Actual PFG results included in statement of income since acquisition date |  | $ | 505 |  |  | $ | 117 |
Supplemental consolidation pro-forma as if PFG had been acquired January 1, 2019 |  | 28,050 |  |  | 4,013 |
2019: |  |  |  |
Supplemental consolidation pro-forma as if PFG had been acquired January 1, 2019 |  | $ | 26,766 |  |  | $ | 3,513 |

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration