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v3.22.2

Business Combinations | 6 Months Ended
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Jun. 30, 2022
Business Combinations [Abstract] |
Business Combinations | Note 2. Business Combinations Sevier County Bancshares, Inc. On September 1, 2021, the Company completed the acquisition of Sevier County Bancshares, Inc., a Tennessee corporation (“SCB”), pursuant to an Agreement and Plan of Merger dated April 13, 2021 (the “Merger Agreement”). In connection with the merger, the Company acquired $484.9 million of assets and assumed $443.1 million of liabilities. Pursuant to the Merger Agreement, at the effective time of the merger, SCB shareholders were entitled to receive for each share of SCB common stock, no par value per share, outstanding immediately prior to the Merger, either (i) $10.17 in cash (the “Per Share Cash Consideration”), or (ii) 0.4116 shares of Company common stock, par value $1.00 (the “Per Share Stock Consideration”). Pursuant to the terms of the Merger Agreement, (i) each SCB shareholder holding 20,000 shares or more of SCB common stock will receive the Per Share Stock Consideration and (ii) each SCB shareholder holding fewer than 20,000 shares of SCB common stock may elect to receive either the Per Share Stock Consideration or the Per Share Cash Consideration. SmartFinancial issued 1,692,168 shares of SmartFinancial common stock and paid $9.6 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 $17.2 million, representing the intangible value of SCB’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 $1.6 million using the effective yield method over 120 months (10 years), which represents the expected useful life of the asset. The purchased assets and assumed liabilities were recorded at their acquisition date fair values (1) and are summarized in the table below (in thousands). ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Initial | ​ | ​ | ​ | ​ | ​ | ​
​ |  | As recorded |  | Fair value | ​ | Subsequent |  | As recorded
​ | ​ | by SCB | ​ | adjustments | ​ | Adjustments | ​ | by the Company
Assets: |  | ​ |  |  | ​ |  | ​ | ​ | ​ |  | ​ |
Cash & cash equivalents | ​ | $ | 84,313 | ​ | $ | — | ​ | $ | — | ​ | $ | 84,313
Investment securities available-for-sale | ​ |  | 64,219 | ​ |  | (614) | ​ | ​ | — | ​ |  | 63,605
Restricted investments | ​ |  | 533 | ​ |  | — | ​ | ​ | — | ​ |  | 533
Loans | ​ |  | 304,620 | ​ |  | (4,551) | ​ | ​ | (3,049) | ​ |  | 297,020
Allowance for loan losses | ​ |  | (3,644) | ​ |  | 3,644 | ​ | ​ | — | ​ |  | —
Premises and equipment, net | ​ |  | 15,579 | ​ |  | (295) | ​ | ​ | (22) | ​ |  | 15,262
Bank owned life insurance | ​ |  | 7,116 | ​ |  | — | ​ | ​ | — | ​ |  | 7,116
Deferred tax asset, net | ​ |  | 10,340 | ​ |  | (4,007) | ​ | ​ | 769 | ​ |  | 7,102
Core deposit intangible | ​ |  | — | ​ |  | 1,550 | ​ | ​ | — | ​ |  | 1,550
Interest Receivable | ​ |  | 884 | ​ |  | — | ​ | ​ | — | ​ |  | 884
Other assets | ​ |  | 920 | ​ |  | (272) | ​ | ​ | (533) | ​ |  | 115
Total assets acquired | ​ | $ | 484,880 | ​ | $ | (4,545) | ​ | $ | (2,835) | ​ | $ | 477,500
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  |
Deposits | ​ | $ | 435,036 | ​ | $ | — | ​ | $ | — | ​ | $ | 435,036
Time deposit premium | ​ |  | — | ​ |  | 888 | ​ | ​ | — | ​ |  | 888
Subordinated debt | ​ | ​ | 2,500 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2,500
Payables and other liabilities | ​ |  | 5,563 | ​ |  | 115 | ​ | ​ | (1,254) | ​ |  | 4,424
Total liabilities assumed | ​ |  | 443,099 | ​ |  | 1,003 | ​ |  | (1,254) | ​ |  | 442,848
Excess of assets acquired over liabilities assumed | ​ | $ | 41,781 | ​ |  |  | ​ | ​ | ​ | ​ |  |
Aggregate fair value adjustments | ​ |  |  | ​ | $ | (5,548) | ​ | $ | (1,581) | ​ |  |
Total identifiable net assets | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 34,652
Consideration transferred: | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  |
Cash | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 9,568
Common stock issued (1,692,168 shares) | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 42,255
Total fair value of consideration transferred | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 51,823
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Goodwill | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | $ | 17,171
(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 purchased credit impaired loans (ASC 310-30) of the acquired loan portfolio at the acquisition date (in thousands):
​ | ​ | ​ | ​
​ |  | September 1, 2021
Accounted for pursuant to ASC 310-30: |  | ​ |
Contractually required principal and interest | ​ | $ | 30,293
Non-accretable differences | ​ |  | 7,609
Cash flows expected to be collected | ​ |  | 22,684
Accretable yield | ​ |  | 3,552
Fair value | ​ | $ | 19,132
​ Fountain Leasing, LLC On May 3, 2021, the Company completed the acquisition of Fountain Leasing, LLC, a Tennessee limited liability company, pursuant to the Purchase Agreement (the “Purchase Agreement”), dated May 2, 2021, by and among the Bank and the members of Fountain Leasing, LLC. Following the closing of the acquisition, on May 4, 2021, the Company changed the name of Fountain Leasing, LLC to Fountain Equipment Finance, LLC (“Fountain”). In connection with the acquisition, the Company acquired $54.1 million of assets and assumed $683 thousand of liabilities. Pursuant to the Purchase Agreement, the Company paid an aggregate amount of consideration to the Fountain members of $14.0 million in cash at closing, and the Company repaid approximately $45.8 million of Fountain’s indebtedness. In addition to the closing consideration, the Purchase Agreement contains a performance-based earnout, pursuant to which the former members of Fountain could be entitled to up to $6.0 million, which is excluded from consideration pursuant to ASC 805, in future cash payments from the Company based on future results of the acquired business over various periods through December 31, 2026. 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 $2.4 million, representing the intangible value of Fountains business and reputation within the markets it served. The goodwill recognized is expected to be deductible for income tax purposes. The Company established an intangible asset related to customer relationships of $2.7 million, amortizing sum-of-the-years digits over 96 months (8 years). The purchased assets and assumed liabilities were recorded at their acquisition date fair values (1) and are summarized in the table below (in thousands).
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | As recorded |  | Fair value | ​ | Subsequent |  | As recorded
​ | ​ | by Fountain | ​ | adjustments | ​ | Adjustments | ​ | by the Company
Assets: |  | ​ |  |  | ​ |  | ​ | ​ | ​ |  | ​ |
Cash & cash equivalents | ​ | $ | 413 | ​ | $ | — | ​ | $ | — | ​ | $ | 413
Leases | ​ |  | 54,945 | ​ |  | (720) | ​ | ​ | — | ​ |  | 54,225
Allowance for lease losses | ​ |  | (1,796) | ​ |  | 1,796 | ​ | ​ | — | ​ |  | —
Customer list intangible | ​ |  | — | ​ |  | 2,658 | ​ | ​ | — | ​ |  | 2,658
Other repossessed assets | ​ |  | 319 | ​ |  | — | ​ | ​ | — | ​ |  | 319
Other assets | ​ |  | 233 | ​ |  | — | ​ | ​ | — | ​ |  | 233
Total assets acquired | ​ | $ | 54,114 | ​ | $ | 3,734 | ​ | $ | — | ​ | $ | 57,848
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  |
Payables and other liabilities | ​ | $ | 683 | ​ | $ | (229) | ​ | $ | — | ​ | $ | 454
Total liabilities assumed | ​ |  | 683 | ​ |  | (229) | ​ |  | — | ​ |  | 454
Excess of assets acquired over liabilities assumed | ​ | $ | 53,431 | ​ |  |  | ​ | ​ | ​ | ​ |  |
Aggregate fair value adjustments | ​ |  |  | ​ | $ | 3,963 | ​ | $ | — | ​ |  |
Total identifiable net assets | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 57,394
Consideration transferred: | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  |
Cash | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 59,794
Total fair value of consideration transferred | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ |  | 59,794
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Goodwill | ​ |  |  | ​ |  |  | ​ | ​ | ​ | ​ | $ | 2,400
(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 purchased credit impaired financing leases (ASC 310-30) of the acquired lease portfolio at the acquisition date (in thousands):
​ | ​ | ​ | ​
​ |  | May 3, 2021
Accounted for pursuant to ASC 310-30: |  | ​ |
Contractually required principal and interest | ​ | $ | 6,018
Non-accretable differences | ​ |  | 447
Cash flows expected to be collected | ​ |  | 5,571
Accretable yield | ​ |  | 649
Fair value | ​ | $ | 4,922
​

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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- References No definition available. + Details
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