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Entegra Bank merges with SmartFinancial

Entegra Bank merges with SmartFinancial

Entegra Bank, which has locations throughout Western North Carolina, will soon merge with SmartFinancial, Inc., the parent company of SmartBank based in Knoxville, Tennessee. 

The merger, an all-stock transaction, will create a $4 billion-asset bank holding company with 47 branches across Tennessee, North Carolina, Alabama, Georgia, South Carolina and Florida, serving a number of key Southeastern growth markets. 

“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, SmartFinancial President & CEO. “This partnership strengthens both organizations in all key areas and presents a compelling value proposition for each of our constituents.”

Entegra had more than a dozen banking locations in Western North Carolina, including Waynesville, Sylva, Franklin, Cashiers, Highlands and Murphy, plus three locations in South Carolina and five locations in Georgia. 

Macon Bank, a regional bank headquartered in Franklin, changed its name to Entegra Bank in 2016 as the company continued to expand outside of Macon County. Around the same time, the new Entegra Bank acquired Old Town Bank in Waynesville. Since opening in 2006, Old Town Bank had prided itself for being a locally governed hometown bank and CEO Charles Umberger promised the acquisition wouldn’t change that. Now it’s merging with an even larger corporation. 

Entegra had approximately $1.7 billion in total assets as of Sept. 30, 2018, while SmartFinancial has about $2.3 billion in total assets following its most recent acquisition of Foothills Bancorp, Inc. that was completed on Nov. 1, 2018. 

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The combined company will be headquartered in Knoxville, but a significant portion of the combined bank’s operations will still be based in Franklin, according to a press release. 

Billy Carroll and Miller Welborn will continue to lead the combined company as President & CEO and Chairman, respectively. Additionally, the combined company is expected to benefit from the integration of key management and directors from Entegra into the SmartFinancial executive team and board of directors. 

Entegra President & CEO Roger D. Plemens is expected to join the combined bank as President of the Carolinas. Entegra Chief Financial Officer David Bright and Chief Operating Officer Ryan Scaggs are expected to assume the same roles with the combined company.

Five Entegra directors are expected to join the pro forma boards of directors of the combined company and the combined bank, each of which would have 17 members upon completion of the merger. 

Additionally, current Entegra directors not joining the SmartFinancial and SmartBank boards will be invited to become members of a newly formed Carolina Advisory Board. SmartFinancial has agreed to make a $1 million contribution to the SmartBank Foundation, a nonprofit charitable organization, upon completion of the transaction, with the allocation of these funds to be directed by recommendation of the Carolina Advisory Board (in consultation with the President of the Carolinas for SmartBank) to charities in the communities served by Entegra.

“We are thrilled to be joining forces with the SmartBank team and to combine these two strong, growing institutions,” Plemens said. “We believe this is going to be an outstanding combination for our shareholders, customers, and employees and the communities we serve.” 

Under the terms of the merger agreement, each share of Entegra common stock outstanding immediately prior to the merger will be converted into the right to receive 1.215 shares of SmartFinancial common stock. 

The transaction is valued at approximately $22.36 per share of Entegra common stock, or approximately $158.2 million in the aggregate, based on the closing price of SmartFinancial’s common stock of $18.40 on Jan. 14, 2019. The transaction is projected to generate more than 20 percent earnings per share accretion in the first full year and tangible book value dilution is expected to be earned back in less than 2.5 years.

SmartBank and Entegra Bank have entered into a separate bank merger agreement providing for the merger of Entegra Bank with and into SmartBank following the merger of SmartFinancial and Entegra. The transaction is expected to close mid-year 2019, subject to customary closing conditions, including the approval of both companies’ shareholders and the receipt of all required regulatory approvals.

SmartFinancial Chairman Miller Welborn added, “The clear common vision of these two management teams and boards of directors has been evident since our first discussion. This combination will result in an exceptional company and present a tremendous amount of new growth opportunities moving forward.”

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