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SmartFinancial buying Tennessee Bancshares in $31.8M stock deal

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SmartFinancial buying Tennessee Bancshares in $31.8M stock deal

In Tennessee, Knoxville-based SmartFinancial Inc. is acquiring Tennessee Bancshares Inc. of Tullahoma.

Under the deal's terms, each share of Tennessee Bancshares common stock will be exchanged for 0.8065 share of SmartFinancial common stock, valuing the transaction at approximately $31.8 million, based on the buyer's Dec. 11 closing price of $21.79 per share.

SNL calculates that the deal value is 142.4% of book, 153.2% of tangible book and 14.8x earnings, on an aggregate basis. The price is 13.04% of assets, 15.13% of deposits and the tangible book premium-to-core deposits ratio is 8.90%. For comparison, SNL valuations for bank and thrift targets in the Southeast region between Dec. 12, 2016, and Dec. 12, 2017, averaged 158.28% of book, 168.83% of tangible book and had a median of 23.79x last-12-months earnings, on an aggregate basis.

Their merger agreement also provides for a special cash dividend of up to 70 cents per share, or $1.27 million in the aggregate, payable by Tennessee Bancshares to its stockholders before deal completion.

SmartBank, which had $1.13 billion in assets as of Sept. 30, will absorb Southern Community Bank, which had $243.9 million.

Based on data collected by SNL, SmartFinancial will enter Coffee County, Tenn., with one branch to be ranked third with a 13.03% share of approximately $1.03 billion in total market deposits. The company will also enter Rutherford County, Tenn., with one branch to be ranked No. 12 with a 0.83% share of approximately $4.22 billion in total market deposits; will expand in Hamilton County, Tenn., by one branch to be ranked sixth with a 4.25% share of approximately $7.85 billion in total market deposits; and will enter Madison County, Ala., with one branch to be ranked No. 22 with a 0.26% share of approximately $7.07 billion in total market deposits.

The deal is still subject to shareholder and regulatory approvals, but expected to close in the second quarter of 2018. Tennessee Bancshares President and CEO William Yoder will join the acquirer as SmartBank's chief banking officer. Director Clifton Miller will join the boards of both SmartFinancial and SmartBank.

Banks Street Partners LLC and Butler Snow LLP served as SmartFinancial's financial adviser and legal counsel, respectively. For Tennessee Bancshares, it was Olsen Palmer LLC and Waller Lansden Dortch & Davis LLP.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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