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Kroll affirms SmartFinancial ratings following Entegra deal announcement

Kroll Bond Rating Agency on Jan. 16 affirmed Knoxville, Tenn.-based SmartFinancial Inc.'s ratings following announcement of its proposed merger of equals with Franklin, N.C.-based Entegra Financial Corp.

The company's senior unsecured debt rating and subordinated debt rating were affirmed at BBB and BBB-, respectively. The outlook for the company's long-term ratings is "stable."

Kroll views the proposed transaction as "neutral" to SmartFinancial's long-term ratings and in-line with its strategy of contiguous market expansion.

The rating agency noted that the transaction would add about $1.7 billion in assets to SmartFinancial's balance sheet, with pro forma assets totaling approximately $4 billion. Also, Entegra Financial's low-cost deposit base is expected to moderately drive down SmartFinancial's cost of deposits.

Kroll also expects capital ratios to reflect a stable to improving trend over the medium-term, based on the combined institution's capacity for internal capital generation.