Item 2.01 | | Completion of Acquisition or Disposition of Assets |
On September 1, 2021 (the “Effective Date”), SmartFinancial, Inc., a Tennessee corporation (“SmartFinancial”), completed its previously announced 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”), by and between SmartFinancial and SCB. On the Effective Date, SCB merged with and into SmartFinancial (the “Merger”), with SmartFinancial continuing as the surviving corporation. Immediately following the Merger, Sevier County Bank, a Tennessee-chartered commercial bank and wholly owned subsidiary of SCB, merged with and into SmartBank, a Tennessee-chartered commercial bank and wholly owned subsidiary of SmartFinancial, with SmartBank continuing as the surviving banking corporation.
Pursuant to the Merger Agreement, at the effective time of the Merger, SCB shareholders are 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 SmartFinancial 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.
Measured pursuant to the Merger Agreement, the total value of all consideration equals approximately $44 million. Depending on the aggregate mix of the Per Share Cash Consideration and the Per Share Stock Consideration elections made by the SCB shareholders holding fewer than 20,000 shares of SCB common stock, SmartFinancial expects to issue up to 1,797,241 shares of SmartFinancial common stock and pay up to approximately $4.5 million in respect of shares of SCB common stock as consideration for the Merger. SmartFinancial will not issue fractional shares of its common stock in connection with the Merger, but will instead pay cash in lieu of fractional shares based on the average closing price of SmartFinancial common stock on the Nasdaq Capital Market for the 10 consecutive trading days ending on and including August 24, 2021 (calculated as $24.71).
Shares of SmartFinancial common stock outstanding prior to the Merger remained outstanding and were not affected by the Merger.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to SmartFinancial’s current report on Form 8-K filed on April 14, 2021, and is incorporated herein by reference.
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Item 5.02 | | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 26, 2021, the Board of Directors of SmartFinancial, acting pursuant to the authority granted to it by SmartFinancial’s Bylaws, increased the size of the Board of Directors from thirteen to fourteen directors, effective as of the closing of the Merger. Also, on August 26, 2021, the Board of Directors appointed John Presley as a director of SmartFinancial, effective as of the closing of the Merger.
John Presley, age 61, is the former Executive Chairman of SCB and Sevier County Bank. He served on the boards of directors of SCB and Sevier County Bank from May of 2019 until the Merger, and served as the Executive Chairman of SCB and Sevier County Bank from May 2019 until the Merger, at which time his employment terminated. Mr. Presley has a long history in the Banking Industry, including 20 plus years with Memphis, Tennessee-based National Commerce Financial where he held several positions, including Chief Financial Officer. He began his career with Ernst & Young (Memphis) and has also served in executive and board positions with community banks in Virginia, Wisconsin and Georgia. Mr. Presley graduated from Rhodes College in Memphis, Tennessee, with a bachelor’s degree in Business Administration and Economics.
Mr. Presley will receive the same compensation as the other directors of SmartFinancial.
Mr. Presley was party to an employment agreement with SCB and Sevier County Bank, pursuant to which he will receive a lump sum severance payment of $1,052,121 in connection with his termination of employment, as well as reimbursement
