SmartFinancial, Inc. (SmartFinancial), parent company of SmartBank, and Cornerstone Bancshares, Inc. (Cornerstone), parent company of Cornerstone Community Bank, this week jointly announced the signing of a definitive agreement to merge, creating a combined company that will operate under the name SmartFinancial, Inc.
While the two holding companies will be combined, the banks will initially remain independent and continue to operate under their respective names in their respective markets. The company plans to merge the banks in the future, combining them under the SmartBank name.
Headquartered in Pigeon Forge, Tenn., SmartBank operates seven branch locations throughout East Tennessee and Northwest Florida. Based in Chattanooga, Tenn., Cornerstone Community Bank currently has five branch locations throughout the Chattanooga area.
On a pro forma basis, based on financial results as of Sept. 30, 2014, the combined holding company would have approximately $945 million in total assets, $790 million in total deposits and $650 million in total loans, with 13 branch locations in the East Tennessee and the Florida Panhandle markets. After the banks are merged, the combined bank is expected to become the twelfth largest bank chartered in Tennessee.
Under the terms of the agreement, each outstanding share of common stock of SmartFinancial will be converted into 4.20 shares of Cornerstone common stock, subject to adjustment based on an anticipated reverse stock split of Cornerstone’s common stock, which is expected to adjust the ratio to 1.05 shares of Cornerstone common stock for each share of SmartFinancial stock. Additionally, each outstanding share of SmartFinancial preferred stock will be converted into a share of Cornerstone preferred stock with similar rights and preferences. Current holders of Cornerstone’s preferred stock will be asked to vote on an amendment to Cornerstone’s charter to allow Cornerstone to redeem its outstanding preferred stock prior to the completion of the merger.
The definitive agreement has been unanimously approved by the boards of directors of SmartFinancial and Cornerstone. The merger is subject to regulatory approvals, approval by both companies’ shareholders, and certain other closing conditions, and is expected to close in the first half of 2015.
The surviving company’s board will include the current seven members of the SmartFinancial board and four current members of the Cornerstone board, under the following leadership structure: Miller Welborn, Chairman; Bill Carroll, Vice-Chairman; and Billy Carroll, President and Chief Executive Officer.
Sources: Cornerstone Bancshares, Inc. and SmartFinancial, Inc.