SmartFinancial returns to M&A with Progressive Savings purchase

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SmartFinancial in Knoxville, Tenn., has agreed to buy Progressive Financial Group in Jamestown, Tenn.

The $2.4 billion-asset SmartFinancial said in a press release Tuesday that it will pay $41.4 million in cash and stock for the $296 million-asset parent of Progressive Savings Bank. The deal, which is expected to close in the first half of 2020, priced Progressive at 124% of its tangible book value.

The acquisition will move SmartFinancial into middle Tennessee. Progressive has six branches, $258 million in deposits and $190 million in loans.

“The Progressive franchise is complementary to our existing Tennessee footprint, adding adjacent markets where we are excited to introduce the SmartBank banking brand,” Billy Carroll, SmartFinancial’s president and CEO, said in the release. “Progressive shares a similar culture … and their talented team will strengthen our market position and product capabilities.”

Ottis Phillips, Progressive’s CEO, will join SmartFinancial’s board.

“We are excited by the prospects of joining a well-respected community bank with strong ties to the state of Tennessee,” Phillips said in the release. “We view SmartFinancial as a natural partner and I truly believe that this will be a win-win for all parties involved.”

It should take SmartFinancial less than three years to earn back any dilution to its tangible book value. The deal should be accretive to SmartFinancial's 2020 earnings.

SmartFinancial expects to incur $4.5 million in merger-related expenses. It plans to cut 30% of Progressive's annual noninterest expenses.

SmartFinancial agreed to buy Entegra Financial in Franklin, N.C., in January as part of a merger of similar-size companies, but First Citizens BancShares in Raleigh, N.C., stepped in with a bigger offer.

Keefe, Bruyette & Woods and Alston & Bird advised SmartFinancial. Olsen Palmer and Baker, Donelson, Bearman, Caldwell & Berkowitz advised Progressive.

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