SmartFinancial, Inc. (NasdaqCM:SMBK) entered into an agreement to acquire Sevier County Bancshares, Inc. (OTCPK:SVRH) (“SCB”) from Spence Limited LP and others for $38.2 million on April 13, 2021. SCB shareholders will receive 0.4116 shares of SmartFinancial common stock for each share of SCB common stock currently held, provided that holders of fewer than 20,000 shares of SCB common stock will have the option to receive cash for their shares in an amount to be calculated based on the average trading price of SmartFinancial's common stock prior to the closing of the transaction. Following the merger, Sevier County Bank, a wholly owned subsidiary of SCB, will merge with and into SmartBank, SmartFinancial's banking subsidiary, with SmartBank continuing as the surviving bank. SmartFinancial shareholders will own 89% stake in the combined company and SCB shareholders will own 11% stake in the combined company after close of the transaction. In case of termination of the transaction, SCB will pay SmartFinancial a termination fee equal to $2 million or 5% of transaction value.

Upon completion of the merger, John M. Presley, the Executive Chairman of SCB, will join the boards of both SmartFinancial and SmartBank. The transaction is subject to various customary conditions, including approval of the transaction by shareholders of SCB; the receipt of certain regulatory approvals and approvals of other third parties; the U.S. Securities and Exchange Commission having declared effective SmartFinancial's registration statement; listing of SmartFinancial shares to be issued in connection with the transactions on the NASDAQ; dissenting shares shall be less than 10% of the issued and outstanding shares of SCB Common Stock; and the receipt by each party of a tax opinion to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. The merger agreement has been approved by the boards of directors of SmartFinancial and SCB. As of August 17, 2021, the transaction has been approved by Federal Reserve Board. The transaction is expected to be completed in early third quarter of 2021. The transaction is expected to be completed in the third quarter of 2021. The transaction is expected to be 15% accretive to SmartFinancial's 2022 earnings per share.

Mark Kanaly of Alston & Bird LLP served as legal advisor to SmartFinancial. Performance Trust Capital Partners, LLC served as financial advisor as well as fairness opinion provider, and D. Taylor Tipton of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC served as legal counsel to SCB. SCB paid Performance Trust Capital Partners, LLC retainer fee of $20,000, $80,000 progress fee upon execution of the agreement and $75,000 upon the delivery of its fairness opinion. Upon closing of the transaction, SCB will pay Performance Trust a success fee equal to 1.25% of the merger consideration. less the progress fee and retainer fee.