SmartFinancial, Inc. (NasdaqCM:SMBK) signed a definitive agreement to acquire Entegra Financial Corp. (NasdaqGM:ENFC) for approximately $150 million in a merger of equals transaction on January 15, 2019. Under the terms of the agreement, each share of Entegra common stock outstanding immediately prior to the merger will be converted into the right to receive 1.215 shares of SmartFinancial's common stock. Outstanding options to purchase shares of Entegra common stock will be converted into options to purchase shares of SmartFinancial's common stock, with the exercise price of and number of shares underlying each option to be adjusted to reflect the exchange ratio of 1.215. In addition to the stated merger consideration, Entegra shareholders will receive one non-transferrable contingent value right ("CVR") for each share of Entegra common stock held immediately prior to the merger in the event that a certain ongoing dispute between Entegra and certain unrelated third-parties has not been resolved, and the proceeds, if any, from the resolution of the dispute have not been paid out to Entegra's shareholders, prior to the merger in accordance with the terms of the merger agreement. The CVRs, which will be subject to a separate agreement provided for by the merger agreement, will provide the holders thereof the opportunity, for a limited period of time after the merger, to participate in the after-tax net proceeds, if any, obtained as a result of the resolution of the dispute. Further, SmartFinancial's shareholders will own 62% of the surviving company and Entegra shareholders will get the other 38% share.

On completion, Entegra will merge with and into SmartFinancial and Entegra Bank will merge with and into SmartBank. Entegra will ultimately adopt the SmartBank name. In case of termination, a termination fee of $6.4 million will be payable by either of Entegra or SmartFinancial. Upon completion, key management and directors from Entegra are expected to join the SmartFinancial's executive team and Board of Directors. Five directors of Entegra and twelve directors of SmartFinancial will to join the pro forma Boards of Directors of the combined company and the combined bank, each of which would have 17 members upon completion of the merger. Additionally, current Entegra's directors not joining SmartFinancial's and SmartBank's Boards will be invited to become members of a newly formed Carolina Advisory Board. Billy Carroll will continue to lead the combined company as President and Chief Executive Officer and Miller Welborn will continue to lead the combined company as Chairman. Entegra's President and Chief Executive Officer, Roger D. Plemens, is expected to join the combined bank as President of the Carolinas. SmartFinancial intends not to renew the employment agreement of C. Bryan Johnson, Chief Financial Officer of SmartFinancial and SmartBank, which will expire effective April 15, 2019. Entegra's Chief Financial Officer, David A. Bright, and Chief Operating Officer, Ryan M. Scaggs, are expected to assume the same roles with the combined company. Greg Davis of SmartFinancial will become Chief Lending Officer of the combined company, Rhett Jordan of SmartFinancial will become Chief Credit Officer of the combined company, Gray Petty of SmartFinancial will become Chief Risk Officer of the combined company, Bill Yoder of SmartFinancial will become Chief Banking Officer of the combined company, Ron Gorczynski of SmartFinancial will become Chief Administrative Officer of the combined company, and Diane Short of SmartFinancial will become Chief HR Officer of the combined company. The combined company will be headquartered in Knoxville, Tennessee, with a significant portion of the combined bank's operations to be based in Franklin, North Carolina.

The transaction is subject to customary closing conditions, including the approval of the shareholders of Entegra and SmartFinancial, the receipt of all required regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System, the Tennessee Department of Financial Institutions, and the North Carolina Office of the Commissioner of Banks, effectiveness of the registration statement on form S-4 for SmartFinancial's common stock to be issued in connection with the merger, receipt by SmartFinancial and Entegra of an opinion from its counsel 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, and authorization for listing on the Nasdaq Capital Market of the shares of SmartFinancial's common stock to be issued in the merger. As of January 15, 2019, the transaction has been approved by the Board of Directors of both Entegra and SmartFinancial. Certain Entegra's Directors and Executive Officers entered into voting agreements with SmartFinancial to vote their shares of Entegra's common stock in favor of the transaction. The transaction is expected to close in mid-year 2019. The transaction is projected to generate more than 20% earnings per share accretion in year 2020, cash IRR of more than 30% and tangible book value dilution is expected to be earned back in less than 2.5 years.

Banks Street Partners, LLC acted as financial advisor while Adam G. Smith of Butler Snow LLP acted as legal counsel to SmartFinancial. BSP Securities, LLC acted as fairness opinion provider for the Board of Directors of SmartFinancial. Scott M. Clark of Sandler O'Neill + Partners, L.P. acted as financial advisor and fairness opinion provider while Peter Weinstock and Eric Markus of Hunton Andrews Kurth LLP acted as legal counsel to Entegra.

SmartFinancial, Inc. (NasdaqCM:SMBK) cancelled the acquisition of Entegra Financial Corp. (NasdaqGM:ENFC) in a merger of equals transaction on April 23, 2019. Entegra terminated the transaction in order to enter into a definitive merger agreement with First Citizens BancShares, Inc. Pursuant to the terms of the agreement, SmartFinancial has received a termination fee of $6.4 million, which was paid to SmartFinancial by First Citizens, on behalf of Entegra, on April 23, 2019. In connection with the termination, SmartFinancial and SmartBank entered into a termination of employment agreement with each of Bright and Scaggs formally terminating the employment agreements. Similarly, on April 23, 2019, SmartBank entered into a termination of employment agreement with Roger D. Plemens, terminating the employment agreement executed by SmartBank and Mr. Plemens on January 15, 2019, which was to be effective—and provided for Mr. Plemens to serve as President of the Carolinas of SmartBank—following the consummation of the proposed merger.