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Section 1: 10-K/A (10-K/A)

Document

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
 
_________________________________________________________
 
FORM 10-K/A
(Amendment No. 1)
_________________________________________________________
  
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from __________ to __________
 
Commission File Number: 001-37391 
_________________________________________________________
 
403302788_sfinclogomay20144c1.jpg
__________________________________________
(Exact name of registrant as specified in its charter)


Tennessee62-1173944
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
5401 Kingston Pike, Suite 600
Knoxville, Tennessee
37919
(Address of principal executive offices)  (Zip Code)
 
(865) 437-5700
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of Exchange on which Registered
Common Stock, par value $1.00 per shareSMBKThe Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
 


Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the of the Securities Act.
Yes No
 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes No
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes No
 
Indicate by check whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
Yes No
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer 
Accelerated filer
Non-accelerated filer
Smaller reporting company ☒
Emerging Growth Company 
  
If emerging growth company, indicate by check market if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes    No  
 
As of June 30, 2019, the aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates was approximately $273.6 million. As of March 6, 2020, there were 15,337,750 shares outstanding of the registrant’s common stock, $1.00 par value.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 28, 2020, are incorporated by reference in Part III of this Form 10-K.
EXPLANATORY NOTE

SmartFinancial, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”), as filed with the Securities and Exchange Commission on March 12, 2020. The sole purpose of this Amendment is to:

a.refile Exhibit 32 that was originally filed with the Form 10-K to (a) correct a typographical error within the exhibit that resulted in the exhibit inadvertently referring to C. Bryan Johnson, rather than Ronald J. Gorczynski, as the Executive Vice President and Chief Financial Officer of the Company, and (b) correct a reference in the exhibit to the year ended December 31, 2018 that should have instead referred to the year ended December 31, 2019; and
b.refile Exhibit 21.1 to include Rains Agency Inc., which the Company acquired as an indirect subsidiary on March 1, 2020.

This Amendment speaks as of the original filing date, does not reflect events occurring after the filing of the Form 10-K and does not modify or update those disclosures that may be affected by subsequent events, and no other changes are being made to any other disclosure contained in the Form 10-K.

This Amendment is an exhibit-only filing, and except for the change to Exhibit 21.1 and Exhibit 32 described above, this Amendment does not otherwise update any exhibits as originally filed or previously amended. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by the Company’s principal executive officer and principal financial officer are filed herewith as exhibits to this Amendment pursuant to Rule 13a-14(a) of the Exchange Act. The Company is not including additional certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as no financial statements are being filed with this Amendment.



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 
The following documents are filed as part of this report:
(1) Financial Statements
  
 The following report and consolidated financial statements of SmartFinancial and Subsidiary are included in Item 8:
  
 Report of Independent Registered Public Accounting Firms
 Consolidated Balance Sheets as of December 31, 2019 and 2018
 Consolidated Statements of Income for the years ended December 31, 2019 and 2018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019 and 2018
 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2019 and 2018
 Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018
 Notes to Consolidated Financial Statements
  
(2) Financial Statement Schedules:
  
 Schedule II: Valuation and Qualifying Accounts
  
 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
  
(3) The following documents are filed, furnished or incorporated by reference as exhibits to this report:

Exhibit Index
Exhibit No. Description Location
Agreement and Plan of Merger, dated as of May 22, 2017, by and among SmartFinancial, Inc., SmartBank, Capstone Bancshares, Inc. and Capstone Bank†
Incorporated by reference to Exhibit 2.1 to Form 8-K filed November 7, 2017

Agreement and Plan of Merger, dated as of December 12, 2017, by and among SmartFinancial, Inc., Tennessee Bancshares, Inc., and Southern Community Bank†

Incorporated by reference to Exhibit 2.1 to Form 8-K filed December 13, 2017

Agreement and Plan of Merger, dated as of June 27, 2018, by and among SmartFinancial, Inc., Foothills Bancorp, Inc., and Foothills Bank & Trust†

Incorporated by reference to Exhibit 2.1 to Form 8-K filed June 27, 2018

     
Agreement and Plan of Merger, dated as of October 29, 2019, by and between SmartFinancial, Inc. and Progressive Financial Group Inc.†Incorporated by reference to Exhibit 2.1 to Form 8-K filed October 30, 2019
 
Second Amended and Restated Charter of SmartFinancial, Inc.

 
Incorporated by reference to Exhibit 3.3 to Form 8-K filed September 2, 2015



     
 
Second Amended and Restated Bylaws of SmartFinancial, Inc.

 
Incorporated by reference to Exhibit 3.1 to Form 8-K filed October 26, 2015

     
 The right of securities holders are defined in the Charter and Bylaws provided in exhibits 3.1 and 3.2  
     



 Specimen Common Stock Certificate 
Incorporated by reference to Exhibit 4.2 to Form 10-K filed March 30, 2016

Form of Fixed-to-Floating Rate Subordinated Note due October 2, 2028

Incorporated by reference to Exhibit 4.1 to Form 8-K filed October 1, 2018
     
10.1**
 SmartFinancial, Inc. 2015 Stock Incentive Plan Incorporated by reference to Exhibit H to the Form S-4 filed April 16, 2015
     
 Form of 2015 Stock Incentive Agreement Incorporated by reference to Exhibit 10.2 to From 10-K filed March 30, 2016
     
 SmartFinancial, Inc. 2010 Incentive Plan  Incorporated by reference to Exhibit 10.6 to Form 8-K filed September 2, 2015
     
 Form of Incentive Stock Option Certificate under SmartFinancial, Inc. 2010 Incentive Plan Incorporated by reference to Exhibit 10.7 to Form 8-K filed September 2, 2015
SmartBank Stock Option Plan
Incorporated by reference to Exhibit 10.5 to Form 8-K filed September 2, 2015

Form of Management Incentive Stock Option Agreement under SmartBank Stock Option Plan

Incorporated by reference to Exhibit 10.8 to Form 8-K filed September 2, 2015
     
 Employment Agreement, dated as of February 1, 2015, by and among William Y. Carroll, Jr., SmartFinancial, Inc. and SmartBank Incorporated by reference to Exhibit 10.2 to Form 8-K filed September 2, 2015
     
 Employment Agreement, dated as of February 1, 2015, by and among William Y. Carroll, Sr., SmartFinancial, Inc. and SmartBank Incorporated by reference to Exhibit 10.3 to Form 8-K filed September 2, 2015
     
 Employment Agreement, dated as of April 15, 2015, by and among C. Bryan Johnson, SmartFinancial, Inc. and SmartBank Incorporated by reference to Exhibit 10.4 to Form 8-K filed September 2, 2015
     
 
Employment Agreement with Gary W. Petty, Jr. dated as of December 5, 2014, by and between Cornerstone Bancshares, Inc., Cornerstone Community Bank, and Gary W. Petty, Jr.

 
Incorporated by reference to Exhibit 10.3 to Form 8-K filed December 10, 2014

First Amendment to Employment Agreement by and among Gary W. Petty, Jr., SmartFinancial, Inc. and Cornerstone Community Bank dated December 8, 2015

Incorporated by reference to Exhibit 10.2 to Form 8-K filed December 9, 2015

    
 
Form of Subscription Agreement for 2015 Equity Financing

 
Incorporated by reference to Exhibit 10.1 to Form 8-K filed August 20, 2015

     
 
Form of Registration Rights Agreement for 2015 Equity Financing


 
Incorporated by reference to Exhibit 10.2 to Form 8-K filed August 20, 2015

     



 
Employment Agreement with Nathaniel F. Hughes, dated as of December 5, 2014, by and between Cornerstone Bancshares, Inc. and Nathaniel F. Hughes

 
Incorporated by reference to Exhibit 10.2 to Form 8-K filed December 10, 2014

     
 
Cornerstone Bancshares, Inc. 2002 Long-Term Incentive Plan

 
Incorporated by reference to Exhibit 99.1 to Form S-8 filed on March 5, 2004




     
 Form of Unqualified Stock Option Award Agreement under 2002 Long-Term Incentive Plan
 
Incorporated by reference to Exhibit 10.22 to Form 10-K filed March 30, 2016

     
 
Form of Stock Appreciation Rights Agreement

 
Incorporated by reference to Exhibit 10.1 to Form 8-K filed August 8, 2017

     
 
Form of Restricted Stock Award Agreement

 
Incorporated by reference to Exhibit 10.2 to Form 8-K filed August 8, 2017

Employment Agreement, dated as of February 1, 2015, by and among Rhett Jordan, SmartFinancial, Inc. and SmartBank

Incorporated by Reference to Exhibit 10.21 to Form 10-K filed March 16, 2018


Employment Agreement, dated as of February 1, 2015, by and among Greg L. Davis and SmartBank

Incorporated by Reference to Exhibit 10.21 to Form 10-K filed March 16, 2018


Employment Agreement, dated as of May 22, 2017, by and between SmartBank and Robert Kuhn

Incorporated by reference to Exhibit 10.1 to Form 10-Q filed November 7, 2017

Capstone Bancshares, Inc. 2008 Long-Term Equity Incentive Plan

Incorporated by reference to Exhibit 10.2 to Form 10-Q filed November 7, 2017

Form of Award Agreement under Capstone Bancshares, Inc. 2008 Long-Term Incentive Plan
Incorporated by reference to Exhibit 10.3 to Form 8-K filed November 7, 2017

Salary Continuation Agreement, dated August 11, 2010, by and between Capstone Bank and Robert W. Kuhn

Incorporated by reference to Exhibit 10.4 to Form 8-K filed November 7, 2017

 Loan Agreement, dated as of October 31, 2017, by and between SmartFinancial, Inc. and CapStar Bank 
Incorporated by reference to Exhibit 2.2 to Form 10-Q filed November, 14, 2017

    
 
Stock Pledge and Security Agreement, dated as of October 31, 2017, by and between SmartFinancial, Inc. and CapStar Bank

 
Incorporated by reference to Exhibit 2.3 to Form 10-Q filed November, 14, 2017

   
 
Line of Credit Note, dated as of October 31, 2017, executed by SmartFinancial, Inc. in favor of CapStar Bank

 
Incorporated by reference to Exhibit 2.4 to Form 10-Q filed November, 14, 2017

Form of Subordinated Note Purchase Agreement dated September 28, 2018, for SmartFinancial, Inc. Fixed-to-Floating Rate Subordinate Notes due October 2, 2028

Incorporated by reference to Exhibit 10.1 to Form 8-K filed October 1, 2018




Letter to the Securities and Exchange Commission from Mauldin & Jenkins, LLC

Incorporated by reference to Exhibit 16.1 to Form 8-K filed March 27, 2018

SmartFinancial, Inc. List of SubsidiariesFiled herewith
     
 Consent of Dixon Hughes Goodman LLP Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
 Certification of Principal Executive Officer Filed herewith
     
 Certification of Principal Financial Officer Filed herewith
     
 Section 906 certifications of Principal Executive Officer and Principal Financial Officer Filed herewith
     
101.INS* XBRL Instance Document Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
     
101.SCH* XBRL Taxonomy Extension Schema Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
     
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
     
101.DEF* XBRL Taxonomy Extension Definition Linkbase Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
     
101.LAB* XBRL Taxonomy Extension Label Linkbase Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
     
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 12, 2020.
 


† Schedules and exhibits to which have been omitted pursuant to Items 601(b)(2) of Regulations S-K. SmartFinancial agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission.

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections. 

** Indicates management contract or compensatory plan or arrangement




SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  SMARTFINANCIAL, INC. 
    
Date: March 13, 2020By:/s/  William Y. Carroll, Jr. 
  William Y. Carroll, Jr. 
  President and Chief Executive Officer and Director 
  (principal executive officer) 
 
 By:/s/  Ron Gorczynski 
  Ron Gorczynski 
  Executive Vice President and Chief Financial Officer 
  (principal financial officer and accounting officer) 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 

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Section 2: EX-21.1 (EX-21.1)

Document

EXHIBIT 21.1

SmartFinancial, Inc.

List of Subsidiaries

Name of Subsidiary        State of Incorporation 

SmartBank          Tennessee
        Smart Investments Management       Tennessee
        Smartholdings I, LLC        Tennessee
        Smartholdings II, LLC        Tennessee
        Rains Agency Inc.        Tennessee



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Section 3: EX-31.1 (EX-31.1)

Document

EXHIBIT 31.1
 
CERTIFICATIONS
 
I, William Y. (Billy) Carroll, Jr., certify that:

1. I have reviewed this Amendment No.1 to Annual Report on Form 10-K of SmartFinancial, Inc. (the “Issuer”) for the fiscal year ended December 31, 2019.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer as of, and for, the periods presented in this period report.

4. The Issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Issuer and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Issuer’s internal control over financial reporting that occurred during the Issuer’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting.

5. The Issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Issuer’s auditors and the audit committee of Issuer’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Issuer’s internal control over financial reporting.

Date: March 13, 2020
/s/ William Y. Carroll, Jr.
William Y. Carroll Jr.
President and Chief Executive Officer and Director
(principle executive officer)

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Section 4: EX-31.2 (EX-31.2)

Document

EXHIBIT 31.2
 
CERTIFICATIONS
 
I, Ronald J. Gorczynski, certify that:

1. I have reviewed this Amendment No.1 to Annual Report on Form 10-K of SmartFinancial, Inc. (the “Issuer”) for the fiscal year ended December 31, 2019.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer as of, and for, the periods presented in this period report.

4. The Issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Issuer and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Issuer’s internal control over financial reporting that occurred during the Issuer’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting.

5. The Issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Issuer’s auditors and the audit committee of Issuer’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Issuer’s internal control over financial reporting.

Date: March 13, 2020
/s/ Ronald J. Gorczynski
Ronald J. Gorczynski
Executive Vice President and Chief Financial Officer
(principle financial and accounting officer)

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Section 5: EX-32 (EX-32)

Document

EXHIBIT 32
 
CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
 
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
 
In connection with the Annual Report of SmartFinancial, Inc., a Tennessee corporation (the “Company”), on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), each of William Y. Carroll, Jr., President & Chief Executive Officer of the Company, and Ronald J. Gorczynski, Executive Vice President and Chief Financial Officer of the Company, do hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 / s/  William Y. Carroll, Jr.
 William Y. Carroll, Jr.
 President & Chief Executive Officer & Director
 (principal executive officer)
 Date: March 12, 2020
 
 / s/  Ronald J. Gorczynski
 Ronald J. Gorczynski
 Executive Vice President and Chief Financial Officer
 (principal financial officer and accounting officer)
 Date: March 12, 2020
 
[A signed original of this written statement required by Section 906 has been provided to SmartFinancial, Inc. and will be retained by SmartFinancial, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.]


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