Toggle SGML Header (+)


Section 1: 424B3 (424B3)

TABLE OF CONTENTS

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-227154



PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS OF
FOOTHILLS BANCORP, INC.
AND PROSPECTUS OF SMARTFINANCIAL, INC.

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Shareholder:

On June 27, 2018, SmartFinancial, Inc., or SmartFinancial, and Foothills Bancorp, Inc., or Foothills Bancorp, entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) that provides for the combination of the two companies. Under the merger agreement, Foothills Bancorp will merge with and into SmartFinancial, with SmartFinancial to be the surviving corporation (which we refer to as the “merger”). Immediately following the merger, Foothills Bank & Trust, or Foothills Bank, the wholly owned bank subsidiary of Foothills Bancorp, will merge with and into SmartBank, the wholly owned bank subsidiary of SmartFinancial, with SmartBank as the surviving bank (which we refer to as the “bank merger”).

In connection with the merger, each share of Foothills Bancorp common stock (except for certain excluded shares and any dissenting shares) will be converted into the right to receive: (i) 0.666 shares (which we refer to as the “exchange ratio”) of SmartFinancial common stock (which we refer to as the “stock consideration”), and (ii) $1.75 in cash (which we refer to as the “cash consideration”, and together with the stock consideration, the “merger consideration”). Based on the exchange ratio and the number of shares of Foothills Bancorp common stock outstanding, SmartFinancial expects to issue 1,183,292 shares of SmartFinancial common stock as stock consideration. Although the exchange ratio is fixed, the market value of the stock consideration will fluctuate with the market price of SmartFinancial common stock and will not be known until the merger is consummated. Based on the closing price of SmartFinancial’s common stock on the Nasdaq Capital Market of $25.82 on June 27, 2018, the last trading day before public announcement of the merger, the merger consideration represented approximately $18.95 in value for each share of Foothills Bancorp common stock and approximately $33.72 million in aggregate consideration. Based on the closing price of SmartFinancial’s common stock of $25.14, on September 6, 2018, the last practicable date before the date of this document, the merger consideration represented approximately $18.49 in value for each share of Foothills Bancorp common stock and approximately $32.86 million in the aggregate. We urge you to obtain current market quotations for SmartFinancial common stock, which trades under the symbol “SMBK”.

In addition, at the effective time of the merger, any unvested options to purchase shares of Foothills Bancorp common stock will accelerate and each outstanding and unexercised stock option will be cancelled in exchange for the right to receive a single lump sum cash payment equal to the product obtained by multiplying (i) the number of shares of Foothills Bancorp common stock subject to such option, by (ii) $17.50 less the exercise price per share of such option. Holders of options to purchase an aggregate 394,500 shares of Foothills Bancorp common stock will receive cash payments totaling approximately $2.96 million in connection with the cancellation of their stock option agreements.

Foothills Bancorp will hold a special meeting of shareholders in connection with the merger. At the special meeting, Foothills Bancorp shareholders will be asked to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger and the bank merger, as described in this proxy statement/prospectus. Approval and adoption of the merger agreement requires the affirmative vote of the holders of a majority of all the votes entitled to be cast by the holders of outstanding shares of Foothills Bancorp common stock.

The special meeting of Foothills Bancorp shareholders will be held at the main office of Foothills Bank which is located at 214 Keller Lane, Maryville, Tennessee 37801 on October 18, 2018, at 5:30 p.m. local time.

Foothills Bancorp’s board of directors recommends that Foothills Bancorp shareholders vote “FOR” the merger proposal and “FOR” other matters to be considered at the special meeting. Your vote is important. Whether or not you expect to attend the special meeting of Foothills Bancorp shareholders, the details of which are described in this proxy statement/prospectus, please follow the instructions on the enclosed proxy card to vote your shares as soon as possible so that your shares may be represented at the special meeting.

This proxy statement/prospectus describes the special meeting of Foothills Bancorp shareholders, the merger, the documents related to the merger, and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors,” beginning on page 17, for a discussion of the risks related to the proposed merger. You can also obtain information about SmartFinancial from documents that it has filed or will file prior to the special meeting with the Securities and Exchange Commission (which we refer to as the “SEC”).

SmartFinancial and Foothills Bancorp are excited about the opportunities the merger brings to the shareholders of both companies. Thank you for your consideration and continued support.

Sincerely,



W. Miller Welborn
Samuel D. Evans, M.D.
Chairman
Chairman
SmartFinancial, Inc.
Foothills Bancorp, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or passed upon the adequacy or completeness of this proxy statement/prospectus. Any representation to the contrary is a criminal offense. The securities to be issued in connection with the merger are not savings or deposit accounts or other obligations of any bank or nonbank subsidiary of any of the parties, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This proxy statement/prospectus is dated September 15, 2018,
and it is first being mailed or otherwise delivered to shareholders of Foothills Bancorp on or about September 19, 2018.

TABLE OF CONTENTS

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON OCTOBER 18, 2018

To the shareholders of Foothills Bancorp, Inc.:

Notice is hereby given that Foothills Bancorp, Inc., or Foothills Bancorp, will hold a special meeting of shareholders at the main office of Foothills Bank, which is located at 214 Keller Lane, Maryville, Tennessee 37801, on October 18, 2018, at 5:30 p.m. local time (which we refer to as the “special meeting”), to consider and vote upon the following matters:

a proposal to approve and adopt the Agreement and Plan of Merger, dated as of June 27, 2018, by and among SmartFinancial, Inc., or SmartFinancial, Foothills Bancorp, and Foothills Bank & Trust, as such agreement may be amended from time to time, a copy of which is attached to the enclosed proxy statement/prospectus as Appendix A (which we refer to as the “merger proposal”); and
a proposal to approve one or more adjournments or postponements of the special meeting, if necessary or appropriate, including adjournments or postponements to permit further solicitation of proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”).

The Foothills Bancorp board of directors has fixed the close of business on September 14, 2018 as the record date for the special meeting. Only Foothills Bancorp shareholders of record at that time are entitled to notice of, and only holders of Foothills Bancorp common stock of record at that time are entitled to vote at, the special meeting, or any adjournment or postponement of the special meeting. Approval of the merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of outstanding shares of Foothills Bancorp common stock. Approval of the adjournment proposal requires that the votes cast in favor of the proposal at the special meeting exceed the votes cast opposing the proposal at the special meeting.

The Foothills Bancorp board of directors has approved and adopted the merger agreement, has determined that the transactions contemplated by the merger agreement, including the merger and the bank merger, on the terms and conditions set forth in the merger agreement, are in the best interests of Foothills Bancorp and its shareholders and recommends that Foothills Bancorp shareholders vote “FOR” the merger proposal and “FOR” the adjournment proposal.

Your vote is very important. We cannot complete the merger unless Foothills Bancorp’s shareholders approve the merger proposal.

Each copy of the proxy statement/prospectus mailed to Foothills Bancorp shareholders is accompanied by a proxy card with instructions for voting. Regardless of whether you plan to attend the special meeting, please vote as soon as possible by accessing the internet site listed on the Foothills Bank proxy card or by submitting your proxy card by mail. If you hold stock in your name as a shareholder of record of Foothills Bancorp and are voting by mail, please complete, sign, date, and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank, broker, or other nominee, please follow the instructions on the voting instruction card furnished by the record holder. Voting by either method will not prevent you from voting in person at the special meeting, but it will help to secure a quorum and avoid added solicitation costs. Any shareholder of record of Foothills Bancorp entitled to vote at the special meeting who is present at the special meeting may vote in person instead of by proxy. If you hold your stock in “street name” through a bank, broker, or other nominee, you may not vote shares held in street name by returning a proxy card directly to Foothills Bancorp or by voting in person at the special meeting, unless you provide a “legal proxy,” which you must obtain from your bank, broker, or other nominee. In any event, a proxy may be revoked at any time before the special meeting in the manner described in the accompanying proxy statement/prospectus. Information and the deadline for voting through the internet are set forth in the enclosed proxy card instructions.

As required by Chapter 23 of the Tennessee Business Corporation Act, Foothills Bancorp is notifying all shareholders entitled to vote on the merger agreement that you are or may be entitled to assert dissenters’ rights under the dissenters’ rights chapter of the Tennessee Business Corporation Act. A copy of the dissenters’ rights chapter is included with the enclosed proxy statement/prospectus as Appendix B. See also The Merger Dissenters’ Rights” beginning on page 50 in the enclosed proxy statement/prospectus for more information.

TABLE OF CONTENTS

The enclosed proxy statement/prospectus provides a detailed description of the special meeting, the merger, the documents related to the merger, the proposals to be voted on at the special meeting, and other related matters. We urge you to read the proxy statement/prospectus, including all financial statements and appendices, carefully and in their entirety.

 
BY ORDER OF THE BOARD OF DIRECTORS,
 

 
Samuel D. Evans, M.D.
 
Chairman
 
Foothills Bancorp, Inc.
September 15, 2018
 

TABLE OF CONTENTS

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appendix A:      Agreement and Plan of Merger
Appendix B:      Tennessee Business Corporation Act Dissenters’ Rights
Appendix C:      Opinion of Monroe Financial Partners, Inc.

ii

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MERGER

The following are some questions that you may have regarding the merger, the merger agreement, and the special meeting, along with brief answers to those questions. We urge you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger, the merger agreement, and the special meeting. Additional important information is also contained in the financial statements and appendices included with this proxy statement/prospectus.

Q: What is the merger?
A: On June 27, 2018, SmartFinancial, Foothills Bancorp, and Foothills Bank entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”). Under the merger agreement, Foothills Bancorp will merge into SmartFinancial subject to and upon the terms and conditions set forth in the merger agreement, with SmartFinancial being the surviving corporation (which we refer to as the “merger”). A copy of the merger agreement is included in this proxy statement/prospectus as Appendix A.

Immediately following the merger, Foothills Bank will merge with and into SmartBank subject to and upon the terms and conditions set forth in an agreement and plan of merger entered into by Foothills Bank and SmartBank, with SmartBank as the surviving bank (which we refer to as the “bank merger”).

At the effective time of the merger (which we refer to as the “effective time”), each holder of Foothills Bancorp common stock, no par value (which we refer to as “Foothills Bancorp common stock”), will receive, for each share of Foothills Bancorp common stock held immediately prior to the merger: (i) 0.666 shares of SmartFinancial common stock, par value $1.00 per share (which we refer to as “SmartFinancial common stock”) (which we refer to as the “stock consideration”), and (ii) $1.75 in cash (which we refer to as the “cash consideration”, and together with the stock consideration, the “merger consideration”).

Based on the number of shares of SmartFinancial common stock and Foothills Bancorp common stock outstanding as of September 6, 2018, the last practicable date before the date of this proxy statement/prospectus, we expect that current Foothills Bancorp shareholders will hold, in the aggregate, approximately 8.5% of the outstanding shares of SmartFinancial common stock immediately following the closing of the merger.

The merger cannot be completed unless, among other things, Foothills Bancorp shareholders approve the Foothills Bancorp proposal to approve and adopt the merger agreement.

Q: Why is Foothills Bancorp merging with SmartFinancial?
A: Foothills Bancorp is merging with SmartFinancial because the board of directors for Foothills Bancorp believes, among other things, that the merger will provide shareholders of Foothills Bancorp with substantial benefits and will enable the combined company to better serve its customers. A detailed discussion of the background of and reasons for the proposed merger is contained under the headings “The Merger — Background of the Merger” beginning on page 36 and “The Merger — Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors” beginning on page 40.
Q: Why am I receiving this proxy statement/prospectus?
A: Foothills Bancorp has called a special meeting of its shareholders (which we refer to as the “special meeting”) to approve and adopt the merger agreement. This document serves as a proxy statement for the special meeting and describes the proposals to be presented at the special meeting. This document is also a prospectus that is being delivered to Foothills Bancorp shareholders because SmartFinancial is offering shares of its common stock to Foothills Bancorp shareholders in connection with the merger.

This proxy statement/prospectus contains important information about the merger, the merger agreement, and the other proposal being voted on at the special meeting, and important information to consider in connection with an investment in SmartFinancial common stock. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares voted by proxy without having to attend the special meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

1

TABLE OF CONTENTS

Q: On what am I being asked to vote?
A: Foothills Bancorp is soliciting proxies from its shareholders with respect to the following proposals:
a proposal to approve and adopt the merger agreement (which we refer to as the “merger proposal”); and
a proposal to approve one or more adjournments or postponements of the special meeting, if necessary or appropriate, including adjournments or postponements to permit further solicitation of proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”).
Q: How does the Foothills Bancorp board recommend that I vote?
A: The Foothills Bancorp board of directors recommends that Foothills Bancorp shareholders vote “FOR” approval of the merger proposal and “FOR” approval of the adjournment proposal.
Q: Are there any voting agreements in relation to the merger?
A: The directors of Foothills Bancorp, who collectively beneficially own and have the power to vote approximately 20.0% of the Foothills Bancorp common stock, have entered into agreements with SmartFinancial in which they have agreed, among other things, to vote their shares of Foothills Bancorp common stock in favor of the merger proposal and the adjournment proposal.
Q: What will Foothills Bancorp shareholders receive in the merger?
A: At the effective time of the merger, holders of Foothills Bancorp common stock will become entitled to receive (i) 0.666 shares (which we refer to as the “exchange ratio”) of SmartFinancial common stock, and (ii) $1.75 in cash for each share of Foothills Bancorp common stock held immediately prior to the merger. SmartFinancial will not issue any fractional shares of its common stock in the merger and will instead pay to each former shareholder of Foothills Bancorp who otherwise would be entitled to receive such fractional share an amount in cash, without interest, (rounded to the nearest cent) determined by multiplying (i) the volume weighted average of the closing prices of SmartFinancial common stock on the Nasdaq Capital Market (or such other securities market or stock exchange on which the SmartFinancial common stock then principally trades) for the ten consecutive trading days ending on and including the trading day immediately preceding the closing date of the merger by (ii) the fraction of a share (rounded to the nearest thousandth) of SmartFinancial common stock that such shareholder would otherwise be entitled to receive pursuant to the merger agreement.
Q: Will the value of the merger consideration change between the date of this proxy statement/prospectus and the effective time of the merger?
A: Because the number of shares of SmartFinancial common stock to be received by Foothills Bancorp shareholders as stock consideration is fixed, the value of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for SmartFinancial common stock. Any fluctuation in the market price of SmartFinancial common stock after the date of this proxy statement/prospectus will change the value of the stock consideration.
Q: What happens if I sell my shares before the special meeting?
A: The record date for the special meeting is earlier than the date of the special meeting and the effective time. If you transfer your shares of Foothills Bancorp common stock after the record date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting, but you will transfer the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, you must hold your shares at the effective time.
Q: Will the shares of SmartFinancial common stock that I receive as stock consideration in the merger be freely tradable?
A: Yes, in most cases. The shares of SmartFinancial common stock to be issued as stock consideration will be registered under the Securities Act and listed for trading on the Nasdaq Capital Market. However, if there

2

TABLE OF CONTENTS

are any former shareholders of Foothills Bancorp who will be deemed to be “affiliates” of SmartFinancial under the Securities Act after the merger (generally, directors and executive officers of SmartFinancial and shareholders holding 10% or more of the outstanding shares of common stock of SmartFinancial), such persons must comply with certain transfer restrictions under the Securities Act.

Q: Who can vote at the special meeting?
A: All holders of record of Foothills Bancorp common stock as of the close of business on September 14, 2018, the record date for the special meeting, are entitled to receive notice of, and to vote at, the special meeting, or any adjournment or postponement thereof, in accordance with Tennessee law.
Q: When and where is the special meeting?
A: The special meeting will be held at the main office of Foothills Bank at 214 Keller Lane, Maryville, Tennessee 37801 on October 18, 2018, at 5:30 p.m. local time.
Q: What do I need to do now?
A: After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at the special meeting. If you hold your shares in your name as a shareholder of record, you must complete, sign, date, and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Alternatively, you may vote through the internet. Information and the deadline for voting through the internet are set forth in the enclosed proxy card instructions. If you hold your shares in “street name” through a bank, broker, or other nominee, you must direct your bank, broker, or other nominee how to vote in accordance with the instructions you have received from your bank, broker, or other nominee. “Street name” shareholders who wish to vote in person at the special meeting will need to obtain a “legal proxy” from the institution that holds their shares.
Q: What constitutes a quorum for the special meeting?
A: The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Foothills Bancorp common stock entitled to vote at the special meeting will constitute a quorum. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.
Q: If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A: No. Your broker will not vote your shares unless you provide instructions on how to vote. If you hold your shares in “street name” through a bank, broker, or other nominee, you should have received access to this proxy statement/prospectus from your bank, broker, or other nominee with instructions on how to instruct the holder of record to vote your shares. Please follow the voting instructions provided by the bank, broker, or other nominee. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. You may not vote shares held in street name by returning a proxy card directly to Foothills Bancorp or by voting in person at the special meeting, unless you provide a “legal proxy,” which you must obtain from your bank, broker, or other nominee. Further, banks, brokers, or other holders of record who hold shares of Foothills Bancorp common stock on behalf of their customers may not give a proxy to Foothills Bancorp to vote those shares with respect to any of the proposals without specific instructions from their customers, as banks, brokers, and other holders of record do not have discretionary voting power on these matters. See “What is the vote required to approve each proposal at the special meeting?
Q: Can I change my vote?
A: Yes. If you are a holder of record of Foothills Bancorp common stock, you may change your vote at any time before your shares are voted at the special meeting by: (1) completing, signing, and returning a proxy card with a later date, (2) delivering a written revocation letter to Foothills Bancorp’s President, (3) attending the special meeting in person, notifying the President of Foothills Bancorp, and voting by ballot at the special meeting, or (4) voting via the Internet. Attendance at the special meeting will not

3

TABLE OF CONTENTS

automatically revoke your proxy. A revocation or later-dated proxy received by Foothills Bancorp after the vote will not affect the vote. Foothills Bancorp’s President’s mailing address is: Foothills Bancorp, Inc., Attention: Mark Loudermilk, 214 Keller Lane, Maryville, Tennessee 37801. If you hold your shares in “street name” through a bank, broker, or other nominee, you should contact your bank, broker, or other nominee to change your vote.

Q: Will Foothills Bancorp be required to submit the merger proposal to its shareholders even if the Foothills Bancorp board of directors has withdrawn, modified, or qualified its recommendation regarding how to vote with respect to the merger proposal?
A: Yes. Unless the merger agreement is terminated before the special meeting, the merger agreement requires that Foothills Bancorp submit the merger proposal to its shareholders even if the Foothills Bancorp board of directors has withdrawn, modified, or qualified its recommendation regarding how to vote with respect to the merger proposal.
Q: What are the United States federal income tax consequences of the merger to Foothills Bancorp shareholders?
A: The merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Internal Revenue Code”). It is a condition to the obligation of Foothills Bancorp and Foothills Bank to effect the merger that Foothills Bancorp receive a written opinion from Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, or Baker Donelson, counsel to Foothills Bancorp, dated as of the closing date of the merger to the effect that for United States federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. It is a condition to the obligation of SmartFinancial to effect the merger that SmartFinancial receive a written opinion from Butler Snow LLP, or Butler Snow, counsel to SmartFinancial, dated as of the closing date of the merger to the effect that for United States federal income tax purposes the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

A United States holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 51) of Foothills Bancorp common stock will recognize gain (but not loss) on the receipt of any cash consideration in an amount equal to the lesser of (i) the amount of cash received by such holder of Foothills Bancorp common stock (in each case excluding any cash received instead of fractional share interests in SmartFinancial), or (ii) the amount by which the sum of the fair market value of the Smart Financial stock and cash received by a holder of Foothills Bancorp stock exceeds such holder’s tax basis in its Foothills Bancorp common stock. This gain generally will be a capital gain and will be a long-term capital gain if the holding period for the shares of Foothills Bancorp common stock exchanged for cash is more than one year at the completion of the merger. Further, if a Foothills Bancorp shareholder receives cash consideration in lieu of a fractional share of SmartFinancial common stock, such exchange generally will be treated as a taxable transaction causing such Foothills Bancorp shareholder to recognize gain or loss on the exchange.

Please carefully review the information set forth in the section entitled “Material United States Federal Income Tax Consequences of the Merger” beginning on page 51 for a description of the material United States federal income tax consequences of the merger.

The United States federal income tax consequences described above may not apply to all holders of Foothills Bancorp common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

Q: Are Foothills Bancorp shareholders entitled to dissenters’ rights?
A: Yes. If you are a holder of shares of Foothills Bancorp common stock and if you follow the procedures prescribed by Tennessee law, you may dissent from the merger proposal and have the fair value of your Foothills Bancorp common stock paid to you in cash. If you follow these procedures, you will not receive the merger consideration. The fair value of your Foothills Bancorp common stock, determined in the manner prescribed by Tennessee law, will be paid to you in cash. That amount could be more or less than the

4

TABLE OF CONTENTS

merger consideration or the market value of SmartFinancial common stock as of the closing date of the merger. For a more complete description of these dissenters’ rights, see “The Merger — Dissenters’ Rights” beginning on page 50 and Appendix B to this proxy statement/prospectus which includes the full text of those sections of the Tennessee Business Corporation Act applicable to dissenters’ rights. A dissenting shareholder will be entitled to payment only if written notice of intent to demand payment is delivered to Foothills Bancorp before the vote is taken and the shareholder does not vote in favor of the merger proposal.

Q: If I am a Foothills Bancorp shareholder, should I send in my Foothills Bancorp stock certificate(s) now?
A: No. Please do not send in your Foothills Bancorp stock certificates with your proxy. After the merger, an exchange agent will send you a letter of transmittal that will contain instructions for exchanging your Foothills Bancorp common stock certificates for the merger consideration. If you have certificates evidencing your shares of Foothills Bancorp common stock, you will need to complete and return the letter of transmittal and follow the instructions in the letter of transmittal for delivery of the certificates with their completed forms to the exchange agent. See “The Merger Agreement — Exchange of Certificates” beginning on page 59.
Q: Who is the exchange agent for the merger?
A: American Stock & Transfer Company, LLC is the exchange agent for the merger.
Q: If I have lost my Foothills Bancorp stock certificate(s), can I receive the merger consideration?
A: Yes. However, as will be detailed in the letter of transmittal delivered to you by the exchange agent, you will have to provide an affidavit attesting to the fact that you lost your Foothills Bancorp stock certificate(s). Additionally, you may have to give SmartFinancial or the exchange agent a bond in an amount determined by SmartFinancial or the exchange agent in order to indemnify SmartFinancial against a loss in the event someone finds or has your lost certificate(s) and is able to transfer such certificate(s). To avoid these measures, you should do everything you can to find your lost certificate(s) before the time comes to send it in. You may also contact Mark W. Loudermilk, Foothills Bancorp’s President and Chief Executive Officer, at (865) 738-2222.
Q: Do any of Foothills Bancorp’s directors or executive officers have interests in the merger that may differ from those of other Foothills Bancorp shareholders?
A: Yes. Foothills Bancorp’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Foothills Bancorp shareholders generally. The members of Foothills Bancorp’s board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending that Foothills Bancorp shareholders approve and adopt the merger agreement. For a description of these interests, refer to the section entitled “The Merger – Interests of Officers and Directors of Foothills Bancorp in the Merger” beginning on page 55 of this proxy statement/prospectus.
Q: What is the vote required to approve each proposal at the special meeting?
A: The merger proposal: Approval of the merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of outstanding shares of Foothills Bancorp common stock. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

The adjournment proposal: Whether or not a quorum is present, approval of the adjournment proposal requires that the votes cast in favor of the proposal at the special meeting exceed the votes cast opposing the proposal at the special meeting. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the adjournment proposal, it will have no effect on the proposal.

5

TABLE OF CONTENTS

Q: Why is my vote important?
A: If you do not vote, it will be more difficult for Foothills Bancorp to obtain the necessary quorum to hold the special meeting. In addition, your abstention or your failure to submit a proxy, instruct your bank, broker, or other nominees how to vote or vote in person will have the same effect as a vote “AGAINST” the merger proposal.
Q: When do you expect to complete the merger?
A: We presently expect to complete the merger during the fourth quarter of 2018. However, we cannot assure you when or if the merger will occur. We must first obtain the necessary regulatory approvals, the approval of the merger proposal by the shareholders of Foothills Bancorp, and satisfy other closing conditions contained in the merger agreement.
Q: What should I do if I receive more than one set of voting materials?
A: Foothills Bancorp shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. If you are a holder of record of Foothills Bancorp common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date, and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of Foothills Bancorp common stock that you own.
Q: What are the conditions to completion of the merger?
A: In addition to the approval of the merger proposal by Foothills Bancorp shareholders, as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including the receipt of all required regulatory approvals and expiration or termination of all statutory waiting periods in respect thereof, the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement), SmartFinancial’s, Foothills Bancorp’s, and Foothills Bank’s performance of their respective obligations under the merger agreement in all material respects, and each of SmartFinancial’s and Foothills Bancorp’s receipt 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. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 70 of this proxy statement/prospectus.
Q: What happens if the merger is not completed?
A: If the merger is not completed, holders of Foothills Bancorp common stock will not receive any consideration for their shares in connection with the merger. Instead, Foothills Bancorp will remain an independent, private company. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by Foothills Bancorp. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 71 for a discussion of the circumstances under which termination fees will be required to be paid.
Q: Whom should I call with questions about the merger?
A: If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, are unable to locate your Foothills Bancorp stock certificate(s), or need help voting your shares of Foothills Bancorp common stock, please contact Mark W. Loudermilk, President and Chief Executive Officer of Foothills Bancorp, at (865) 738-2222.
Q: Are there risks associated with the merger that I should consider in deciding how to vote?
A: Yes. There are a number of risks related to the merger and the other transactions contemplated by the merger agreement, including the merger and the bank merger that are discussed in this proxy statement/prospectus and in the appendices. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 17 and in SmartFinancial’s SEC filings incorporated by reference herein and referred to in “Where You Can Find More Information” beginning on page 136.

6

TABLE OF CONTENTS

SUMMARY

This summary highlights material information regarding the merger and the special meeting contained later in this proxy statement/prospectus. This summary does not contain all of the information that may be important to you. We urge you to carefully read this entire document, including the appendices and enclosures, to better understand the merger and its potential impact on you before deciding how to vote. Each item in this summary includes a page reference directing you to a more complete discussion of the item.

The Parties to the Merger Agreement (pages 74 and 131)

SmartFinancial

SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, Tennessee 37919
(865) 868-0613

SmartFinancial is a Knoxville, Tennessee-based corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended (which we refer to as the “Bank Holding Company Act”). SmartFinancial is the publicly traded bank holding company for SmartBank, which operates offices across Tennessee, Alabama, and the Florida Panhandle.

As of June 30, 2018, SmartFinancial had total assets of approximately $2 billion. Shares of SmartFinancial common stock are traded on the Nasdaq Capital Market under the symbol “SMBK.” Additional information about SmartFinancial and its subsidiaries can be found under the heading “Information about SmartFinancial” beginning on page 74.

Foothills Bancorp Parties

Foothills Bancorp, Inc.
Foothills Bank & Trust
214 Keller Lane
Maryville, Tennessee 37801
(865) 738-2222

Foothills Bancorp is a Tennessee-based corporation and bank holding company registered under the Bank Holding Company Act. Foothills Bancorp is the bank holding company for Foothills Bank, a Tennessee chartered commercial bank headquartered in Maryville, Tennessee, with two branches in Maryville and one branch in Knoxville, Tennessee. As of June 30, 2018, Foothills Bank had total assets of approximately $220.2 million, total deposits of $187.1 million, and total shareholders’ equity of approximately $21.0 million.

The Merger (page 36)

Pursuant to the merger agreement, Foothills Bancorp will merge into SmartFinancial subject to and upon the terms and conditions set forth in the merger agreement, with SmartFinancial as the surviving corporation. Immediately following the merger, Foothills Bank will merge with and into SmartBank subject to and upon the terms and conditions set forth in an agreement and plan of merger entered into by Foothills Bank and SmartBank, with SmartBank as the surviving bank. The merger agreement is attached as Appendix A and is incorporated into this proxy statement/prospectus by reference. We encourage you to read the merger agreement carefully as it is the legal document that governs the merger.

We expect to complete the merger during the fourth quarter of 2018. However, neither SmartFinancial nor Foothills Bancorp can assure you of when or if the merger will be completed. Foothills Bancorp must obtain the approval of its shareholders for the merger proposal at the special meeting. SmartFinancial and Foothills Bancorp must also satisfy certain other closing conditions, including receiving certain required regulatory approvals. If the merger has not been completed by March 31, 2019, either SmartFinancial or the Foothills Bancorp parties may terminate the merger agreement so long as the party electing to terminate has not caused the failure of the merger to occur by failing to comply with its obligations under the merger agreement.

What Foothills Bancorp Shareholders Will Receive in the Merger (page 58)

At the effective time of the merger, holders of Foothills Bancorp common stock will become entitled to receive: (i) 0.666 shares of SmartFinancial common stock and (ii) $1.75 in cash for each share of Foothills Bancorp

7

TABLE OF CONTENTS

common stock held at the effective time of the merger. SmartFinancial will not issue any fractional shares of its common stock in the merger and will instead pay to each former shareholder of Foothills Bancorp who otherwise would be entitled to receive such fractional share an amount in cash, without interest and rounded to the nearest cent, determined by multiplying (a) the volume weighted average of the closing prices of SmartFinancial common stock on the Nasdaq Capital Market for the ten consecutive trading days ending on and including the trading day immediately preceding the closing date by (b) the fraction of a share of SmartFinancial common stock that such shareholder would otherwise be entitled to receive as stock consideration.

Issued Shares of SmartFinancial Common Stock Will be Eligible for Trading (page 57)

The shares of SmartFinancial common stock to be issued as stock consideration to Foothills Bancorp shareholders upon consummation of the merger will, subject to official notice of issuance, be authorized for listing and eligible for trading on the Nasdaq Capital Market under the symbol “SMBK.”

Voting Agreements (page 54)

The directors of Foothills Bancorp who collectively beneficially own and have the power to vote approximately 20.0% of the Foothills Bancorp common stock have entered into agreements with SmartFinancial in which they have agreed, among other things, to vote their shares of Foothills Bancorp common stock in favor of the merger proposal and the adjournment proposal. The voting agreements automatically terminate upon the earlier to occur of (a) the approval by Foothills Bancorp’s shareholders of the merger proposal or (b) the termination of the merger agreement. As of the record date, the directors and executive officers of Foothills Bancorp and their affiliates collectively beneficially owned and were entitled to vote 366,528 shares of Foothills Bancorp common stock, representing approximately 20.6% of the outstanding shares of Foothills Bancorp common stock.

Regulatory Approvals (page 57)

Subject to the terms of the merger agreement, both SmartFinancial and the Foothills Bancorp parties have agreed to use commercially reasonable efforts to obtain all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement, including the merger and the bank merger. These approvals include, among others, approval from the Board of Governors of the Federal Reserve System, or the Federal Reserve, and the Tennessee Department of Financial Institutions, or the TDFI. SmartBank has filed an interagency bank merger act application with the Federal Reserve and with the TDFI. As of the date of this proxy statement/prospectus, SmartFinancial and SmartBank have not received any of the required regulatory approvals.

Although neither SmartFinancial nor Foothills Bancorp knows of any reason why these regulatory approvals cannot be obtained in a timely manner, SmartFinancial and Foothills Bancorp cannot be certain when or if they will be obtained.

Completion of the Merger is Subject to Customary Conditions (page 70)

The completion of the merger is subject to a number of customary conditions being met, including the approval of the merger proposal by the requisite vote of Foothills Bancorp shareholders, as well as receipt of all required regulatory approvals. Where the law permits, a party to the merger agreement could elect to waive a condition to its obligation to complete the merger, even if that condition has not been satisfied. Neither SmartFinancial nor Foothills Bancorp can be certain when (or if) the conditions to the merger will be satisfied or waived by the applicable party or that the merger will be completed.

Foothills Bancorp Special Meeting (page 32)

The special meeting will be held on October 18, 2018 at 5:30 p.m., local time, at the main office of Foothills Bank at 214 Keller Lane, Maryville, Tennessee 37801.

At the special meeting, Foothills Bancorp shareholders will be asked to:

approve the merger proposal; and
approve the adjournment proposal.

8

TABLE OF CONTENTS

All shareholders of record of Foothills Bancorp common stock as of the close of business on September 14, 2018, the record date for the special meeting, are entitled to receive notice of, and to vote at, the special meeting, or any adjournment or postponement thereof, in accordance with Tennessee law. The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Foothills Bancorp common stock entitled to vote at the special meeting will constitute a quorum. Abstentions, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

Special Meeting Proposals: Required Vote; Treatment of Abstentions and Failure to Vote (page 32)

The merger proposal: Approval of the merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of outstanding shares of Foothills Bancorp common stock. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

The adjournment proposal: Whether or not a quorum is present, approval of the adjournment proposal requires that the votes cast in favor of the proposal at the special meeting exceed the votes cast opposing the proposal at the special meeting. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the adjournment proposal, it will have no effect on the proposal.

Foothills Bancorp’s Board of Directors Recommends that Foothills Bancorp Shareholders Vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal (page 34)

The Foothills Bancorp board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger and the bank merger, are advisable and in the best interests of Foothills Bancorp and its shareholders, and has approved and adopted the merger agreement. The Foothills Bancorp board of directors recommends that holders of shares of Foothills Bancorp common stock vote “FOR” the merger proposal and “FOR” the adjournment proposal. For the factors considered by the Foothills Bancorp board of directors in reaching its decision to approve and adopt the merger agreement, see “The Merger — Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors” beginning on page 40.

Foothills Bancorp’s and Foothill Bank’s Officers and Directors Have Financial Interests in the Merger that are Different From or in Addition to the Interests of Other Foothills Bancorp Shareholders (page 55)

In considering the recommendation of the Foothills Bancorp board of directors, shareholders should be aware that the directors and executive officers of Foothills Bancorp have certain interests in the merger that may be different from, or in addition to, the interests of Foothills Bancorp shareholders generally. The Foothills Bancorp board of directors was aware of these interests and considered them, among other matters, in making its recommendation that Foothills Bancorp shareholders vote to approve the merger proposal.

These interests include:

Joseph Hamdi, Foothills Bank’s Chief Lending Officer, and Foothills Bank’s Senior Vice Presidents Steven Kitts and David Conner have entered into employment agreements, each dated as of June 27, 2018, with SmartBank, which will be effective as of the consummation of the bank merger. Under their respective employment agreements, Mr. Hamdi will serve as Senior Vice President, Knox County Market Executive of SmartBank, Mr. Kitts will serve as Senior Vice President, Relationship Manager of SmartBank, and Mr. Conner will serve as Senior Vice President, Blount County Commercial Lender/Relationship Manager of SmartBank. These employment agreements all have an initial term of two years followed by annual one-year extensions, with the annual base salary for each of Messrs. Hamdi, Kitts, and Conner being $186,000, $130,000, and $150,000, respectively. Additionally, the employment agreements of Messrs. Hamdi and Kitts provide that in the event SmartBank terminates their employment without cause or either of Mr. Hamdi or Mr. Kitts terminate his employment for good reason, they will each receive (a) a severance payment equal to one times their then-current annual base salary, and (b) reimbursement for any employee-paid monthly Consolidated Omnibus

9

TABLE OF CONTENTS

Budget Reconciliation Act (which we refer to as “COBRA”) premiums for up to 12 months. Mr. Kitts will receive a one-time payment of $25,000 from SmartBank should he remain a full-time employee of SmartBank through the later of March 31, 2019 and the Foothills Bank data processing core system conversion.

Mr. Hamdi will receive a one-time payment of $309,000 from Foothills Bank in connection with the closing of the merger. Mark Loudermilk, President and Chief Executive Officer of Foothills Bank and Foothills Bancorp, and Melissa Hodges, Senior Vice President and Chief Compliance Officer of Foothills Bank, will each receive change of control payments in connection with the merger pursuant to the terms of their respective employment agreements with Foothills Bank. Mr. Loudermilk will receive a lump sum cash payment of approximately $527,875, plus continuation of insurance and benefits for a period of 30 months with the option to elect COBRA coverage at his own expense for an additional 18 months. Ms. Hodges will receive a lump sum cash payment of approximately $188,000, plus continuation of insurance and benefits for a period of 24 months.
Foothills Bancorp’s directors and certain executive officers of Foothills Bancorp and Foothills Bank hold options to purchase shares of Foothills Bancorp common stock. In connection with the merger, all outstanding and unexercised stock options, including unvested options, will be cancelled in exchange for the right to receive a single lump sum cash payment equal to the product obtained by multiplying (i) the number of shares of Foothills Bancorp common stock subject to such option, by (ii) $17.50 less the exercise price per share of such option. Foothills Bancorp and Foothills Bank directors and officers, as a group, will receive cash payments totaling approximately $2.96 million in connection with the cancellation of their stock option agreements. Foothills Bancorp and Foothills Bank executive officers, as a group, will receive accelerated vesting of options to purchase 30,000 shares of common stock in connection with the merger.
Foothills Bancorp’s and Foothills Bank’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement for a period of six years.

For a more complete description of these interests, see “The Merger — Interests of Officers and Directors of Foothills Bancorp in the Merger” beginning on page 55.

Most Foothills Bancorp Shareholders May Resell SmartFinancial Common Stock (page 2)

The shares of SmartFinancial common stock to be issued to the shareholders of Foothills Bancorp in connection with the merger will be freely tradable by such shareholders, except that if any Foothills Bancorp shareholders are deemed to be “affiliates” of SmartFinancial, they must abide by certain transfer restrictions under the Securities Act.

The Merger Generally Will Be Tax-Deferred to Holders of Foothills Bancorp Common Stock to the Extent They Receive SmartFinancial Common Stock but Will Be Taxable With Respect to Any Cash Received (page 51)

The merger will qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code. It is a condition to the obligation of Foothills Bancorp and Foothills Bank to effect the merger that Foothills Bancorp receive a written opinion from Baker Donelson, dated as of the closing date of the merger, to the effect that for United States federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. It is a condition to the obligation of SmartFinancial to effect the merger that SmartFinancial receive a written opinion from Butler Snow, dated as of the closing date of the merger, to the effect that for United States federal income tax purposes the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code. The opinions will not bind the Internal Revenue Service or any court, which could view the merger differently.

A United States holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 51) of Foothills Bancorp common stock will recognize gain (but not loss) on the receipt of any cash consideration in an amount equal to the lesser of (i) the amount of cash received by such holder of Foothills Bancorp common stock (in each case excluding any cash received instead of fractional share interests in SmartFinancial), or (ii) the amount by which the sum of the fair market value of the Smart Financial stock and cash received by a holder of Foothills Bancorp stock exceeds such holder’s tax basis in its Foothills

10

TABLE OF CONTENTS

Bancorp common stock. This gain generally will be a capital gain and will be a long-term capital gain if the holding period for the shares of Foothills Bancorp common stock exchanged for cash is more than one year at the completion of the merger. Further, if a Foothills Bancorp shareholder receives cash consideration in lieu of a fractional share of SmartFinancial common stock, such exchange generally will be treated as a taxable transaction causing such Foothills Bancorp shareholder to recognize gain or loss on the exchange.

You should read “Material United States Federal Income Tax Consequences of the Merger” beginning on page 51 for a more complete discussion of the United States federal income tax consequences of the merger. Tax matters can be complicated and the tax consequences of the merger to you will depend on your particular tax situation. You are strongly encouraged to consult your tax advisor to fully understand the tax consequences of the merger to you.

Comparative Rights of Shareholders (page 95)

The rights of Foothills Bancorp’s shareholders are currently governed by Foothills Bancorp’s charter and bylaws. The rights of SmartFinancial’s shareholders are currently governed by SmartFinancial’s charter and bylaws. Additionally, Tennessee corporate law governs the rights of the shareholders of both SmartFinancial and Foothills Bancorp. Upon consummation of the merger, the shareholders of Foothills Bancorp will become shareholders of SmartFinancial, and the charter and bylaws of SmartFinancial will govern their rights. SmartFinancial’s charter and bylaws differ somewhat from those of Foothills Bancorp with respect to certain matters. The different shareholder rights are explained more fully in “Comparative Rights of Shareholders” beginning on page 95.

Termination of the Merger Agreement and Termination Fee (page 71)

The Foothills Bancorp parties and SmartFinancial may mutually agree to terminate the merger agreement at any time. Additionally, the merger agreement may be terminated:

by SmartFinancial or the Foothills Bancorp parties, in the event that Foothills Bancorp’s shareholders do not approve the merger proposal, provided that in the case of termination by the Foothills Bancorp parties Foothills Bancorp and its board of director have complied with their obligations to call and hold the special meeting and to recommend and solicit approval of the merger agreement by Foothills Bancorp’s shareholders;
by SmartFinancial or the Foothills Bancorp parties, in the event that any consent, approval, or waiver from the Federal Reserve, the TDFI, the United States Department of Justice, or any other governmental agency required in connection with the consummation of the transactions contemplated by the merger agreement, including the merger and the bank merger, has been denied by final and non-appealable action of such governmental authorities or any application for any such consent, approval, or waiver has been permanently withdrawn at the request of any such governmental authority, provided the denial or withdrawal is not due to the failure of the terminating parties to perform or observe their obligations under the merger agreement;
by SmartFinancial or the Foothills Bancorp parties, in the event that any court or other governmental authority of competent jurisdiction has issued a final, non-appealable order enjoining or otherwise prohibiting the consummation of any of the transactions contemplated by the merger agreement, including the merger and the bank merger, provided that the action of such governmental authority is not due to the failure of the terminating parties to perform or observe their obligations under the merger agreement;
by SmartFinancial or the Foothills Bancorp parties, in the event the merger is not consummated by March 31, 2019, provided that the failure to consummate the merger by such date is not due to the failure of the terminating parties to perform or observe their obligations under the merger agreement;
by SmartFinancial: (a) in the event of a breach of the merger agreement by Foothills Bancorp or Foothills Bank, if the breach (individually or in the aggregate with all other breaches) would, if occurring or continuing on the closing date for the merger, result in any of the conditions to the merger not being satisfied and is not cured by the earlier of March 31, 2019, and 30 days after written notice to the breaching party of the breach (provided that SmartFinancial is not in material breach of the merger agreement) (which we refer to as a “SmartFinancial material breach termination”); (b) in the event that, (i) the Foothills Bancorp parties breach their obligations under the merger agreement relative

11

TABLE OF CONTENTS

to acquisition proposals or calling and holding the special meeting and recommending and soliciting approval of the merger agreement by Foothills Bancorp’s shareholders or (ii) the Foothills Bancorp board of directors does not recommend in this proxy statement/prospectus the approval of the merger agreement and the transactions contemplated thereby by Foothills Bancorp’s shareholders, including the merger and the bank merger, or, after having made such recommendation, subsequently changes such recommendation; or (c) in the event of a third-party tender or exchange offer for 10% or more of the outstanding shares of Foothills Bancorp stock is commenced and Foothills Bancorp’s board of directors recommends that Foothills Bancorp shareholders tender their shares in such tender or exchange offer or otherwise fails to recommend that Foothills Bancorp shareholders reject the tender or exchange offer within the 10 business day period specified in Rule 14e-2(a) under the Exchange Act;

by the Foothills Bancorp parties: (a) in the event of a breach of the merger agreement by SmartFinancial if the breach (individually or in the aggregate with all other breaches) would, if occurring or continuing on the closing date for the merger, result in any of the conditions to the merger not being satisfied and is not cured by the earlier of March 31, 2019, and 30 days after written notice to the breaching party of the breach (provided that the Foothills Bancorp parties are not in material breach of the merger agreement); or (b) at any time prior to approval of the merger agreement by the Foothills Bancorp shareholders, for the purpose of entering into an agreement with regard to a superior proposal, provided that the Foothills Bancorp parties have not breached their obligations under the merger agreement relative to acquisition proposals or calling and holding the special meeting and recommending and soliciting approval of the merger agreement by Foothills Bancorp’s shareholders;

The Foothills Bancorp parties will be required to pay SmartFinancial a termination fee of $1,450,000:

in the event of a SmartFinancial material breach termination, if at or before the special meeting the Foothills Bancorp parties receive a bona fide acquisition proposal that is not withdrawn prior to the date of termination of the merger agreement and within 12 months of the date of termination Foothills Bancorp or Foothills Bank enters into a definitive agreement with respect to or consummates an acquisition proposal, whether or not the same acquisition proposal first mentioned above;
in the event the SmartFinancial parties terminate the merger agreement because, (i) the Foothills Bancorp parties breach their obligations under the merger agreement relative to acquisition proposals or calling and holding the special meeting and recommending and soliciting approval of the merger agreement by Foothills Bancorp’s shareholders or (ii) the Foothills Bancorp board of directors does not recommend in this proxy statement/prospectus the approval of the merger agreement and the transactions contemplated thereby by Foothills Bancorp’s shareholders, including the merger and the bank merger, or, after having made such recommendation, subsequently changes such recommendation;
in the event the SmartFinancial parties terminate the merger agreement because Foothills Bancorp’s board of directors recommends that Foothills Bancorp shareholders tender their shares in a third-party tender or exchange offer for 10% or more of any class or series of outstanding shares of Foothills Bancorp stock or otherwise fails to recommend that Foothills Bancorp shareholders reject the tender or exchange offer within the 10 business day period specified in Rule 14e-2(a) under the Exchange Act; or
in the event the Foothills Bancorp parties terminate the merger agreement for the purpose of entering into an agreement with regard to a superior proposal.

The above-described termination fee payable by the Foothills Bancorp parties could discourage other companies from seeking to acquire or merge with the Foothills Bancorp parties prior to completion of the merger and could cause the Foothills Bancorp parties to reject any acquisition proposal from a third party which does not take into account the termination fee.

Foothills Bancorp Shareholders Have Dissenters’ Rights (page 50)

Tennessee law permits holders of Foothills Bancorp common stock to dissent from the merger and to have the fair value of their Foothills Bancorp common stock paid in cash. To do this, a Foothills Bancorp shareholder must follow certain procedures, including filing certain notices with Foothills Bancorp and refraining from voting the shareholder’s shares of Foothills Bancorp common stock in favor of the merger proposal. If a Foothills Bancorp shareholder properly dissents from the merger proposal, that shareholder’s shares of Foothills Bancorp common stock will not be exchanged for the merger consideration, but rather, that shareholder’s only right will

12

TABLE OF CONTENTS

be to receive the appraised value of the shareholder’s shares in cash. For a complete description of these dissenters’ rights, see page 50 and Appendix B to this proxy statement/prospectus where the full text of those sections of the Tennessee Business Corporation Act applicable to dissenters’ rights is set out. A dissenting shareholder will be entitled to payment only if written notice of intent to demand payment is delivered to Foothills Bancorp before the vote is taken and the shareholder does not vote in favor of the merger proposal.

Opinion of Financial Advisor to Foothills Bancorp (page 41 and Appendix C)

Monroe Financial Partners, Inc., or Monroe Financial, has delivered a written opinion to Foothills Bancorp’s board of directors, as of June 27, 2018, based upon and subject to certain matters stated in the opinion, that the merger consideration is fair, from a financial point of view, to Foothills Bancorp. This opinion is attached to this proxy statement/prospectus as Appendix C. The opinion of Monroe Financial is not a recommendation to any shareholder of Foothills Bancorp as to how to vote on the proposal to approve the merger agreement, the merger, or the issuance of SmartFinancial common stock to the shareholders of Foothills Bancorp in the merger. You should read this opinion completely to understand the procedures followed, matters considered, and limitations on the reviews undertaken by Monroe Financial in providing its opinion. For further information, see “The Merger — Opinion of Foothills Bancorp’s Financial Advisor” beginning on page 41.

Risk Factors (page 17)

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page 17.

13

TABLE OF CONTENTS

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

SmartFinancial

SmartFinancial common stock is traded on the Nasdaq Capital Market under the symbol “SMBK.” There is no established public trading market for Foothills Bancorp common stock, and shares of Foothills Bancorp common stock are traded solely in individually-arranged transactions between buyers and sellers.

The following table presents the closing sale price of SmartFinancial common stock on June 27, 2018, the last trading day before the date of the public announcement of the merger agreement, and September 6, 2018, the last practicable date before the date of this proxy statement/prospectus. The table also presents the equivalent value of the merger consideration per share of Foothills Bancorp common stock on that date, calculated by multiplying the closing sale price of SmartFinancial common stock on those dates by the exchange ratio (0.666) and adding $1.75 per share in cash consideration.

The following table shows only historical comparisons. No assurance can be given as to what the market price of the SmartFinancial common stock will be when the merger is completed or any time thereafter. Because the market value of SmartFinancial common stock will fluctuate after the date of this proxy statement/prospectus, no assurance can be given as to the value a share of SmartFinancial common stock will have when received by a Foothills Bancorp shareholder. Foothills Bancorp shareholders are advised to obtain current market quotations for Foothills Bancorp common stock and SmartFinancial common stock and to review carefully the other information contained in this proxy statement/prospectus in considering whether to approve the proposals contained in this proxy statement/prospectus.

Date
SmartFinancial
common stock
Equivalent Foothills
Bancorp share price(1)
June 27, 2018
$
25.82
 
$
18.94
 
September 6, 2018
$
25.14
 
$
18.49
 
(1) Equivalent per share price includes $1.75 cash consideration per share.

The following table sets forth, for the periods indicated, the high and low sales prices of SmartFinancial common stock and cash dividends paid per share of SmartFinancial common stock for the periods indicated.

 
High
Low
Cash Dividends Paid
Per Share
2018
 
 
 
 
 
 
 
 
 
First Quarter
$
23.70
 
$
21.03
 
 
 
Second Quarter
$
26.71
 
$
23.00
 
 
 
Third Quarter (through September 6)
$
27.42
 
$
24.05
 
 
 
2017
 
 
 
 
 
 
 
 
 
First Quarter
$
23.20
 
$
17.17
 
 
 
Second Quarter
$
26.26
 
$
20.35
 
 
 
Third Quarter
$
25.95
 
$
22.31
 
 
 
Fourth Quarter
$
24.98
 
$
21.10
 
 
 
2016
 
 
 
 
 
 
 
 
 
First Quarter
$
18.50
 
$
14.75
 
 
 
Second Quarter
$
18.75
 
$
14.21
 
 
 
Third Quarter
$
16.79
 
$
14.41
 
 
 
Fourth Quarter
$
20.58
 
$
16.14
 
 
 

As of September 6, 2018, the last practicable date prior to the date of this proxy statement/prospectus, there were 12,748,397 shares of SmartFinancial common stock issued and outstanding and approximately 827 shareholders of record.

SmartFinancial has not paid dividends to its common shareholders during the last three years. As a holding company, SmartFinancial is ultimately dependent upon its bank subsidiary, SmartBank, to provide funding for SmartFinancial’s operating expenses, debt service, and dividends. Various banking laws and regulations

14

TABLE OF CONTENTS

applicable to SmartBank limit the payment of dividends and other distributions by SmartBank to SmartFinancial, and these laws and regulations may limit SmartFinancial’s ability to pay dividends to its shareholders. Additionally, bank regulatory authorities could impose administratively stricter limitations on the ability of SmartBank to pay dividends to SmartFinancial if such limitations were deemed appropriate to preserve certain capital adequacy requirements. Accordingly, there can be no assurance that SmartFinancial will pay dividends to its shareholders in the future. See the information included in this proxy statement/prospectus in the Section “Information about SmartFinancial Bank holding company dividends” and “— Bank dividends” beginning on page 79.

Foothills Bancorp

There is no established public trading market for Foothills Bancorp’s common stock, and shares of Foothills Bancorp common stock are thinly traded in private transactions. A Foothills Bancorp common stock shareholder who desires to sell his or her common stock must privately locate one or more willing buyers. Additionally, a seller in this private transaction may ultimately be motivated to sell for reasons that are different from a seller of shares with an established public market. Recent trades of Foothills Bancorp’s common stock are not necessarily indicative of the potential value of Foothills Bancorp’s common stock if it were actually traded in a public market. The price per share for trades among Foothills Bancorp’s common shareholders are not necessarily reported to Foothills Bancorp’s management, and trades known to Foothills Bancorp management are not necessarily the only trades of Foothills Bancorp’s common stock. To the best knowledge of Foothills Bancorp’s management, the most recent trades were an aggregate of 165 shares at a price of $12.00 per share on April 6, 2018.

Payment of dividends by Foothills Bancorp is subject to certain regulations that may limit or prevent the payment of dividends and is further subject to the discretion of Foothills Bancorp’s board of directors. During the previous three years, Foothills Bancorp has paid the following dividends:

 
Dividend per Share
Total Paid
June 2016
$
0.13
 
$
231,479.38
 
June 2017
$
0.18
 
$
312,484.57
 
June 2018
$
0.20
 
$
355,385.00
 

As of September 6, 2018, the last practicable date prior to the date of this proxy statement/prospectus, there were 1,776,715 shares of Foothills Bancorp common stock issued and outstanding and approximately 555 Foothills Bancorp shareholders of record.

15

TABLE OF CONTENTS

UNAUDITED COMPARATIVE PER SHARE DATA

Presented below are unaudited per share basic and diluted earnings, cash dividends, and book value for SmartFinancial and Foothills Bancorp on a historical basis, and for Foothills Bancorp on a pro forma equivalent basis. The information presented below should be read together with the historical consolidated financial statements of SmartFinancial, including the related notes, included with this proxy statement/prospectus.

The pro forma, pro forma combined, and pro forma equivalent per share information gives effect to the Tennessee Bancshares merger and Foothills Bancorp merger as if the transactions had been effective as of the dates presented, in the case of the book value data, and as if the transactions had become effective on January 1, 2017, in the case of the net income per share and dividends declared per share data.

The unaudited pro forma adjustments are based upon available information and certain assumptions that SmartFinancial and Foothills Bancorp management believe are reasonable. The unaudited pro forma data, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of factors that may result as a consequence of the merger or consider any potential impacts of current market conditions nor the impact of possible business model changes. As a result, unaudited pro forma data is presented for illustrative purposes only and does not represent an attempt to predict or suggest future results. Upon completion of the merger, the operating results of Foothills Bancorp will be reflected in the consolidated financial statements of SmartFinancial on a prospective basis.

Unaudited Comparative Per Share Data
For The Year Ended December 31, 2017

 
SmartFinancial
Historical(1)
Foothills
Bancorp
Historical
Equivalent
Pro
Forma(2)
Net income available to common shareholders, per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.56
 
$
0.80
 
$
0.64
 
Diluted
 
0.55
 
 
0.80
 
 
0.63
 
Equity per common share
$
18.46
 
$
11.98
 
$
18.41
 
(1) Exclusive of the merger consummated May 1, 2018, pursuant to that certain Agreement and Plan of Merger dated December 12, 2017, by and among SmartFinancial, Tennessee Bancshares, Inc. and Southern Community Bank, pursuant to which Tennessee Bancshares merged with and into SmartFinancial, with SmartFinancial continuing as the surviving corporation.
(2) The unaudited pro forma equivalent per share amount is calculated by multiplying the pro forma combined per share amount by the exchange ratio of 0.666.

16

TABLE OF CONTENTS

RISK FACTORS

If the merger is consummated, Foothills Bancorp shareholders will receive shares of SmartFinancial common stock in exchange for their shares of Foothills Bancorp common stock. An investment in SmartFinancial common stock is subject to a number of risks and uncertainties, many of which also apply to your existing investment in Foothills Bancorp common stock. Risks and uncertainties relating to general economic conditions are not summarized below. Those risks, among others, are highlighted on page 30 under the heading “Cautionary Statement Regarding Forward-Looking Statements.” However, there are a number of other risks and uncertainties relating to SmartFinancial that you should consider in deciding how to vote at the special meeting, in addition to the risks and uncertainties associated with financial institutions generally. Many of these risks and uncertainties could affect SmartFinancial’s future financial results and may cause SmartFinancial’s future earnings and financial condition to be less favorable than SmartFinancial’s expectations. There are also a number of risks related to the merger that shareholders of Foothills Bancorp should consider in deciding how to vote on the merger proposal. This section summarizes many of those risks.

Risks Related to the Merger

Because the market price of SmartFinancial common stock will fluctuate, the value of the stock consideration to be received by Foothills Bancorp shareholders is uncertain.

In connection with the merger, each share of Foothills Bancorp common stock (except for certain excluded shares and any dissenting shares) will be converted into the right to receive 0.666 shares of SmartFinancial common stock and $1.75 in cash.

Although the exchange ratio is fixed, the market value of the stock consideration will fluctuate. The market value of the shares of SmartFinancial common stock to be received as stock consideration will vary from the closing price of SmartFinancial common stock on the date SmartFinancial and Foothills Bancorp announced the merger, on the date that this proxy statement/prospectus is mailed to Foothills Bancorp shareholders, on the date of the special meeting, and on the date the merger is completed and thereafter. Any change in the market price of SmartFinancial common stock prior to the completion of the merger will affect the market value of the stock consideration that Foothills Bancorp shareholders will receive upon completion of the merger, and there will be no adjustment to the stock consideration for changes in the market price of shares of SmartFinancial common stock. Stock price changes may result from a variety of factors that are beyond the control of SmartFinancial, including, but not limited to, general market and economic conditions, changes in SmartFinancial’s business, operations, and prospects and regulatory considerations. Therefore, at the time of the special meeting, you will not know the precise market value of the stock consideration Foothills Bancorp shareholders will receive at the effective time of the merger. You should obtain current market quotations for shares of SmartFinancial common stock.

The market price for SmartFinancial common stock may be affected by factors different from those that historically have affected Foothills Bancorp.

Upon completion of the merger, holders of Foothills Bancorp common stock will become holders of SmartFinancial common stock. SmartFinancial’s business differs from that of Foothills Bancorp, and accordingly, the results of operations of SmartFinancial will be affected by some factors that are different from those currently affecting the results of operations of Foothills Bancorp. For a discussion of the businesses of SmartFinancial and Foothills Bancorp and of some important factors to consider in connection with those businesses, see the section entitled “Information About SmartFinancial” beginning on page 74, and “Information About Foothills Bancorp” beginning on page 131.

Integrating Foothills Bank into SmartBank’s operations may be more difficult, costly, or time-consuming than anticipated.

SmartBank and Foothills Bank have operated and, until the bank merger is completed, will continue to operate, independently. Accordingly, the process of integrating Foothills Bank’s operations into SmartBank’s operations could result in the disruption of operations or the loss of Foothills Bank customers and employees, and could make it more difficult to achieve the intended benefits of the merger. Inconsistencies between the standards, controls, procedures, and policies of SmartBank and those of Foothills Bank could adversely affect SmartBank’s ability to maintain relationships with current customers and employees of Foothills Bank if and when the bank merger is completed.

17

TABLE OF CONTENTS

As with any merger of banking institutions, business disruptions may occur that may cause SmartBank to lose customers or may cause Foothills Bank’s customers to withdraw their deposits from Foothills Bank prior to the bank merger’s consummation and from SmartBank thereafter. The realization of the anticipated benefits of the merger may depend in large part on the successful integration of Foothills Bank’s operations into SmartBank’s operations, including the ability to address differences in business models and cultures. If the operations of Foothills Bancorp and Foothills Bank are not successfully integrated into SmartFinancial’s and SmartBank’s operations and on a timely basis, some or all of the expected benefits of the merger and the bank merger may not be realized. Difficulties encountered with respect to such matters could result in an adverse effect on the financial condition, results of operations, capital, liquidity, or cash flows of SmartBank and SmartFinancial.

In addition, the integration and systems conversion of Tennessee Bancshares and its subsidiary following the completion of the Tennessee Bancshares merger on May 1, 2018 is ongoing. It remains a priority for SmartFinancial and continues to utilize human and capital resources. The risk of a diversion of management attention away from ongoing business concerns may be increased by two merger integration processes which are relatively close in time. These integration matters could have an adverse effect on SmartFinancial during this transition period and for an undetermined period after completion of the merger on the combined company. In addition, the actual cost savings of the merger could be less than anticipated.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Before the transactions contemplated in the merger agreement, including the merger and the bank merger, may be completed, the approval of both the Federal Reserve Board and the TDFI must be obtained. These governmental entities and regulatory agencies may impose conditions, limitations or costs or place restrictions on the conduct of SmartFinancial or SmartBank after the completion of the merger as a condition to the granting of such approvals or require changes to the terms of the merger or the bank merger. Although SmartFinancial and Foothills Bancorp do not currently expect that any material conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the transactions contemplated in the merger agreement, including the merger and the bank merger, or imposing additional costs on the combined company or limiting the combined company’s revenues, any of which might have a material adverse effect on SmartFinancial following the merger and the bank merger. There can be no assurance as to whether the required regulatory approvals will be received, the timing of those approvals, or whether any conditions will be imposed. See “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 70 for a discussion of the conditions to the completion of the merger and for a description of the regulatory approvals that must be received in connection with the merger and the bank merger.

SmartFinancial may fail to realize the benefits and cost savings anticipated from the merger.

Although SmartFinancial anticipates that it will realize certain benefits and cost savings as to the operations of Foothills Bancorp and Foothills Bank and otherwise from the merger if and when the operations of Foothills Bancorp and Foothills Bank are fully integrated into SmartFinancial’s and SmartBank’s operations, it is possible that SmartFinancial may not realize all of the benefits and cost savings that it has estimated to be realized from the merger and the bank merger. For example, SmartFinancial may be required to continue to operate or maintain functions that are currently expected to be combined or reduced as a result of the merger. The realization of the estimated benefits and cost savings also will depend on our ability to combine the operations of SmartFinancial and SmartBank with the operations of Foothills Bancorp and Foothills Bank in a manner that permits those benefits and costs savings to be realized. If SmartFinancial is not able to integrate the operations of Foothills Bancorp and Foothills Bank into SmartFinancial’s and SmartBank’s operations successfully and to reduce the combined costs of conducting the integrated operations of the two banks, the anticipated benefits and cost savings may not be fully realized, if at all, or may take longer to realize than expected. The failure to realize those benefits and cost savings could materially adversely affect the combined company’s financial condition, results of operations, capital, liquidity, or cash flows.

The combined company will incur significant transaction and merger-related costs in connection with the merger.

SmartFinancial expects to incur significant costs associated with combining the operations of Foothills Bancorp and Foothills Bank with the operations of SmartFinancial and SmartBank. SmartFinancial recently began

18

TABLE OF CONTENTS

collecting information in order to formulate detailed integration plans to deliver anticipated cost savings. Additional unanticipated costs may be incurred in the integration of the businesses of SmartFinancial and Foothills Bancorp. Although SmartFinancial expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.

Whether or not the merger is consummated, each of SmartFinancial and Foothills Bancorp will incur substantial expenses, such as legal, accounting, and financial advisory fees, in pursuing the merger which will adversely impact each company’s earnings.

The termination fee and the restrictions on negotiation contained in the merger agreement may discourage other companies from trying to acquire Foothills Bancorp.

Until the consummation of the merger, with some exceptions, Foothills Bancorp is prohibited from soliciting, initiating, knowingly facilitating or encouraging, or participating in any discussion, negotiation, or activity regarding an acquisition proposal, such as a merger or other business combination transaction, with any person or entity other than SmartFinancial. In addition, Foothills Bancorp has agreed to pay a termination fee of $1.45 million to SmartFinancial if the merger agreement is terminated under certain circumstances, including a change of recommendation of the Foothills Bancorp board of directors. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 71. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Foothills Bancorp from considering or proposing such an acquisition that might result in greater value to Foothills Bancorp’s shareholders than the merger, or may result in a potential competing acquirer proposing to pay a lower per share price to acquire Foothills Bancorp than it might otherwise have proposed to pay.

Certain executive officers and directors of Foothills Bancorp and Foothills Bank have interests in the merger different from, or in addition to, the interests of Foothills Bancorp shareholders.

Certain of Foothills Bancorp’s and Foothills Bank’s existing directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Foothills Bancorp’s shareholders generally. For example, certain Foothills Bancorp and Foothills Bank executive officers have entered into employment agreements with SmartBank which will take effect following the consummation of the merger. The Foothills Bancorp board of directors was aware of these interests when it approved and adopted the merger agreement. See “The Merger Interests of Officers and Directors of Foothills Bancorp and Foothills Bank in the Merger” beginning on page 55.

The opinion delivered to the Foothills Bancorp’s board of directors by its financial advisor prior to the signing of the merger agreement does not reflect any changes in circumstances since the date of the opinion.

Monroe Financial, the financial advisor to Foothills Bancorp, delivered its written opinion to the Foothills Bancorp’s board of directors on June 27, 2018. Changes in the operations and prospects of Foothills Bancorp, Foothills Bank, SmartFinancial, or SmartBank, general market and economic conditions, and other factors that may be beyond the control of Foothills Bancorp, Foothills Bank, SmartFinancial, and SmartBank, may alter the value of Foothills Bancorp, Foothills Bank, SmartFinancial, or SmartBank, or the value of shares of Foothills Bancorp common stock or SmartFinancial common stock by the time the merger is completed. The opinion does not speak as of the date of this document, at the time the merger is completed or as of any date other than the date of the opinion. The opinion is attached as Appendix C to this proxy statement/prospectus. For a description of the opinion, see “The Merger — Opinion of Foothills Bancorp’s Financial Advisor” beginning on page 41.

Holders of Foothills Bancorp common stock will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Holders of Foothills Bancorp common stock currently have the right to vote in the election of the board of directors of and on other matters affecting Foothills Bancorp. Upon the completion of the merger, each Foothills Bancorp shareholder who receives shares of SmartFinancial common stock as merger consideration will become a shareholder of SmartFinancial with a percentage ownership of SmartFinancial that is smaller than such shareholder’s percentage ownership of Foothills Bancorp. It is currently expected that the former shareholders of Foothills Bancorp as a group will receive shares of SmartFinancial common stock constituting approximately

19

TABLE OF CONTENTS

8.5% of the outstanding shares of SmartFinancial common stock immediately after the effective time of the merger. Because of this, Foothills Bancorp shareholders may have less influence on the management and policies of SmartFinancial than they now have on the management and policies of Foothills Bancorp.

The shares of SmartFinancial common stock to be received by Foothills Bancorp shareholders as consideration for the merger will have different rights from the shares of Foothills Bancorp common stock.

Upon completion of the merger, Foothills Bancorp shareholders will become SmartFinancial shareholders and their rights as shareholders will continue to be governed by Tennessee corporate law, and will additionally be governed by the SmartFinancial charter and bylaws. The rights associated with Foothills Bancorp common stock are different from the rights associated with SmartFinancial common stock. For example, under Tennessee law, dissenters’ rights are not available to holders of a class of stock that is traded on a national securities exchange, such as SmartFinancial common stock, whereas generally under Tennessee law dissenters’ rights are available to holders of a class of stock that is not traded on a national securities exchange, such as Foothills Bancorp common stock. Please see “Comparative Rights of SmartFinancial and Foothills Bancorp Shareholders” beginning on page 95 for a further discussion of the different rights associated with SmartFinancial common stock.

The merger will not be completed unless important conditions are satisfied.

Specified conditions set forth in the merger agreement must be satisfied or waived to complete the merger. If the conditions are not satisfied or waived, the merger will not occur or will be delayed and each of SmartFinancial and Foothills Bancorp may lose some or all of the intended benefits and cost savings of the merger. See “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 70.

Termination of the merger agreement could negatively impact Foothills Bancorp.

If the merger agreement is terminated before closing, Foothills Bancorp may suffer various consequences. For example, Foothills Bancorp’s business may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits and cost savings of completing the merger. Also, Foothills Bancorp will have incurred substantial expenses in connection with the proposed merger without realizing the benefits and cost savings of the merger. If the merger agreement is terminated and the Foothills Bancorp board of directors seeks another merger or business combination, Foothills Bancorp shareholders cannot be certain that Foothills Bancorp will be able to find a party willing to pay the equivalent or greater consideration than that which SmartFinancial has agreed to pay in the merger. In addition, if the merger agreement is terminated under certain circumstances, Foothills Bancorp may be required to pay SmartFinancial a termination fee. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 71.

SmartFinancial and Foothills Bancorp will be subject to business uncertainties and Foothills Bancorp will be subject to contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on SmartFinancial or Foothills Bancorp. These uncertainties may impair the ability of SmartFinancial or Foothills Bancorp to attract, retain and motivate strategic personnel until the merger is consummated, and could cause customers and others that deal with Foothills Bancorp or SmartFinancial to seek to change existing business relationships. Experienced employees in the financial services industry are in high demand, and competition for their talents can be intense. Employees of Foothills Bancorp may experience uncertainty about their future role with the surviving corporation until, or even after, strategies with regard to the combined company are announced or executed. If any key employees of Foothills Bancorp or SmartFinancial depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the surviving corporation, Foothills Bancorp’s business prior to the merger closing and SmartFinancial’s business after the merger closes could be harmed. In addition, subject to certain exceptions, Foothills Bancorp has agreed to operate its business in the ordinary course, and to comply with certain other operational restrictions, prior to closing the merger. See “The Merger Agreement — Conduct of Business Pending the Merger” beginning on page 63.

The merger may distract SmartFinancial’s management from its other responsibilities.

The acquisition of Foothills Bancorp could cause SmartFinancial’s management to focus its time and energies on matters related to the acquisition that otherwise would be directed to the business and operations of

20

TABLE OF CONTENTS

SmartFinancial. Any such distraction on the part of management, if significant, could affect SmartFinancial’s ability to service existing business and develop new business, adversely affect its business and earnings and negatively impact the trading price of its common stock.

The market price of SmartFinancial common stock may decline as a result of the merger.

The market price of SmartFinancial common stock may decline as a result of the merger if SmartFinancial does not achieve the perceived benefits and cost savings of the merger or the effect of the merger on SmartFinancial’s financial results is not consistent with the expectations of financial or industry analysts. In addition, upon completion of the merger, shareholders will own interests in a combined company operating an expanded business with a different mix of assets, risks and liabilities. Shareholders may not wish to continue to invest in the combined company, or for other reasons may wish to dispose of some or all of their shares of the combined company.

SmartFinancial’s management will have broad discretion as to the use of assets acquired from this merger, and may not use these assets effectively.

SmartFinancial’s management will have broad discretion in the application of the assets from this merger and could utilize the assets in ways that do not improve SmartFinancial’s results of operations or enhance the value of its common stock. Foothills Bancorp shareholders will not have the opportunity, as part of their investment decision, to assess whether these acquired assets are being used appropriately. SmartFinancial’s failure to utilize these assets effectively could have a material adverse effect on the combined company, delay the development of products and cause the price of SmartFinancial common stock to decline.

Risks Related to SmartFinancial

If SmartFinancial’s allowance for loan and lease losses and fair value adjustments with respect to acquired loans is not sufficient to cover actual loan losses, its earnings will be adversely affected.

SmartFinancial’s success depends significantly on the quality of its assets, particularly loans. Like other financial institutions, the company is exposed to the risk that its borrowers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs to dispose of the collateral. As a result, SmartFinancial may experience significant loan losses that may have a material adverse effect on its operating results and financial condition.

SmartFinancial maintains an allowance for loan and lease losses with respect to its loan portfolio, in an attempt to cover loan losses inherent in its loan portfolio. In determining the size of the allowance, the company relies on an analysis of the loan portfolio, its experience and its evaluation of general economic conditions. The company also makes various assumptions and judgments about the collectability of the loan portfolio, including the diversification in the portfolio, the effect of changes in the economy on real estate and other collateral values, the results of recent regulatory examinations, the effects on the loan portfolio of current economic conditions and their probable impact on borrowers, the amount of charge-offs for the period, and the amount of nonperforming loans and related collateral security.

The application of the acquisition method of accounting in acquisitions has impacted SmartFinancial’s allowance for loan and lease losses. Under the acquisition method of accounting, all acquired loans were recorded in the company’s consolidated financial statements at their fair values at the time of acquisition and the related allowance for loan and lease losses was eliminated because credit quality, among other factors, was considered in the determination of fair value. To the extent that estimates of fair values are too high, the company will incur losses associated with the acquired loans. The allowance, if any, associated with SmartFinancial’s purchased credit impaired loans reflects deterioration in cash flows since acquisition resulting from its quarterly re-estimation of cash flows which involves complex cash flow projections and significant judgment on timing of loan resolution.

If SmartFinancial’s analysis or assumptions prove to be incorrect, its current allowance may not be sufficient, and adjustments may be necessary to allow for different economic conditions or adverse developments in the loan portfolio. Material additions to the allowance for loan and lease losses would materially decrease net income and adversely affect the company’s general financial condition. As an example, an increase in the amount of the reserve to organic loans of 0.05 percent in 2017 would have resulted in a reduction of approximately 3 percent to pre-tax income.

21

TABLE OF CONTENTS

In addition, federal and state regulators periodically review the company’s allowance for loan and lease losses and may require it to increase our allowance for loan and lease losses or recognize further loan charge-offs, based on judgments different than those of management. Any increase in our allowance for loan and lease losses or loan charge-offs required by these regulatory agencies could have a material adverse effect on SmartFinancial’s operating results and financial condition.

SmartFinancial’s success depends significantly on economic conditions in its market areas.

Unlike larger organizations that are more geographically diversified, SmartFinancial’s branches are currently concentrated in Eastern Tennessee, Alabama, and the Florida Panhandle. As a result of this geographic concentration, SmartFinancial’s financial results will depend largely upon economic conditions in these market areas. If the communities in which SmartFinancial operates do not grow or if prevailing economic conditions, locally or nationally, deteriorate, this may have a significant impact on the amount of loans that the company originates, the ability of its borrowers to repay these loans and the value of the collateral securing these loans. A return to economic downturn conditions caused by inflation, recession, unemployment, government action, natural disasters or other factors beyond the company’s control would likely contribute to the deterioration of the quality of the loan portfolio and reduce the level of deposits, which in turn would have an adverse effect on SmartFinancial’s business. As an example, the Florida Panhandle area has been and will continue to be susceptible to major hurricanes, floods, and tropical storms. In 2016, certain of SmartBank’s markets in Eastern Tennessee were disrupted by wildfires which damaged homes and businesses. In addition, some portions of the bank’s target market are in areas which a substantial portion of the economy is dependent upon tourism. The tourism industry tends to be more sensitive than the economy as a whole to changes in unemployment, inflation, wage growth, and other factors which affect consumer’s financial condition and sentiment.

SmartFinancial’s organic loan growth may be limited by regulatory constraints

During 2017 many of the regulatory agencies, including SmartFinancial’s primary federal regulator, increased their focus on the application of an interagency guidance issued in 2006, titled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices.” The 2006 interagency guidance focuses on the risks of high levels of concentration in commercial real estate (which we refer to as “CRE”) lending at banking institutions, and specifically addresses two supervisory criteria:

Construction concentration criterion: Loans for construction, land, and land development (which we refer to as “CLD” or “construction”)
represent 100 percent or more of a banking institution’s total risk-based capital, commonly referred to as the “100 ratio”
Total CRE concentration criterion: Total nonowner-occupied CRE loans (including CLD loans), as defined in the 2006 guidance (“total CRE”), represent 300 percent or more of the institution’s total risk-based capital, and growth in total CRE lending has increased by 50 percent or more during the previous 36 months, commonly referred to as the “300 ratio”

The guidance states that banking institutions exceeding the concentration levels mentioned in the two supervisory criteria should have in place enhanced credit risk controls, including stress testing of CRE portfolios. The guidance also states that institutions with CRE concentration levels above those specified in the two supervisory criteria may be identified for further supervisory analysis. Under the guidance for every $1 in increased capital only $1 can be leveraged to construction lending and only $3 can be lent to total CRE lending. In comparison $1 of capital can be leveraged into about $10 other types of lending. At the end of 2017, the loan portfolio was below both the 100 and 300 ratio as laid out in the guidance, but given the guidance SmartFinancial’s ability to grow those loan types could well be constrained by the amount it is also able to grow capital.

To the extent that SmartFinancial is unable to identify and consummate attractive acquisitions, or increase loans through organic loan growth, it may be unable to successfully implement its growth strategy, which could materially and adversely affect the company.

A substantial part of SmartFinancial’s historical growth has been a result of acquisitions. SmartFinancial intends to continue to grow its business through strategic acquisitions of banking franchises coupled with organic loan growth. Previous availability of attractive acquisition targets may not be indicative of future acquisition

22

TABLE OF CONTENTS

opportunities, and SmartFinancial may be unable to identify any acquisition targets that meet its investment objectives. To the extent that SmartFinancial is unable to find suitable acquisition candidates, an important component of its strategy may be lost. If SmartFinancial is able to identify attractive acquisition opportunities, it must generally satisfy a number of conditions prior to completing any such transaction, including certain bank regulatory approvals, which have become substantially more difficult, time-consuming and unpredictable as a result of the recent financial crisis. Additionally, any future acquisitions may not produce the revenue, earnings or synergies that SmartFinancial anticipated. As SmartFinancial’s purchased credit impaired loan portfolio, which produces substantially higher yields than its organic and purchased non-credit impaired loan portfolios, is paid down, SmartFinancial expects downward pressure on its income. If SmartFinancial is unable to replace its purchased credit impaired loans and the related accretion with a significantly higher level of new performing loans and other earning assets due to its inability to identify attractive acquisition opportunities, a decline in loan demand, competition from other financial institutions in its markets, stagnation or continued deterioration of economic conditions, or other conditions, its financial condition and earnings may be adversely affected.

SmartFinancial’s strategic growth plan contemplates additional acquisitions, which could expose it to additional risks.

SmartFinancial periodically evaluates opportunities to acquire additional financial institutions. As a result, the company may engage in negotiations or discussions that, if they were to result in a transaction, could have a material effect on operating results and financial condition, including short and long-term liquidity. SmartFinancial’s acquisition activities could be material and could require the use of a substantial amount of common stock, cash, other liquid assets, and/or debt.

SmartFinancial’s acquisition activities could involve a number of additional risks, including the risks of:

incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in management’s attention being diverted from the operation of our existing business;
using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets;
incurring time and expense required to integrate the operations and personnel of the combined businesses, creating an adverse short-term effect on results of operations; and
losing key employees and customers as a result of an acquisition that is poorly received.

SmartFinancial’s recent acquisition and future expansion may result in additional risks.

Over the last three years SmartFinancial has completed the acquisitions of Legacy SmartFinancial, Tennessee Bancshares, Capstone, in addition to the proposed merger with Foothills Bancorp. SmartFinancial expects to continue to expand in its current markets and in other select markets through additional branches or through additional acquisitions of all or part of other financial institutions. These types of expansions involve various risks, including the risks detailed below.

Growth. As a result of its merger activity, SmartFinancial may be unable to successfully:

maintain loan quality in the context of significant loan growth;
obtain regulatory and other approvals;
attract sufficient deposits and capital to fund anticipated loan growth;
maintain adequate common equity and regulatory capital;
avoid diversion or disruption of existing operations or management as well as those of the acquired institution;
maintain adequate management personnel and systems to oversee and support such growth;
maintain adequate internal audit, loan review and compliance functions; and
implement additional policies, procedures and operating systems required to support such growth.

23

TABLE OF CONTENTS

Results of Operations. There is no assurance that existing offices or future offices will maintain or achieve deposit levels, loan balances or other operating results necessary to avoid losses or produce profits. SmartFinancial’s growth strategy necessarily entails growth in overhead expenses as it routinely adds new offices and staff. The company’s historical results may not be indicative of future results or results that may be achieved as it continues to increase the number and concentration of its branch offices in newer markets.

Development of offices. There are considerable costs involved in opening branches, and new branches generally do not generate sufficient revenues to offset their costs until they have been in operation for at least a year or more. Accordingly, any new branches SmartFinancial establishes can be expected to negatively impact its earnings for some period of time until they reach certain economies of scale. The same is true for SmartFinancial’s efforts to expand in these markets with the hiring of additional seasoned professionals with significant experience in that market. SmartFinancial’s expenses could be further increased if it encounters delays in opening any of our new branches. SmartFinancial may be unable to accomplish future branch expansion plans due to a lack of available satisfactory sites, difficulties in acquiring such sites, failure to receive any required regulatory approvals, increased expenses or loss of potential sites due to complexities associated with zoning and permitting processes, higher than anticipated merger and acquisition costs, or other factors. Finally, SmartFinancial has no assurance any branch will be successful even after it has been established or acquired, as the case may be.

Regulatory and economic factors. SmartFinancial’s growth and expansion plans may be adversely affected by a number of regulatory and economic developments or other events. Failure to obtain required regulatory approvals, changes in laws and regulations or other regulatory developments, and changes in prevailing economic conditions or other unanticipated events may prevent or adversely affect SmartFinancial’s continued growth and expansion. Such factors may cause SmartFinancial to alter its growth and expansion plans or slow or halt the growth and expansion process, which may prevent SmartFinancial from entering into or expanding in its targeted markets or allow competitors to gain or retain market share in our existing markets.

Failure to successfully address these and other issues related to SmartFinancial’s expansion could have a material adverse effect on its financial condition and results of operations, and could adversely affect its ability to successfully implement its business strategy. Also, if SmartFinancial’s growth occurs more slowly than anticipated or declines, its results of operations and financial condition could be materially adversely affected.

Integrating recent merger partners into SmartBank’s may be more difficult, costly, or time-consuming than anticipated.

SmartFinancial is still in the process of integrating Southern Community Bank and recently integrated Capstone Bank with SmartBank’s business. A successful integration of these businesses with SmartFinancial will depend substantially on its ability to consolidate operations, corporate cultures, systems and procedures and to eliminate redundancies and costs. SmartFinancial may not be able to combine our business with one or both of the targets’ businesses without encountering difficulties, such as:

the loss of key employees;
disruption of operations and business;
inability to maintain and increase competitive presence;
loan and deposit attrition, customer loss and revenue loss, including as a result of any decision SmartFinancial may make to close one or more locations;
possible inconsistencies in standards, control procedures and policies;
unexpected problems with costs, operations, personnel, technology, and credit; and/or
problems with the assimilation of new operations, sites or personnel, which could divert resources from regular banking operations.

Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit SmartFinancial’s successful integration of one or both of the targets’ businesses. Further, SmartFinancial acquired Capstone and Tennessee Bancshares with the expectation that the acquisitions will result in various benefits including, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company, cross selling opportunities, technological efficiencies, cost savings, and

24

TABLE OF CONTENTS

operating efficiencies. Achieving the anticipated benefits of this acquisition is subject to a number of uncertainties, including whether SmartFinancial integrated Capstone’s and/or Southern Community Bank’s businesses, including its organizational culture, operations, technologies, services, and products, in an efficient and effective manner, SmartFinancial’s ability to achieve the estimated noninterest expense savings it believes it can achieve, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits on the anticipated timeframe, or at all, could result in a reduction in the price of SmartFinancial’s shares as well as in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could materially and adversely affect its business, results of operations and financial condition. Additionally, SmartFinancial made fair value estimates of certain assets and liabilities in recording its acquisition of Capstone and will make fair value estimates of certain assets and liabilities in recording its acquisition of Southern Community Bank. Actual values of these assets and liabilities could differ from SmartFinancial’s estimates, which could result in its not achieving the anticipated benefits of the acquisition. Finally, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.

SmartFinancial may face risks with respect to future acquisitions.

When SmartFinancial attempts to expand its business through mergers and acquisitions (as it has done over the last three years), SmartFinancial seek targets that are culturally similar to it, have experienced management and possess either market presence or have potential for improved profitability through economies of scale or expanded services. In addition to the general risks associated with SmartFinancial’s growth plans which are highlighted above, in general acquiring other banks, businesses or branches, particularly those in markets with which SmartFinancial is less familiar, involves various risks commonly associated with acquisitions, including, among other things:

the time and costs associated with identifying and evaluating potential acquisition and merger targets;
inaccuracies in the estimates and judgments used to evaluate credit, operations, management, and market risks with respect to the target institution;
the time and costs of evaluating new markets, hiring experienced local management, including as a result of de novo expansion into a market, and opening new bank locations, and the time lags between these activities, and the generation of sufficient assets and deposits to support the significant costs of the expansion that SmartFinancial may incur, particularly in the first 12 to 24 months of operations;
our ability to finance an acquisition and possible dilution to SmartFinancial’s existing shareholders;
the diversion of SmartFinancial’s management’s attention to the negotiation of a transaction and integration of an acquired company’s operations with its own;
the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on SmartFinancial’s results of operations;
entry into new markets where SmartFinancial has limited or no direct prior experience;
closing delays and increased expenses related to the resolution of lawsuits filed by SmartFinancial’s shareholders or shareholders of companies we may seek to acquire;
the inability to receive regulatory approvals timely or at all, including as a result of community objections, or such approvals being restrictively conditional; and
risks associated with integrating the operations, technologies and personnel of the acquired business.

SmartFinancial expects to continue to evaluate merger and acquisition opportunities that are presented to it in SmartFinancial’s current markets as well as other markets throughout the region and conduct due diligence activities related to possible transactions with other financial institutions. As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash or equity securities and related capital raising transactions may occur at any time. Generally, acquisitions of financial institutions involve the payment of a premium over book and market values, and, therefore, some dilution of our book value and fully diluted earnings per share may occur in connection with any future transaction. Failure to realize the expected revenue increases, cost savings, increases in product presence, and/or other projected benefits from an acquisition could have a material adverse effect on SmartFinancial’s financial condition and results of operations.

25

TABLE OF CONTENTS

In addition, SmartFinancial may face significant competition from numerous other financial services institutions, many of which may have greater financial resources than SmartFinancial does, when considering acquisition opportunities. Accordingly, attractive acquisition opportunities may not be available to SmartFinancial. There can be no assurance that SmartFinancial will be successful in identifying or completing any potential future acquisitions.

SmartBank’s concentration in loans secured by real estate, particularly commercial real estate and construction and development, is subject to risks that could adversely affect results of operations and financial condition.

SmartBank offers a variety of secured loans, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer, and other loans. Many of SmartBank’s loans are secured by real estate (both residential and commercial) in its market areas. Consequently, declines in economic conditions in these market areas may have a greater effect on SmartBank’s earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse. At December 31, 2017, approximately 81 percent of SmartBank’s loans had real estate as a primary or secondary component of collateral, with 11 percent of its loans secured by construction and development collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If SmartBank is required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, its earnings and capital could be adversely affected. Real estate values declined significantly during the recent economic crisis and may decline similarly in future periods. Although real estate prices in most of SmartBank’s markets have stabilized or are improving, a renewed decline in real estate values would expose it to further deterioration in the value of the collateral for all loans secured by real estate and may adversely affect its results of operations and financial condition.

Commercial real estate loans are generally viewed as having more risk of default than residential real estate loans, particularly when there is a downturn in the business cycle. They are also typically larger than residential real estate loans and consumer loans and depend on cash flows from the owner’s business or the property to service the debt. Cash flows may be affected significantly by general economic conditions and a downturn in the local economy or in occupancy rates in the local economy where the property is located, each of which could increase the likelihood of default on the loan. Because the loan portfolio contains a number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in the percentage of nonperforming loans. An increase in nonperforming loans could result in a loss of earnings from these loans, an increase in the provision for loan losses and an increase in charge-offs, all of which could have a material adverse effect on SmartFinancial’s results of operations and financial condition, which could negatively affect its stock price.

If a commercial real estate loan did default there would be legal expenses associated with obtaining the real estate which is typically collateral for the loan. In the last several years the amount of these legal expenses has been low, compared to periods when the defaults of commercial real estate loans have been higher. Once SmartBank obtains the collateral for the commercial real estate loan the loan is put into foreclosed assets. Foreclosed assets generally do not produce income but do have the costs associated with the ownership of real estate, principally real estate taxes and maintenance costs. Since these assets have a cost to maintain, SmartBank’s goal is to keep costs at a minimum by liquidating the assets as soon as possible. Generally, in spite of SmartFinancial’s best efforts and intentions, foreclosed assets are sold at a loss. Among other reasons the rate of loan defaults increase as the economy worsens and declining economic environment and political turmoil generally results in downward pressure on foreclosed asset values and increased marketing periods. In simple terms, for banks like SmartBank that have a large amount of commercial real estate loans, a worsening economy will typically lead to higher loan delinquencies, followed by increases in loan defaults and greater legal expenses, leading to higher foreclosed asset levels with an increased expense to maintain the properties, ending in a sale of the foreclosed assets - most likely at a loss.

SmartBank’s largest loan relationships currently make up a significant percentage of its total loan portfolio.

As of December 31, 2017, SmartBank’s 10 largest borrowing relationships totaled approximately $149 million in commitments (including unfunded commitments), or approximately 11 percent of its total loan portfolio. The concentration risk associated with having a small number of relatively large loan relationships is that, if one or

26

TABLE OF CONTENTS

more of these relationships were to become delinquent or suffer default, it could be at risk of material losses. The allowance for loan losses may not be adequate to cover losses associated with any of these relationships, and any loss or increase in the allowance could have a material adverse effect on SmartBank and SmartFinancial’s business, financial condition, results of operations, and prospects.

SmartFinancial’s and SmartBank’s corporate structure provides for decision-making authority by regional presidents and banking teams. SmartBank’s business, financial condition, results of operations, and prospects could be negatively affected if employees do not follow internal policies or are negligent in their decision-making.

SmartFinancial attracts and retains its management talent by empowering them to make certain business decisions on a local level. Lending authorities are assigned to relationship managers, regional presidents, and regional credit officers to make credit decisions based on their experience. Additionally, all loans not in full compliance with the bank’s loan policy must be approved by an additional level of authority with adequate credit authority for the exposure and any exposure in excess of $2.8 million in total relationship exposure with some sample loans below this amount are reviewed by SmartFinancial’s Chief Credit Officer in Knoxville, Tennessee. Moreover, for decisions that fall outside of the assigned individual authorities at every level, SmartFinancial’s teams are required to obtain approval from its Officer Loan Committee and/or Directors Loan Committee. SmartFinancial’s local bankers may not follow its internal procedures or otherwise act in its best interests with respect to their decision-making. A failure of SmartFinancial’s employees to follow its internal policies, or actions taken by its employees that are negligent could have a material adverse effect on its business, financial condition, results of operations, and prospects.

Declines in the businesses or industries of SmartBank’s customers could cause increased credit losses and decreased loan balances, which could adversely affect SmartFinancial’s financial results.

The small to medium-sized businesses that SmartFinancial lends to may have fewer resources to weather adverse business developments. That may impair a borrower’s ability to repay a loan, and such impairment could have an adverse effect on our business, financial condition and results of operations. A substantial focus of SmartFinancial’s marketing and business strategy is to serve small to medium-sized businesses in its market areas. As a result, a relatively high percentage of the loan portfolio consists of commercial loans to such businesses. SmartFinancial further anticipates an increase in the amount of loans to small to medium-sized businesses during 2018.

Small to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan. In addition, the success of a small and medium-sized business often depends on the management skills, talents and efforts of one or two people or a small group of people, and the death, disability or resignation of one or more of these people could have an adverse impact on the business and its ability to repay its loan. If general economic conditions negatively impact the markets in which SmartFinancial operates and small to medium-sized businesses are adversely affected or its borrowers are otherwise harmed by adverse business developments, this, in turn, could have an adverse effect on its business, financial condition, and results of operations.

Certain of SmartBank’s deposits and other funding sources may be volatile and impact liquidity.

In addition to the traditional core deposits, such as demand deposit accounts, interest checking, money market savings, and certificates of deposits less than $250,000, SmartBank utilizes or in the past has utilized several noncore funding sources, such as brokered certificates of deposit, Federal Home Loan Bank (which we refer to as “FHLB”) of Cincinnati advances, federal funds purchased, and other sources. SmartBank utilizes these noncore funding sources to fund the ongoing operations and growth. The availability of these noncore funding sources is subject to broad economic conditions and to investor assessment of SmartFinancial’s financial strength and, as such, the cost of funds may fluctuate significantly and/or be restricted, thus impacting its net interest income, its immediate liquidity, and/or its access to additional liquidity. SmartFinancial has somewhat similar risks to the extent high balance core deposits exceed the amount of deposit insurance coverage available.

SmartFinancial imposes certain internal limits as to the absolute level of noncore funding it will incur at any point in time. Should SmartFinancial exceed those limitations, it may need to modify our growth plans, liquidate certain assets, participate loans to correspondents, or execute other actions to allow for it to return to an acceptable level of noncore funding within a reasonable amount of time.

27

TABLE OF CONTENTS

SmartFinancial faces additional risks due to its increase in mortgage banking activities that have and could negatively impact its net income and profitability.

SmartFinancial, through SmartBank, has established mortgage banking operations which expose it to risks that are different from its retail and commercial banking operations. During higher and rising interest rate environments, the demand for mortgage loans and the level of refinancing activity tends to decline, which can lead to reduced volumes of business and lower revenues, which could negatively impact its earnings. While SmartFinancial has been experiencing historically low interest rates, the low interest rate environment likely will not continue indefinitely. Because SmartFinancial sells a substantial portion of the mortgage loans it originates, the profitability of its mortgage banking operations also depends in large part on its ability to aggregate a high volume of loans and sell them in the secondary market at a gain. Thus, in addition to SmartFinancial’s dependence on the interest rate environment, it is dependent upon (a) the existence of an active secondary market and (b) its ability to profitably sell loans into that market. SmartFinancial’s mortgage banking operations incurred additional expenses over $2.1 million in 2017 and generated noninterest income of $1,058 thousand. Profitability of SmartFinancial’s mortgage operations will depend upon its ability to increase production and thus income while holding or reducing costs. In addition, mortgages sold to third-party investors are typically subject to certain repurchase provisions related to borrower refinancing, defaults, fraud or other reasons stipulated in the applicable third-party investor agreements. If the fair value of a loan when repurchased is less than the fair value when sold, SmartFinancial may be required to charge such shortfall to earnings.

Any expansion into new lines of business might not be successful.

As part of SmartFinancial’s ongoing strategic plan, it will continue to consider expansion into new lines of business through the acquisition of third parties, or through organic growth and development. There are substantial risks associated with such efforts, including risks that (a) revenues from such activities might not be sufficient to offset the development, compliance, and other implementation costs, (b) competing products and services and shifting market preferences might affect the profitability of such activities, and (c) SmartFinancial’s internal controls might be inadequate to manage the risks associated with new activities. Furthermore, it is possible that SmartFinancial’s unfamiliarity with new lines of business might adversely affect the success of such actions. If any such expansions into new product markets are not successful, there could be an adverse effect on SmartFinancial’s financial condition and results of operations.

SmartFinancial may need additional access to capital, which it may be unable to obtain on attractive terms or at all.

SmartFinancial may need to incur additional debt or equity financing in the future to make strategic acquisitions or investments, for future growth or to fund losses or additional provision for loan losses in the future. SmartFinancial’s ability to raise additional capital, if needed, will depend in part on conditions in the capital markets at that time, which are outside of its control, and on its financial performance. Accordingly, SmartFinancial may be unable to raise additional capital, if and when needed, on terms acceptable to it, or at all. If SmartFinancial cannot raise additional capital when needed, its ability to further expand its operations through internal growth and acquisitions could be materially impaired and its stock price negatively affected.

Any deficiencies in SmartFinancial’s financial reporting or internal controls could materially and adversely affect the company, including resulting in material misstatements in its financial statements, and could materially and adversely affect the market price of its common stock.

If SmartFinancial fails to maintain effective internal controls over financial reporting, its operating results could be harmed and it could result in a material misstatement in its financial statements in the future. Inferior controls and procedures or the identification of accounting errors could cause SmartFinancial’s investors to lose confidence in its internal controls and question its reported financial information, which, among other things, could have a negative impact on the trading price of its common stock. Additionally, SmartFinancial could become subject to increased regulatory scrutiny and a higher risk of shareholder litigation, which could result in significant additional expenses and require additional financial and management resources.

Inability to retain senior management and key employees or to attract new experienced financial services professionals could impair SmartFinancial’s relationship with its customers, reduce growth, and adversely affect its business.

SmartFinancial has assembled a senior management team which has substantial background and experience in banking and financial services. Moreover, much of SmartFinancial’s organic loan growth in 2012 through 2017

28

TABLE OF CONTENTS

was the result of its ability to attract experienced financial services professionals who have been able to attract customers from other financial institutions. Inability to retain these key personnel or to continue to attract experienced lenders with established books of business could negatively impact SmartFinancial’s growth because of the loss of these individuals’ skills and customer relationships and/or the potential difficulty of promptly replacing them.

SmartFinancial may be subject to losses due to fraudulent and negligent conduct of its loan customers, deposit customers, third party service providers, and employees.

When SmartFinancial makes loans to individuals or entities, it relies upon information supplied by borrowers and other third parties, including information contained in the applicant’s loan application, property appraisal reports, title information and the borrower’s net worth, liquidity and cash flow information. While SmartFinancial attempts to verify information provided through available sources, it cannot be certain all such information is correct or complete. SmartFinancial’s reliance on incorrect or incomplete information could have a material adverse effect on its financial condition or results of operations.

The value of SmartFinancial’s goodwill and other intangible assets may decline in the future.

As of December 31, 2017, SmartFinancial had $50.8 million of goodwill and other intangible assets. A significant decline in SmartFinancial’s financial condition, a significant adverse change in the business climate, slower growth rates, or a significant and sustained decline in the price of SmartFinancial’s common stock may necessitate taking charges in the future related to the impairment of its goodwill and other intangible assets. If SmartFinancial were to conclude that a future write-down of goodwill and other intangible assets is necessary, it would record the appropriate charge, which could have a material adverse effect on its financial condition and results of operations. Future acquisitions could result in additional goodwill.

SmartFinancial’s ability to declare and pay dividends is limited.

There can be no assurance of whether or when the company may pay dividends on SmartFinancial’s common stock in the future. Future dividends, if any, will be declared and paid at the discretion of the SmartFinancial board of directors and will depend on a number of factors. SmartFinancial’s principal source of funds used to pay cash dividends on its common stock will be dividends that it receives from SmartBank. Although SmartBank’s asset quality, earnings performance, liquidity, and capital requirements will be taken into account before SmartFinancial declares or pays any future dividends on its common stock, the SmartFinancial board of directors will also consider its liquidity and capital requirements and the SmartFinancial board of directors could determine to declare and pay dividends without relying on dividend payments from SmartBank.

Federal and state banking laws and regulations and state corporate laws restrict the amount of dividends SmartFinancial may declare and pay. For example, Federal Reserve Board regulations implementing the capital rules required under Basel III do not permit dividends unless capital levels exceed certain higher levels applying capital conservation buffers that began to apply on January 1, 2016 and are being phased in over three years.

Further, in connection with the Capstone merger, SmartFinancial entered into a loan agreement for a revolving line of credit of up to $15 million. Under the terms of the loan agreement, SmartFinancial may not pay dividends on its common stock if it does not satisfy certain financial covenants and capital ratio requirements.

29

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus, including the appendixes hereto and information incorporated by reference, contains statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (which we refer to as the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (which we refer to as the “Exchange Act”). Forward-looking statements may relate to, among other matters, the financial condition, results of operations, plans, objectives, future performance, and business of each of SmartFinancial and Foothills Bancorp, as well as certain information relating to the merger. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. The actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which SmartFinancial and Foothills Bancorp are unsure, including many factors that are beyond their control. The words “may,” “would,” “could,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “contemplate,” “seek,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. You should note that the discussion of SmartFinancial and Foothills Bancorp’s reasons for the merger contain many forward-looking statements that describe beliefs, assumptions, expectations, and estimates of the board or management of each of SmartFinancial and Foothills Bancorp and public sources as of the indicated dates and those assumptions, expectations and estimates may have changed as of the date of this proxy statement/prospectus. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from these forward-looking statements.

The ability to predict results or the actual effects of the combined company’s plans and strategies is inherently uncertain. Some of the factors that may cause actual results to differ materially from those contemplated by the forward-looking statements, include, but are not limited to, those identified in the section of this proxy statement/prospectus titled “Risk Factors” beginning on page 17 of this proxy statement/prospectus and the following:

expected revenue synergies and cost savings from the combination may not be fully realized or may take longer than anticipated to be realized;
disruption from the merger with customers, suppliers or employees or other business partners’ relationships;
the risk of successful integration of the two companies’ business;
a material adverse change in the financial condition of SmartFinancial or Foothills Bancorp;
loan losses that exceed the level of allowance for loan losses of the combined company;
lower than expected revenue following the merger;
SmartFinancial’s ability to manage the combined company’s growth;
the risks inherent or associated with a merger or acquisition, like the merger;
ability to obtain governmental approvals of the combination on the proposed terms and schedule;
general economic conditions, either nationally or in certain of the Metropolitan Statistical Areas (which we refer to as “MSAs”) in which we operate, that are less favorable than expected resulting in, among other things, a deterioration of the quality of the combined company’s loan portfolio and the demand for its products and services;
failure of Foothills Bancorp’s shareholders to approve the merger agreement and the merger;
the ability to obtain required governmental approvals of the merger and for such approvals to not be revoked;
reputational risk and the risk of adverse reaction of SmartFinancial’s, SmartBank’s, Foothills Bancorp’s or Foothills Bank’s customers, suppliers, employees, or other business partners to the merger;
the failure of the closing conditions to be satisfied or any unexpected delay in closing the merger;

30

TABLE OF CONTENTS

the risk that the integration of SmartFinancial and Foothills Bancorp’s operations will be materially delayed or will be more costly or difficult than expected;
the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
the dilution caused by SmartFinancial’s issuance of additional shares of its common stock in the merger or related to the merger;
continuation of the historically low short-term interest rate environment;
rapid fluctuations or unanticipated changes in interest rates on loans or deposits;
the inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels or regulatory agencies in connection with those agencies’ approval of the merger;
credit losses as a result of, among other potential factors, declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors;
the amount of the combined financial institution’s loan portfolio collateralized by real estate and weaknesses in the real estate market;
restrictions or conditions imposed by the combined financial institution’s regulators on its operations;
the adequacy of the level of the combined financial institution’s allowance for loan losses and the amount of loan loss provisions required in future periods;
examinations by the combined financial institution’s regulatory authorities, including the possibility that the regulatory authorities may, among other things, require the combined financial institution to increase its allowance for loan losses or write down assets;
reduced earnings due to higher other-than-temporary impairment charges resulting from additional decline in the value of the combined financial institution’s securities portfolio, specifically as a result of increasing default rates, and loss severities on the underlying real estate collateral;
changes in political conditions or the legislative or regulatory environment, including governmental initiatives affecting the financial services industry;
general economic conditions resulting in, among other things, a deterioration in credit quality, and other general competitive, political and market conditions;
increased competition with other financial institutions and other changes occurring in business conditions, including inflation.

Additional factors are discussed in the reports filed with the SEC by SmartFinancial. See “Where You Can Find More Information” on page 136.

The above list is not intended to be exhaustive and there may be other factors that would preclude us from realizing the predictions made in the forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Foothills Bancorp shareholders are cautioned not to place undue reliance on such statements, which speak only as of the date of this proxy statement/prospectus.

All subsequent written or oral forward-looking statements concerning the merger or other matters addressed in this proxy statement/prospectus and attributable to SmartFinancial, Foothills Bancorp, or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, SmartFinancial and Foothills Bancorp undertake no obligation to update such forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

31

TABLE OF CONTENTS

SPECIAL MEETING OF SHAREHOLDERS

General

With respect to Foothills Bancorp shareholders, this document constitutes a proxy statement of Foothills Bancorp in connection with its solicitation of proxies from its shareholders for the vote on the merger proposal, and on the adjournment proposal. The proxy statement/prospectus is being mailed to Foothills Bancorp shareholders of record on or about September 19, 2018, together with the notice of the special meeting and a proxy solicited by Foothills Bancorp’s board of directors for use at the special meeting and at any adjournments or postponements of the special meeting.

Meeting Date, Time, and Place

The special meeting will be held on October 18, 2018 at 5:30 p.m., local time, at the main office of Foothills Bank at 214 Keller Lane, Maryville, Tennessee 37801.

Matters to be Considered

At the special meeting, Foothills Bancorp shareholders will be asked to:

approve the merger proposal; and
approve the adjournment proposal.

Each copy of this proxy statement/prospectus mailed to Foothills Bancorp shareholders is accompanied by a proxy form for use at the special meeting.

Record Date; Quorum

The Foothills Bancorp board of directors has fixed the close of business on September 14, 2018 as the record date for determining the Foothills Bancorp shareholders entitled to receive notice of and to vote at the special meeting. As of the record date, there were 1,776,715 shares of Foothills Bancorp common stock outstanding and entitled to vote at the special meeting held by approximately 555 holders of record. Each share of Foothills Bancorp common stock entitles the holder to one vote at the special meeting on each proposal to be considered at the special meeting.

The presence at the special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Foothills Bancorp common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. All shares of Foothills Bancorp common stock present in person or represented by proxy, including abstentions and broker non-votes, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting, including any adjournment thereof (unless a new record date is or must be set for the adjourned meeting).

Vote Required; Treatment of Abstentions and Failure to Vote

The merger proposal: Approval of the merger proposal requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of the outstanding shares of Foothills Bancorp common stock. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the proposal.

The adjournment proposal: Whether or not a quorum is present, approval of the adjournment proposal requires that the votes cast in favor of the proposal exceed the votes cast opposing the proposal at the special meeting. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the special meeting, or fail to instruct your bank, broker, or other nominee how to vote with respect to the adjournment proposal, it will have no effect on the proposal.

Shares Held in “Street Name”; Broker Non-Votes

Under stock exchange rules, banks, brokers, and other nominees who hold shares of stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers, and other nominees

32

TABLE OF CONTENTS

are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a bank, broker, or other nominee that are represented at the special meeting, but with respect to which the bank, broker, or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the bank, broker, or other nominee does not have discretionary voting power on such proposal. If your bank, broker, or other nominee holds your shares of Foothills Bancorp common stock in “street name,” your bank, broker, or other nominee will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your bank, broker, or other nominee with this proxy statement/prospectus. Foothills Bancorp believes that all of the proposals to be presented at the special meeting are “non-routine” proposals, and your bank, broker, or other nominee may not vote your shares without your specific voting instructions. Therefore, if you are a Foothills Bancorp shareholder and you fail to direct your bank, broker, or other nominee to vote your shares, it could have the same effect as voting against the merger proposal and no effect on the adjournment proposal.

Shares Held by Officers and Directors

As of the record date, the directors and executive officers of Foothills Bancorp and their affiliates collectively beneficially owned and were entitled to vote 366,528 shares of Foothills Bancorp common stock, representing approximately 20.6% of the outstanding shares of Foothills Bancorp common stock. In connection with the execution of the merger agreement, directors of Foothills Bancorp who collectively beneficially own and have the power to vote approximately 20.0% of the Foothills Bancorp common stock have entered into agreements with SmartFinancial in which they have agreed, among other things, to vote their shares of Foothills Bancorp common stock for the approval of the merger proposal. As of the record date, excluding shares held in a fiduciary or agency capacity, SmartFinancial and its subsidiaries did not own any shares of Foothills Bancorp common stock.

Voting of Proxies

Each copy of this proxy statement/prospectus mailed to Foothills Bancorp shareholders is accompanied by a proxy card with instructions for voting. If you hold stock in your name as a shareholder of record, you should complete, sign, date, and return the proxy card accompanying this proxy statement/prospectus, regardless of whether you plan to attend the special meeting. You may also vote your shares through the internet. Information and the deadline for voting through the Internet are set forth in the enclosed proxy card instructions. If you hold your stock in “street name” through a bank, broker, or other nominee, you must direct your bank, broker, or nominee how to vote in accordance with the instructions you have received from your bank, broker, or nominee.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF FOOTHILLS BANCORP COMMON STOCK YOU OWN. Accordingly, please sign, date, and return the enclosed proxy card, or vote via the internet, whether or not you plan to attend the special meeting in person.

All shares represented by valid proxies that Foothills Bancorp receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the merger proposal and “FOR” the adjournment proposal. No matters other than the matters described in this proxy statement/prospectus are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting. However, if other business properly comes before the special meeting, the proxy agents will, in their discretion, vote upon such matters in their best judgment.

Revocability of Proxies

If you hold your shares of Foothills Bancorp common stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation letter to Foothills Bancorp’s President, (3) attending the special meeting in person, notifying the President, and voting by ballot at the special meeting, or (4) voting via the internet. Any shareholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying Foothills Bancorp’s President) of a

33

TABLE OF CONTENTS

shareholder at the special meeting will not constitute revocation of a previously given proxy. Written notices of revocation and other communications about revoking your proxy card should be addressed to:

Foothills Bancorp, Inc.
Attention: Mark W. Loudermilk, President and Chief Executive Officer
214 Keller Lane
Maryville, TN 37801

If your shares of Foothills Bancorp common stock are held in “street name” by a bank, broker, or other nominee, you should follow the instructions of your bank, broker, or nominee regarding the revocation of proxies.

Solicitation of Proxies

Foothills Bancorp, on behalf of Foothills Bancorp’s board of directors, is soliciting your proxy in connection with the merger. Foothills Bancorp will pay all of the costs of soliciting proxies in connection with the special meeting. In addition to solicitation of proxies by mail, Foothills Bancorp will request that banks, brokers, nominees, and other record holders send proxies and proxy material to the beneficial owners of Foothills Bancorp common stock and secure their voting instructions. Further, directors, officers, and employees of Foothills Bancorp may solicit proxies in person or by telephone or e-mail. However, Foothills Bancorp’s directors, officers, and employees will not be paid any special or extra compensation for soliciting such proxies.

No person is authorized to give any information or to make any representation not contained in this proxy statement/prospectus and, if given or made, such information or representation should not be relied upon as having been authorized by SmartFinancial, SmartBank, Foothills Bancorp, Foothills Bank or any other person.

Recommendation of the Board of Directors

The Foothills Bancorp board of directors has determined that the transactions contemplated by the merger agreement, including the merger and the bank merger, each on the terms and conditions set forth in the merger agreement, are in the best interests of Foothills Bancorp and its shareholders and has approved and adopted the merger agreement. The Foothills Bancorp board of directors recommends that Foothills Bancorp shareholders vote “FOR” the merger proposal and “FOR” the adjournment proposal. See “The Merger — Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors” beginning on page 40 for a more detailed discussion of the Foothills Bancorp board of directors’ recommendation.

In the course of reaching its decision to approve the merger agreement and the merger, Foothills Bancorp’s board of directors, among other things, consulted with its legal advisors, Baker Donelson, regarding the legal terms of the merger agreement, and with its financial advisor, Monroe Financial, as to the fairness, from a financial point of view and as of the date of the opinion, to Foothills Bancorp shareholders of the merger consideration. For a discussion of the factors considered by Foothills Bancorp’s board of directors in reaching its conclusion, see “The Merger Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors” beginning on page 40.

Dissenters’ Rights

Holders of Foothills Bancorp common stock who comply with the provisions of Chapter 23 of the Tennessee Business Corporation Act are entitled to dissent from the merger and receive payment of the fair value of their shares of Foothills Bancorp common stock if the merger is consummated. A copy of Chapter 23 of the Tennessee Business Corporation Act is attached as Appendix B to this proxy statement/prospectus. Please see the section entitled “The Merger — Dissenters’ Rights” beginning on page 50 for a summary of the procedures to be followed in asserting dissenters’ rights. A dissenting shareholder will be entitled to payment only if written notice of intent to demand payment is delivered to Foothills Bancorp before the vote on the merger proposal is taken and the shareholder does not vote in favor of the merger proposal.

34

TABLE OF CONTENTS

Attending the Special Meeting

All holders of Foothills Bancorp common stock, including holders of record and shareholders who hold their shares through banks, brokers, nominees, or any other shareholder of record, are invited to attend the special meeting. Shareholders of record of Foothills Bancorp common stock can vote in person at the special meeting. If you are not a shareholder of record, you must obtain a legal proxy executed in your favor from the record holder of your shares, such as a bank, broker, or other nominee, to be able to vote in person at the special meeting.

Assistance

If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, or need help voting your shares of Foothills Bancorp common stock, please contact Mark Loudermilk at (865) 738-2222.

35

TABLE OF CONTENTS

THE MERGER

The following is a summary of certain terms and conditions of the merger and the merger agreement. You are urged to read the merger agreement carefully, and a copy of the merger agreement is attached as Appendix A to this proxy statement/prospectus.

Transaction Structure

Each of the board of directors of SmartFinancial, Foothills Bancorp, and Foothills Bank has approved the merger agreement, which provides for the merger of Foothills Bancorp with and into SmartFinancial, with SmartFinancial to be the corporation to survive, upon and subject to the terms and conditions set forth in the merger agreement and in accordance with the Tennessee Business Corporation Act. At the effective time of the merger, the separate corporate existence of Foothills Bancorp will cease and SmartFinancial, as the surviving corporation of the merger, will continue as a bank holding company chartered under Tennessee law. Following the merger, the charter and bylaws of SmartFinancial as in effect immediately prior to the merger will serve as the charter and bylaws of the surviving corporation, until amended in accordance with applicable law.

Immediately following the merger, Foothills Bank will merge with and into SmartBank, with SmartBank to be the banking corporation to survive the bank merger, upon and subject to the terms and conditions set forth in the agreement and plan of merger entered into by SmartBank and Foothills Bank and in accordance with the Tennessee Banking Act and the Tennessee Business Corporation Act. At the effective time of the bank merger, the separate corporate existence of Foothills Bank will cease and SmartBank, as the surviving corporation of the bank merger, will continue as a banking corporation chartered under Tennessee law. The charter and bylaws of SmartBank as in effect immediately prior to the bank merger will serve as the charter and bylaws of the surviving bank, until amended in accordance with applicable law.

Merger Proposal

At the special meeting, holders of Foothills Bancorp common stock will be asked to vote to approve the merger agreement and the merger. The merger will not be completed unless Foothills Bancorp’s shareholders approve the merger agreement and thus the proposed merger of Foothills Bancorp with and into SmartFinancial.

Background of the Merger

Foothills Bank opened for business in 2007, as a state chartered commercial bank serving Maryville, Tennessee, and surrounding communities. Through the following years, Foothills Bank experienced good growth and financial performance as it grew to three offices in Blount and Knox Counties and over $220 million in total assets. Since its founding, executive management and directors of Foothills Bancorp have considered various strategic alternatives to enhance and maximize shareholder value. These strategic alternatives have included continuing as an independent institution, acquiring other banks, bank branches, or other financial services related businesses, or a sale or merger of Foothills Bancorp.

SmartFinancial’s long-range corporate strategy includes a disciplined merger and acquisition strategy of targets within geographic areas complimentary to the company’s existing footprint, in addition to organic loan and deposit growth. Management has expressed its intention to continue this growth strategy with the goal of becoming the Southeast’s next great community bank. In connection with this strategy, members of SmartFinancial’s board of directors and senior management have met with representatives of various investment banking firms and evaluated various strategic opportunities.

SmartFinancial leadership identified the proposed merger with Foothills Bancorp as a combination of complementary organizations, beneficial to the shareholders of both companies, and a transaction that provides substantial value appreciation opportunities across an attractive geographic footprint. In June 2017, Miller Welborn, Chairman of the SmartFinancial board of directors, Billy Carroll, President and Chief Executive Officer of SmartFinancial, and Bill Carroll, Vice Chairman of SmartFinancial met with Herb Newton, of the Foothills board of directors, to discuss SmartFinancial’s interest in a possible merger with Foothills Bancorp. Mr. Newton reported on this meeting to the Foothills Bancorp board of directors at its regularly scheduled board meeting on June 20, 2017. The Foothills Bancorp board of directors engaged in a general discussion about seeking a merger partner and indicated that it would consider a merger for the right consideration. Subsequent to the board meeting, Mr. Billy Carroll contacted Mark Loudermilk, Chief Executive Officer of Foothills Bancorp, to express SmartFinancial’s interest in an affiliation.

36

TABLE OF CONTENTS

On August 30, 2017, Mr. Welborn, Mr. Bill Carroll, and Mr. Billy Carroll met with Samuel Evans, Chairman of the Foothills Bancorp board of directors, along with Lee Chambers, of the Foothills Bancorp board of directors, and Mr. Loudermilk to discuss, among other things, the financial services industry and the business of their respective companies. At this meeting, the parties discussed their respective companies and the general feasibility and potential benefits of a strategic affiliation between the two companies, including the potential operational and cultural fit between Foothills Bancorp and SmartFinancial.

The parties entered into a confidentiality and non-disclosure agreement on September 7, 2017 in anticipation of further discussions. SmartFinancial subsequently received certain non-public preliminary diligence material about Foothills Bancorp. On September 12, 2017, Mr. Billy Carroll and Mr. Welborn made a presentation to the Foothills Bancorp board of directors updating the directors on SmartFinancial’s recent financial performance and acquisition activity. This presentation also included an indicated preliminary, informal offer of 0.718 shares of SmartFinancial common stock for each of Foothills Bancorp’s outstanding common shares, subject to further discussion, due diligence, and other customary conditions. The Foothills Bancorp board of directors and management determined that the strategic fit and potential future benefits to Foothills Bancorp’s shareholders of a merger with SmartFinancial appeared sufficiently attractive for Foothills Bancorp to seek to negotiate the terms of an affiliation with SmartFinancial.

On September 19, 2017, representatives of Monroe Financial made a presentation to the Foothills Bancorp board of directors. Monroe Financial has provided annual valuation services to Foothills Bancorp since 2014 and has updated the Foothills Bancorp board of directors from time to time on its strategic alternatives. The Monroe Financial presentation included an analysis of current industry and market conditions, the current merger market and Foothills Bancorp’s potential value under those conditions, a summary of SmartFinanical’s indicated preliminary offer, and an assessment of the potential value that may be available from potential partners other than SmartFinancial. On September 22, 2017, Monroe Financial was engaged by the Foothills Bancorp board of directors to serve as its financial advisor in a potential transaction with SmartFinancial. Representatives of Baker Donelson met with the board on October 17, 2017, and the firm was subsequently engaged to provide legal services in regard to any potential affiliation.

Over the next several months, general discussions were held amongst the parties and their respective advisors but no formal offer was made. On December 12, 2017, SmartFinancial announced that it had entered into an agreement to acquire Tennessee Bancshares, Inc. (which we refer to as “Tennessee Bancshares”), a $244 million asset bank based in Tullahoma, Tennessee. The acquisition of Tennessee Bancshares closed on May 1, 2018.

Following the announcement of Tennessee Bancshares acquisition, the management team of SmartFinancial and BSP Securities, LLC (which we refer to as “BSP Securities”), its financial advisor, began additional discussions about Foothills Bancorp and the possibility of structuring a transaction. On February 12, 2018, representatives of Monroe Financial and BSP Securities met with Mr. Billy Carroll to discuss certain financial aspects of a possible offer, including cost savings opportunities, merger costs, and potential pricing issues. Mr. Loudermilk joined the meeting briefly, and Mr. Carroll reiterated their desire to make an offer for Foothills Bancorp.

Mr. Welborn, Mr. Bill Carroll, and Mr. Billy Carroll presented a nonbinding indication of interest at the Foothills Bancorp board of directors meeting on April 17, 2018. This offer contemplated an exchange ratio of 0.7384 shares of SmartFinancial common stock or $17.25 per share, subject to a consideration mix of 85% stock and 15% cash. A representative from Monroe Financial was also at this meeting and updated the board regarding the current potential value of Foothills Bancorp. After discussion, the board directed Monroe Financial to negotiate revised terms including the price and merger consideration mix. At the April 24, 2018 board meeting of Foothills Bancorp, the board consulted with Baker Donelson, and Monroe Financial , regarding the legal and financial terms of the offer. At that meeting, the Foothills Bancorp board of directors authorized the execution of the offer, subject to an agreement on pricing and consideration mix.

During the week of April 23, 2018, the final terms of the indication of interest were negotiated. On May 4, 2018, SmartFinancial submitted a nonbinding indication of interest to Foothills Bancorp setting forth the proposed terms of a merger transaction between the two organizations, pursuant to which Foothills Bancorp would merge into SmartFinancial, for a purchase price of $17.50 per share in cash for 10% of the outstanding shares of Foothills Bancorp common stock and .74 shares of SmartFinancial common stock for each of the remaining 90% of the outstanding shares of Foothills Bancorp common stock. The nonbinding indication of interest contained a proposed exclusivity agreement, which provided that during a 90-day period from execution, Foothills Bancorp

37

TABLE OF CONTENTS

and Foothills Bank would agree to terminate any discussions with any other party, and neither initiate nor encourage or solicit another party to make a competing offer. On May 8, 2018, the Foothills Bancorp board of directors formally accepted this nonbinding indication of interest, subject to satisfactory completion of the due diligence of both Foothills Bancorp and SmartFinancial, negotiation of a merger agreement, and an exclusivity period of 90 days, among other conditions.

In May 2018, the parties established a data room to facilitate the due diligence review of both Foothills Bancorp and SmartFinancial. Over the next eight weeks, the parties exchanged data and conducted a review of their respective operations and financial condition. On May 30, 2018, SmartFinancial and Foothills Bancorp entered into a mutual confidentiality agreement, which superseded and replaced the confidentiality agreement executed on September 7, 2017.

SmartFinancial presented Foothills Bancorp with an initial draft of the merger agreement on June 12, 2018. The merger agreement presented slightly revised terms reflecting cash consideration of $1.75 per share and 0.666 shares of SmartFinancial common stock for each share of Foothills common stock. While the parties had previously discussed the possibility of providing the Foothills Bancorp shareholders an election process, SmartFinancial subsequently determined that each shareholder would receive the merger consideration mix of 90% stock and 10% cash. Foothills Bancorp presented initial comments on the draft merger agreement to the SmartFinancial and its counsel on June 19, 2018. On June 21, 2018, Butler Snow provided a draft of the form of voting agreement and bank merger agreement to Foothills Bancorp’s counsel. From June 12, 2018, to June 27, 2018, executive management of both Foothills Bancorp and SmartFinancial and their respective legal counsel continued to negotiate the final terms of the merger agreement and related documents.

On June 26, 2018, and June 27, 2018, the Foothills Bancorp’s board of directors at special called meetings, which were attended by senior management of Foothills Bancorp and representatives of Monroe Financial and Baker Donelson, reviewed the proposed merger agreement and related documents; discussed its legal obligations and fiduciary obligations as directors in considering the proposed merger agreement with Baker Donelson; and received Monroe Financial’s summary analyses and opinion that the merger consideration to be received by the shareholders of Foothills Bancorp was fair, from a financial point of view, which was subsequently confirmed in writing (the full text of which is attached to this joint proxy statement/prospectus as Appendix C). Based upon this review and discussion of the legal terms of the merger agreement, the analyses and opinion of Monroe Financial, and other relevant factors, including consideration of the factors described under “The Merger — Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors” beginning on page 40, the Foothills Bancorp board voted unanimously to approve the merger with SmartFinancial and to approve the merger agreement.

At a meeting of the SmartFinancial board of directors on June 27, 2018, the SmartFinancial board of directors met with members of SmartFinancial’s senior management, BSP Securities, and SmartFinancial’s legal advisors. Mr. Carroll and Mr. Welborn reviewed with the SmartFinancial board of directors information regarding SmartFinancial, Foothills Bancorp, and the terms of the proposed merger. Representatives of BSP Securities then reviewed with the SmartFinancial board of directors a range of matters, including the structure of the merger, business and financial information regarding the two companies, valuation methodologies and analyses and, other matters. Members of SmartFinancial’s senior management also apprised the board of directors of the results of its due diligence investigations of Foothills Bancorp. SmartFinancial’s legal advisors discussed with the board of directors the legal standards applicable to its decisions and actions with respect to the proposed merger and reviewed the terms of the proposed merger, the merger agreement, and the ancillary transaction agreements, including the proposed employment agreements.

After considering the proposed terms of the merger agreement and the various presentations of its financial and legal advisors, and taking into consideration the matters discussed during that meeting and prior meetings of the SmartFinancial board of directors, including the factors described under “SmartFinancial’s Reasons for the Merger” the SmartFinancial board of directors determined that a merger with Foothills Bancorp was consistent with SmartFinancial’s business strategies and in the best interests of SmartFinancial and SmartFinancial’s shareholders and the directors voted to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger and the bank merger.

38

TABLE OF CONTENTS

On June 27, 2018, the merger agreement and related documents were executed and delivered by the parties. On the evening of June 27, 2018, SmartFinancial and Foothills Bancorp jointly issued a press release announcing the signing of the merger agreement.

SmartFinancial’s Reasons for the Merger

In the course of reaching its conclusion that the merger agreement is in the best interest of SmartFinancial and its shareholders, the SmartFinancial board of directors considered many factors, including the positive and negative factors described elsewhere in this proxy statement/prospectus. In reaching their conclusion, the members of the SmartFinancial board of directors relied on, among other things, their personal knowledge of SmartFinancial, Foothills Bancorp, and the banking industry, on information provided by executive officers of SmartFinancial, and on advice and information provided by SmartFinancial’s legal and financial advisors. The Smart Financial board of directors, among other things, considered:

each of SmartFinancial’s, Foothills Bancorp’s and the combined entity’s business, operations, financial condition, asset quality, earnings, and prospects;
the complementary nature of Foothills Bank’s geographic footprint, which offers the potential to grow market share and scale within the core geographic area of Knoxville, Tennessee;
SmartFinancial’s management’s review of the business, operations, earnings and financial condition, including capital levels and asset quality, of Foothills Bancorp;
the similarity of the business models and cultures of the two companies, including with respect to strategic focus, client service, credit cultures and risk profiles, which SmartFinancial management believes should facilitate the successful integration and implementation of the transaction;
potential increased income opportunity derived from the ability to market a large number of products and services to Foothills Bank customers that are not presently offered;
the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital, and footprint;
the potential enhanced economies of scale resulting in improved efficiencies, risk diversification and reduction of marginal cost risk management;
the anticipated pro forma impact of the transaction on the surviving corporation, including the expected impact on financial metrics including earnings and tangible book value and regulatory capital levels;
the Smart Financial board of directors’ understanding of the current and prospective environment in which SmartFinancial and Foothills Bancorp operate, including national, regional, and local economic conditions, the competitive and regulatory environment for financial institutions generally, and the likely effect of these factors on SmartFinancial in the context of the proposed merger;
the board of directors’ beliefs with respect to the complementary aspects of SmartFinancial’s and Foothills Bancorp’s businesses, including customer focus, business orientation, and compatibility of the companies’ cultures and management and operating styles;
the belief of SmartFinancial’s senior management that the management teams and employees of SmartFinancial and Foothills Bancorp possess complementary skills and expertise and the potential advantages of a larger institution when pursuing, or seeking to retain, talent;
the belief of the board of directors that the pro forma increased market capitalization of SmartFinancial could result in higher visibility and exposure in the capital markets, which could have positive valuation implications; and
the beliefs of the board of directors that heightened regulatory scrutiny makes consolidation preferable, as large banks can more easily respond to market changes.

The foregoing information and factors considered by the SmartFinancial board of directors is not exhaustive, but includes material factors that the SmartFinancial board of directors considered and discussed in approving the merger. In view of the wide variety of factors considered and discussed by the SmartFinancial board of directors in connection with its evaluation of the merger and the complexity of these factors, the SmartFinancial board of

39

TABLE OF CONTENTS

directors did not consider it practical to, nor did it attempt to, quantify, rank, or otherwise assign any specific or relative weights to the specific factors that it considered in reaching its decision; rather it considered all of the factors as a whole. The SmartFinancial board of directors discussed the foregoing factors internally and with SmartFinancial’s management and legal and financial advisors and reached the general consensus that the merger was in the best interests of SmartFinancial and its shareholders. In considering the foregoing factors, individual directors may have assigned different weights to different factors. It should be noted that this explanation of the reasoning of the SmartFinancial board of directors and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 30.

The SmartFinancial board of directors determined that the merger, the merger agreement, and the issuance of SmartFinancial common stock in connection with the merger are in the best interests of SmartFinancial and its shareholders.

Foothills Bancorp’s Reasons for the Merger; Recommendation of the Foothills Bancorp Board of Directors

The Foothills Bancorp board of directors reviewed and discussed the proposed merger with management and its financial and legal advisors in determining that the proposed merger is in the best interest of Foothills Bancorp and its shareholders. In reaching its conclusion to approve the merger agreement and the other transactions contemplated by the merger agreement, including the merger and the bank merger, and to recommend to its shareholder to approve the merger proposal, the Foothills Bancorp board of directors considered a number of factors, including the following:

the board’s familiarity with Foothills Bancorp’s consolidated business, operations, earnings, and financial conditions;
the board’s review, based in part by the presentation by management and Foothills Bancorp’s legal and financial advisors, of the proposal, including a review of the business, operations, earnings, financial conditions, and community service and involvement of SmartFinancial, as well as the potential results from a sale to SmartFinancial;
the board’s review of possible affiliation partners other than SmartFinancial, the prospects of such other possible affiliation partners, and the likelihood of any such affiliation;
the board’s review of alternatives to such a transaction (including the alternatives of remaining independent and growing organically, remaining independent for a period of time and then selling, and remaining independent and growing through future acquisitions);
the recent business combinations involving financial institutions either announced or completed during the past few years in the State of Tennessee and the southeastern United States, and the effect of such combinations on competitive conditions in the Foothills Bancorp’s market area;
a comparison of the proposal from SmartFinancial to such recent business combinations involving financial institutions;
increasing regulatory and statutory burdens on Foothills Bancorp and its subsidiaries as a community banking organization in general and as a result of the particular status of Foothills Bancorp;
management succession alternatives for Foothills Bancorp;
the opportunity for Foothills Bancorp shareholders to exchange their shares of Foothills Bancorp partially for shares of SmartFinancial resulting in the ownership of a publically traded stock and the liquidity provided;
the increasing information technology costs and requirements for Foothills Bancorp as well as the costs and risks of cybersecurity;
enhancing the ability of a merged organization to provide Foothills Bancorp’ customers with additional resources and the best banking options available;
the limited opportunities for Foothills Bancorp to continue to grow organically long term in consideration of capital, regulatory, competitive, and other factors; and
a fairness opinion presented by Monroe Financial.

40

TABLE OF CONTENTS

The discussion of the information and factors considered by the Foothills Bancorp board of directors is not exhaustive, but includes material factors considered and discussed by the Foothills Bancorp board of directors. In view of the wide variety of factors considered and discussed by the Foothills Bancorp board of directors in connection with its evaluation of the merger and the complexity of these matters, the board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The Foothills Bancorp board of directors evaluated the factors described above, including asking questions of management and its legal and financial advisors, and reached consensus that the merger was in the best interests of Foothills Bancorp and its shareholders. In considering the factors described above, individual members of the Foothills Bancorp board of directors may have assigned different weights to different factors. The Foothills Bancorp board of directors considered these factors as a whole, and overall considered them to be favorable to, and to support its determination. It should be noted that this explanation of the reasoning of the Foothills Bancorp board of directors and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 30.

For the reasons set forth above, the Foothills Bancorp board of directors determined that the merger, the merger agreement, and the transactions contemplated thereby, including the merger and the bank merger, are advisable and in the best interests of Foothills Bancorp and its shareholders. Accordingly, the Foothills Bancorp board of directors approved the merger agreement and the transactions contemplated thereby, including the merger and the bank merger, and recommends that the Foothills Bancorp shareholders vote “FOR” the merger proposal and “FOR” the adjournment proposal, if necessary or appropriate to solicit additional proxies.

Opinion of Foothills Bancorp’s Financial Advisor

Foothills Bancorp retained Monroe Financial to act as its financial advisor in connection with the merger and participated in certain related negotiations leading to the merger agreement. As part of its engagement, Foothills Bancorp requested that Monroe Financial provide to it an opinion as to the fairness from a financial point of view of the merger consideration to be received by the shareholders of Foothills Bancorp. Monroe Financial is a nationally-recognized investment banking firm that provides specialized corporate finance and investment research services to financial institutions. In the ordinary course of its investment banking business, Monroe Financial is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions. Foothills Bancorp selected Monroe Financial as its financial advisor based upon Monroe Financial’s qualifications, expertise, and reputation in such capacity and its historical relationship with Foothills Bancorp.

On June 27, 2018, Monroe Financial rendered its fairness opinion to the Foothills Bancorp board of directors that, as of such date and based upon and subject to various matters set forth in its opinion, the merger consideration was fair, from a financial point of view, to the shareholders of Foothills Bancorp. The full text of the fairness opinion is attached as Appendix C to this proxy statement/prospectus.

You should consider the following when reading the discussion of Monroe Financial’s opinion in this document:

The summary of the opinion of Monroe Financial set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion that is attached as Appendix C to this proxy statement/prospectus. You should read the opinion in its entirety for a full discussion to the procedures followed, assumptions made, matters considered, and qualification and limitation on the review undertaken by Monroe Financial in connection with its opinion.
Monroe Financial’s opinion speaks only as of the date of its opinion. The opinion was directed to the Foothills Bancorp board of directors and is directed only to the fairness of the merger consideration to the Foothills Bancorp shareholders, from a financial point of view. It does not address the Foothills Bancorp board of director’s underlying business decision to engage in the merger or any other aspect of the merger agreement and is not a recommendation to any shareholder as to how he or she should vote at the special meeting with respect to the merger proposal or any other matter.

In connection with its written opinion dated June 27, 2018, Monroe Financial reviewed and considered, among other things:

the merger agreement;

41

TABLE OF CONTENTS

audited financial information of Foothills Bancorp for the years ending December 31, 2014 through 2017, and unaudited financial information for the three months ended March 31, 2018;
audited financial information of SmartFinancial for the years ending December 31, 2014 through 2017, and unaudited financial information for the three months ended March 31, 2018; and
certain other financial and operating information with respect to the business, operations, and prospects of Foothills Bancorp, SmartFinancial, and their subsidiaries.

In addition, Monroe Financial:

held discussions with members of the managements of both Foothills Bancorp and SmartFinancial regarding historical and current business operations, financial condition, and future prospects of their respective companies;
reviewed the historical market prices and any trading activity for the common stocks of both Foothills Bancorp and SmartFinancial;
compared the results of operations of Foothills Bancorp and SmartFinancial with those of certain banking companies which were deemed to be comparable and relevant;
compared the proposed financial terms of the merger agreement with the financial terms, to the extent publicly available, of certain other recent business combinations of commercial banking organizations which were deemed to be comparable and relevant;
considered the current market environment generally and the commercial banking environment in particular; and
considered such other information, financial studies, analyses, and investigations and financial, economic, and market criteria as it deemed relevant.

In performing its review, Monroe Financial relied upon the accuracy and completeness of all of the financial and other information, including financial projections, that was available to Monroe Financial from public sources, that was provided to Monroe Financial by SmartFinancial and Foothills Bancorp or their respective representatives or that was otherwise reviewed by Monroe Financial. Monroe Financial has assumed such accuracy and completeness for purposes of rendering its opinion. Monroe Financial further relied on the assurances of the senior management of each of SmartFinancial and Foothills Bancorp that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Monroe Financial has not been asked to undertake, and has not undertaken, an independent verification of any of such information, and Monroe Financial does not assume any responsibility or liability for the accuracy or completeness thereof. Monroe Financial did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of SmartFinancial or Foothills Bancorp or any of their subsidiaries, or the collectability of any such assets, nor has Monroe Financial been furnished with any such evaluations or appraisals. Monroe Financial did not make an independent evaluation of the adequacy of the allowance for loan losses of SmartFinancial or Foothills Bancorp or any of their subsidiaries nor has Monroe Financial reviewed any individual credit files relating to SmartFinancial or Foothills Bancorp or any of their subsidiaries.

Monroe Financial utilized estimated long term projections of Foothills Bancorp, as provided by the senior management of Foothills Bancorp, as well as publicly available earnings per share estimates provided by senior management of SmartFinancial. With respect to the financial projections for both SmartFinancial and Foothills Bancorp used by Monroe Financial in its analyses, the senior management of each confirmed to Monroe Financial that those projections reflected the best currently available estimates and judgments of the future financial performances of their respective companies. Monroe Financial assumed that the financial performances reflected in all projections and estimates used by in its analyses would be achieved. Monroe Financial expressed no opinion as to such financial projections or estimates or the assumptions on which they are based. Any estimates for Foothills Bancorp and SmartFinancial contained in Monroe Financial’s analyses are not necessarily predictive of future results or values, which may be significantly more or less favorable than the estimates. Monroe Financial has also assumed that there has been no material change in the assets, financial condition, results of operations, business or prospects of either SmartFinancial or Foothills Bancorp since the date of the most recent financial statements made available to Monroe Financial. Monroe Financial has assumed in all

42

TABLE OF CONTENTS

respects material to its analysis that all of the representations and warranties contained in the merger agreement and all related agreements are true and correct, that each party to the merger agreement will perform all of the covenants required to be performed by such party under the merger agreement and that the conditions precedent in the merger agreement are not waived. Finally, Monroe Financial has relied upon the advice Foothills Bancorp received from its legal, accounting and tax advisors as to all legal, accounting, regulatory and tax matters relating to the merger and the other transactions contemplated by the merger agreement, including the merger and the bank merger.

Monroe Financial’s opinion is necessarily based on financial, economic, regulatory, market, and other conditions as in effect on, and the information made available to Monroe Financial as of, the date of its opinion. Events occurring after the date of its opinion could materially affect Monroe Financial’s views. Monroe Financial has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of the opinion. Monroe Financial is not expressing any opinion as to the prices at which SmartFinancial common stock or Foothills Bancorp common stock have traded or will trade following the announcement of the merger nor the prices at which SmartFinancial common stock will trade following the consummation of the merger. Monroe Financial expressed no opinion as to any of the legal, regulatory, tax or accounting matters relating to the merger or any other transactions contemplated in connection with the merger agreement, including the merger and the bank merger.

In performing its analyses, Monroe Financial made numerous assumptions with respect to industry performance, business and economic conditions, and other matters, many of which cannot be predicted and are beyond the control of Foothills Bancorp, SmartFinancial, and Monroe Financial. The analyses performed by Monroe Financial are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Monroe Financial prepared its analyses solely for the purposes of rendering its opinion and provided its analyses to the Foothills Bancorp board of directors when the merger agreement was considered. Estimates on the values of the companies do not purport to be appraisals or necessarily reflect the prices at which the companies or their securities may be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different.

In rendering the opinion, Monroe Financial performed a variety of financial analyses. The following is a summary of the material analyses performed by Monroe Financial, but is not a complete description of all the analyses underlying Monroe Financial’s opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgment as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances. The evaluation of fairness, from a financial point of view, of the merger consideration is to some extent subjective, based on the experience and judgment of Monroe Financial, and not merely the result of mathematical analysis of financial data. Monroe Financial did not attribute particular weight to any analysis or factor considered by it. The process, therefore, is not necessarily susceptible to partial analysis or summary description. Monroe Financial believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered in its analyses, without considering all other factors and analyses, could create an incomplete or inaccurate view of the analyses and the process underlying the rendering of Monroe Financial’s opinion. Also, no company included in Monroe Financial’s comparative analysis described below is identical to Foothills Bancorp and SmartFinancial and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex consideration and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Foothills Bancorp and SmartFinancial and the companies to which they are being compared.

The analyses and opinion of Monroe Financial were among several factors taken into consideration by the Foothills Bancorp board of directors in making its determination to approve the merger agreement and the transactions contemplated by the merger agreement, including the merger and the bank merger, and the analyses described below should not be viewed as determinative of the decision of the Foothills Bancorp board of directors or management with respect to the fairness of the merger.

43

TABLE OF CONTENTS

Summary of the Proposed Merger. Foothills Bancorp has agreed to be acquired by SmartFinancial in a stock and cash transaction. Pursuant to the merger agreement, each share of Foothills Bancorp common stock issued and outstanding prior to the effective time shall be converted into the right to $1.75 in cash (the “cash consideration”) and 0.666 (the “exchange ratio”) shares of SmartFinancial common stock (the “stock consideration”) (collectively, the “merger consideration”). In addition, at the effective time of the merger, any unvested options to purchase shares of Foothills Bancorp common stock will accelerate and each outstanding and unexercised stock option will be cancelled in exchange for the right to receive a single lump sum cash payment equal to the product obtained by multiplying (i) the number of shares of Foothills Bancorp common stock subject to such option, by (ii) $17.50 less the exercise price per share of such option. The total merger consideration is equal to $36.9 million or approximately $19.09 per share (the “per share consideration”), based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018, the date one day prior to the merger announcement, and the mix of stock and cash consideration provided for in the merger agreement. Based on the exchange ratio, Foothills Bancorp shareholders will own approximately 8.5% of the combined company, and SmartFinancial shareholders will own 91.5%, assuming SmartFinancial’s common shares outstanding at May 1, 2018, including the impact from the Tennessee Bancshares acquisition.

Based upon financial information at or for the three months ended March 31, 2018 and the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018, Monroe Financial calculated the following merger consideration transaction ratios:

Merger Consideration
Stock
 
Cash
Common
Consideration
Options
Total
Deal
Value
Merger Agreement Terms
90%
 
 
 
10%
 
Cashed
 
Exchange Ratio/ Cash Consideration
0.666
 
 
 
$17.50
 
 
 
SmartFinancial Stock Price (10 day avg 6/26/18)
$26.03
 
 
 
 
 
 
 
Indicated Per Share Value
$17.34
 
 
 
$1.75
$19.09
 
 
 
Foothills Bancorp Shares Exchanged/ Options
1,776,925
 
 
 
1,776,925
 
394,500
 
Exchange Ratio
0.666
 
 
 
 
 
na
 
SmartFinancial Shares Received
1,183,432
 
 
 
na
 
0
 
SmartFinancial Stock Price
$26.03
 
 
 
 
Net Profit ($17.50- $10.00)
$7.50
 
Merger Consideration Value (S000)
$30,805
 
 
 
$3,110
$30,808
$2,959
$36,873
 
 
 
 
 
 
 
 
 
Merger Multiples based on Total Deal Value Consideration
 
 
 
 
 
 
 
3/31/2018
 
 
 
 
 
 
 
 
Stated Tangible Book Value
 
171.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value Per Share
 
157.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LTM Earnings
 
19.4
x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core Deposits
 
9.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Analysis of Comparable Merger Transactions. In rendering its opinion, Monroe Financial analyzed the consideration paid in selected financial institution merger transactions that it deemed similar to Foothills Bancorp and the terms of the merger agreement. The objective of Monroe Financial’s analysis was to determine an appropriate value for Foothills Bancorp common stock by analyzing data related to actual sales transactions of similar financial institutions.

Tennessee Transactions. Monroe Financial selected a group of comparable Tennessee transactions and compared the pricing multiples to the multiples implied by the merger agreement. Specifically, Monroe Financial selected 6 bank merger transactions (the “Tennessee Transactions”) according to the following criteria:

Merger transactions announced from January 1, 2016 to June 26, 2018; and
Seller’s total assets were between $100 million and $500 million; and
Seller was located in Tennessee.

44

TABLE OF CONTENTS

Southeast Transactions. Monroe Financial selected a group of comparable Southeast United States merger transactions and compared the pricing multiples to the multiples implied by the merger agreement. Specifically, Monroe Financial selected 21 bank merger transactions (the “Southeast Transactions”) according to the following criteria:

Merger transactions announced from January 1, 2017 to June 26, 2018;
Seller’s total assets were between $100 million and $500 million;
Seller’s total nonperforming assets to total assets ratio was less than 2.5%; and
Seller was located within the Southeast United States.

Indicated Value Based on Comparable Merger Transactions. Monroe Financial compared the price to tangible book value, price to latest twelve months earnings, and core deposit premiums for the recent comparable merger transactions and applied the mean multiple for those transactions to the appropriate Foothills Bancorp indicators, to determine an indicated value for Foothills Bancorp.

Value Indicated by Comparable Merger Transactions

 
Tangible
Book
Value
LTM
Earnings*
Core
Deposit
Premium
Average
Value
Foothills Bancorp Values ($000)
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2018
$21,559
$1,897
$167,131
 
 
 
 
 
 
Tennessee Transactions
 
 
 
 
Mean Transaction Multiple
168.9%
17.4|x
8.9%
 
Indicated Value ($000s)
$36,412
$33,008
$36,433
$35,284
Indicated Per Share Value, fully diluted
$18.59
$17.02
$18.60
$18.07
 
 
 
 
 
Southeast Transactions
 
 
 
 
Mean Transaction Multiple
159.5%
19.2|x
10.1%
 
Indicated Value (4000s)
$34,386
$36,422
$38,439
$36,416
Indicated Per Share Value, fully diluted
$17.65
$18.56
$19.52
$18.59
 
 
 
 
 
 
 
 
 
 
Indicated Merger Values
 
 
 
 
Total Deal Value ($000s)
$36,873
$36,873
$36,873
 
Per Share Consideration
$19.09
$19.09
$19.09
 
Indicated Multiples (based on Deal Value)
171.0%
19.4|x
9.2%
 
* 2017 periods adjusted for effective tax rate of 38%

Monroe Financial noted that the per share consideration of $19.09 per share was above the average range of the implied values based on the comparable merger transactions.

Monroe Financial then compared the implied value of the merger to Foothills Bancorp’s tangible book value, latest twelve months earnings, and core deposit premium with the same metrics for the comparable merger transactions groups. The tables below compare the mean, median, high, and low multiples of the comparable transactions with those of the merger.

Comparable Merger Transaction Analysis
Tennessee Transactions

 
Foothills
Bancorp
Indicators
Comparable Merger Transactions
Pricing Multiples
Mean
Median
High
Low
Deal Value % of Tangible Book Value
 
171.0
%
 
168.9
%
 
166.3
%
 
232.0
%
 
116.2
%
Deal Value as a Multiple of LTM Earnings
 
19.4
x
 
17.4
x
 
17.0
x
 
22.8
x
 
14.8
x
Core Deposit Premium
 
9.2
%
 
8.9
%
 
8.3
%
 
18.6
%
 
2.7
%

45

TABLE OF CONTENTS

Southeast Transactions

 
Foothills
Bancorp
Indicators
Comparable Merger Transactions
Pricing Multiples
Mean
Median
High
Low
Deal Value % of Tangible Book Value
 
171.0
%
 
159.5
%
 
162.0
%
 
232.0
%
 
99.0
%
Deal Value as a Multiple of LTM Earnings
 
19.4
x
 
19.2
x
 
22.3
x
 
28.4
x
 
11.1
x
Core Deposit Premium
 
9.2
%
 
10.1
%
 
9.5
%
 
18.6
%
 
(0.1
)%

Discounted Cash Flow Analysis. In rendering its opinion, Monroe Financial utilized a discounted cash flow analysis, an income-based valuation approach, to value Foothills Bancorp common stock utilizing future financial projections derived by Monroe Financial and Foothills Bancorp management. These projections are discounted back to present value utilizing a certain cost of capital, or required rate of return, that is currently available in the market on alternative investments with comparable risk. The discount rate is derived from market evidence that includes current interest rates and equity returns for the market, adjusted for the risks inherent in the banking industry and for Foothills Bancorp.

Under the discounted cash flow analysis, Monroe Financial assumed that Foothills Bancorp remains independent for approximately five years (until December 31, 2022) and then is sold at the mean pricing multiples of all the comparable merger transactions. The value of Foothills Bancorp common stock is thus the present value of the cash flows received, i.e., dividends, and the present value of the proceeds received upon the sale of Foothills Bancorp, i.e., the terminal value.

In order to derive the terminal value of Foothills Bancorp common stock in the discounted cash flow analysis, Monroe Financial applied the mean price to tangible book value multiple of 161.6% to projected fiscal year 2022 tangible book value and the mean price to latest twelve months earnings multiple of 18.8x to projected fiscal year 2022 earnings. These mean pricing multiples were derived from the comparable merger transactions. The resulting terminal values were then discounted to the present value at a discount rate of 13.0%, chosen to reflect the required return for the risk of owning Foothills Bancorp common stock in the current environment. These values were averaged to derive a single indicated value under the discounted cash flow analysis. On the basis of these assumptions, Monroe Financial calculated that the present value of Foothills Bancorp common stock under the discounted cash flow analysis, at a 13.0% discount rate, was $15.59 per fully diluted share, which is below the per share consideration of $19.09 per share, based on based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018 and the mix of stock and cash consideration provided for in the merger agreement.

In order to derive the impact of changes in price to tangible book value multiples and discount rates to the terminal value of the Foothills Bancorp common stock, Monroe Financial applied multiples of tangible book value ranging from 100% to 200% to projected fiscal year 2022 tangible book value and discount rates ranging from 11.0% to 15.0%. The imputed range of per share values of Foothills Bancorp common stock, based on tangible book value multiples, is illustrated below.

 
Price to Tangible Book Multiples
Discount Rate
100%
125%
150%
175%
200%
11.0%
$
11.04
 
$
13.13
 
$
15.22
 
$
17.31
 
$
19.40
 
13.0%
$
10.28
 
$
12.19
 
$
14.10
 
$
16.01
 
$
17.93
 
15.0%
$
9.60
 
$
11.35
 
$
13.10
 
$
14.85
 
$
16.60
 

Monroe Financial noted that the per share consideration of $19.09 per share, based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018 and the mix of stock and cash consideration provided for in the merger agreement, was at the high end of the range of the implied values.

46

TABLE OF CONTENTS

In order to derive the impact of changes in price to earnings multiples and discount rates to the terminal value of the Foothills Bancorp common stock, Monroe Financial applied multiples of latest twelve months earnings ranging from 16.0x to 24.0x to projected fiscal year 2022 earnings and discount rates ranging from 11.0% to 15.0%. The imputed range of per share values of Foothills Bancorp common stock, based on latest twelve months earnings multiples, is illustrated below.

 
Price to Earnings Sales Multiples
Discount Rate
16.0x
18.0x
20.0x
22.0x
24.0x
11.0%
$
15.30
 
$
16.87
 
$
18.45
 
$
20.03
 
$
21.60
 
13.0%
$
14.17
 
$
15.62
 
$
17.06
 
$
18.50
 
$
19.94
 
15.0%
$
13.16
 
$
14.48
 
$
15.80
 
$
17.13
 
$
18.45
 

Monroe Financial noted that the per share consideration of $19.09 per share, based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018 and the mix of stock and cash consideration provided for in the merger agreement, was at the high end of the range of the implied values.

Monroe Financial also considered the overall sensitivity to Foothills Bancorp’s projected 2022 earnings based on variations in Foothills Bancorp’s projected earnings, ranging from a 25% discount to a 25% premium from management’s base forecast. Monroe Financial then applied multiples of tangible book value ranging from 100% to 200% to projected fiscal year 2022 tangible book value at the discount rate of 13.0%. The imputed range of per share values of Foothills Bancorp common stock, utilizing different tangible book value multiples and earnings variances, is illustrated below.

 
Price to Tangible Book Multiples
Earnings Variance
100%
125%
150%
175%
200%
(25.0%)
$
9.54
 
$
11.26
 
$
12.99
 
$
14.71
 
$
16.44
 
(10.0%)
$
9.98
 
$
11.82
 
$
13.66
 
$
15.49
 
$
17.33
 
0.0%
$
10.28
 
$
12.19
 
$
14.10
 
$
16.01
 
$
17.93
 
10.0%
$
10.58
 
$
12.56
 
$
14.55
 
$
16.53
 
$
18.52
 
25.0%
$
11.02
 
$
13.12
 
$
15.22
 
$
17.32
 
$
19.41
 

Monroe Financial noted that the per share consideration of $19.09 per share, based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018 and the mix of stock and cash consideration provided for in the merger agreement, was at the high end of the range of the implied values.

Monroe Financial also considered the overall sensitivity to Foothills Bancorp’s projected 2022 earnings based on variations in Foothills Bancorp’s projected earnings, ranging from a 25% discount to a 25% premium from management’s base forecast. Monroe Financial then applied latest twelve months earnings multiples ranging from 16.0x to 24.0x to derive the terminal value at the discount rate of 13.0%. The imputed range of per share values of Foothills Bancorp common stock, utilizing different terminal price to earnings multiples and earnings variances, is illustrated below.

 
Price to Earnings Sales Multiples
Earnings Variance
16.0x
18.0x
20.0x
22.0x
24.0x
(25.0%)
$
11.29
 
$
12.37
 
$
13.45
 
$
14.53
 
$
15.62
 
(10.0%)
$
13.02
 
$
14.32
 
$
15.62
 
$
16.91
 
$
18.21
 
0.0%
$
14.17
 
$
15.62
 
$
17.06
 
$
18.50
 
$
19.94
 
10.0%
$
15.33
 
$
16.91
 
$
18.50
 
$
20.09
 
$
21.67
 
25.0%
$
17.06
 
$
18.86
 
$
20.66
 
$
22.47
 
$
24.27
 

Monroe Financial noted that the per share consideration of $19.09 per share, based on the SmartFinancial 10 day average common stock price of $26.03 on June 26, 2018 and the mix of stock and cash consideration provided for in the merger agreement, was at the high end the range of the implied values.

Monroe Financial noted that the discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

47

TABLE OF CONTENTS

Contribution Analysis. In rendering its opinion, Monroe Financial considered the relative contribution of Foothills Bancorp and SmartFinancial to various elements of the pro forma company as of March 31, 2018, and the resulting ownership of each under the terms of the merger agreement. The balance sheet and income statement components analyzed included total assets, gross loans, total deposits, tangible common equity, LTM net interest income and LTM pre-tax income. This analysis excluded any purchase accounting adjustments. The following table compares the pro forma contribution and ownership in the combined company. Monroe Financial noted that this contribution analysis is more relevant for an all stock transaction and that the indicated Merger Consideration consisted of an aggregate of 10% cash.

 
Contribution
 
SMBK(1)
Foothills
Bancorp
Balance Sheet at March 31, 2018
Total Assets
 
90.3
%
 
9.7
%
Total Gross Loans
 
91.1
%
 
8.9
%
Total Deposits
 
89.9
%
 
10.1
%
Total Equity
 
89.5
%
 
10.5
%
Tangible Common Equity
 
83.9
%
 
16.1
%
 
 
 
 
 
 
 
Income Statement LTM Ended March 31, 2018
Net Interest Income, LTM
 
89.5
%
 
10.5
%
Pre Tax Income, LTM
 
85.8
%
 
14.2
%
Average Contribution
 
89.4
%
 
10.6
%
Pro Forma Ownership (90% stock)
 
91.5
%
 
8.5
%
(1) ProForma with Tennessee Bancshares, excluding any purchase accounting adjustments

Recent Financial Performance – Foothills Bancorp. Monroe Financial reviewed the recent financial performance of Foothills Bancorp, including balance sheet and income statement trends, profitability and net interest margin ratios, asset quality, and capitalization levels. Monroe Financial’s analysis included an assessment of Foothills Bancorp’s current capital position especially its compliance with the regulatory minimums.

Selected Peer Group Analysis – Southeast. Monroe Financial used publicly-available information to compare selected financial information for Foothills Bancorp to a peer group of publicly-traded financial institutions that Monroe Financial deemed relevant for purposes of its analysis. Monroe Financial compared selected operating results of Foothills Bancorp to those of 13 Southeast commercial banks with similar asset size (total assets from $100 million to $500 million) and asset quality (nonperforming assets to total assets ratio less than 1.00%) (the “Southeast Peer Group”). Monroe Financial noted the following financial performance was based on results for the three months ended March 31, 2018 for Foothills Bancorp and the Southeast Peer Group, and June 26, 2018 pricing data.

 
Foothills
Bancorp
Southeast
Peer Group
Average
Assets ($ millions)
$
215
 
$
310
 
Return on Avg. Assets
 
1.14
%
 
0.98
%
Return on Avg. Equity
 
11.3
%
 
9.0
%
Tang. Equity/Assets
 
10.0
%
 
10.7
%
Net Interest Margin
 
3.76
%
 
3.74
%
Efficiency Ratio
 
59.9
%
 
68.5
%
Adj. NPAs/Assets(1)
 
0.00
%
 
0.42
%
 
 
 
 
 
 
 
Price to LTM Earnings (x)
 
na
 
 
16.5
x
Price to Tangible Book Value (%)
 
na
 
 
141
%
(1) NPAs include loans past due 90 days or more, nonaccrual assets, OREO and restructured loans, adjusted for any government guarantees

48

TABLE OF CONTENTS

Monroe Financial noted that Foothills Bancorp had better profitability, including efficiencies and net interest margins, and asset quality compared to the Southeast Peer Group. Foothills Bancorp’s capitalization was slightly less than the Southeast Peer Group.

Recent Financial Performance – SmartFinancial. Monroe Financial reviewed the recent financial performance of SmartFinancial including balance sheet and income statement trends, profitability and net interest margin ratios, asset quality, and capitalization levels. Monroe Financial’s analysis included an assessment of SmartFinancial’s current capital position especially its compliance with the regulatory minimums.

Selected Peer Group Analysis – SmartFinancial. Monroe Financial used publicly-av