XML 71 R10.htm IDEA: XBRL DOCUMENT
v3.20.1

Acquisition of a Business | 12 Months Ended
--- | ---
Dec. 31, 2019
Business Combinations [Abstract] |
Acquisition of a Business | Note 3—Acquisition of a Business On April 30, 2019, the Company acquired all of the outstanding common stock of Oak Park River Forest Bankshares, Inc. (“Oak Park River Forest”) and its subsidiary pursuant to an Agreement and Plan of Merger, dated as of October 17, 2018 (the “OPRF Merger Agreement”). Oak Park River Forest operated one wholly owned subsidiary, Community Bank of Oak Park River Forest. Oak Park River Forest was merged with and into Byline. As a result of the merger, Oak Park River Forest’s subsidiary bank, Community Bank of Oak Park River Forest, was merged with and into Byline Bank, with Byline Bank as the surviving bank. The acquisition improves the Company’s footprint in the Chicagoland market, diversifies its commercial banking business, and strengthens the core deposit base. At the effective time of the merger (the “OPRF Effective Time”), each share of Oak Park River Forest’s common stock was converted into the right to receive: (1) 7.9321 shares of Byline’s common stock, and (2) an amount in cash equal to $6.2 million divided by the number of outstanding shares of Oak Park River Forest common stock as of the closing date, with cash paid in lieu of any fractional shares. The per share cash consideration was based on the total $6.2 million divided by the outstanding shares of Oak Park River Forest common stock, or $33.375 per outstanding share. Based on the closing price of the Company’s common stock of $20.02, as reported by the New York Stock Exchange, and 1,464,558 shares of common stock issued with respect to the outstanding shares of Oak Park River Forest common stock, the stock consideration was valued at $29.3 million. Options to acquire 35,870 shares of Oak Park River Forest common stock that were outstanding at the OPRF Effective Time were cancelled, at the option holders’ election, in exchange for a cash payment in accordance with the OPRF Merger agreement of $4.2 million, to be paid after the closing date. The value of the total merger consideration at closing was $35.5 million before issuance costs of $585,000. The transaction resulted in goodwill of $20.2 million, which is nondeductible for tax purposes, as this acquisition was a nontaxable transaction. Goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired and reflects related synergies expected from the combined operations. The Company incurred Oak Park River Forest merger-related expenses, including acquisition advisory expenses, of $2.3 million for the year ended December 31, 2019. Core system conversion expenses related to the Oak Park River Forest acquisition were $2.0 million for year ended December 31, 2019 and $335,000 for the year ended December 31, 2018. These expenses are reflected in non-interest expense on the Consolidated Statements of Operations. The acquisition of Oak Park River Forest was accounted for using the acquisition method of accounting in accordance with ASC Topic 805. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values become available. On May 31, 2018, the Company acquired all of the outstanding common stock of First Evanston Bancorp, Inc. (“First Evanston”) and its subsidiaries pursuant to an Agreement and Plan of Merger, dated as of November 27, 2017 (the “Merger Agreement”). First Evanston operated two wholly owned subsidiaries, First Bank & Trust and First Evanston Bancorp Trust I. First Evanston was merged with and into Byline. As a result of the merger, First Evanston’s subsidiary bank, First Bank & Trust, was merged with and into Byline Bank, with Byline Bank as the surviving bank. The acquisition improves the Company’s footprint in the Chicagoland market, diversifies its commercial banking business, and strengthens the core deposit base. Note 3—Acquisition of a Business (continued) At the effective time of the merger (the “Effective Time”), each share of First Evanston’s common stock was converted into the right to receive: (1) 3.994 shares of Byline’s common stock, and (2) an amount in cash equal to $27.0 million divided by the number of outstanding shares of First Evanston common stock as of the closing date, with cash paid in lieu of any fractional shares. The per share cash consideration was based on the total $27.0 million divided by the outstanding shares of First Evanston common stock, or $16.136 per outstanding share. Based on the closing price of the Company’s common stock of $21.62, as reported by the New York Stock Exchange, and 6,682,850 shares of common stock issued with respect to the outstanding shares of First Evanston common stock, the stock consideration was valued at $144.5 million. Options to acquire 144,090 shares of First Evanston common stock that were outstanding at the Effective Time were converted into options to acquire 680,787 shares of Byline common stock, resulting in a consideration value of $7.6 million. The value of the total merger consideration at closing was $179.1 million before issuance costs of $852,000. The transaction resulted in goodwill of $73.6 million, which is nondeductible for tax purposes, as this acquisition was a nontaxable transaction. Goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired and reflects related synergies expected from the combined operations. The Company incurred First Evanston merger-related expenses, including acquisition advisory expenses, of $1.7 million and $1.3 million for the years ended December 31, 2018 and 2017, respectively. Core system conversion expenses related to the First Evanston acquisition were $2.0 million and $9.8 million for the years ended December 31, 2019 and 2018, respectively. These expenses are reflected in non-interest expense on the Consolidated Statements of Operations. The acquisition of First Evanston was accounted for using the acquisition method of accounting in accordance with ASC Topic 805. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions used to calculate estimated fair values. The fair value adjustments associated with this transaction were finalized during the fourth quarter of 2018. Note 3—Acquisition of a Business (continued) The following table presents a summary of the estimated fair values of assets acquired and liabilities assumed as of the acquisition date:
|  | Preliminary Estimates April 30, 2019 Oak Park River Forest |  |  | May 31, 2018 First Evanston |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 10,469 |  |  | $ | 47,378 |
Securities available-for-sale |  |  | 30,343 |  |  |  | 128,063 |
Restricted stock |  |  | 414 |  |  |  | 1,360 |
Loans |  |  | 257,423 |  |  |  | 916,011 |
Premises and equipment |  |  | 3,488 |  |  |  | 15,890 |
Other real estate owned |  |  | 2,201 |  |  |  | — |
Other intangible assets |  |  | 6,220 |  |  |  | 22,276 |
Bank-owned life insurance |  |  | 3,485 |  |  |  | — |
Deferred tax assets, net |  |  | 5,925 |  |  |  | 2,302 |
Other assets |  |  | 1,231 |  |  |  | 8,845 |
Total assets acquired |  |  | 321,199 |  |  |  | 1,142,125 |
Liabilities |  |  |  |  |  |  |  |
Deposits |  |  | 290,171 |  |  |  | 1,022,268 |
Line of credit |  |  | 5,655 |  |  |  | — |
Federal Home Loan Bank advances |  |  | 5,300 |  |  |  | — |
Junior subordinated debentures |  |  | — |  |  |  | 8,497 |
Accrued expenses and other liabilities |  |  | 4,766 |  |  |  | 5,844 |
Total liabilities assumed |  |  | 305,892 |  |  |  | 1,036,609 |
Net assets acquired |  | $ | 15,307 |  |  | $ | 105,516 |
Consideration paid |  |  |  |  |  |  |  |
Common stock (2019 - 1,464,558 shares issued at $20.02 per share, 2018 - 6,682,850 shares issued at $21.62 per share) |  |  | 29,320 |  |  |  | 144,483 |
Outstanding stock options converted to Byline stock options |  |  | — |  |  |  | 7,644 |
Cash paid |  |  | 6,163 |  |  |  | 27,004 |
Total consideration paid |  |  | 35,483 |  |  |  | 179,131 |
Goodwill |  | $ | 20,176 |  |  | $ | 73,615 |
The following table presents the acquired non-impaired loans as of the acquisition date:
|  | Preliminary Estimates April 30, 2019 Oak Park River Forest |  |  | May 31, 2018 First Evanston |
Fair value |  | $ | 204,496 |  |  | $ | 890,986 |
Gross contractual amounts receivable |  |  | 254,755 |  |  |  | 1,057,374 |
Estimate of contractual cash flows not expected to be collected(1) |  |  | 12,987 |  |  |  | 36,544 |
Estimate of contractual cash flows expected to be collected |  |  | 241,768 |  |  |  | 1,020,830 |
(1) | Includes interest payments not expected to be collected due to loan prepayments as well as principal and interest payments not expected to be collected due to customer default.
The discount on the acquired non-impaired loans is being accreted into income over the life of the loans on an effective yield basis. Note 3—Acquisition of a Business (continued) The fair value estimates for the acquisition of Oak Park River Forest were adjusted during the fourth quarter of 2019. Compared to previously reported balances, the fair value estimates of loans and other assets decreased by $3.7 million and $25,000, respectively, which increased the deferred tax asset by $1.0 million and goodwill by $2.7 million as of December 31, 2019. The following table provides the pro forma information for the results of operations for the years ended December 31, 2019 and 2018, as if the acquisitions had occurred on January 1, 2018. The pro forma results combine the historical results of First Evanston and Oak Park River Forest into the Company’s Consolidated Statements of Operations, including the impact of certain acquisition accounting adjustments, which includes loan discount accretion, intangible assets amortization, deposit premium accretion and borrowing net discount amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisitions actually occurred on January 1, 2018. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. The acquisition-related expenses that have been recognized are included in net income in the following table.
|  | Years ended December 31, |
|  | 2019 |  |  | 2018 |
Total revenues (net interest income and non-interest income) |  | $ | 272,081 |  |  | $ | 274,108 |
Net income |  |  | 57,797 |  |  |  | 61,356 |
Earnings per share—basic |  |  | 1.47 |  |  |  | 1.61 |
Earnings per share—diluted |  |  | 1.45 |  |  |  | 1.57 |
The operating results of the Company include the operating results produced by the acquired assets and assumed liabilities of First Evanston for the period beginning June 1, 2018 through December 31, 2019, and Oak Park River Forest for the period beginning May 1, 2019 through December 31, 2019. Revenues and earnings of the acquired companies since their respective acquisition dates have not been disclosed as it is not practicable as First Evanston and Oak Park River Forest were merged into the Company and separate financial information is not readily available.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration