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Share-Based Compensation | 9 Months Ended
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Sep. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-Based Compensation | Note 17 – Share-Based Compensation In June 2017, the Company adopted the 2017 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) in connection with our IPO. The Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other equity-based, equity-related or cash-based awards. A total of 1,550,000 shares of our common stock have been reserved for issuance under the Omnibus Plan. As of September 30, 2021, there were 698,331 shares available for future grants under the Omnibus Plan. The Company primarily grants time-based restricted share awards that vest over a one to four year period, subject to continued employment. The Company also grants performance-based restricted share awards. The number of shares which may be earned under the award is dependent upon the Company’s return on average assets, weighted equally, over a three-year period, measured against a peer group consisting of publicly-traded bank holding companies. Results will be measured cumulatively at the end of the three years. Any earned shares will vest on the third anniversary of the grant date. During 2021, the Company granted 308,452 shares of restricted common stock, par value $0.01 per share. Of this total, 119,344 restricted shares will vest ratably over four years on each anniversary of the grant date, 109,475 restricted shares will vest ratably on the last business day of 2021, 2022 and 2023, 38,279 restricted shares will vest ratably over three years on each anniversary of the grant date, 9,141 restricted shares will cliff vest on the third anniversary of the grant date, and 130 shares have vested, all subject to continued employment. In addition, 32,083 performance-based restricted shares were included in the February 2021 grant. The number of shares which may be earned under the award is dependent upon the Company’s return on average assets, weighted equally, over a three-year period ending December 31, 2023, measured against a peer group consisting of publicly-traded bank holding companies. Results will be measured cumulatively at the end of the three years. Any earned shares will vest on the third anniversary of the grant date. The following table discloses the changes in restricted shares for the nine months ended September 30, 2021:
|  | Omnibus Plan |
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Beginning balance, January 1, 2021 |  |  | 383,539 |  |  | $ | 18.75 |
Granted |  |  | 308,452 |  |  |  | 19.38 |
Vested |  |  | (103,187 | ) |  |  | 19.52 |
Forfeited |  |  | (9,740 | ) |  |  | 20.58 |
Ending balance outstanding at September 30, 2021 |  |  | 579,064 |  |  | $ | 18.92 |
A total of 103,187 restricted shares vested during the nine months ended September 30, 2021. A total of 113,264 restricted shares vested during the year ended December 31, 2020. The fair value of restricted shares that vested during the nine months ended September 30, 2021 was $2.2 million. The fair value of restricted shares that vested during the year ended December 31, 2020 was $1.4 million. The Company recognizes share-based compensation based on the estimated fair value of the restricted stock at the grant date. Share-based compensation expense is included in non-interest expense in the Consolidated Statements of Operations. The following table summarizes restricted stock compensation expense for the nine months ended September 30, 2021 and 2020:
|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Total share-based compensation - restricted stock |  | $ | 2,966 |  |  | $ | 2,019 |
Income tax benefit |  |  | 826 |  |  |  | 562 |
Unrecognized compensation expense |  |  | 7,840 |  |  |  | 5,566 |
Weighted-average amortization period remaining |  | 2.4 years |  |  | 2.4 years |
The fair value of the unvested restricted stock awards at September 30, 2021 was $14.2 million. In October 2014, the Company adopted the Byline Bancorp, Inc. Equity Incentive Plan (“BYB Plan”). The maximum number of shares available for grants under this plan was 2,476,122 shares. During 2016 and 2015, the Company granted options to purchase 212,400 and 1,634,568 shares, respectively; the Company did no t grant any stock options during 2017. In June 2017, the Board of Directors terminated the BYB Plan and no future grants can be made under this plan. Options to purchase a total of 1,344,548 shares remain outstanding under the BYB Plan at September 30, 2021. The types of stock options granted under the BYB Plan were Time Options and Performance Options. The exercise price of each option is equal to the fair value of the stock as of the date of grant. These option awards have vesting periods ranging from one to five years and have 10-year contractual terms. Stock volatility was computed as the average of the volatilities of peer group companies. All outstanding stock options were fully vested and exercisable at September 30, 2021. The fair values of the stock options were determined using the Black-Scholes-Merton model for Time Options and a Monte Carlo simulation model for Performance Options. The following table discloses the activity in shares subject to options and the weighted average exercise prices, in actual dollars, for the nine months ended September 30, 2021:
|  | BYB Plan |
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Intrinsic Value |  |  | Weighted Average Remaining Contractual Term (in Years) |
Beginning balance, January 1, 2021 |  |  | 1,390,579 |  |  | $ | 11.36 |  |  | $ | 5,724 |  |  |  | 4.4 |
Exercised |  |  | (46,031 | ) |  |  | 13.66 |  |  | $ | 359 |  |  |  |
Expired |  |  | — |  |  |  |  |  |  |  |  |  |
Ending balance outstanding at September 30, 2021 |  |  | 1,344,548 |  |  | $ | 11.28 |  |  | $ | 17,851 |  |  |  | 3.7 |
Exercisable at September 30, 2021 |  |  | 1,344,548 |  |  | $ | 11.28 |  |  | $ | 17,851 |  |  |  | 3.7 |
A total of 46,031 stock options were exercised during the nine months ended September 30, 2021, proceeds of which were $629,000, with a related tax benefit of $100,000. A total of 19,496 stock options were exercised during the year ended December 31, 2020. During the year ended December 31, 2020, with proceeds of $253,000 and a related tax benefit of $39,000. No stock options vested during the three or nine months ended September 30, 2021. The Company recognizes share-based compensation based on the estimated fair value of the option at the grant date. Forfeitures are estimated based upon industry standards. Share-based compensation expense is included in non-interest expense in the Consolidated Statements of Operations. The following table summarizes stock option compensation expense for the nine months ended September 30, 2021 and 2020:
|  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |
Total share-based compensation - stock options |  | $ | — |  |  | $ | 7 |
Income tax benefit |  |  | — |  |  |  | 2 |
Unrecognized compensation expense - stock options |  |  | — |  |  |  | — |
Weighted-average amortization period remaining |  | 0.0 years |  |  | 0.0 years |
There was no unrecognized stock option compensation expenses as of September 30, 2021. Pursuant to the terms of the Merger Agreement, upon the Effective Time, each outstanding First Evanston Option held by a participant in the First Evanston Bancorp, Inc. Stock Incentive Plan (the “FEB Plan”) ceased to represent a right to acquire shares of First Evanston common stock and was assumed and converted automatically into a fully vested and exercisable adjusted option to purchase shares of Byline common stock (each an “Adjusted Option”). In accordance with the Merger Agreement, the number of shares of Byline common stock to which each such Adjusted Option relates is equal to the product (rounded down to the nearest whole share of Byline common stock) of: (a) the number of shares of First Evanston common stock subject to the First Evanston Option immediately prior to May 31, 2018, multiplied by (ii) 4.725. Each Adjusted Option has an exercise price per share of Byline common stock equal to the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price of such First Evanston Option immediately prior to May 31, 2018, divided by (y) 4.725. The description of the conversion process is based on, and qualified by, the Merger Agreement. The following table discloses the activity in shares subject to options under the FEB Plan and the weighted average exercise prices, in actual dollars, for the nine months ended September 30, 2021:
|  | FEB Plan |
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Intrinsic Value |  |  | Weighted Average Remaining Contractual Term (in Years) |
Beginning balance, January 1, 2021 |  |  | 233,630 |  |  | $ | 11.52 |  |  | $ | 918 |  |  |  | 3.3 |
Exercised |  |  | (46,774 | ) |  | $ | 11.55 |  |  | $ | 313 |  |  |  |
Expired |  |  | — |  |  |  |  |  |  |  |  |  |
Ending balance outstanding at September 30, 2021 |  |  | 186,856 |  |  | $ | 11.52 |  |  | $ | 2,437 |  |  |  | 3.3 |
Exercisable at September 30, 2021 |  |  | 186,856 |  |  | $ | 11.52 |  |  | $ | 2,437 |  |  |  | 3.3 |
A total of 46,774 stock options were exercised during the nine months ended September 30, 2021, proceeds of which were $540,000 and a related tax benefit of $87,000. A total of 255,615 stock options were exercised during the year ended December 31, 2020, proceeds of which were $2.8 million and a related tax benefit of $219,000. No stock options vested during the three or nine months ended September 30, 2021.

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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