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Byline buying First Evanston for $169M in cash and stock

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Byline buying First Evanston for $169M in cash and stock

Chicago-based Byline Bancorp Inc. is acquiring Evanston, Ill.-based First Evanston Bancorp Inc. for approximately $169 million in cash and stock, based on Byline's closing price of $19.73 on Nov. 24.

Each First Evanston common share will be converted into the right to receive 3.994 Byline common shares, plus cash equal to $27.0 million divided by the number of outstanding First Evanston shares.

The deal is expected to close in the first half of 2018, pending regulatory and shareholder approvals. The buyer expects resulting cost-saves, pretax, to amount to 29% of First Evanston's expense base.

Byline expects the deal to be accretive to 2018 EPS and then accretive by 14.5% to 2019 EPS. The internal rate of return is projected to be more than 17%. Using the crossover method, tangible book value dilution is calculated to be earned back in about 3.3 years.

On an aggregate basis, SNL calculates that the deal value is 172.6% of book and tangible book and 23.2x earnings. The price is 17.01% of deposits, 15.03% of assets and the tangible book premium-to-core deposits ratio is 7.90%.

For comparison, SNL valuations for bank and thrift targets in the Midwest region between Nov. 27, 2016, and Nov. 27, 2017, averaged 161.04% of book and 166.67% of tangible book and had a median of 19.54x last-12-months earnings, on an aggregate basis.

Byline will expand in Cook County, Ill., by seven branches to be ranked No. 16 with a 1.04% share of approximately $282.90 billion in total market deposits. It will expand in DuPage County, Ill., by two branches to be ranked No. 22 with a $40.58 billion in total market deposits and will enter Lake County, Ill., with one branch with $21.11 billion in total market deposits.

First Evanston and Byline are the parent companies of First Bank & Trust and Byline Bank, respectively. As of Sept. 30, First Evanston had $1.1 billion in total assets, $892 million in loans and $994 million in deposits. The combined company, which will operate under the Byline brand, will have approximately $4.4 billion in assets, $3.1 billion in loans and $3.5 billion in deposits. The resulting board will have eight members, including First Evanston Chairman and CEO Robert Yohanan.

Keefe Bruyette & Woods, a Stifel company, and Vedder Price PC served as Byline's financial adviser and legal counsel, respectively. For First Evanston, it was Piper Jaffray & Co. and Wachtell Lipton Rosen & Katz.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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