Oak Brook, Ill.-based Inland Bancorp Inc. and its wholly owned subsidiary, Inland Bank and Trust, will combine with Chicago-based Byline Bancorp Inc. in a cash-and-stock transaction.
Under the merger agreement, at the closing of the transaction, Byline Bancorp will issue approximately 6.4 million common shares and $22.9 million in cash to Inland Bancorp stockholders, subject to adjustment per the terms of the deal. Based on the closing price of Byline Bancorp's common stock of $22.21 on Nov. 29, this represents a fully diluted transaction value of roughly $165 million, or $4.90 per Inland Bancorp share.
Inland Bancorp had total assets of $1.2 billion, total loans of $854 million and total deposits of $1.0 billion as of Sept. 30. Inland Bank and Trust has 10 branch locations primarily in the western and northern suburbs of Chicago.
Byline Bancorp is the parent company of Byline Bank, which has approximately $7.3 billion in assets and operates more than 30 full-service branch locations throughout the Chicago and Milwaukee metropolitan areas.
The combined organization will have about $8.5 billion in assets, $6.2 billion in loans and $6.6 billion in deposits, with 47 branches across the greater Chicago metropolitan area, according to a news release.
Byline Bancorp will expand in Cook County, Ill., by five branches to be ranked No. 14 with a 1.15% share of approximately $478.82 billion in total market deposits, will enter DuPage County, Ill., with four branches to be ranked No. 28 with a 0.37% share of approximately $53.11 billion in total market deposits, will expand in Lake County, Ill., by two branches to be ranked No. 13 with a 1.35% share of approximately $30.87 billion in total market deposits and will enter Kane County, Ill., with one branch to be ranked No. 24 with a 0.52% share of approximately $14.45 billion in total market deposits.
At announcement, S&P Global Market Intelligence calculates the deal value to be 123.33% of common equity and tangible common equity, 15.89% of deposits, 13.39% of assets, and 22.20x earnings. The tangible book premium-to-core deposits ratio is 3.35%.
S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between Nov. 30, 2021, and Nov. 30, 2022, averaged 151.97% of book and 154.94% of tangible book and had a median of 15.14x last-12-months earnings, on an aggregate basis.
The transaction was approved by the boards of Byline Bancorp and Inland Bancorp. It is expected to close during the second quarter of 2023, subject to regulatory approvals, the approval of Inland Bancorp stockholders and the satisfaction of certain other closing conditions.
Byline Bancorp currently estimates that pretax expense reductions associated with the transaction will be about 30% of Inland Bancorp's expense base. The deal is expected to be 8.1% accretive to Byline Bancorp's EPS in 2023 and 10.7% accretive in 2024, with an expected tangible book value per share dilution earnback period of approximately 2.7 years using the crossover method.
Inland Home Mortgage Co. LLC, a division of Inland Bank and Trust, will cease operations prior to the closing of the transaction, according to a presentation related to the deal.
Stephens Inc. was financial adviser and Vedder Price PC was legal adviser to Byline Bancorp. Piper Sandler & Co. was financial adviser and Barack Ferrazzano Kirschbaum & Nagelberg LLP was legal adviser to Inland Bancorp.
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