v3.26.1
Acquisition of a Business
 6 Months Ended
Jun. 30, 2026
Business Combination [Abstract]  
Acquisition of a Business

Note 3—Acquisition of a Business

On April 1, 2025 we acquired all of the outstanding common stock of First Security Bancorp, Inc., a Delaware corporation ("First Security"), and its subsidiaries pursuant to an Agreement and Plan of Merger, dated September 30, 2024. First Security operated a wholly owned subsidiary, First Security Trust and Savings Bank. As a result of the acquisition, effective April 1, 2025, First Security Trust and Savings Bank was merged with and into Byline Bank.

At the effective time of the merger, each share of First Security's common stock was converted into the right to receive 2.3539 shares of Byline common stock. The value of the total merger consideration at closing was approximately $41.5 million.

The transaction resulted in goodwill of $147,000, 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.

Merger-related expenses, including salaries and employee benefits of $3.5 million, acquisition advisory expenses of $597,000, core system conversion expenses of $251,000, and other non-interest expenses of $78,000 related to the acquisition are reflected in non-interest expense on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2025. There were no merger-related expenses in the three months ended June 30, 2026.

Merger-related expenses, including salaries and employee benefits of $3.5 million, acquisition advisory expenses of $788,000, core system conversion expenses of $696,000, and other non-interest expenses of $78,000 related to the acquisition are reflected in non-interest expense on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2025. There were no merger-related expenses in the six months ended June 30, 2026.

The acquisition 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 acquisition accounting values, including fair values, were final as of December 31, 2025.

The following table presents a summary of the fair values of assets acquired and liabilities assumed as of the acquisition date:

Assets

 

 

 

Cash and cash equivalents

 

$

62,035

 

Securities available-for-sale

 

 

88,574

 

Loans

 

 

149,698

 

Other real estate owned

 

 

168

 

Other intangible assets

 

 

7,880

 

Bank-owned life insurance

 

 

5,012

 

Deferred tax assets, net

 

 

7,457

 

Other assets

 

 

1,167

 

Total assets acquired

 

 

321,991

 

Liabilities

 

 

 

Deposits

 

 

279,192

 

Accrued expenses and other liabilities

 

 

1,442

 

Total liabilities assumed

 

 

280,634

 

Net assets acquired

 

$

41,357

 

Consideration paid

 

 

 

Common stock, net (1,586,542 shares issued at $26.16 per share)

 

 

41,303

 

Cash paid

 

 

201

 

Total consideration paid

 

 

41,504

 

Goodwill

 

$

147

 

The following table presents the fair value and gross contractual amounts receivable of acquired non-credit-deteriorated loans from the acquisition, and their respective expected contractual cash flows as of the acquisition date:

Fair value

 

$

127,889

 

Gross contractual amounts receivable

 

 

148,674

 

Estimate of contractual cash flows not expected to be collected

 

 

1,184

 

Estimate of contractual cash flows expected to be collected

 

 

147,490

 

The following table provides the unaudited pro forma information for the results of operations for the six months ended June 30, 2025, as if the acquisition had occurred on January 1, 2025. The pro forma results combine the historical results of First Security into our Condensed Consolidated Statements of Operations, including the impact of certain acquisition accounting adjustments, which includes loan discount accretion, intangible assets amortization, and deposit premium 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 acquisition actually occurred on January 1, 2025. 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. Recognized acquisition-related expenses and other adjustments related to the timing of expenses, are included in net income in the following table:

 

 

For the Six Months Ended

 

 

 

June 30,

 

(unaudited)

 

2025

 

Total revenues (net interest income and non-interest income)

 

$

217,265

 

Net income

 

$

59,513

 

Earnings per share—basic

 

$

1.31

 

Earnings per share—diluted

 

$

1.31

 

 

The operating results of the Company include the operating results generated by the acquired assets and assumed liabilities of First Security for the period from April 1, 2025 through June 30, 2026. Revenues and earnings of the acquired company since the acquisition date have not been disclosed as it is not practicable as First Security was merged into the Company and separate financial information is not readily available.