Byline Bank was Chicago’s # 1 financial security in 2021

With $ 6.6 billion in assets, Byline is at a size that would make a digestible acquisition for a larger bank looking to enter the fragmented Chicago market or consolidate here. Investors seem to be betting at least in part on an acquisition premium if Byline management decides to seek a buyer.

Byline CEO Roberto Herencia said in an email he believed Byline’s shares were undervalued before the pandemic arrived: builder. Banks that show above-average organic loan growth, avoid costly acquisitions or acquisitions at all, and that are asset sensitive, have higher valuations in this environment. We check all of these boxes. Our specialized lending activity (administration of small businesses) also performed very well given the environment and generated record fee income.

Investor speculation is understandable, however, given that banking transactions came back to life in 2021 after a pandemic hiatus in 2020. Several major deals have been made for Chicago institutions, including the pending buyout of First Midwest. , based in Chicago, by Evansville, Ind. -Based Old National.

Other notable sellers in 2021 included large private banks like Lombard-based Glenview State Bank and West Suburban.

With one of the country’s most fragmented banking markets consolidating rapidly, Byline emerges as one of the best options for large players outside the state.

Herencia, a seasoned Chicago banker who led the $ 207 million recapitalization of the former Metropolitan Bank Group in 2013 and renamed it Byline, has been an active buyer rather than seller since taking over. But Byline was not the winner in any of the deals that took place in 2021. Its investors include ultra-wealthy Mexican nationals whose investment horizons are unclear.

At the very least, the high stock price gives Herencia a currency to shop with.

“It’s safe to assume that acquisition activity in and around Chicago will continue into 2022,” Stephens analyst Terry McEvoy wrote in a Dec. 6 report on the Chicago banking market.

The local banks that participated in last year’s cycle, whether as buyers or sellers, did not perform particularly well on a relative basis. Stock in Aurora-based Old Second, which doubled in size with the $ 297 million buyout of West Suburban, rose 25%. First Midwest saw its stock price rise 29% in a year in which one of Chicago’s top choice targets chose a low-premium ‘merger of equals’ with a bank of Indiana its size.

These look like great returns, and in a normal year they would be. But 2021 was not a normal year; the KBW index of regional banks returned 33%.

The other notable financial value locally was Enova International, the Chicago-based online lender focused on small businesses and consumers with subprime loans. It rose 65% last year as consumers weathered the pandemic in a much better financial situation than expected and non-bank lenders focused on their needs performed extremely well.

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