BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, DC 20551

LEGAL DIVISION

January 29, 2018

Mr. James W. Morrissey

Vedder Price P.C.

222 North LaSalle Street, Suite 2400
Chicago, Illinois 60601

Dear Mr. Morrissey:

This is in response to your letter, dated January 19, 2018, and received on
January 22, to the Federal Reserve Bank of Chicago requesting a waiver from an
application requirement under the Bank Holding Company Act of 1956, as amended
(“BHC Act”),! for Byline Bancorp, Inc. (“Byline”), Chicago, Illinois, a bank holding
company, to acquire First Evanston Bancorp, Inc. (“First Evanston”), a bank holding
company, and thereby indirectly acquire First Evanston’s subsidiary state member bank,
First Bank & Trust (“First Bank”), both of Evanston, Illinois.

The purpose of the proposed transaction is to facilitate the merger of First
Bank with and into Byline’s subsidiary state nonmember bank, Byline Bank, Chicago,
Illinois. The transaction would occur as follows: (1) First Evanston would merge with
and into Wildcat Acquisition Corporation, a wholly-owned subsidiary of Byline formed
for the sole purpose of facilitating the transaction, with First Evanston as the resulting
entity; (2) First Evanston would merge with and into Byline, with Byline as the resulting
entity; and (3) First Bank would merge with and into Byline Bank, with Byline Bank as
the resulting entity (“Bank Merger’). You have indicated that the transaction steps would
occur simultaneously and that Byline would not operate First Bank as a separate entity.

Section 3 of the BHC Act and the Board’s Regulation Y require the
approval of the Board before the merger or consolidation of bank holding companies and
before a bank holding company may acquire direct or indirect ownership or control of
more than 5 percent of the voting shares of a bank.’ Through the transaction described
above, Byline would merge with First Evanston and acquire control of First Bank.

' 12 U.S.C. § 1841 et seq.
2 12 U.S.C. § 1842(a); 12 CFR 225.11.

www.federalreserve.gow



Accordingly, Byline would be required to obtain the Board’s approval under section 3 of
the BHC Act and Regulation Y.

In certain circumstances, however, in order to avoid duplication of
regulatory review by federal banking regulators, the Board’s rules provide that a bank
holding company seeking to merge with another bank holding company or acquire
control of a bank need not obtain the Board’s prior approval if the transaction is subject
to review by a federal banking agency under section 18(c) of the Federal Deposit
Insurance Act (“the Bank Merger Act”) and meets certain other criteria.4 Your proposal
meets all of the applicable criteria, and Byline has provided all necessary information.

The proposed Bank Merger requires the prior approval of the Federal
Deposit Insurance Corporation (“FDIC”) under the Bank Merger Act.> In acting on the
merger proposal, the FDIC must consider the impact the acquisition would have on
competition, the financial and managerial resources and future prospects of the combined
organization, the convenience and needs of the communities served by Byline Bank and
First Bank, the institutions’ records of performance under the Community Reinvestment
Act, the institutions’ effectiveness in combating money laundering activities, and risks to
the stability of the United States banking or financial system.® These criteria are
substantially similar to the criteria the Board would consider under section 3 of the BHC
Act.”

Additionally, at no time would First Bank operate as a separate subsidiary
bank of Byline. Following the transaction, the separate corporate existence of First Bank
would cease, and Byline Bank would continue to operate as a state nonmember bank.
Under these circumstances, review of the transaction under section 3 of the BHC Act
would be duplicative of the review under the Bank Merger Act.

3 12 U.S.C. § 1828(c).
4 12 CER 225.12(d)(2).

5 12 U.S.C. § 1828(c). Byline has filed a Bank Merger Act application with the FDIC
requesting prior approval of the Bank Merger and has provided the Board with a copy of
the application.

6 12 U.S.C. §§ 1828(c)(5) & (11), 2902(3)(E), 2903(a)(2).

7 12US.C. § 1842(c); 12 CFR 225.13. First Bank is located only in Illinois, the home
state of Byline. See 12 U.S.C. § 1841(0)(4). The acquisition, therefore, is not considered
an interstate acquisition for purposes of section 3(d) of the BHC Act. See 12 U.S.C.

§ 1842(d).



Based on a review of these and other facts presented, the Legal Division
believes that no regulatory purpose would be served by requiring Byline to file a formal
application under section 3 of the BHC Act. The Legal Division, therefore, would not
recommend that the Board take action to require the filing of a formal application by
Byline in connection with the transaction described above. This opinion is subject to the
receipt by Byline, Byline Bank, First Evanston, and First Bank of all other necessary
regulatory approvals and compliance with any terms and conditions that may be imposed
in connection with those approvals.

This opinion is based on all the facts and representations presented to
Federal Reserve staff. Any material change in those facts or representations should be
communicated immediately to Federal Reserve staff and may cause this opinion to be
reconsidered. This opinion is limited to this proposal and does not apply to any other
transaction.

If you have any questions regarding this matter, please contact
Derald Seid at (202) 452-2246, or Kirin Walsh at (202) 452-3058, of the Legal Division
staff.

Sincerely,

Laur Schaffer
Associate General Counsel

cc: Federal Deposit Insurance Corporation