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Byline Bancorp, Inc. Reports Third Quarter 2022 Financial Results

Select Third Quarter 2022 Financial Highlights

  • Net income of $22.7 million, or $0.61 per diluted share
  • Net interest income of $68.9 million and $12.0 million of non-interest income
    • Total revenue1 of $80.9 million
  • Net interest margin of 4.04%
  • Return on average assets of 1.26%
  • Efficiency ratio of 55.11%
  • Originated loans and leases increased $134.3 million, loan and lease production, net of loan sales of $303.2 million
  • Total deposits increased $224.1 million to $5.6 billion
  • Common Equity Tier 1 to risk weighted assets of 10.24%

Byline Bancorp, Inc. ("Byline", the “Company”, "we", "our", or "us")(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $22.7 million, or $0.61 per diluted share, for the third quarter of 2022 compared with net income of $20.3 million, or $0.54 per diluted share, for the second quarter of 2022, and net income of $25.3 million, or $0.66 per diluted share, for the third quarter 2021.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “Byline delivered a strong third quarter with record revenues, driven by expansion in net interest income supported by loan, lease and deposit growth and the benefit of higher interest rates. We continue to focus on maintaining a healthy balance sheet and strong capital and liquidity positions. Given the uncertain economic environment, we are preparing for a range of possible outcomes and will continue to manage the bank in a prudent, disciplined manner. I want to thank our employees for their dedication to helping our customers, communities, and shareholders.”

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “Our performance was balanced and resilient in an uncertain and difficult environment, delivering solid financial results for the third quarter. Our net interest margin increased and thanks to our bankers and team members, we continued to experience healthy growth on our balance sheet. While the loan and lease portfolio continues to perform well, we believe our consistently strong underwriting and credit risk management practices prepare us well for changes in the business cycle.”

Board Declares Cash Dividend of $0.09 per Share

On October 25, 2022, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on November 22, 2022, to stockholders of record of the Company's common stock as of November 8, 2022.

STATEMENTS OF OPERATIONS

Net Interest Income

The following table presents the average interest-earning assets and average interest-bearing liabilities for the periods indicated. Net interest income and margin are adjusted to reflect tax-exempt interest income on a tax-equivalent basis using tax rates effective as of the end of the period:

 

For the Three Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

(dollars in thousands)

Average

Balance(5)

 

Interest

Inc / Exp

 

Avg.

Yield /

Rate

 

Average

Balance(5)

 

Interest

Inc / Exp

 

Avg.

Yield /

Rate

 

Average

Balance(5)

 

Interest

Inc / Exp

 

Avg.

Yield /

Rate

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

77,522

 

 

$

210

 

1.08

%

 

$

66,034

 

 

$

74

 

0.45

%

 

$

40,088

 

 

$

19

 

0.19

%

Loans and leases(1)

 

5,218,135

 

 

 

72,824

 

5.54

%

 

 

5,009,077

 

 

 

59,674

 

4.78

%

 

 

4,539,111

 

 

 

56,291

 

4.92

%

Taxable securities

 

1,302,375

 

 

 

6,014

 

1.83

%

 

 

1,330,200

 

 

 

5,904

 

1.78

%

 

 

1,309,802

 

 

 

5,472

 

1.66

%

Tax-exempt securities(2)

 

162,591

 

 

 

1,083

 

2.64

%

 

 

168,567

 

 

 

1,131

 

2.69

%

 

 

187,064

 

 

 

1,254

 

2.66

%

Total interest-earning assets

$

6,760,623

 

 

$

80,131

 

4.70

%

 

$

6,573,878

 

 

$

66,783

 

4.07

%

 

$

6,076,065

 

 

$

63,036

 

4.12

%

Allowance for loan and lease losses

 

(62,733

)

 

 

 

 

 

 

(59,883

)

 

 

 

 

 

 

(61,528

)

 

 

 

 

All other assets

 

447,299

 

 

 

 

 

 

 

461,730

 

 

 

 

 

 

 

546,331

 

 

 

 

 

TOTAL ASSETS

$

7,145,189

 

 

 

 

 

 

$

6,975,725

 

 

 

 

 

 

$

6,560,868

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

$

583,777

 

 

$

1,077

 

0.73

%

 

$

615,831

 

 

$

415

 

0.27

%

 

$

653,543

 

 

$

228

 

0.14

%

Money market accounts

 

1,391,923

 

 

 

3,358

 

0.96

%

 

 

1,307,320

 

 

 

1,194

 

0.37

%

 

 

1,031,009

 

 

 

280

 

0.11

%

Savings

 

673,966

 

 

 

247

 

0.15

%

 

 

664,954

 

 

 

83

 

0.05

%

 

 

625,037

 

 

 

75

 

0.05

%

Time deposits

 

687,124

 

 

 

1,289

 

0.74

%

 

 

627,199

 

 

 

436

 

0.28

%

 

 

709,805

 

 

 

403

 

0.23

%

Total interest-bearing deposits

 

3,336,790

 

 

 

5,971

 

0.71

%

 

 

3,215,304

 

 

 

2,128

 

0.27

%

 

 

3,019,394

 

 

 

986

 

0.13

%

Other borrowings

 

607,471

 

 

 

3,232

 

2.11

%

 

 

497,082

 

 

 

1,083

 

0.87

%

 

 

426,284

 

 

 

349

 

0.33

%

Federal funds purchased

 

 

 

 

 

0.00

%

 

 

2,527

 

 

 

14

 

2.32

%

 

 

 

 

 

 

0.00

%

Subordinated notes and debentures

 

110,799

 

 

 

1,825

 

6.54

%

 

 

110,649

 

 

 

1,694

 

6.14

%

 

 

110,195

 

 

 

1,592

 

5.73

%

Total borrowings

 

718,270

 

 

 

5,057

 

2.79

%

 

 

610,258

 

 

 

2,791

 

1.83

%

 

 

536,479

 

 

 

1,941

 

1.44

%

Total interest-bearing liabilities

$

4,055,060

 

 

$

11,028

 

1.08

%

 

$

3,825,562

 

 

$

4,919

 

0.52

%

 

$

3,555,873

 

 

$

2,927

 

0.33

%

Non-interest-bearing demand deposits

 

2,198,095

 

 

 

 

 

 

 

2,265,426

 

 

 

 

 

 

 

2,106,189

 

 

 

 

 

Other liabilities

 

116,676

 

 

 

 

 

 

 

104,085

 

 

 

 

 

 

 

75,052

 

 

 

 

 

Total stockholders’ equity

 

775,358

 

 

 

 

 

 

 

780,652

 

 

 

 

 

 

 

823,754

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

7,145,189

 

 

 

 

 

 

$

6,975,725

 

 

 

 

 

 

$

6,560,868

 

 

 

 

 

Net interest spread(3)

 

 

 

 

3.62

%

 

 

 

 

 

3.55

%

 

 

 

 

 

3.79

%

Net interest income, fully taxable equivalent

 

 

$

69,103

 

 

 

 

 

$

61,864

 

 

 

 

 

$

60,109

 

 

Net interest margin, fully taxable equivalent(2)(4)

 

 

 

 

4.05

%

 

 

 

 

 

3.77

%

 

 

 

 

 

3.92

%

Less: Tax-equivalent adjustment

 

 

 

228

 

0.01

%

 

 

 

 

237

 

0.01

%

 

 

 

 

264

 

0.01

%

Net interest income

 

 

$

68,875

 

 

 

 

 

$

61,627

 

 

 

 

 

$

59,845

 

 

Net interest margin(4)

 

 

 

 

4.04

%

 

 

 

 

 

3.76

%

 

 

 

 

 

3.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

$

1,559

 

0.09

%

 

 

 

$

1,383

 

0.08

%

 

 

 

$

1,638

 

0.11

%

(1)

Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.

(2)

Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

(3)

Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(4)

Represents net interest income (annualized) divided by total average earning assets.

(5)

Average balances are average daily balances.

The following table presents net interest income for the periods indicated:

 

 

 

 

 

 

 

 

September 30, 2022

 

 

Three Months Ended

 

Change from

 

 

September 30,

 

June 30,

 

September 30,

 

June 30,

 

September 30,

(dollars in thousands)

 

2022

 

2022

 

2021

 

2022

 

2021

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

72,824

 

$

59,674

 

$

56,291

 

22.0

%

 

29.4

%

Interest on securities

 

 

6,402

 

 

6,264

 

 

5,534

 

2.2

%

 

15.7

%

Other interest and dividend income

 

 

677

 

 

608

 

 

947

 

11.4

%

 

(28.5

)%

Total interest and dividend income

 

 

79,903

 

 

66,546

 

 

62,772

 

20.1

%

 

27.3

%

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

5,971

 

 

2,128

 

 

986

 

180.6

%

 

505.6

%

Other borrowings

 

 

3,232

 

 

1,097

 

 

349

 

194.5

%

 

824.8

%

Subordinated notes and debentures

 

 

1,825

 

 

1,694

 

 

1,592

 

7.8

%

 

14.7

%

Total interest expense

 

 

11,028

 

 

4,919

 

 

2,927

 

124.2

%

 

276.8

%

Net interest income

 

$

68,875

 

$

61,627

 

$

59,845

 

11.8

%

 

15.1

%

Net interest income for the third quarter of 2022 was $68.9 million, an increase of $7.2 million, or 11.8%, from the second quarter of 2022, driven mainly by the rising interest rate environment.

The increase in net interest income was primarily due to:

  • An increase of $13.2 million in interest income and fees on loans and leases due to higher yields and growth in the originated loan and lease portfolio.

Partially offset by:

  • An increase of $3.8 million in deposit interest expense due to higher rates paid on deposits and growth in interest-bearing deposits; and
  • An increase of $2.1 million in interest expense on other borrowings due to rates paid on higher average balances of FHLB advances.

Tax-equivalent net interest margin for the third quarter of 2022 was 4.05%, an increase of 28 basis points compared to the second quarter of 2022. Total net accretion income on acquired loans contributed nine basis points to the net interest margin for the third quarter of 2022 compared to eight basis points for the second quarter of 2022, an increase of one basis point.

The average cost of total deposits was 0.43% for the third quarter of 2022, an increase of 27 basis points compared to the second quarter of 2022. Average non-interest-bearing demand deposits were 39.7% of average total deposits for the third quarter of 2022 compared to 41.3% during the second quarter of 2022.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $4.2 million for the third quarter of 2022, a decrease of $1.7 million compared to $5.9 million for the second quarter of 2022. The decrease in provision during the third quarter of 2022 was primarily driven by lower growth in the originated loan and lease portfolio, which reduced the impact of qualitative factors surrounding the macroeconomic environment and rising interest rates. This decrease was partially offset by increases in specific reserves on impaired loans.

Non-interest Income

The following table presents the components of non-interest income for the periods indicated:

 

 

 

 

 

 

 

 

September 30, 2022

 

 

Three Months Ended

 

Change from

 

 

September 30,

 

June 30,

 

September 30,

 

June 30,

 

September 30,

(dollars in thousands)

 

2022

 

2022

 

2021

 

2022

 

2021

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposits

 

$

2,128

 

 

$

2,059

 

 

$

1,867

 

 

3.4

%

 

14.0

%

Loan servicing revenue

 

 

3,422

 

 

 

3,384

 

 

 

3,344

 

 

1.1

%

 

2.4

%

Loan servicing asset revaluation

 

 

(2,342

)

 

 

(4,636

)

 

 

(2,650

)

 

(49.5

)%

 

(11.6

)%

ATM and interchange fees

 

 

1,007

 

 

 

1,131

 

 

 

1,201

 

 

(11.0

)%

 

(16.1

)%

Net realized gains (losses) on securities available-for-sale

 

 

(2

)

 

 

52

 

 

 

130

 

 

NM

 

 

NM

 

Change in fair value of equity securities, net

 

 

(581

)

 

 

(697

)

 

 

(275

)

 

(16.7

)%

 

111.0

%

Net gains on sales of loans

 

 

5,580

 

 

 

9,983

 

 

 

12,761

 

 

(44.1

)%

 

(56.3

)%

Wealth management and trust income

 

 

995

 

 

 

900

 

 

 

815

 

 

10.7

%

 

22.2

%

Other non-interest income

 

 

1,785

 

 

 

1,985

 

 

 

1,302

 

 

(10.2

)%

 

37.0

%

Total non-interest income

 

$

11,992

 

 

$

14,161

 

 

$

18,495

 

 

(15.3

)%

 

(35.2

)%

Non-interest income for the third quarter of 2022 was $12.0 million, a decrease of $2.2 million or 15.3%, compared to $14.2 million for the second quarter of 2022.

The decrease in total non-interest income was primarily due to:

  • A decrease of $4.4 million in net gains on sales of loans due to lower volume of loan sales and lower average premiums.

Partially offset by:

  • A decrease of $2.3 million in the downward valuation adjustment to the loan servicing asset, due to changes in discount rates and lower prepayments compared to the prior quarter.

During the third quarter of 2022, we sold $75.4 million of U.S. government guaranteed loans compared to $118.5 million during the second quarter of 2022.

Non-interest Expense

The following table presents the components of non-interest expense for the periods indicated:

 

 

 

 

 

 

 

 

September 30, 2022

 

 

Three Months Ended

 

Change from

 

 

September 30,

 

June 30,

 

September 30,

 

June 30,

 

September 30,

(dollars in thousands)

 

2022

 

2022

 

2021

 

2022

 

2021

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

29,587

 

$

27,697

 

$

25,978

 

6.8

%

 

13.9

%

Occupancy and equipment expense, net

 

 

3,919

 

 

4,409

 

 

4,982

 

(11.1

)%

 

(21.3

)%

Impairment charge on assets held for sale

 

 

 

 

 

 

1,434

 

NM

 

 

NM

 

Loan and lease related expenses

 

 

530

 

 

942

 

 

1,175

 

(43.6

)%

 

(54.8

)%

Legal, audit and other professional fees

 

 

2,733

 

 

1,820

 

 

2,710

 

50.1

%

 

0.8

%

Data processing

 

 

3,370

 

 

3,396

 

 

3,108

 

(0.8

)%

 

8.4

%

Net loss recognized on other real estate owned and other related expenses

 

 

275

 

 

158

 

 

42

 

74.4

%

 

NM

 

Other intangible assets amortization expense

 

 

1,611

 

 

1,868

 

 

1,738

 

(13.7

)%

 

(7.3

)%

Other non-interest expense

 

 

4,153

 

 

3,483

 

 

3,013

 

19.2

%

 

37.9

%

Total non-interest expense

 

$

46,178

 

$

43,773

 

$

44,180

 

5.5

%

 

4.5

%

Non-interest expense for the third quarter of 2022 was $46.2 million, an increase of $2.4 million, or 5.5%, from $43.8 million for the second quarter of 2022.

The increase in total non-interest expense was primarily due to:

  • An increase of $1.9 million in salaries and employee benefits due to increased headcount and higher commissions;
  • An increase of $913,000 in legal, audit and other professional fees related to higher second quarter reimbursements; and
  • An increase of $670,000 in other non-interest expense mainly related to new advertising campaigns.

Partially offset by:

  • A decrease of $490,000 in occupancy and equipment expense, net, due to the impact from branch consolidations.

Our efficiency ratio was 55.11% for the third quarter of 2022 compared to 55.29% for the second quarter of 2022.

INCOME TAXES

We recorded income tax expense of $7.9 million during the third quarter of 2022, compared to $5.8 million during the second quarter of 2022. The effective tax rate was 25.7% and 22.3% for the third quarter of 2022 and second quarter of 2022, respectively. The increase in the effective tax rate is a result of tax benefits related to share-based compensation taken during the second quarter.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $7.3 billion at September 30, 2022, an increase of $145.9 million compared to $7.1 billion at June 30, 2022.

The current quarter increase was primarily due to:

  • An increase in net loans and leases of $105.2 million primarily due to growth in originated commercial and industrial loans and the lease financing receivables portfolio.

Partially offset by:

  • A decrease in securities available-for-sale of $91.5 million primarily due to changes in market value.

The following table shows our allocation of the originated, acquired impaired, and acquired non-impaired loans and leases at the dates indicated:

 

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

(dollars in thousands)

 

Amount

 

% of Total

 

Amount

 

% of Total

 

Amount

 

% of Total

Originated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,652,890

 

 

31.3

%

 

$

1,672,438

 

 

32.4

%

 

$

1,298,454

 

 

28.2

%

Residential real estate

 

 

410,285

 

 

7.8

%

 

 

401,095

 

 

7.7

%

 

 

387,578

 

 

8.4

%

Construction, land development, and other land

 

 

456,463

 

 

8.7

%

 

 

434,132

 

 

8.4

%

 

 

336,460

 

 

7.3

%

Commercial and industrial

 

 

1,938,320

 

 

36.7

%

 

 

1,861,582

 

 

36.0

%

 

 

1,480,076

 

 

32.1

%

Paycheck Protection Program

 

 

1,522

 

 

0.0

%

 

 

10,391

 

 

0.2

%

 

 

268,081

 

 

5.8

%

Installment and other

 

 

1,016

 

 

0.0

%

 

 

926

 

 

0.0

%

 

 

998

 

 

0.0

%

Leasing financing receivables

 

 

492,744

 

 

9.3

%

 

 

438,379

 

 

8.5

%

 

 

331,149

 

 

7.2

%

Total originated loans and leases

 

$

4,953,240

 

 

93.8

%

 

$

4,818,943

 

 

93.2

%

 

$

4,102,796

 

 

89.0

%

Acquired impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

56,974

 

 

1.1

%

 

$

60,075

 

 

1.2

%

 

$

84,821

 

 

1.8

%

Residential real estate

 

 

37,246

 

 

0.7

%

 

 

39,902

 

 

0.8

%

 

 

61,893

 

 

1.3

%

Construction, land development, and other land

 

 

1,144

 

 

0.0

%

 

 

1,184

 

 

0.0

%

 

 

1,746

 

 

0.1

%

Commercial and industrial

 

 

3,029

 

 

0.1

%

 

 

3,232

 

 

0.1

%

 

 

6,651

 

 

0.1

%

Installment and other

 

 

153

 

 

0.0

%

 

 

157

 

 

0.0

%

 

 

169

 

 

0.0

%

Total acquired impaired loans

 

$

98,546

 

 

1.9

%

 

$

104,550

 

 

2.1

%

 

$

155,280

 

 

3.3

%

Acquired non-impaired loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

159,130

 

 

3.0

%

 

$

167,425

 

 

3.2

%

 

$

235,103

 

 

5.1

%

Residential real estate

 

 

34,313

 

 

0.7

%

 

 

40,174

 

 

0.8

%

 

 

58,283

 

 

1.3

%

Construction, land development, and other land

 

 

 

 

0.0

%

 

 

191

 

 

0.0

%

 

 

206

 

 

0.0

%

Commercial and industrial

 

 

26,959

 

 

0.5

%

 

 

32,569

 

 

0.6

%

 

 

49,678

 

 

1.1

%

Installment and other

 

 

199

 

 

0.0

%

 

 

227

 

 

0.0

%

 

 

275

 

 

0.0

%

Leasing financing receivables

 

 

3,084

 

 

0.1

%

 

 

3,992

 

 

0.1

%

 

 

7,607

 

 

0.2

%

Total acquired non-impaired loans and leases

 

$

223,685

 

 

4.3

%

 

$

244,578

 

 

4.7

%

 

$

351,152

 

 

7.7

%

Total loans and leases

 

$

5,275,471

 

 

100.0

%

 

$

5,168,071

 

 

100.0

%

 

$

4,609,228

 

 

100.0

%

Allowance for loan and lease losses

 

 

(64,655

)

 

 

 

 

(62,436

)

 

 

 

 

(60,598

)

 

 

Total loans and leases, net of allowance for loan and lease losses

 

$

5,210,816

 

 

 

 

$

5,105,635

 

 

 

 

$

4,548,630

 

 

 

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and leases (excluding acquired impaired), other real estate owned, and accruing troubled debt restructured loans at the dates indicated:

 

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

 

Change from

(dollars in thousands)

 

September 30,

2022

 

June 30,

2022

 

September 30,

2021

 

June 30,

2022

 

September 30,

2021

Non-performing assets:

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases

 

$

35,165

 

 

$

33,944

 

 

$

34,465

 

 

3.6

%

2.0

%

Past due loans and leases 90 days or more and still accruing interest

 

 

 

 

 

 

 

 

 

 

%

 

%

Total non-performing loans and leases

 

$

35,165

 

 

$

33,944

 

 

$

34,465

 

 

3.6

%

2.0

%

Other real estate owned

 

 

4,402

 

 

 

4,749

 

 

 

3,033

 

 

(7.3

)%

45.1

%

Total non-performing assets

 

$

39,567

 

 

$

38,693

 

 

$

37,498

 

 

2.3

%

5.5

%

Accruing troubled debt restructured loans (1)

 

$

737

 

 

$

1,358

 

 

$

2,366

 

 

(45.8

)%

(68.8

)%

Total non-performing loans and leases as a percentage of total loans and leases

 

 

0.67

%

 

0.66

%

 

0.75

%

 

 

 

Total non-performing assets as a percentage of total assets

 

 

0.54

%

 

0.54

%

 

0.56

%

 

 

 

Allowance for loan and lease losses as a percentage of non-performing loans and leases

 

 

183.86

%

 

183.94

%

 

175.82

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets guaranteed by U.S. government:

 

 

 

 

 

 

 

 

 

 

Non-accrual loans guaranteed

 

$

1,676

 

 

$

1,731

 

 

$

6,326

 

 

(3.2

)%

(73.5

)%

Past due loans 90 days or more and still accruing interest guaranteed

 

 

 

 

 

 

 

 

 

 

%

 

%

Total non-performing loans guaranteed

 

$

1,676

 

 

$

1,731

 

 

$

6,326

 

 

(3.2

)%

(73.5

)%

Accruing troubled debt restructured loans guaranteed (1)

 

$

 

 

$

 

 

$

 

 

%

 

%

Total non-performing loans and leases not guaranteed as a percentage of total loans and leases

 

 

0.63

%

 

0.62

%

 

0.61

%

 

 

 

Total non-performing assets not guaranteed as a percentage of total assets

 

 

0.52

%

 

0.52

%

 

0.46

%

 

 

 

(1)

Accruing troubled debt restructured loans are not included in total non-performing loans and leases or in non-performing assets.

Variances in non-performing assets were:

  • Non-performing loans and leases were $35.2 million at September 30, 2022, an increase of $1.2 million from $33.9 million at June 30, 2022, primarily due to one new conventional non-performing relationship.
  • Other real estate owned was $4.4 million at September 30, 2022, a decrease of $347,000 from $4.7 million at June 30, 2022, primarily due to the sale of one property.

Allowance for Loan and Lease Losses

The following table presents the balance and activity within the allowance for loan and lease losses for the periods indicated:

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(dollars in thousands)

 

2022

 

2022

 

2021

Allowance for loan and lease losses, beginning of period

 

$

62,436

 

 

$

59,458

 

 

$

61,719

 

Provision for loan and lease losses

 

 

4,176

 

 

 

5,908

 

 

 

352

 

Net charge-offs of loans and leases

 

 

(1,957

)

 

 

(2,930

)

 

 

(1,473

)

Allowance for loan and lease losses, end of period

 

$

64,655

 

 

$

62,436

 

 

$

60,598

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses to period end total loans and leases held for investment

 

 

1.23

%

 

 

1.21

%

 

 

1.31

%

Net charge-offs to average total loans and leases held for investment, net before ALLL

 

 

0.15

%

 

 

0.24

%

 

 

0.13

%

Provision for loan and lease losses to net charge-offs during the period

 

 

2.13

x

 

 

2.02

x

 

 

0.24

x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment increased to 1.23% at September 30, 2022 compared to 1.21% at June 30, 2022, primarily due to higher provision to net charge-offs for the third quarter 2022.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on the recognition of credit losses, otherwise known as "CECL", which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses. In November 2019, the FASB delayed the effective date of the standard for smaller reporting companies, which includes emerging growth companies. The Company will adopt the standard on December 31, 2022. The new guidance may result in an increase in the allowance for loan and lease losses, which will reflect the requirement to include expected losses on purchased credit-impaired loans. The extent of the increase will depend on the composition of the loan and lease portfolio, as well as the economic conditions and forecasts as of the adoption date.

Net Charge-Offs

Net charge-offs during the third quarter of 2022 were $2.0 million, or 0.15% of average loans and leases, on an annualized basis, a decrease of $973,000 compared to $2.9 million, or 0.24% of average loans and leases, during the second quarter of 2022, and an increase of $484,000 from $1.5 million or 0.13% of average loans and leases from the comparable period a year ago.

Net charge-offs for the third quarter of 2022 included $1.9 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the second quarter of 2022 and third quarter of 2021 included $2.7 million and $1.3 million, respectively, in the unguaranteed portion of U.S. government guaranteed loans.

Deposits and Other Liabilities

The following table presents the composition of deposits at the dates indicated:

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

Change from

(dollars in thousands)

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

June 30, 2022

 

September 30, 2021

Non-interest-bearing demand deposits

$

2,142,183

 

$

2,180,927

 

$

2,117,749

 

(1.8

)%

 

1.2

%

Interest-bearing checking accounts

 

616,139

 

 

535,856

 

 

652,824

 

15.0

%

 

(5.6

)%

Money market demand accounts

 

1,485,815

 

 

1,323,287

 

 

1,057,419

 

12.3

%

 

40.5

%

Other savings

 

669,734

 

 

669,164

 

 

627,294

 

0.1

%

 

6.8

%

Time deposits (below $250,000)

 

586,198

 

 

544,759

 

 

553,364

 

7.6

%

 

5.9

%

Time deposits ($250,000 and above)

 

112,387

 

 

134,384

 

 

149,628

 

(16.4

)%

 

(24.9

)%

Total deposits

$

5,612,456

 

$

5,388,377

 

$

5,158,278

 

4.2

%

 

8.8

%

Total deposits increased to $5.6 billion at September 30, 2022 compared to $5.4 billion at June 30, 2022. Non-interest-bearing deposits were 38.2% and 40.5% of total deposits at September 30, 2022 and June 30, 2022, respectively.

The increase in deposits in the current quarter was primarily due to:

  • An increase in money market demand accounts of $162.5 million, due to increases in consumer deposits; and
  • An increase in interest bearing checking accounts of $80.3 million, principally due to increases in commercial deposits.

Total borrowings and other liabilities were $917.6 million at September 30, 2022, a decrease of $60.6 million from $978.2 million at June 30, 2022, primarily driven by decreases in Federal Home Loan Bank advances.

Stockholders’ Equity

Total stockholders’ equity was $747.6 million at September 30, 2022, a decrease of $17.6 million from $765.2 million at June 30, 2022. The decrease was primarily due to an increase in accumulated other comprehensive loss.

Under its stock repurchase program, the Company repurchased 174,249 shares of its common stock at an average price of $23.84 per share during the third quarter of 2022.

The following table presents actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of September 30, 2022:

 

 

Actual

 

Minimum Capital

Required

 

Required to be

Considered

Well Capitalized

September 30, 2022

 

Amount

 

Ratio

 

Amount

 

 

Ratio

 

Amount

 

 

Ratio

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

873,588

 

13.02

%

 

$

536,609

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

825,499

 

12.35

%

 

 

534,820

 

 

8.00

%

 

$

668,525

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

731,606

 

10.91

%

 

$

402,457

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

$

758,517

 

11.35

%

 

 

401,115

 

 

6.00

%

 

$

534,820

 

 

8.00

%

Common Equity Tier 1 (CET1) to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

686,606

 

10.24

%

 

$

301,842

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

758,517

 

11.35

%

 

 

300,836

 

 

4.50

%

 

$

434,541

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

731,606

 

10.30

%

 

$

284,252

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

758,517

 

10.69

%

 

$

283,789

 

 

4.00

%

 

$

354,736

 

 

5.00

%

Capital ratios for the period presented are based on the Basel III regulatory capital framework as applied to our current business and operations, and are subject to, among other things, completion and filing of our regulatory reports and ongoing regulatory review and implementation guidance.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, October 28, 2022 to discuss our quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (844) 200-6205; passcode 518637. A recorded replay can be accessed through November 11, 2022 by dialing (866) 813-9403; passcode: 271643.

A slide presentation relating to our third quarter 2022 results will be accessible prior to the conference call. The slide presentation and webcast of the conference call can be accessed on our investor relations website at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company for Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bank has approximately $7.3 billion in assets and operates more than 30 full service branch locations throughout the Chicago and Milwaukee metropolitan areas. Byline Bank offers a broad range of commercial and retail banking products and services including small ticket equipment leasing solutions and is one of the top five Small Business Administration lenders in the United States.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication.

No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.

Certain risks and important factors that could affect Byline’s future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(dollars in thousands)

 

2022

 

2022

 

2022

 

2021

 

2021

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

56,546

 

 

$

58,844

 

 

$

48,015

 

 

$

35,247

 

 

$

46,900

 

Interest bearing deposits with other banks

 

 

159,744

 

 

 

83,057

 

 

 

105,564

 

 

 

122,684

 

 

 

95,978

 

Cash and cash equivalents

 

 

216,290

 

 

 

141,901

 

 

 

153,579

 

 

 

157,931

 

 

 

142,878

 

Equity and other securities, at fair value

 

 

7,279

 

 

 

7,860

 

 

 

10,677

 

 

 

10,578

 

 

 

10,299

 

Securities available-for-sale, at fair value

 

 

1,181,654

 

 

 

1,273,138

 

 

 

1,369,368

 

 

 

1,454,542

 

 

 

1,427,605

 

Securities held-to-maturity, at amortized cost

 

 

3,877

 

 

 

3,880

 

 

 

3,882

 

 

 

3,885

 

 

 

3,887

 

Restricted stock, at cost

 

 

27,077

 

 

 

30,002

 

 

 

13,977

 

 

 

22,002

 

 

 

15,927

 

Loans held for sale

 

 

33,975

 

 

 

17,284

 

 

 

39,520

 

 

 

64,460

 

 

 

48,372

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

 

5,275,471

 

 

 

5,168,071

 

 

 

4,789,068

 

 

 

4,537,128

 

 

 

4,609,228

 

Allowance for loan and lease losses

 

 

(64,655

)

 

 

(62,436

)

 

 

(59,458

)

 

 

(55,012

)

 

 

(60,598

)

Net loans and leases

 

 

5,210,816

 

 

 

5,105,635

 

 

 

4,729,610

 

 

 

4,482,116

 

 

 

4,548,630

 

Servicing assets, at fair value

 

 

21,127

 

 

 

22,155

 

 

 

24,497

 

 

 

23,744

 

 

 

23,597

 

Premises and equipment, net

 

 

59,049

 

 

 

60,773

 

 

 

62,281

 

 

 

62,548

 

 

 

76,995

 

Other real estate owned, net

 

 

4,402

 

 

 

4,749

 

 

 

2,221

 

 

 

2,112

 

 

 

3,033

 

Goodwill and other intangible assets, net

 

 

160,484

 

 

 

162,094

 

 

 

163,962

 

 

 

165,558

 

 

 

167,296

 

Bank-owned life insurance

 

 

81,592

 

 

 

81,100

 

 

 

80,604

 

 

 

80,039

 

 

 

60,992

 

Deferred tax assets, net

 

 

91,532

 

 

 

78,950

 

 

 

67,335

 

 

 

50,329

 

 

 

45,165

 

Accrued interest receivable and other assets

 

 

178,433

 

 

 

142,196

 

 

 

113,123

 

 

 

116,328

 

 

 

129,775

 

Total assets

 

$

7,277,587

 

 

$

7,131,717

 

 

$

6,834,636

 

 

$

6,696,172

 

 

$

6,704,451

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

$

2,142,183

 

 

$

2,180,927

 

 

$

2,281,612

 

 

$

2,158,420

 

 

$

2,117,749

 

Interest-bearing deposits

 

 

3,470,273

 

 

 

3,207,450

 

 

 

3,248,490

 

 

 

2,996,627

 

 

 

3,040,529

 

Total deposits

 

 

5,612,456

 

 

 

5,388,377

 

 

 

5,530,102

 

 

 

5,155,047

 

 

 

5,158,278

 

Other borrowings

 

 

653,954

 

 

 

748,092

 

 

 

311,450

 

 

 

519,723

 

 

 

539,119

 

Subordinated notes, net

 

 

73,648

 

 

 

73,604

 

 

 

73,560

 

 

 

73,517

 

 

 

73,473

 

Junior subordinated debentures issued to capital trusts, net

 

 

37,232

 

 

 

37,123

 

 

 

37,011

 

 

 

36,906

 

 

 

36,796

 

Accrued expenses and other liabilities

 

 

152,732

 

 

 

119,360

 

 

 

93,842

 

 

 

74,597

 

 

 

72,367

 

Total liabilities

 

 

6,530,022

 

 

 

6,366,556

 

 

 

6,045,965

 

 

 

5,859,790

 

 

 

5,880,033

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

 

10,438

 

 

 

10,438

 

Common stock

 

 

389

 

 

 

388

 

 

 

388

 

 

 

387

 

 

 

386

 

Additional paid-in capital

 

 

597,049

 

 

 

595,938

 

 

 

595,006

 

 

 

593,753

 

 

 

592,192

 

Retained earnings

 

 

326,560

 

 

 

307,278

 

 

 

290,397

 

 

 

271,676

 

 

 

258,077

 

Treasury stock

 

 

(51,535

)

 

 

(47,181

)

 

 

(40,732

)

 

 

(31,570

)

 

 

(31,161

)

Accumulated other comprehensive loss, net of tax

 

 

(124,898

)

 

 

(91,262

)

 

 

(56,388

)

 

 

(8,302

)

 

 

(5,514

)

Total stockholders’ equity

 

 

747,565

 

 

 

765,161

 

 

 

788,671

 

 

 

836,382

 

 

 

824,418

 

Total liabilities and stockholders’ equity

 

$

7,277,587

 

 

$

7,131,717

 

 

$

6,834,636

 

 

$

6,696,172

 

 

$

6,704,451

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

(dollars in thousands,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

September 30,

 

September 30,

except per share data)

 

2022

 

2022

 

2022

 

2021

 

2021

 

2022

 

2021

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

72,824

 

 

$

59,674

 

 

$

55,426

 

 

$

58,570

 

 

$

56,291

 

 

$

187,924

 

 

$

164,423

 

Interest on securities

 

 

6,402

 

 

 

6,264

 

 

 

6,155

 

 

 

5,619

 

 

 

5,534

 

 

 

18,821

 

 

 

17,982

 

Other interest and dividend income

 

 

677

 

 

 

608

 

 

 

237

 

 

 

495

 

 

 

947

 

 

 

1,522

 

 

 

1,837

 

Total interest and dividend income

 

 

79,903

 

 

 

66,546

 

 

 

61,818

 

 

 

64,684

 

 

 

62,772

 

 

 

208,267

 

 

 

184,242

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

5,971

 

 

 

2,128

 

 

 

1,087

 

 

 

1,037

 

 

 

986

 

 

 

9,186

 

 

 

3,465

 

Other borrowings

 

 

3,232

 

 

 

1,097

 

 

 

395

 

 

 

330

 

 

 

349

 

 

 

4,724

 

 

 

1,333

 

Subordinated notes and debentures

 

 

1,825

 

 

 

1,694

 

 

 

1,600

 

 

 

1,589

 

 

 

1,592

 

 

 

5,119

 

 

 

4,785

 

Total interest expense

 

 

11,028

 

 

 

4,919

 

 

 

3,082

 

 

 

2,956

 

 

 

2,927

 

 

 

19,029

 

 

 

9,583

 

Net interest income

 

 

68,875

 

 

 

61,627

 

 

 

58,736

 

 

 

61,728

 

 

 

59,845

 

 

 

189,238

 

 

 

174,659

 

PROVISION/(RECAPTURE) FOR LOAN AND LEASE LOSSES

 

 

4,176

 

 

 

5,908

 

 

 

4,995

 

 

 

(1,293

)

 

 

352

 

 

 

15,079

 

 

 

2,750

 

Net interest income after provision/(recapture) for loan and lease losses

 

 

64,699

 

 

 

55,719

 

 

 

53,741

 

 

 

63,021

 

 

 

59,493

 

 

 

174,159

 

 

 

171,909

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposits

 

 

2,128

 

 

 

2,059

 

 

 

1,884

 

 

 

1,955

 

 

 

1,867

 

 

 

6,071

 

 

 

5,299

 

Loan servicing revenue

 

 

3,422

 

 

 

3,384

 

 

 

3,380

 

 

 

3,392

 

 

 

3,344

 

 

 

10,186

 

 

 

9,301

 

Loan servicing asset revaluation

 

 

(2,342

)

 

 

(4,636

)

 

 

(1,231

)

 

 

(2,510

)

 

 

(2,650

)

 

 

(8,209

)

 

 

(4,148

)

ATM and interchange fees

 

 

1,007

 

 

 

1,131

 

 

 

1,049

 

 

 

1,219

 

 

 

1,201

 

 

 

3,187

 

 

 

3,257

 

Net realized gains (losses) on securities available-for-sale

 

 

(2

)

 

 

52

 

 

 

 

 

 

(21

)

 

 

130

 

 

 

50

 

 

 

1,456

 

Change in fair value of equity securities, net

 

 

(581

)

 

 

(697

)

 

 

(35

)

 

 

(98

)

 

 

(275

)

 

 

(1,313

)

 

 

36

 

Net gains on sales of loans

 

 

5,580

 

 

 

9,983

 

 

 

10,827

 

 

 

12,924

 

 

 

12,761

 

 

 

26,390

 

 

 

33,350

 

Wealth management and trust income

 

 

995

 

 

 

900

 

 

 

1,048

 

 

 

764

 

 

 

815

 

 

 

2,943

 

 

 

2,305

 

Other non-interest income

 

 

1,785

 

 

 

1,985

 

 

 

2,504

 

 

 

1,389

 

 

 

1,302

 

 

 

6,274

 

 

 

4,383

 

Total non-interest income

 

 

11,992

 

 

 

14,161

 

 

 

19,426

 

 

 

19,014

 

 

 

18,495

 

 

 

45,579

 

 

 

55,239

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

29,587

 

 

 

27,697

 

 

 

28,959

 

 

 

28,850

 

 

 

25,978

 

 

 

86,243

 

 

 

72,372

 

Occupancy and equipment expense, net

 

 

3,919

 

 

 

4,409

 

 

 

5,128

 

 

 

4,995

 

 

 

4,982

 

 

 

13,456

 

 

 

15,617

 

Impairment charge on assets held for sale

 

 

 

 

 

 

 

 

 

 

 

8,351

 

 

 

1,434

 

 

 

 

 

 

3,981

 

Loan and lease related expenses

 

 

530

 

 

 

942

 

 

 

(891

)

 

 

2,328

 

 

 

1,175

 

 

 

581

 

 

 

3,629

 

Legal, audit, and other professional fees

 

 

2,733

 

 

 

1,820

 

 

 

2,600

 

 

 

2,376

 

 

 

2,710

 

 

 

7,153

 

 

 

7,822

 

Data processing

 

 

3,370

 

 

 

3,396

 

 

 

3,186

 

 

 

3,070

 

 

 

3,108

 

 

 

9,952

 

 

 

8,710

 

Net loss recognized on other real estate owned and other related expenses

 

 

275

 

 

 

158

 

 

 

54

 

 

 

26

 

 

 

42

 

 

 

487

 

 

 

1,052

 

Other intangible assets amortization expense

 

 

1,611

 

 

 

1,868

 

 

 

1,596

 

 

 

1,738

 

 

 

1,738

 

 

 

5,075

 

 

 

5,335

 

Other non-interest expense

 

 

4,153

 

 

 

3,483

 

 

 

3,923

 

 

 

7,234

 

 

 

3,013

 

 

 

11,559

 

 

 

7,485

 

Total non-interest expense

 

 

46,178

 

 

 

43,773

 

 

 

44,555

 

 

 

58,968

 

 

 

44,180

 

 

 

134,506

 

 

 

126,003

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

30,513

 

 

 

26,107

 

 

 

28,612

 

 

 

23,067

 

 

 

33,808

 

 

 

85,232

 

 

 

101,145

 

PROVISION FOR INCOME TAXES

 

 

7,857

 

 

 

5,824

 

 

 

6,301

 

 

 

5,878

 

 

 

8,502

 

 

 

19,982

 

 

 

25,549

 

NET INCOME

 

 

22,656

 

 

 

20,283

 

 

 

22,311

 

 

 

17,189

 

 

 

25,306

 

 

 

65,250

 

 

 

75,596

 

Dividends on preferred shares

 

 

 

 

 

 

 

 

196

 

 

 

196

 

 

 

196

 

 

 

196

 

 

 

587

 

INCOME AVAILABLE TO COMMON STOCKHOLDERS

 

$

22,656

 

 

$

20,283

 

 

$

22,115

 

 

$

16,993

 

 

$

25,110

 

 

$

65,054

 

 

$

75,009

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.61

 

 

$

0.55

 

 

$

0.60

 

 

$

0.46

 

 

$

0.68

 

 

$

1.76

 

 

$

1.99

 

Diluted

 

$

0.61

 

 

$

0.54

 

 

$

0.58

 

 

$

0.45

 

 

$

0.66

 

 

$

1.73

 

 

$

1.95

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA (unaudited)

 

 

As of or For the Three Months Ended

 

As of or For the Nine Months Ended

(dollars in thousands, except share

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

September 30,

 

September 30,

and per share data)

2022

 

2022

 

2022

 

2021

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.61

 

 

$

0.55

 

 

$

0.60

 

 

$

0.46

 

 

$

0.68

 

 

$

1.76

 

 

$

1.99

 

Diluted earnings per common share

$

0.61

 

 

$

0.54

 

 

$

0.58

 

 

$

0.45

 

 

$

0.66

 

 

$

1.73

 

 

$

1.95

 

Adjusted diluted earnings per common share(1)(2)(3)(4)

$

0.61

 

 

$

0.54

 

 

$

0.58

 

 

$

0.69

 

 

$

0.69

 

 

$

1.73

 

 

$

2.02

 

Weighted average common shares outstanding (basic)

 

36,851,973

 

 

 

37,064,795

 

 

 

37,123,161

 

 

 

37,124,176

 

 

 

37,200,778

 

 

 

37,012,316

 

 

 

37,773,350

 

Weighted average common shares outstanding (diluted)

 

37,371,159

 

 

 

37,612,268

 

 

 

38,042,822

 

 

 

37,999,401

 

 

 

38,018,301

 

 

 

37,581,866

 

 

 

38,523,112

 

Common shares outstanding

 

37,465,902

 

 

 

37,669,102

 

 

 

37,811,582

 

 

 

37,713,903

 

 

 

37,690,087

 

 

 

37,465,902

 

 

 

37,690,087

 

Cash dividends per common share

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

$

0.27

 

 

$

0.21

 

Dividend payout ratio on common stock

 

14.75

%

 

 

16.67

%

 

 

15.52

%

 

 

20.00

%

 

 

13.64

%

 

 

15.61

%

 

 

10.77

%

Tangible book value per common share(1)

$

15.67

 

 

$

16.01

 

 

$

16.52

 

 

$

17.51

 

 

$

17.16

 

 

$

15.67

 

 

$

17.16

 

Key Ratios and Performance Metrics (annualized where applicable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, fully taxable equivalent (1)(5)

 

4.05

%

 

 

3.77

%

 

 

3.82

%

 

 

3.97

%

 

 

3.92

%

 

 

3.88

%

 

 

3.82

%

Average cost of deposits

 

0.43

%

 

 

0.16

%

 

 

0.08

%

 

 

0.08

%

 

 

0.08

%

 

 

0.22

%

 

 

0.09

%

Efficiency ratio(2)

 

55.11

%

 

 

55.29

%

 

 

54.96

%

 

 

70.88

%

 

 

54.18

%

 

 

55.12

%

 

 

52.49

%

Adjusted efficiency ratio(1)(2)(3)

 

55.11

%

 

 

55.29

%

 

 

54.96

%

 

 

55.46

%

 

 

52.35

%

 

 

55.12

%

 

 

50.76

%

Non-interest expense to average assets

 

2.56

%

 

 

2.52

%

 

 

2.69

%

 

 

3.49

%

 

 

2.67

%

 

 

2.59

%

 

 

2.54

%

Adjusted non-interest expense to average assets(1)(3)

 

2.56

%

 

 

2.52

%

 

 

2.69

%

 

 

2.76

%

 

 

2.58

%

 

 

2.59

%

 

 

2.46

%

Return on average stockholders' equity

 

11.59

%

 

 

10.42

%

 

 

10.87

%

 

 

8.13

%

 

 

12.19

%

 

 

10.96

%

 

 

12.42

%

Adjusted return on average stockholders' equity(1)(3)(4)

 

11.59

%

 

 

10.42

%

 

 

10.87

%

 

 

12.42

%

 

 

12.69

%

 

 

10.96

%

 

 

12.90

%

Return on average assets

 

1.26

%

 

 

1.17

%

 

 

1.35

%

 

 

1.02

%

 

 

1.53

%

 

 

1.26

%

 

 

1.53

%

Adjusted return on average assets(1)(3)(4)

 

1.26

%

 

 

1.17

%

 

 

1.35

%

 

 

1.56

%

 

 

1.59

%

 

 

1.26

%

 

 

1.58

%

Non-interest income to total revenues(1)

 

14.83

%

 

 

18.69

%

 

 

24.85

%

 

 

23.55

%

 

 

23.61

%

 

 

19.41

%

 

 

24.03

%

Pre-tax pre-provision return on average assets(1)

 

1.93

%

 

 

1.84

%

 

 

2.03

%

 

 

1.29

%

 

 

2.07

%

 

 

1.93

%

 

 

2.10

%

Adjusted pre-tax pre-provision return on average assets(1)(3)

 

1.93

%

 

 

1.84

%

 

 

2.03

%

 

 

2.03

%

 

 

2.15

%

 

 

1.93

%

 

 

2.18

%

Return on average tangible common stockholders' equity(1)

 

15.40

%

 

 

14.06

%

 

 

14.36

%

 

 

10.94

%

 

 

16.22

%

 

 

14.60

%

 

 

16.66

%

Adjusted return on average tangible common stockholders' equity(1)(3)

 

15.40

%

 

 

14.06

%

 

 

14.36

%

 

 

16.38

%

 

 

16.86

%

 

 

14.60

%

 

 

17.27

%

Non-interest-bearing deposits to total deposits

 

38.17

%

 

 

40.47

%

 

 

41.26

%

 

 

41.87

%

 

 

41.06

%

 

 

38.17

%

 

 

41.06

%

Loans and leases held for sale and loans and lease held for investment to total deposits

 

94.60

%

 

 

96.23

%

 

 

87.31

%

 

 

89.26

%

 

 

90.29

%

 

 

94.60

%

 

 

90.29

%

Deposits to total liabilities

 

85.95

%

 

 

84.64

%

 

 

91.47

%

 

 

87.97

%

 

 

87.73

%

 

 

85.95

%

 

 

87.73

%

Deposits per branch

$

147,696

 

 

$

141,799

 

 

$

125,684

 

 

$

117,160

 

 

$

117,234

 

 

$

147,696

 

 

$

117,234

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans and leases to total loans and leases held for investment, net before ALLL

 

0.67

%

 

 

0.66

%

 

 

0.42

%

 

 

0.51

%

 

 

0.75

%

 

 

0.67

%

 

 

0.75

%

ALLL to total loans and leases held for investment, net before ALLL

 

1.23

%

 

 

1.21

%

 

 

1.24

%

 

 

1.21

%

 

 

1.31

%

 

 

1.23

%

 

 

1.31

%

Net charge-offs to average total loans and leases held for investment, net before ALLL

 

0.15

%

 

 

0.24

%

 

 

0.05

%

 

 

0.37

%

 

 

0.13

%

 

 

0.15

%

 

 

0.25

%

Acquisition accounting adjustments(4)

$

2,537

 

 

$

3,050

 

 

$

3,364

 

 

$

4,769

 

 

$

6,327

 

 

$

2,537

 

 

$

6,327

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity to total assets

 

10.27

%

 

 

10.73

%

 

 

11.54

%

 

 

12.33

%

 

 

12.14

%

 

 

10.27

%

 

 

12.14

%

Tangible common equity to tangible assets(1)

 

8.25

%

 

 

8.65

%

 

 

9.36

%

 

 

10.11

%

 

 

9.89

%

 

 

8.25

%

 

 

9.89

%

Leverage ratio

 

10.30

%

 

 

10.34

%

 

 

10.70

%

 

 

10.89

%

 

 

11.21

%

 

 

10.30

%

 

 

11.21

%

Common equity tier 1 capital ratio

 

10.24

%

 

 

10.26

%

 

 

10.75

%

 

 

11.39

%

 

 

11.32

%

 

 

10.24

%

 

 

11.32

%

Tier 1 capital ratio

 

10.91

%

 

 

10.95

%

 

 

11.49

%

 

 

12.37

%

 

 

12.32

%

 

 

10.91

%

 

 

12.32

%

Total capital ratio

 

13.02

%

 

 

13.09

%

 

 

13.72

%

 

 

14.70

%

 

 

14.78

%

 

 

13.02

%

 

 

14.78

%

(1)

Represents a non-GAAP financial measure.  See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.

(3)

Calculation excludes impairment charges.

(4)

Represents the remaining net unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.

(5)

Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

BYLINE BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

2021

(dollars in thousands)

 

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

 

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

72,802

 

$

313

 

 

0.58

%

 

$

56,926

 

 

$

75

 

 

0.18

%

Loans and leases(1)

 

 

4,967,769

 

 

187,924

 

 

5.06

%

 

 

4,487,909

 

 

 

164,423

 

 

4.90

%

Taxable securities

 

 

1,323,838

 

 

17,393

 

 

1.76

%

 

 

1,405,390

 

 

 

16,798

 

 

1.60

%

Tax-exempt securities(2)

 

 

166,911

 

 

3,338

 

 

2.67

%

 

 

184,826

 

 

 

3,729

 

 

2.70

%

Total interest-earning assets

 

$

6,531,320

 

$

208,968

 

 

4.28

%

 

$

6,135,051

 

 

$

185,025

 

 

4.03

%

Allowance for loan and lease losses

 

 

(59,526

)

 

 

 

 

 

 

(64,768

)

 

 

 

 

 

All other assets

 

 

472,115

 

 

 

 

 

 

 

552,660

 

 

 

 

 

 

TOTAL ASSETS

 

$

6,943,909

 

 

 

 

 

 

$

6,622,943

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

592,985

 

$

1,670

 

 

0.38

%

 

$

609,444

 

 

$

647

 

 

0.14

%

Money market accounts

 

 

1,318,725

 

 

5,026

 

 

0.51

%

 

 

1,068,770

 

 

 

940

 

 

0.12

%

Savings

 

 

662,820

 

 

406

 

 

0.08

%

 

 

603,366

 

 

 

214

 

 

0.05

%

Time deposits

 

 

658,893

 

 

2,084

 

 

0.42

%

 

 

734,708

 

 

 

1,664

 

 

0.30

%

Total interest-bearing deposits

 

 

3,233,423

 

 

9,186

 

 

0.38

%

 

 

3,016,288

 

 

 

3,465

 

 

0.15

%

Other borrowings

 

 

466,194

 

 

4,710

 

 

1.35

%

 

 

572,018

 

 

 

1,333

 

 

0.31

%

Federal funds purchased

 

 

842

 

 

14

 

 

2.32

%

 

 

 

 

 

 

 

0.00

%

Subordinated notes and debentures

 

 

110,648

 

 

5,119

 

 

6.19

%

 

 

110,029

 

 

 

4,785

 

 

5.81

%

Total borrowings

 

 

577,684

 

 

9,843

 

 

2.28

%

 

 

682,047

 

 

 

6,118

 

 

1.20

%

Total interest-bearing liabilities

 

$

3,811,107

 

$

19,029

 

 

0.67

%

 

$

3,698,335

 

 

$

9,583

 

 

0.35

%

Non-interest-bearing demand deposits

 

 

2,237,002

 

 

 

 

 

 

 

2,039,242

 

 

 

 

 

 

Other liabilities

 

 

99,951

 

 

 

 

 

 

 

71,737

 

 

 

 

 

 

Total stockholders’ equity

 

 

795,849

 

 

 

 

 

 

 

813,629

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

6,943,909

 

 

 

 

 

 

$

6,622,943

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

3.61

%

 

 

 

 

 

 

 

3.68

%

Net interest income, fully taxable equivalent

 

 

 

$

189,939

 

 

 

 

 

 

 

$

175,442

 

 

 

Net interest margin, fully taxable equivalent(2)(4)

 

 

 

 

 

 

3.88

%

 

 

 

 

 

 

 

3.82

%

Less: Tax-equivalent adjustment

 

 

 

 

701

 

 

0.01

%

 

 

 

 

 

783

 

 

0.01

%

Net interest income

 

 

 

$

189,238

 

 

 

 

 

 

 

$

174,659

 

 

 

Net interest margin(4)

 

 

 

 

 

 

3.87

%

 

 

 

 

 

 

 

3.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

$

4,418

 

 

0.09

%

 

 

 

 

$

5,001

 

 

0.11

%

(1) Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.

(2) Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

(3) Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(4) Represents net interest income (annualized) divided by total average earning assets.

(5) Average balances are average daily balances.

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Non-GAAP Financial Measures

This release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures include adjusted net income, adjusted diluted earnings per share, adjusted efficiency ratio, adjusted non-interest expense to average assets, tax-equivalent net interest margin, total revenue, non-interest income to total revenues, adjusted return on average stockholders’ equity, adjusted return on average assets, pre-tax pre-provision return on average assets, adjusted pre-tax pre-provision return on average assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common stockholders' equity, and adjusted return on average tangible common stockholders' equity. Management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, management acknowledges that our non-GAAP financial measures have a number of limitations. As such, these disclosures should not be viewed as a substitute for results determined in accordance with GAAP financial measures that we and other companies use. Management also uses these measures for peer comparison. See below in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.

 

 

As of or For the Three Months Ended

 

 

As of or For the Nine Months Ended

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

September 30,

 

(dollars in thousands, except per share data)

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

2021

 

Net income and earnings per share excluding significant items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Net Income

 

$

22,656

 

 

$

20,283

 

 

$

22,311

 

 

$

17,189

 

 

$

25,306

 

 

$

65,250

 

$

75,596

 

Significant items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charges on assets held for sale and ROU asset

 

 

 

 

 

 

 

 

 

 

 

12,449

 

 

 

1,434

 

 

 

 

 

3,981

 

Tax benefit

 

 

 

 

 

 

 

 

 

 

 

(3,377

)

 

 

(390

)

 

 

 

 

(1,085

)

Adjusted Net Income

 

$

22,656

 

 

$

20,283

 

 

$

22,311

 

 

$

26,261

 

 

$

26,350

 

 

$

65,250

 

$

78,492

 

Reported Diluted Earnings per Share

 

$

0.61

 

 

$

0.54

 

 

$

0.58

 

 

$

0.45

 

 

$

0.66

 

 

$

1.73

 

$

1.95

 

Significant items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charges on assets held for sale and ROU asset

 

 

 

 

 

 

 

 

 

 

 

0.33

 

 

 

0.04

 

 

 

 

 

0.10

 

Tax benefit

 

 

 

 

 

 

 

 

 

 

 

(0.09

)

 

 

(0.01

)

 

 

 

 

(0.03

)

Adjusted Diluted Earnings per Share

 

$

0.61

 

 

$

0.54

 

 

$

0.58

 

 

$

0.69

 

 

$

0.69

 

 

$

1.73

 

$

2.02

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

 

 

 

As of or For the Three Months Ended

 

 

As of or For the Nine Months Ended

 

(dollars in thousands, except per share data,

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

ratios annualized, where applicable)

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Adjusted non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

$

46,178

 

 

$

43,773

 

 

$

44,555

 

 

$

58,968

 

 

$

44,180

 

 

$

134,506

 

 

$

126,003

 

Less: Significant items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment charges on assets held for sale and ROU asset

 

 

 

 

 

 

 

 

 

 

 

12,449

 

 

 

1,434

 

 

 

 

 

 

3,981

 

Adjusted non-interest expense

 

$

46,178

 

 

$

43,773

 

 

$

44,555

 

 

$

46,519

 

 

$

42,746

 

 

$

134,506

 

 

$

122,022

 

Adjusted non-interest expense excluding amortization of intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted non-interest expense

 

$

46,178

 

 

$

43,773

 

 

$

44,555

 

 

$

46,519

 

 

$

42,746

 

 

$

134,506

 

 

$

122,022

 

Less: Amortization of intangible assets

 

 

1,611

 

 

 

1,868

 

 

 

1,596

 

 

 

1,738

 

 

 

1,738

 

 

 

5,075

 

 

 

5,335

 

Adjusted non-interest expense excluding amortization of intangible assets

 

$

44,567

 

 

$

41,905

 

 

$

42,959

 

 

$

44,781

 

 

$

41,008

 

 

$

129,431

 

 

$

116,687

 

Pre-tax pre-provision net income: