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Byline Bancorp, Inc. Reports Second Quarter 2022 Financial Results

Select Second Quarter 2022 Financial Highlights

  • Net income of $20.3 million, or $0.54 per diluted share
  • Net interest income of $61.6 million and $14.2 million of non-interest income
    • Total revenue1 of $75.8 million
  • Net interest margin of 3.76%
  • Return on average assets of 1.17%
  • Efficiency ratio of 55.29%
  • Non-interest bearing deposits totaled 40.5% of total deposits
  • Originated loans and leases increased $425.1 million, loan and lease production, net of loan sales of $443.0 million
  • Common Equity Tier 1 to risk weighted assets of 10.26%

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 $20.3 million, or $0.54 per diluted share, for the second quarter of 2022, compared with net income of $22.3 million, or $0.58 per diluted share, for the first quarter of 2022, and net income of $28.5 million, or $0.73 per diluted share, for the second quarter 2021.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “We are pleased with our second quarter results as our team continued to move with agility and execute well in a highly dynamic environment. We continued to experience healthy growth in our loan and lease portfolio as we eclipsed $5.0 billion in loans and leases and surpassed $7.0 billion total assets. I want to thank our employees for their hard work and unwavering dedication to our business.”

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “Our second quarter results reflect the strength and durability of our business model as we posted strong growth in net interest income. Loan and lease growth exceeded our expectations with annualized growth of 34.2%, excluding PPP loans. Credit quality remains solid, and we continue to manage our operating expenses prudently. As we head into the second half of the year we face an uncertain economic environment. However, we believe we are well positioned for the range of possible outcomes given our strong liquidity and capital ratios, our diversified business mix, and our well-established risk management track record.”

Board Declares Cash Dividend of $0.09 per Share

On July 26, 2022, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on August 23, 2022, to stockholders of record of the Company's common stock as of August 9, 2022.

Company Completes Branch Consolidations

The Company continued to execute on its previously announced strategic efforts to optimize its branch network by consolidating six branches during the second quarter 2022, which resulted in a one-time charge of $267,000 during the quarter. These consolidations conclude the Company’s branch consolidation and real estate reduction strategic efforts announced on December 10, 2021.

(1)

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

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

 

 

June 30, 2022

 

 

March 31, 2022

 

 

June 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

$

66,034

 

 

$

74

 

 

 

0.45

%

 

$

74,822

 

 

$

29

 

 

 

0.16

%

 

$

75,382

 

 

$

28

 

 

 

0.15

%

Loans and leases(1)

 

5,009,077

 

 

 

59,674

 

 

 

4.78

%

 

 

4,670,070

 

 

 

55,426

 

 

 

4.81

%

 

 

4,491,197

 

 

 

54,324

 

 

 

4.85

%

Taxable securities

 

1,330,200

 

 

 

5,904

 

 

 

1.78

%

 

 

1,339,345

 

 

 

5,475

 

 

 

1.66

%

 

 

1,477,070

 

 

 

5,947

 

 

 

1.62

%

Tax-exempt securities(2)

 

168,567

 

 

 

1,131

 

 

 

2.69

%

 

 

169,652

 

 

 

1,124

 

 

 

2.69

%

 

 

187,967

 

 

 

1,281

 

 

 

2.73

%

Total interest-earning assets

$

6,573,878

 

 

$

66,783

 

 

 

4.07

%

 

$

6,253,889

 

 

$

62,054

 

 

 

4.02

%

 

$

6,231,616

 

 

$

61,580

 

 

 

3.96

%

Allowance for loan and lease losses

 

(59,883

)

 

 

 

 

 

 

 

 

(55,885

)

 

 

 

 

 

 

 

 

(65,848

)

 

 

 

 

 

 

All other assets

 

461,730

 

 

 

 

 

 

 

 

 

507,982

 

 

 

 

 

 

 

 

 

554,724

 

 

 

 

 

 

 

TOTAL ASSETS

$

6,975,725

 

 

 

 

 

 

 

 

$

6,705,986

 

 

 

 

 

 

 

 

$

6,720,492

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

$

615,831

 

 

$

415

 

 

 

0.27

%

 

$

579,297

 

 

$

178

 

 

 

0.12

%

 

$

626,886

 

 

$

220

 

 

 

0.14

%

Money market accounts

 

1,307,320

 

 

 

1,194

 

 

 

0.37

%

 

 

1,255,431

 

 

 

474

 

 

 

0.15

%

 

 

1,052,223

 

 

 

279

 

 

 

0.11

%

Savings

 

664,954

 

 

 

83

 

 

 

0.05

%

 

 

649,269

 

 

 

76

 

 

 

0.05

%

 

 

607,035

 

 

 

72

 

 

 

0.05

%

Time deposits

 

627,199

 

 

 

436

 

 

 

0.28

%

 

 

662,080

 

 

 

359

 

 

 

0.22

%

 

 

717,795

 

 

 

487

 

 

 

0.27

%

Total interest-bearing deposits

 

3,215,304

 

 

 

2,128

 

 

 

0.27

%

 

 

3,146,077

 

 

 

1,087

 

 

 

0.14

%

 

 

3,003,939

 

 

 

1,058

 

 

 

0.14

%

Other borrowings

 

497,082

 

 

 

1,083

 

 

 

0.87

%

 

 

290,545

 

 

 

395

 

 

 

0.55

%

 

 

642,586

 

 

 

482

 

 

 

0.30

%

Federal funds purchased

 

2,527

 

 

 

14

 

 

 

2.32

%

 

 

 

 

 

 

 

 

0.00

%

 

 

 

 

 

 

 

 

0.00

%

Subordinated notes and debentures

 

110,649

 

 

 

1,694

 

 

 

6.14

%

 

 

110,490

 

 

 

1,600

 

 

 

5.87

%

 

 

110,030

 

 

 

1,597

 

 

 

5.82

%

Total borrowings

 

610,258

 

 

 

2,791

 

 

 

1.83

%

 

 

401,035

 

 

 

1,995

 

 

 

2.02

%

 

 

752,616

 

 

 

2,079

 

 

 

1.11

%

Total interest-bearing liabilities

$

3,825,562

 

 

$

4,919

 

 

 

0.52

%

 

$

3,547,112

 

 

$

3,082

 

 

 

0.35

%

 

$

3,756,555

 

 

$

3,137

 

 

 

0.33

%

Non-interest-bearing demand deposits

 

2,265,426

 

 

 

 

 

 

 

 

 

2,248,035

 

 

 

 

 

 

 

 

 

2,085,358

 

 

 

 

 

 

 

Other liabilities

 

104,085

 

 

 

 

 

 

 

 

 

78,678

 

 

 

 

 

 

 

 

 

68,089

 

 

 

 

 

 

 

Total stockholders’ equity

 

780,652

 

 

 

 

 

 

 

 

 

832,161

 

 

 

 

 

 

 

 

 

810,490

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

6,975,725

 

 

 

 

 

 

 

 

$

6,705,986

 

 

 

 

 

 

 

 

$

6,720,492

 

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

 

3.55

%

 

 

 

 

 

 

 

 

3.67

%

 

 

 

 

 

 

 

 

3.63

%

Net interest income, fully taxable equivalent

 

 

 

$

61,864

 

 

 

 

 

 

 

 

$

58,972

 

 

 

 

 

 

 

 

$

58,443

 

 

 

 

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

 

 

 

 

 

 

 

3.77

%

 

 

 

 

 

 

 

 

3.82

%

 

 

 

 

 

 

 

 

3.76

%

Tax-equivalent adjustment

 

 

 

 

(237

)

 

 

0.01

%

 

 

 

 

 

(236

)

 

 

0.01

%

 

 

 

 

 

(269

)

 

 

0.02

%

Net interest income

 

 

 

$

61,627

 

 

 

 

 

 

 

 

$

58,736

 

 

 

 

 

 

 

 

$

58,174

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

3.76

%

 

 

 

 

 

 

 

 

3.81

%

 

 

 

 

 

 

 

 

3.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

$

1,383

 

 

 

0.08

%

 

 

 

 

$

1,476

 

 

 

0.10

%

 

 

 

 

$

1,395

 

 

 

0.09

%

(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:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

 

Three Months Ended

 

 

Change from

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

(dollars in thousands)

 

2022

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

59,674

 

 

$

55,426

 

 

$

54,324

 

 

 

7.7

%

 

 

9.8

%

Interest on securities

 

 

6,264

 

 

 

6,155

 

 

 

6,359

 

 

 

1.8

%

 

 

(1.5

)%

Other interest and dividend income

 

 

608

 

 

 

237

 

 

 

628

 

 

 

157.2

%

 

 

(3.3

)%

Total interest and dividend income

 

 

66,546

 

 

 

61,818

 

 

 

61,311

 

 

 

7.6

%

 

 

8.5

%

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,128

 

 

 

1,087

 

 

 

1,058

 

 

 

95.8

%

 

 

101.2

%

Other borrowings

 

 

1,097

 

 

 

395

 

 

 

482

 

 

 

178.0

%

 

 

128.0

%

Subordinated notes and debentures

 

 

1,694

 

 

 

1,600

 

 

 

1,597

 

 

 

5.9

%

 

 

6.0

%

Total interest expense

 

 

4,919

 

 

 

3,082

 

 

 

3,137

 

 

 

59.6

%

 

 

56.8

%

Net interest income

 

$

61,627

 

 

$

58,736

 

 

$

58,174

 

 

 

4.9

%

 

 

5.9

%

Net interest income for the second quarter of 2022 was $61.6 million, an increase of $2.9 million, or 4.9%, from the first quarter of 2022.

The increase in net interest income was primarily due to:

  • An increase of $4.2 million in interest income on loans and leases, primarily due to loan and lease growth.

Partially offset by:

  • An increase of $1.0 million in interest expense on deposits due to the rising interest rate environment.

Tax-equivalent net interest margin for the second quarter of 2022 was 3.77%, a decrease of five basis points compared to the first quarter of 2022. Total net accretion income on acquired loans contributed eight basis points to the net interest margin for the second quarter of 2022 compared to 10 basis points for the first quarter of 2022, a decrease of two basis points. PPP loan interest income and net fee income combined, contributed $746,000 to net interest income for the second quarter of 2022 compared to $2.7 million for the first quarter of 2022, a decrease of $1.9 million.

The average cost of total deposits was 0.16% for the second quarter of 2022, an increase of eight basis points compared to the first quarter of 2022. Average non-interest-bearing demand deposits were 41.3% of average total deposits for the second quarter of 2022 compared to 41.7% during the first quarter of 2022.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $5.9 million for the second quarter of 2022, an increase of $913,000 compared to $5.0 million for the first quarter of 2022. The increase in provision during the second quarter of 2022 was mainly driven by changes to qualitative factors surrounding macroeconomic environment and rising interest rates, as well as growth in the loan and lease portfolio.

Non-interest Income

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

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

 

Three Months Ended

 

 

Change from

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

(dollars in thousands)

 

2022

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposits

 

$

2,059

 

 

$

1,884

 

 

$

1,768

 

 

 

9.2

%

 

 

16.4

%

Loan servicing revenue

 

 

3,384

 

 

 

3,380

 

 

 

3,188

 

 

 

0.1

%

 

 

6.1

%

Loan servicing asset revaluation

 

 

(4,636

)

 

 

(1,231

)

 

 

7

 

 

NM

 

 

NM

 

ATM and interchange fees

 

 

1,131

 

 

 

1,049

 

 

 

1,044

 

 

 

7.9

%

 

 

8.4

%

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

 

 

52

 

 

 

 

 

 

(136

)

 

NM

 

 

NM

 

Change in fair value of equity securities, net

 

 

(697

)

 

 

(35

)

 

 

517

 

 

NM

 

 

NM

 

Net gains on sales of loans

 

 

9,983

 

 

 

10,827

 

 

 

12,270

 

 

 

(7.8

)%

 

 

(18.6

)%

Wealth management and trust income

 

 

900

 

 

 

1,048

 

 

 

722

 

 

 

(14.2

)%

 

 

24.5

%

Other non-interest income

 

 

1,985

 

 

 

2,504

 

 

 

1,622

 

 

 

(20.7

)%

 

 

22.4

%

Total non-interest income

 

$

14,161

 

 

$

19,426

 

 

$

21,002

 

 

 

(27.1

)%

 

 

(32.6

)%

Non-interest income for the second quarter of 2022 was $14.2 million, a decrease of $5.3 million or 27.1%, compared to $19.4 million for the first quarter of 2022

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

  • An increase of $3.4 million in loan servicing asset revaluation charges due to higher downward asset revaluation adjustment resulting from unfavorable fair value adjustments due to increased discount rates; and
  • A decrease of $844,000 in net gains on sales of loans due to lower premiums on government guaranteed loan sales.

During the second quarter of 2022, we sold $118.5 million of U.S. government guaranteed loans compared to $102.3 million during the first quarter of 2022.

Non-interest Expense

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

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

 

Three Months Ended

 

 

Change from

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

(dollars in thousands)

 

2022

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

27,697

 

 

$

28,959

 

 

$

24,588

 

 

 

(4.4

)%

 

 

12.6

%

Occupancy and equipment expense, net

 

 

4,409

 

 

 

5,128

 

 

 

4,856

 

 

 

(14.0

)%

 

 

(9.2

)%

Impairment charge on assets held for sale

 

 

 

 

 

 

 

 

1,943

 

 

NM

 

 

NM

 

Loan and lease related expenses

 

 

942

 

 

 

(891

)

 

 

1,503

 

 

NM

 

 

 

(37.4

)%

Legal, audit and other professional fees

 

 

1,820

 

 

 

2,600

 

 

 

2,898

 

 

 

(30.0

)%

 

 

(37.2

)%

Data processing

 

 

3,396

 

 

 

3,186

 

 

 

2,847

 

 

 

6.6

%

 

 

19.3

%

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

 

 

158

 

 

 

54

 

 

 

389

 

 

 

189.5

%

 

 

(59.4

)%

Other intangible assets amortization expense

 

 

1,868

 

 

 

1,596

 

 

 

1,848

 

 

 

17.0

%

 

 

1.1

%

Other non-interest expense

 

 

3,483

 

 

 

3,923

 

 

 

2,109

 

 

 

(11.1

)%

 

 

65.1

%

Total non-interest expense

 

$

43,773

 

 

$

44,555

 

 

$

42,981

 

 

 

(1.8

)%

 

 

1.8

%

Non-interest expense for the second quarter of 2022 was $43.8 million, a decrease of $782,000, or 1.8%, from $44.6 million for the first quarter of 2022.

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

  • A decrease of $1.3 million in salaries and employee benefits primarily due to lower payroll taxes and higher deferred salary costs related to loan and lease originations; and
  • A decrease of $780,000 in legal, audit and other professional fees due to higher reimbursements of legal fees; and
  • A decrease of $719,000 in occupancy and equipment expense due to the net effects of our branch consolidation and real estate strategy.

Partially offset by:

  • An increase of $1.8 million in loan and lease related expenses due to second quarter loan and lease growth and recapture of government guaranteed loan expenses during the first quarter of 2022.

Our efficiency ratio was 55.29% for the second quarter of 2022 compared to 54.96% for the first quarter of 2022.

INCOME TAXES

We recorded income tax expense of $5.8 million during the second quarter of 2022, compared to $6.3 million during the first quarter of 2022. The effective tax rate was 22.3% and 22.0% for the second quarter of 2022 and first quarter of 2022, respectively. The effective tax rate is a result of tax benefits related to share-based compensation.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $7.1 billion at June 30, 2022, an increase of $297.1 million compared to $6.8 billion at March 31, 2022.

The current quarter increase was primarily due to:

  • An increase in net loans and leases of $376.0 million primarily due to growth in originated commercial real estate and commercial and industrial loans.

Partially offset by:

  • A decrease in securities available-for-sale of $96.2 million primarily due to changes in market values.

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

 

 

June 30, 2022

 

 

March 31, 2022

 

 

June 30, 2021

 

(dollars in thousands)

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

Originated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,672,438

 

 

 

32.4

%

 

$

1,527,920

 

 

 

31.9

%

 

$

1,156,824

 

 

 

25.9

%

Residential real estate

 

 

401,095

 

 

 

7.7

%

 

 

399,638

 

 

 

8.3

%

 

 

389,758

 

 

 

8.7

%

Construction, land development, and other land

 

 

434,132

 

 

 

8.4

%

 

 

351,519

 

 

 

7.3

%

 

 

271,710

 

 

 

6.1

%

Commercial and industrial

 

 

1,861,582

 

 

 

36.0

%

 

 

1,698,025

 

 

 

35.5

%

 

 

1,350,471

 

 

 

30.2

%

Paycheck Protection Program

 

 

10,391

 

 

 

0.2

%

 

 

36,260

 

 

 

0.8

%

 

 

476,282

 

 

 

10.7

%

Installment and other

 

 

926

 

 

 

0.0

%

 

 

945

 

 

 

0.0

%

 

 

982

 

 

 

0.0

%

Leasing financing receivables

 

 

438,379

 

 

 

8.5

%

 

 

379,527

 

 

 

7.9

%

 

 

267,300

 

 

 

6.0

%

Total originated loans and leases

 

$

4,818,943

 

 

 

93.2

%

 

$

4,393,834

 

 

 

91.7

%

 

$

3,913,327

 

 

 

87.6

%

Acquired impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

60,075

 

 

 

1.2

%

 

$

67,092

 

 

 

1.4

%

 

$

91,313

 

 

 

2.0

%

Residential real estate

 

 

39,902

 

 

 

0.8

%

 

 

47,347

 

 

 

1.0

%

 

 

67,401

 

 

 

1.5

%

Construction, land development, and other land

 

 

1,184

 

 

 

0.0

%

 

 

1,357

 

 

 

0.0

%

 

 

2,008

 

 

 

0.0

%

Commercial and industrial

 

 

3,232

 

 

 

0.1

%

 

 

3,792

 

 

 

0.1

%

 

 

7,444

 

 

 

0.2

%

Installment and other

 

 

157

 

 

 

0.0

%

 

 

163

 

 

 

0.0

%

 

 

180

 

 

 

0.0

%

Total acquired impaired loans

 

$

104,550

 

 

 

2.1

%

 

$

119,751

 

 

 

2.5

%

 

$

168,346

 

 

 

3.7

%

Acquired non-impaired loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

167,425

 

 

 

3.2

%

 

$

184,353

 

 

 

3.8

%

 

$

254,739

 

 

 

5.6

%

Residential real estate

 

 

40,174

 

 

 

0.8

%

 

 

47,735

 

 

 

1.0

%

 

 

65,119

 

 

 

1.5

%

Construction, land development, and other land

 

 

191

 

 

 

0.0

%

 

 

196

 

 

 

0.1

%

 

 

208

 

 

 

0.0

%

Commercial and industrial

 

 

32,569

 

 

 

0.6

%

 

 

37,794

 

 

 

0.8

%

 

 

58,320

 

 

 

1.3

%

Installment and other

 

 

227

 

 

 

0.0

%

 

 

248

 

 

 

0.0

%

 

 

311

 

 

 

0.0

%

Leasing financing receivables

 

 

3,992

 

 

 

0.1

%

 

 

5,157

 

 

 

0.1

%

 

 

9,087

 

 

 

0.3

%

Total acquired non-impaired loans and leases

 

$

244,578

 

 

 

4.7

%

 

$

275,483

 

 

 

5.8

%

 

$

387,784

 

 

 

8.7

%

Total loans and leases

 

$

5,168,071

 

 

 

100.0

%

 

$

4,789,068

 

 

 

100.0

%

 

$

4,469,457

 

 

 

100.0

%

Allowance for loan and lease losses

 

 

(62,436

)

 

 

 

 

 

(59,458

)

 

 

 

 

 

(61,719

)

 

 

 

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

 

$

5,105,635

 

 

 

 

 

$

4,729,610

 

 

 

 

 

$

4,407,738

 

 

 

 

PPP loans outstanding were $10.4 million as of June 30, 2022, compared with $36.3 million as of March 31, 2022. The decreased was as a result of forgiveness of PPP loans. Forgiveness for the second quarter 2022 was $25.9 million compared to $73.7 million for the first quarter of 2022. As of June 30, 2022, 115 PPP loans remain outstanding, and more than 97% of PPP loan balances have been forgiven.

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:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Change from

 

(dollars in thousands)

 

June 30, 2022

 

 

March 31, 2022

 

 

June 30, 2021

 

 

March 31, 2022

 

 

June 30, 2021

 

Non-performing assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases

 

$

33,944

 

 

$

20,277

 

 

$

35,514

 

 

 

67.4

%

 

 

(4.4

)%

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

 

 

 

 

 

 

 

 

 

 

—%

 

 

—%

 

Total non-performing loans and leases

 

$

33,944

 

 

$

20,277

 

 

$

35,514

 

 

 

67.4

%

 

 

(4.4

)%

Other real estate owned

 

 

4,749

 

 

 

2,221

 

 

 

4,417

 

 

 

113.8

%

 

 

7.5

%

Total non-performing assets

 

$

38,693

 

 

$

22,498

 

 

$

39,931

 

 

 

72.0

%

 

 

(3.1

)%

Accruing troubled debt restructured loans (1)

 

$

1,358

 

 

$

1,456

 

 

$

2,395

 

 

 

(6.7

)%

 

 

(43.3

)%

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

 

 

0.66

%

 

 

0.42

%

 

 

0.79

%

 

 

 

 

 

 

Total non-performing assets as a percentage of total assets

 

 

0.54

%

 

 

0.33

%

 

 

0.61

%

 

 

 

 

 

 

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

 

 

183.94

%

 

 

293.23

%

 

 

173.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans guaranteed

 

$

1,731

 

 

$

1,832

 

 

$

5,847

 

 

 

(5.5

)%

 

 

(70.4

)%

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

 

 

 

 

 

 

 

 

 

 

—%

 

 

—%

 

Total non-performing loans guaranteed

 

$

1,731

 

 

$

1,832

 

 

$

5,847

 

 

 

(5.5

)%

 

 

(70.4

)%

Accruing troubled debt restructured loans guaranteed (1)

 

$

 

 

$

 

 

$

 

 

—%

 

 

—%

 

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

 

 

0.62

%

 

 

0.39

%

 

 

0.66

%

 

 

 

 

 

 

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

 

 

0.52

%

 

 

0.30

%

 

 

0.52

%

 

 

 

 

 

 

(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 $33.9 million at June 30, 2022, an increase of $13.7 million from $20.3 million at March 31, 2022 primarily due to one conventional non-performing relationship.
  • Other real estate owned was $4.7 million at June 30, 2022, an increase of $2.5 million from $2.2 million at March 31, 2022, primarily due to the transfer of one property into other real estate owned.

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

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

(dollars in thousands)

 

2022

 

 

2022

 

 

2021

 

Allowance for loan and lease losses, beginning of period

 

$

59,458

 

 

$

55,012

 

 

$

65,590

 

Provision/(recapture) for loan and lease losses

 

 

5,908

 

 

 

4,995

 

 

 

(1,969

)

Net charge-offs of loans and leases

 

 

(2,930

)

 

 

(549

)

 

 

(1,902

)

Allowance for loan and lease losses, end of period

 

$

62,436

 

 

$

59,458

 

 

$

61,719

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1.21

%

 

 

1.24

%

 

 

1.38

%

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

 

 

0.24

%

 

 

0.05

%

 

 

0.17

%

Provision/(recapture) for loan and lease losses to net charge-offs during the period

 

 

2.02

x

 

 

9.09

x

 

(1.04)x

 

The allowance for loan and lease losses as a percentage of total loans and leases held for investment decreased to 1.21% at June 30, 2022 compared to 1.24% at March 31, 2022, primarily due to growth in the loan and lease portfolio, as well as the change in the mix of the portfolio.

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 anticipates adopting the standard on December 31, 2022. We are in the process of implementation and determining the impact that this new authoritative guidance will have on our consolidated financial statements.

Net Charge-Offs

Net charge-offs during the second quarter of 2022 were $2.9 million, or 0.23% of average loans and leases, on an annualized basis, an increase of $2.4 million compared to $549,000, or 0.05% of average loans and leases, during the first quarter of 2022, and an increase of $1.0 million from $1.9 million or 0.17% of average loans and leases from the comparable period a year ago.

Net charge-offs for the second quarter of 2022 included $2.7 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the first quarter of 2022 and second quarter of 2021 included $362,000 and $1.6 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:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

Change from

 

(dollars in thousands)

 

June 30, 2022

 

 

March 31, 2022

 

 

June 30, 2021

 

 

March 31, 2022

 

 

June 30, 2021

 

Non-interest-bearing demand deposits

 

$

2,180,927

 

 

$

2,281,612

 

 

$

2,089,455

 

 

 

(4.4

)%

 

 

4.4

%

Interest-bearing checking accounts

 

 

535,856

 

 

 

596,497

 

 

 

653,558

 

 

 

(10.2

)%

 

 

(18.0

)%

Money market demand accounts

 

 

1,323,287

 

 

 

1,357,679

 

 

 

1,023,675

 

 

 

(2.5

)%

 

 

29.3

%

Other savings

 

 

669,164

 

 

 

659,218

 

 

 

613,136

 

 

 

1.5

%

 

 

9.1

%

Time deposits (below $250,000)

 

 

544,759

 

 

 

505,141

 

 

 

567,469

 

 

 

7.8

%

 

 

(4.0

)%

Time deposits ($250,000 and above)

 

 

134,384

 

 

 

129,955

 

 

 

144,902

 

 

 

3.4

%

 

 

(7.3

)%

Total deposits

 

$

5,388,377

 

 

$

5,530,102

 

 

$

5,092,195

 

 

 

(2.6

)%

 

 

5.8

%

Total deposits decreased to $5.4 billion at June 30, 2022 compared to $5.5 billion at March 31, 2022. Non-interest-bearing deposits were 40.5% and 41.3% of total deposits at June 30, 2022 and March 31, 2022, respectively.

The decrease in the current quarter was primarily due to:

  • A decrease in non-interest-bearing deposits of $100.7 million, primarily due to decreases in commercial deposits; and
  • A decrease in interest-bearing checking accounts of $60.6 million, driven primarily by decreases in business accounts.

Partially offset by:

  • An increase in time deposits of $44.0 million, principally driven by an increase in brokered deposits.

Total borrowings and other liabilities were $978.2 million at June 30, 2022, an increase of $462.3 million from $515.9 million at March 31, 2022, primarily driven by a $370.0 million increase in FHLB advances and a $45.0 million increase in federal funds purchased.

Stockholders’ Equity

Total stockholders’ equity was $765.2 million at June 30, 2022, a decrease of $23.5 million from $788.7 million at March 31, 2022. The decrease was primarily due to an increase in accumulated other comprehensive loss, and the repurchase of shares of our common stock under the Company's stock repurchase program. These were offset by an increase to retained earnings.

Under its stock repurchase program, the Company repurchased an aggregate 232,000 shares of its common stock at an average price of $23.84 per share during the second quarter of 2022.

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

 

 

Actual

 

 

Minimum Capital

Required

 

 

Required to be

Considered

Well Capitalized

 

June 30, 2022

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

853,822

 

 

 

13.09

%

 

$

521,687

 

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

801,925

 

 

 

12.34

%

 

 

519,994

 

 

 

8.00

%

 

$

649,992

 

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

714,195

 

 

 

10.95

%

 

$

391,265

 

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

$

737,298

 

 

 

11.34

%

 

 

389,995

 

 

 

6.00

%

 

$

519,994

 

 

 

8.00

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

669,195

 

 

 

10.26

%

 

$

293,449

 

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

737,298

 

 

 

11.34

%

 

 

292,496

 

 

 

4.50

%

 

$

422,495

 

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

714,195

 

 

 

10.34

%

 

$

276,366

 

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

737,298

 

 

 

10.68

%

 

$

276,159

 

 

 

4.00

%

 

$

345,199

 

 

 

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, July 29, 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 761227. A recorded replay can be accessed through August 12, 2022 by dialing (866) 813-9403; passcode: 015913.

A slide presentation relating to our second 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 $7.1 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)

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

(dollars in thousands)

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

58,844

 

 

$

48,015

 

 

$

35,247

 

 

$

46,900

 

 

$

50,558

 

Interest bearing deposits with other banks

 

 

83,057

 

 

 

105,564

 

 

 

122,684

 

 

 

95,978

 

 

 

52,138

 

Cash and cash equivalents

 

 

141,901

 

 

 

153,579

 

 

 

157,931

 

 

 

142,878

 

 

 

102,696

 

Equity and other securities, at fair value

 

 

7,860

 

 

 

10,677

 

 

 

10,578

 

 

 

10,299

 

 

 

10,575

 

Securities available-for-sale, at fair value

 

 

1,273,138

 

 

 

1,369,368

 

 

 

1,454,542

 

 

 

1,427,605

 

 

 

1,495,789

 

Securities held-to-maturity, at amortized cost

 

 

3,880

 

 

 

3,882

 

 

 

3,885

 

 

 

3,887

 

 

 

3,890

 

Restricted stock, at cost

 

 

30,002

 

 

 

13,977

 

 

 

22,002

 

 

 

15,927

 

 

 

11,927

 

Loans held for sale

 

 

17,284

 

 

 

39,520

 

 

 

64,460

 

 

 

48,372

 

 

 

25,046

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

 

5,168,071

 

 

 

4,789,068

 

 

 

4,537,128

 

 

 

4,609,228

 

 

 

4,469,457

 

Allowance for loan and lease losses

 

 

(62,436

)

 

 

(59,458

)

 

 

(55,012

)

 

 

(60,598

)

 

 

(61,719

)

Net loans and leases

 

 

5,105,635

 

 

 

4,729,610

 

 

 

4,482,116

 

 

 

4,548,630

 

 

 

4,407,738

 

Servicing assets, at fair value

 

 

22,155

 

 

 

24,497

 

 

 

23,744

 

 

 

23,597

 

 

 

24,683

 

Premises and equipment, net

 

 

60,773

 

 

 

62,281

 

 

 

62,548

 

 

 

76,995

 

 

 

80,482

 

Other real estate owned, net

 

 

4,749

 

 

 

2,221

 

 

 

2,112

 

 

 

3,033

 

 

 

4,417

 

Goodwill and other intangible assets, net

 

 

162,094

 

 

 

163,962

 

 

 

165,558

 

 

 

167,296

 

 

 

169,034

 

Bank-owned life insurance

 

 

81,100

 

 

 

80,604

 

 

 

80,039

 

 

 

60,992

 

 

 

60,628

 

Deferred tax assets, net

 

 

78,950

 

 

 

67,335

 

 

 

50,329

 

 

 

45,165

 

 

 

43,127

 

Accrued interest receivable and other assets

 

 

142,196

 

 

 

113,123

 

 

 

116,328

 

 

 

129,775

 

 

 

100,570

 

Total assets

 

$

7,131,717

 

 

$

6,834,636

 

 

$

6,696,172

 

 

$

6,704,451

 

 

$

6,540,602

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

$

2,180,927

 

 

$

2,281,612

 

 

$

2,158,420

 

 

$

2,117,749

 

 

$

2,089,455

 

Interest-bearing deposits

 

 

3,207,450

 

 

 

3,248,490

 

 

 

2,996,627

 

 

 

3,040,529

 

 

 

3,002,740

 

Total deposits

 

 

5,388,377

 

 

 

5,530,102

 

 

 

5,155,047

 

 

 

5,158,278

 

 

 

5,092,195

 

Other borrowings

 

 

748,092

 

 

 

311,450

 

 

 

519,723

 

 

 

539,119

 

 

 

446,836

 

Subordinated notes, net

 

 

73,604

 

 

 

73,560

 

 

 

73,517

 

 

 

73,473

 

 

 

73,429

 

Junior subordinated debentures issued to capital trusts, net

 

 

37,123

 

 

 

37,011

 

 

 

36,906

 

 

 

36,796

 

 

 

36,682

 

Accrued expenses and other liabilities

 

 

119,360

 

 

 

93,842

 

 

 

74,597

 

 

 

72,367

 

 

 

74,387

 

Total liabilities

 

 

6,366,556

 

 

 

6,045,965

 

 

 

5,859,790

 

 

 

5,880,033

 

 

 

5,723,529

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

10,438

 

 

 

10,438

 

 

 

10,438

 

Common stock

 

 

388

 

 

 

388

 

 

 

387

 

 

 

386

 

 

 

385

 

Additional paid-in capital

 

 

595,938

 

 

 

595,006

 

 

 

593,753

 

 

 

592,192

 

 

 

590,422

 

Retained earnings

 

 

307,278

 

 

 

290,397

 

 

 

271,676

 

 

 

258,077

 

 

 

236,363

 

Treasury stock

 

 

(47,181

)

 

 

(40,732

)

 

 

(31,570

)

 

 

(31,161

)

 

 

(20,712

)

Accumulated other comprehensive income (loss), net of tax

 

 

(91,262

)

 

 

(56,388

)

 

 

(8,302

)

 

 

(5,514

)

 

 

177

 

Total stockholders’ equity

 

 

765,161

 

 

 

788,671

 

 

 

836,382

 

 

 

824,418

 

 

 

817,073

 

Total liabilities and stockholders’ equity

 

$

7,131,717

 

 

$

6,834,636

 

 

$

6,696,172

 

 

$

6,704,451

 

 

$

6,540,602

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

(dollars in thousands,

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

except per share data)

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

59,674

 

 

$

55,426

 

 

$

58,570

 

 

$

56,291

 

 

$

54,324

 

 

$

115,100

 

 

$

108,132

 

Interest on securities

 

 

6,264

 

 

 

6,155

 

 

 

5,619

 

 

 

5,534

 

 

 

6,359

 

 

 

12,419

 

 

 

12,448

 

Other interest and dividend income

 

 

608

 

 

 

237

 

 

 

495

 

 

 

947

 

 

 

628

 

 

 

845

 

 

 

890

 

Total interest and dividend income

 

 

66,546

 

 

 

61,818

 

 

 

64,684

 

 

 

62,772

 

 

 

61,311

 

 

 

128,364

 

 

 

121,470

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,128

 

 

 

1,087

 

 

 

1,037

 

 

 

986

 

 

 

1,058

 

 

 

3,215

 

 

 

2,479

 

Other borrowings

 

 

1,097

 

 

 

395

 

 

 

330

 

 

 

349

 

 

 

482

 

 

 

1,492

 

 

 

984

 

Subordinated notes and debentures

 

 

1,694

 

 

 

1,600

 

 

 

1,589

 

 

 

1,592

 

 

 

1,597

 

 

 

3,294

 

 

 

3,193

 

Total interest expense

 

 

4,919

 

 

 

3,082

 

 

 

2,956

 

 

 

2,927

 

 

 

3,137

 

 

 

8,001

 

 

 

6,656

 

Net interest income

 

 

61,627

 

 

 

58,736

 

 

 

61,728

 

 

 

59,845

 

 

 

58,174

 

 

 

120,363

 

 

 

114,814

 

PROVISION/(RECAPTURE) FOR LOAN AND LEASE LOSSES

 

 

5,908

 

 

 

4,995

 

 

 

(1,293

)

 

 

352

 

 

 

(1,969

)

 

 

10,903

 

 

 

2,398

 

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

 

 

55,719

 

 

 

53,741

 

 

 

63,021

 

 

 

59,493

 

 

 

60,143

 

 

 

109,460

 

 

 

112,416

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposits

 

 

2,059

 

 

 

1,884

 

 

 

1,955

 

 

 

1,867

 

 

 

1,768

 

 

 

3,943

 

 

 

3,432

 

Loan servicing revenue

 

 

3,384

 

 

 

3,380

 

 

 

3,392

 

 

 

3,344

 

 

 

3,188

 

 

 

6,764

 

 

 

5,957

 

Loan servicing asset revaluation

 

 

(4,636

)

 

 

(1,231

)

 

 

(2,510

)

 

 

(2,650

)

 

 

7

 

 

 

(5,867

)

 

 

(1,498

)

ATM and interchange fees

 

 

1,131

 

 

 

1,049

 

 

 

1,219

 

 

 

1,201

 

 

 

1,044

 

 

 

2,180

 

 

 

2,056

 

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

 

 

52

 

 

 

 

 

 

(21

)

 

 

130

 

 

 

(136

)

 

 

52

 

 

 

1,326

 

Change in fair value of equity securities, net

 

 

(697

)

 

 

(35

)

 

 

(98

)

 

 

(275

)

 

 

517

 

 

 

(732

)

 

 

311

 

Net gains on sales of loans

 

 

9,983

 

 

 

10,827

 

 

 

12,924

 

 

 

12,761

 

 

 

12,270

 

 

 

20,810

 

 

 

20,589

 

Wealth management and trust income

 

 

900

 

 

 

1,048

 

 

 

764

 

 

 

815

 

 

 

722

 

 

 

1,948

 

 

 

1,490

 

Other non-interest income

 

 

1,985

 

 

 

2,504

 

 

 

1,389

 

 

 

1,302

 

 

 

1,622

 

 

 

4,489

 

 

 

3,081

 

Total non-interest income

 

 

14,161

 

 

 

19,426

 

 

 

19,014

 

 

 

18,495

 

 

 

21,002

 

 

 

33,587

 

 

 

36,744

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

27,697

 

 

 

28,959

 

 

 

28,850

 

 

 

25,978

 

 

 

24,588

 

 

 

56,656

 

 

 

46,394

 

Occupancy and equipment expense, net

 

 

4,409

 

 

 

5,128

 

 

 

4,995

 

 

 

4,982

 

 

 

4,856

 

 

 

9,537

 

 

 

10,635

 

Impairment charge on assets held for sale

 

 

 

 

 

 

 

 

8,351

 

 

 

1,434

 

 

 

1,943

 

 

 

 

 

 

2,547

 

Loan and lease related expenses

 

 

942

 

 

 

(891

)

 

 

2,328

 

 

 

1,175

 

 

 

1,503

 

 

 

51

 

 

 

2,454

 

Legal, audit, and other professional fees

 

 

1,820

 

 

 

2,600

 

 

 

2,376

 

 

 

2,710

 

 

 

2,898

 

 

 

4,420

 

 

 

5,112

 

Data processing

 

 

3,396

 

 

 

3,186

 

 

 

3,070

 

 

 

3,108

 

 

 

2,847

 

 

 

6,582

 

 

 

5,602

 

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

 

 

158

 

 

 

54

 

 

 

26

 

 

 

42

 

 

 

389

 

 

 

212

 

 

 

1,010

 

Other intangible assets amortization expense

 

 

1,868

 

 

 

1,596

 

 

 

1,738

 

 

 

1,738

 

 

 

1,848

 

 

 

3,464

 

 

 

3,597

 

Other non-interest expense

 

 

3,483

 

 

 

3,923

 

 

 

7,234

 

 

 

3,013

 

 

 

2,109

 

 

 

7,406

 

 

 

4,472

 

Total non-interest expense

 

 

43,773

 

 

 

44,555

 

 

 

58,968

 

 

 

44,180

 

 

 

42,981

 

 

 

88,328

 

 

 

81,823

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

26,107

 

 

 

28,612

 

 

 

23,067

 

 

 

33,808

 

 

 

38,164

 

 

 

54,719

 

 

 

67,337

 

PROVISION FOR INCOME TAXES

 

 

5,824

 

 

 

6,301

 

 

 

5,878

 

 

 

8,502

 

 

 

9,672

 

 

 

12,125

 

 

 

17,047

 

NET INCOME

 

 

20,283

 

 

 

22,311

 

 

 

17,189

 

 

 

25,306

 

 

 

28,492

 

 

 

42,594

 

 

 

50,290

 

Dividends on preferred shares

 

 

 

 

 

196

 

 

 

196

 

 

 

196

 

 

 

195

 

 

 

196

 

 

 

391

 

INCOME AVAILABLE TO COMMON STOCKHOLDERS

 

$

20,283

 

 

$

22,115

 

 

$

16,993

 

 

$

25,110

 

 

$

28,297

 

 

$

42,398

 

 

$

49,899

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.55

 

 

$

0.60

 

 

$

0.46

 

 

$

0.68

 

 

$

0.75

 

 

$

1.14

 

 

$

1.31

 

Diluted

 

$

0.54

 

 

$

0.58

 

 

$

0.45

 

 

$

0.66

 

 

$

0.73

 

 

$

1.12

 

 

$

1.29

BYLINE BANCORP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA (unaudited)

 

As of or For the Three Months Ended

 

 

As of or For the Six Months Ended

 

(dollars in thousands, except share

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

and per share data)

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.55

 

 

$

0.60

 

 

$

0.46

 

 

$

0.68

 

 

$

0.75

 

 

$

1.14

 

 

$

1.31

 

Diluted earnings per common share

$

0.54

 

 

$

0.58

 

 

$

0.45

 

 

$

0.66

 

 

$

0.73

 

 

$

1.12

 

 

$

1.29

 

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

$

0.54

 

 

$

0.58

 

 

$

0.69

 

 

$

0.69

 

 

$

0.77

 

 

$

1.12

 

 

$

1.34

 

Weighted average common shares outstanding (basic)

 

37,064,795

 

 

 

37,123,161

 

 

 

37,124,176

 

 

 

37,200,778

 

 

 

37,965,658

 

 

 

37,093,816

 

 

 

38,064,381

 

Weighted average common shares outstanding (diluted)

 

37,612,268

 

 

 

38,042,822

 

 

 

37,999,401

 

 

 

38,018,301

 

 

 

38,696,036

 

 

 

37,740,682

 

 

 

38,773,018

 

Common shares outstanding

 

37,669,102

 

 

 

37,811,582

 

 

 

37,713,903

 

 

 

37,690,087

 

 

 

38,094,972

 

 

 

37,669,102

 

 

 

38,094,972

 

Cash dividends per common share

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

$

0.06

 

 

$

0.18

 

 

$

0.12

 

Dividend payout ratio on common stock

 

16.67

%

 

 

15.52

%

 

 

20.00

%

 

 

13.64

%

 

 

8.22

%

 

 

16.07

%

 

 

9.30

%

Tangible book value per common share(1)

$

16.01

 

 

$

16.52

 

 

$

17.51

 

 

$

17.16

 

 

$

16.74

 

 

$

16.01

 

 

$

16.74

 

Key Ratios and Performance Metrics (annualized where applicable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3.77

%

 

 

3.82

%

 

 

3.97

%

 

 

3.92

%

 

 

3.76

%

 

 

3.80

%

 

 

3.77

%

Average cost of deposits

 

0.16

%

 

 

0.08

%

 

 

0.08

%

 

 

0.08

%

 

 

0.08

%

 

 

0.12

%

 

 

0.10

%

Efficiency ratio(2)

 

55.29

%

 

 

54.96

%

 

 

70.88

%

 

 

54.18

%

 

 

51.95

%

 

 

55.12

%

 

 

51.61

%

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

 

55.29

%

 

 

54.96

%

 

 

55.46

%

 

 

52.35

%

 

 

49.50

%

 

 

55.12

%

 

 

49.93

%

Non-interest expense to average assets

 

2.52

%

 

 

2.69

%

 

 

3.49

%

 

 

2.67

%

 

 

2.57

%

 

 

2.60

%

 

 

2.48

%

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

 

2.52

%

 

 

2.69

%

 

 

2.76

%

 

 

2.58

%

 

 

2.45

%

 

 

2.60

%

 

 

2.40

%

Return on average stockholders' equity

 

10.42

%

 

 

10.87

%

 

 

8.13

%

 

 

12.19

%

 

 

14.10

%

 

 

10.65

%

 

 

12.54

%

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

 

10.42

%

 

 

10.87

%

 

 

12.42

%

 

 

12.69

%

 

 

14.80

%

 

 

10.65

%

 

 

13.01

%

Return on average assets

 

1.17

%

 

 

1.35

%

 

 

1.02

%

 

 

1.53

%

 

 

1.70

%

 

 

1.26

%

 

 

1.52

%

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

 

1.17

%

 

 

1.35

%

 

 

1.56

%

 

 

1.59

%

 

 

1.78

%

 

 

1.26

%

 

 

1.58

%

Non-interest income to total revenues(1)

 

18.69

%

 

 

24.85

%

 

 

23.55

%

 

 

23.61

%

 

 

26.53

%

 

 

21.82

%

 

 

24.24

%

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

 

1.84

%

 

 

2.03

%

 

 

1.29

%

 

 

2.07

%

 

 

2.16

%

 

 

1.93

%

 

 

2.11

%

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

 

1.84

%

 

 

2.03

%

 

 

2.03

%

 

 

2.15

%

 

 

2.28

%

 

 

1.93

%

 

 

2.19

%

Return on average tangible common stockholders' equity(1)

 

14.06

%

 

 

14.36

%

 

 

10.94

%

 

 

16.22

%

 

 

18.87

%

 

 

14.21

%

 

 

16.88

%

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

 

14.06

%

 

 

14.36

%

 

 

16.38

%

 

 

16.86

%

 

 

19.77

%

 

 

14.21

%

 

 

17.48

%

Non-interest-bearing deposits to total deposits

 

40.47

%

 

 

41.26

%

 

 

41.87

%

 

 

41.06

%

 

 

41.03

%

 

 

40.47

%

 

 

41.03

%

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

 

96.23

%

 

 

87.31

%

 

 

89.26

%

 

 

90.29

%

 

 

88.26

%

 

 

96.23

%

 

 

88.26

%

Deposits to total liabilities

 

84.64

%

 

 

91.47

%

 

 

87.97

%

 

 

87.73

%

 

 

88.97

%

 

 

84.64

%

 

 

88.97

%

Deposits per branch

$

141,799

 

 

$

125,684

 

 

$

117,160

 

 

$

117,234

 

 

$

115,732

 

 

$

141,799

 

 

$

115,732

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.66

%

 

 

0.42

%

 

 

0.51

%

 

 

0.75

%

 

 

0.79

%

 

 

0.66

%

 

 

0.79

%

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

 

1.21

%

 

 

1.24

%

 

 

1.21

%

 

 

1.31

%

 

 

1.38

%

 

 

1.21

%

 

 

1.38

%

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

 

0.24

%

 

 

0.05

%

 

 

0.37

%

 

 

0.13

%

 

 

0.17

%

 

 

0.15

%

 

 

0.32

%

Acquisition accounting adjustments(4)

$

3,050

 

 

$

3,364

 

 

$

4,769

 

 

$

6,327

 

 

$

9,393

 

 

$

3,050

 

 

$

9,393

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity to total assets

 

10.73

%

 

 

11.54

%

 

 

12.33

%

 

 

12.14

%

 

 

12.33

%

 

 

10.73

%

 

 

12.33

%

Tangible common equity to tangible assets(1)

 

8.65

%

 

 

9.36

%

 

 

10.11

%

 

 

9.89

%

 

 

10.01

%

 

 

8.65

%

 

 

10.01

%

Leverage ratio

 

10.34

%

 

 

10.70

%

 

 

10.89

%

 

 

11.21

%

 

 

10.82

%

 

 

10.34

%

 

 

10.82

%

Common equity tier 1 capital ratio

 

10.26

%

 

 

10.75

%

 

 

11.39

%

 

 

11.32

%

 

 

11.97

%

 

 

10.26

%

 

 

11.97

%

Tier 1 capital ratio

 

10.95

%

 

 

11.49

%

 

 

12.37

%

 

 

12.32

%

 

 

13.05

%

 

 

10.95

%

 

 

13.05

%

Total capital ratio

 

13.09

%

 

 

13.72

%

 

 

14.70

%

 

 

14.78

%

 

 

15.74

%

 

 

13.09

%

 

 

15.74

%

(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 Six Months Ended June 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

 

$

70,404

 

 

$

103

 

 

 

0.29

%

 

$

65,484

 

 

$

56

 

 

 

0.17

%

Loans and leases(1)

 

 

4,840,510

 

 

 

115,100

 

 

 

4.80

%

 

 

4,461,884

 

 

 

108,132

 

 

 

4.89

%

Taxable securities

 

 

1,334,747

 

 

 

11,379

 

 

 

1.72

%

 

 

1,453,976

 

 

 

11,326

 

 

 

1.57

%

Tax-exempt securities(2)

 

 

169,107

 

 

 

2,255

 

 

 

2.69

%

 

 

183,689

 

 

 

2,475

 

 

 

2.72

%

Total interest-earning assets

 

$

6,414,768

 

 

$

128,837

 

 

 

4.05

%

 

$

6,165,033

 

 

$

121,989

 

 

 

3.99

%

Allowance for loan and lease losses

 

 

(57,895

)

 

 

 

 

 

 

 

 

(66,415

)

 

 

 

 

 

 

All other assets

 

 

484,728

 

 

 

 

 

 

 

 

 

555,877

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

6,841,601

 

 

 

 

 

 

 

 

$

6,654,495

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

597,665

 

 

$

593

 

 

 

0.20

%

 

$

587,030

 

 

$

419

 

 

 

0.14

%

Money market accounts

 

 

1,281,519

 

 

 

1,668

 

 

 

0.26

%

 

 

1,087,964

 

 

 

660

 

 

 

0.12

%

Savings

 

 

657,155

 

 

 

159

 

 

 

0.05

%

 

 

592,350

 

 

 

139

 

 

 

0.05

%

Time deposits

 

 

644,543

 

 

 

795

 

 

 

0.25

%

 

 

747,366

 

 

 

1,261

 

 

 

0.34

%

Total interest-bearing deposits

 

 

3,180,882

 

 

 

3,215

 

 

 

0.20

%

 

 

3,014,710

 

 

 

2,479

 

 

 

0.17

%

Other borrowings

 

 

394,385

 

 

 

1,478

 

 

 

0.76

%

 

 

646,093

 

 

 

984

 

 

 

0.31

%

Federal funds purchased

 

 

1,271

 

 

 

14

 

 

 

2.32

%

 

 

 

 

 

 

 

 

0.00

%

Subordinated notes and debentures

 

 

110,570

 

 

 

3,294

 

 

 

6.01

%

 

 

109,945

 

 

 

3,193

 

 

 

5.86

%

Total borrowings

 

 

506,226

 

 

 

4,786

 

 

 

1.91

%

 

 

756,038

 

 

 

4,177

 

 

 

1.11

%

Total interest-bearing liabilities

 

$

3,687,108

 

 

$

8,001

 

 

 

0.44

%

 

$

3,770,748

 

 

$

6,656

 

 

 

0.36

%

Non-interest-bearing demand deposits

 

 

2,256,778

 

 

 

 

 

 

 

 

 

2,005,213

 

 

 

 

 

 

 

Other liabilities

 

 

91,451

 

 

 

 

 

 

 

 

 

70,052

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

806,264

 

 

 

 

 

 

 

 

 

808,482

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

6,841,601

 

 

 

 

 

 

 

 

$

6,654,495

 

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

 

 

3.61

%

 

 

 

 

 

 

 

 

3.63

%

Net interest income, fully taxable equivalent

 

 

 

 

$

120,836

 

 

 

 

 

 

 

 

$

115,333

 

 

 

 

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

 

 

 

 

 

 

 

 

3.80

%

 

 

 

 

 

 

 

 

3.77

%

Tax-equivalent adjustment

 

 

 

 

 

(473

)

 

 

0.02

%

 

 

 

 

 

(519

)

 

 

0.01

%

Net interest income

 

 

 

 

$

120,363

 

 

 

 

 

 

 

 

$

114,814

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

 

3.78

%

 

 

 

 

 

 

 

 

3.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

 

$

2,859

 

 

 

0.09

%

 

 

 

 

$

3,363

 

 

 

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 Six Months Ended

 

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

(dollars in thousands, except per share data)

 

2022