株探米国株
英語
エドガーで原本を確認する
0001702750false--12-31Q1http://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://www.bylinebank.com/20240331#AccruedInterestPayableAndOtherLiabilitieshttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://www.bylinebank.com/20240331#AccruedInterestPayableAndOtherLiabilitieshttp://fasb.org/us-gaap/2023#EquitySecuritiesFvNiRealizedGainLosshttp://fasb.org/us-gaap/2023#EquitySecuritiesFvNiRealizedGainLosshttp://fasb.org/us-gaap/2023#EquitySecuritiesFvNiRealizedGainLosshttp://fasb.org/us-gaap/2023#EquitySecuritiesFvNiRealizedGainLosshttp://www.bylinebank.com/20240331#SingleIssuerTrustPreferredSecurityMemberhttp://www.bylinebank.com/20240331#ServicingAssetsMemberhttp://fasb.org/us-gaap/2023#OtherComprehensiveIncomeLossCashFlowHedgeGainLossReclassificationBeforeTaxP1YP1YP1Y0001702750us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:AssetBackedSecuritiesMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2023-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:CommercialConstructionMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2022-12-3100017027502022-12-310001702750by:TotalModifiedByClassMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2024-03-310001702750us-gaap:CoreDepositsMember2023-03-310001702750us-gaap:CommitmentsToExtendCreditMember2023-01-012023-12-310001702750us-gaap:CoreDepositsMember2023-01-012023-03-310001702750us-gaap:CustomerRelationshipsMember2024-03-310001702750us-gaap:AdditionalPaidInCapitalMember2024-03-310001702750us-gaap:RestrictedStockMember2023-03-310001702750by:FixedInterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:AdjustableRateLoansMember2024-03-310001702750us-gaap:RetainedEarningsMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2023-03-310001702750srt:ScenarioForecastMember2024-05-262024-05-260001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001702750us-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2023-12-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750srt:MaximumMemberus-gaap:PerformanceSharesMember2023-01-012023-12-310001702750us-gaap:TreasuryStockCommonMember2023-01-012023-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFourMember2024-03-310001702750by:BusinessAssetsMember2024-03-310001702750by:NonAgencySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2024-03-310001702750by:TermModificationMember2023-03-310001702750by:InlandBancorpIncMember2023-06-302023-06-300001702750us-gaap:ResidentialPortfolioSegmentMemberby:NonOwnerOccupiedCommercialMember2024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberby:SingleIssuerTrustPreferredSecurityMembersrt:WeightedAverageMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMemberby:MetropolitanStatutoryTrustOneMember2024-01-012024-03-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-310001702750by:FederalReserveBankMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:AcquiredImpairedLoansMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:CommercialConstructionMember2023-12-310001702750by:AmerimarkCapitalTrustOneMember2024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:CustomerRelationshipsMember2024-01-012024-03-310001702750by:BYBPlanMemberby:TimeOptionsGrantsMember2024-01-012024-03-310001702750us-gaap:OtherCreditDerivativesMember2023-12-310001702750us-gaap:CustomerRelationshipsMember2023-03-310001702750us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2023-01-012023-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:NondesignatedMemberus-gaap:OtherCreditDerivativesMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMember2024-03-310001702750by:InlandBancorpTrustFourMember2023-12-3100017027502023-01-012023-03-310001702750us-gaap:CommonStockMember2023-03-310001702750by:InstallmentAndOtherPortfolioSegmentMember2022-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:CommercialConstructionMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:OriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:OriginatedLoansMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:PaymentDeferralMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:AcquiredImpairedLoansMember2023-12-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-03-310001702750us-gaap:FairValueInputsLevel3Memberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:AmendedCreditAgreementMemberus-gaap:PrimeRateMemberby:RidgestoneMemberby:CorrespondentBankMember2019-10-102019-10-100001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2022-12-310001702750by:FixedToFloatingSubordinateNotesMatureOnFirstJulyTwoThousandThirtyMemberus-gaap:SubordinatedDebtMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750us-gaap:InvestmentsMember2024-03-3100017027502024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001702750us-gaap:InvestmentsMember2023-03-310001702750by:AcquiredNonImpairedLoansMember2023-12-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:CommonStockMember2022-12-310001702750by:AcquiredNonImpairedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001702750us-gaap:MeasurementInputExpectedTermMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembersrt:WeightedAverageMember2024-01-012024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2023-01-012023-03-310001702750us-gaap:LoansInsuredOrGuaranteedByUsGovernmentAuthoritiesMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2024-03-310001702750by:OwnerOccupiedCommercialMember2024-03-310001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310001702750by:FirstEvanstonBancorpTrustOneMember2023-12-310001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310001702750by:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembersrt:MinimumMemberus-gaap:MeasurementInputDiscountRateMember2024-03-310001702750by:NonOwnerOccupiedCommercialMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:BYBPlanMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001702750by:ServicingAssetsMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MeasurementInputDiscountRateMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001702750us-gaap:CustomerRelationshipsMember2023-01-012023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:CommercialConstructionMember2023-12-310001702750by:OwnerOccupiedCommercialMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:AmendedCreditAgreementMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberby:RidgestoneMemberby:CorrespondentBankMember2019-10-102019-10-100001702750us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2024-03-310001702750by:TotalModifiedByClassMember2023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:LetterOfCreditMember2023-01-012023-12-310001702750by:MetropolitanStatutoryTrustOneMember2024-03-310001702750by:InlandBancorpIncMember2023-01-012023-06-300001702750by:NonAccrualLoansMember2023-01-012023-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2023-01-012023-03-310001702750us-gaap:CoreDepositsMember2023-12-310001702750us-gaap:AdditionalPaidInCapitalMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2023-12-310001702750us-gaap:CoreDepositsMember2024-03-310001702750by:BusinessAssetsMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750us-gaap:RetainedEarningsMember2023-01-012023-03-310001702750by:CommercialConstructionMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001702750srt:MaximumMemberby:OmnibusPlanMemberby:TimeOptionsGrantsMember2024-01-012024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2024-03-310001702750by:FixedToFloatingSubordinateNotesMatureOnFirstJulyTwoThousandThirtyMemberus-gaap:SubordinatedDebtMember2020-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:NonOwnerOccupiedCommercialMember2023-12-3100017027502023-12-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-12-310001702750by:InlandBancorpIncMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:SingleFamilyResidence1stLienMember2024-03-310001702750by:AcquiredImpairedLoansMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750us-gaap:OtherCreditDerivativesMember2023-01-012023-12-310001702750us-gaap:FairValueInputsLevel1Memberus-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2024-03-310001702750by:PurchaseCreditDeterioratedMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:BusinessAssetsMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:OwnerOccupiedCommercialMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:CombinationTermModificationAndInterestRateReductionMember2023-03-310001702750us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2024-03-310001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMember2024-03-310001702750by:OmnibusPlanMember2017-06-300001702750us-gaap:JuniorSubordinatedDebtMemberby:MetropolitanStatutoryTrustOneMemberby:ThreeMonthCmeSecuredOvernightFinancingRatePlusTenorSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2023-12-310001702750us-gaap:MeasurementInputPrepaymentRateMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:AmerimarkCapitalTrustOneMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFiveMember2024-03-310001702750us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2023-07-010001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFourMember2024-01-012024-03-310001702750srt:ScenarioForecastMember2026-05-260001702750by:BankTermFundingProgramMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2024-01-012024-03-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-03-310001702750us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedLoansMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:RetainedEarningsMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:AmerimarkCapitalTrustOneMember2024-03-310001702750us-gaap:OtherCreditDerivativesMember2024-03-310001702750us-gaap:FairValueMeasurementsRecurringMemberby:NonAgencySecuritiesMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMember2024-03-310001702750by:BYBPlanMember2024-03-310001702750us-gaap:CashFlowHedgingMemberby:OtherInterestRateDerivativesMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-3100017027502022-12-120001702750srt:MultifamilyMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:InlandBancorpTrustThreeMember2023-12-310001702750by:AgencyCommercialMortgageBackedSecuritiesMember2023-12-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:MetropolitanStatutoryTrustOneMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2024-03-310001702750by:OtherRealEstateOwnedPortfolioSegmentMemberus-gaap:FairValueInputsLevel3Member2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:CommercialConstructionMember2024-03-310001702750by:ThreeMonthCmeSecuredOvernightFinancingRatePlusTenorSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberby:SingleIssuerTrustPreferredSecurityMember2024-03-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:InterestRateSwapMember2023-01-012023-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:BYBPlanMembersrt:MinimumMemberby:PerformanceOptionsGrantsMember2024-01-012024-03-310001702750by:TotalModifiedByClassMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:FederalReserveBankMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMember2023-12-310001702750by:OmnibusPlanMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMember2023-03-310001702750by:InlandBancorpTrustTwoMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750us-gaap:RestrictedStockMemberby:OmnibusPlanMember2024-03-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001702750by:BusinessAssetsMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:NondesignatedMember2023-07-010001702750us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:NonOwnerOccupiedCommercialMember2024-03-310001702750by:ServicingAssetsMember2023-03-310001702750by:InlandBancorpTrustFiveMember2024-03-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2023-12-310001702750us-gaap:AvailableforsaleSecuritiesMember2024-03-310001702750us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:OtherInterestRateDerivativesMember2023-01-012023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMember2024-03-310001702750by:InlandBancorpIncMember2023-01-012023-03-310001702750by:OriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-3100017027502024-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:SingleFamilyResidence1stLienMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:AcquiredNonCreditDeterioratedMember2023-12-310001702750us-gaap:RestrictedStockMemberby:OmnibusPlanMember2023-12-310001702750by:USDAGuaranteedLoansMember2024-03-310001702750us-gaap:NondesignatedMemberus-gaap:OtherCreditDerivativesMember2023-12-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001702750us-gaap:USTreasuryNotesSecuritiesMember2024-03-310001702750srt:MinimumMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:FourthAmendmentRevolvingCreditAgreementMemberby:RidgestoneMemberby:CorrespondentBankMember2016-10-130001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:CommercialConstructionMember2023-12-310001702750by:BYBPlanMember2017-06-300001702750by:SingleFamilyResidence2ndLienMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:NonOwnerOccupiedCommercialMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMember2023-12-310001702750by:NonOwnerOccupiedCommercialMember2023-12-310001702750by:OriginatedLoansMember2024-03-310001702750srt:MinimumMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberby:InterestRateSwapTwoEffectiveHedgesMember2024-03-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001702750us-gaap:RestrictedStockMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel2Memberby:NonAgencySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2024-03-310001702750by:InlandBancorpTrustThreeMember2024-03-310001702750by:CombinationTermModificationAndInterestRateReductionMember2024-03-310001702750srt:MinimumMemberus-gaap:PerformanceSharesMember2023-01-012023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:AcquiredImpairedLoansMember2023-12-310001702750by:SingleFamilyResidence2ndLienMember2023-12-310001702750by:AgencyResidentialMortgageBackedSecuritiesMember2023-12-310001702750by:FederalReserveBankOfChicagoDiscountWindowLineMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:SingleFamilyResidence1stLienMember2023-12-310001702750by:AcquiredNonCreditDeterioratedMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:PaymentDeferralMember2023-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:CombinationTermModificationAndInterestRateReductionMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:SBAGuaranteedLoansMember2024-03-310001702750us-gaap:PerformanceSharesMember2024-03-310001702750us-gaap:AssetBackedSecuritiesMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:LetterOfCreditMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:OriginatedLoansMember2023-12-310001702750by:NonAgencyResidentialMortgageBackedSecuritiesMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-01-012024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMember2024-03-310001702750us-gaap:PaymentDeferralMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:InlandBancorpIncMember2023-07-010001702750us-gaap:CorporateDebtSecuritiesMember2023-12-310001702750by:InstallmentAndOtherPortfolioSegmentMember2023-01-012023-03-310001702750by:InlandBancorpIncMember2023-03-312023-03-310001702750by:BYBPlanMemberby:PerformanceOptionsGrantsMember2024-01-012024-03-310001702750by:FixedInterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2024-03-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:NonOwnerOccupiedCommercialMember2023-12-310001702750by:ServicingAssetsMember2022-12-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-310001702750us-gaap:SubsequentEventMember2024-04-232024-04-230001702750us-gaap:RestrictedStockMemberby:OmnibusPlanMember2023-01-012023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:SingleFamilyResidence1stLienMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:LoansInsuredOrGuaranteedByUsGovernmentAuthoritiesMember2023-12-310001702750by:ServicingAssetsMember2023-01-012023-03-310001702750by:PublicFundDepositsMember2024-03-310001702750by:ServicingAssetsMember2023-12-310001702750by:OtherRealEstateOwnedPortfolioSegmentMember2023-12-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001702750us-gaap:TreasuryStockCommonMember2022-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:CommercialConstructionMember2023-12-310001702750by:ThreeMonthSofrAndSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:PerformanceSharesMember2023-12-310001702750us-gaap:CommonStockMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-310001702750us-gaap:RetainedEarningsMember2023-03-310001702750us-gaap:MeasurementInputPrepaymentRateMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembersrt:WeightedAverageMember2024-03-310001702750by:InlandBancorpIncMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:BusinessAssetsMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750us-gaap:CommonStockMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2023-12-310001702750us-gaap:PassMemberus-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMember2023-12-310001702750us-gaap:AdditionalPaidInCapitalMember2022-12-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMember2024-03-310001702750us-gaap:RetainedEarningsMember2022-12-310001702750us-gaap:USTreasuryNotesSecuritiesMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750srt:MultifamilyMember2024-03-310001702750us-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:SubsequentEventMember2024-04-230001702750by:OtherRealEstateOwnedPortfolioSegmentMember2024-03-3100017027502023-01-012023-12-310001702750by:BYBPlanMembersrt:MaximumMemberby:PerformanceOptionsGrantsMember2024-01-012024-03-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-01-012024-03-310001702750by:CreditAgreementMemberby:RidgestoneMemberby:CorrespondentBankMember2016-10-130001702750us-gaap:InvestmentsMember2022-12-310001702750us-gaap:InterestRateSwapMember2023-07-012023-07-010001702750us-gaap:ResidentialPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMember2023-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750us-gaap:FederalHomeLoanBankAdvancesMember2024-03-310001702750us-gaap:FederalHomeLoanBankAdvancesMember2023-12-310001702750us-gaap:RestrictedStockMember2023-01-012023-03-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:MetropolitanStatutoryTrustOneMember2024-01-012024-03-310001702750by:CombinationTermModificationAndInterestRateReductionMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:FederalReserveBankAdvancesMember2024-01-220001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMembersrt:MultifamilyMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:OriginatedLoansMember2024-03-310001702750by:BankTermFundingProgramMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:SingleFamilyResidence1stLienMember2024-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001702750by:InlandBancorpTrustFiveMember2023-12-310001702750by:FourthAmendmentRevolvingCreditAgreementMemberby:CorrespondentBankMemberby:RidgestoneMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMember2024-03-310001702750us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:CoreDepositsMember2022-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMemberby:InlandBancorpTrustTwoMember2024-01-012024-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMemberby:ThreeMonthCmeSecuredOvernightFinancingRatePlusTenorSpreadAdjustmentMember2023-09-152023-09-150001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750us-gaap:OtherCreditDerivativesMember2023-01-012023-12-310001702750by:EachAnniversaryDateOfGrantVestOverThreeYearsMemberus-gaap:RestrictedStockMemberus-gaap:CommonStockMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:InlandBancorpIncMember2023-07-012023-07-010001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FairValueInputsLevel3Member2023-12-310001702750us-gaap:MeasurementInputExpectedTermMembersrt:MaximumMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-01-012024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:FairValueInputsLevel1Memberus-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2022-12-310001702750by:PerformanceBasedRestrictedSharesMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2023-12-310001702750by:NonAgencyResidentialMortgageBackedSecuritiesMember2024-03-310001702750by:AcquiredImpairedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonCreditDeterioratedMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750us-gaap:CommitmentsToExtendCreditMember2024-01-012024-03-310001702750us-gaap:TreasuryStockCommonMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMember2023-12-310001702750by:CollectivelyEvaluatedForImpairmentMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750by:PurchaseCreditDeterioratedMember2023-12-310001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-03-310001702750us-gaap:PerformanceSharesMember2023-01-012023-12-310001702750by:USDAGuaranteedLoansMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMember2023-12-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustThreeMember2024-03-310001702750by:NonOwnerOccupiedCommercialMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:HeldtomaturitySecuritiesMember2024-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberby:ForwardStartingInterestRateSwapsDueAugust2024Member2024-03-310001702750us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:RidgestoneMemberby:CorrespondentBankMember2024-01-012024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMember2023-12-310001702750by:BusinessAssetsMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AgencyCommercialMortgageBackedSecuritiesMember2024-03-310001702750by:OtherInterestRateDerivativesMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:AmerimarkCapitalTrustOneMember2024-01-012024-03-310001702750by:OtherRealEstateOwnedPortfolioSegmentMemberus-gaap:FairValueInputsLevel3Member2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2024-03-310001702750by:AmerimarkCapitalTrustOneMember2023-12-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750by:FixedToFloatingSubordinateNotesMatureOnFirstJulyTwoThousandThirtyMemberus-gaap:SubordinatedDebtMember2024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2024-03-310001702750us-gaap:MeasurementInputExpectedTermMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembersrt:MinimumMember2024-01-012024-03-310001702750by:SingleFamilyResidence1stLienMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750by:BusinessAssetsMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:FixedInterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberby:DepositsAndOtherBorrowingsMemberus-gaap:CashFlowHedgingMember2024-03-310001702750by:InlandBancorpTrustFourMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:AcquiredImpairedLoansMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMembersrt:MultifamilyMember2023-12-310001702750by:AcquiredNonCreditDeterioratedMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750us-gaap:CustomerRelationshipsMember2022-12-310001702750by:OwnerOccupiedCommercialMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:RepurchaseAgreementsMember2023-12-310001702750us-gaap:RevolvingCreditFacilityMembersrt:ScenarioForecastMember2024-05-260001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-03-310001702750srt:MaximumMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MeasurementInputDiscountRateMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:PaymentDeferralMember2023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonCreditDeterioratedMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:InlandBancorpTrustTwoMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMember2024-01-012024-03-310001702750us-gaap:InvestmentsMember2023-01-012023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-01-012023-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:OriginatedLoansMember2024-03-3100017027502023-12-060001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustTwoMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001702750us-gaap:TreasuryStockCommonMember2024-03-310001702750us-gaap:PerformanceSharesMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:CollectivelyEvaluatedForImpairmentMember2023-01-012023-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:OriginatedLoansMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750by:SBAGuaranteedLoansMember2023-12-310001702750us-gaap:MeasurementInputPrepaymentRateMembersrt:MaximumMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:NonOwnerOccupiedCommercialMember2024-03-310001702750us-gaap:NondesignatedMemberby:OtherInterestRateDerivativesMember2024-03-310001702750us-gaap:OtherCreditDerivativesMember2024-01-012024-03-310001702750by:BusinessAssetsMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2024-03-310001702750by:TermModificationMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750srt:MultifamilyMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:TermModificationMember2023-03-310001702750by:OtherInterestRateDerivativesMember2023-01-012023-03-310001702750us-gaap:TreasuryStockCommonMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001702750us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750by:OwnerOccupiedCommercialMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:BYBPlanMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:InlandBancorpIncMemberby:NonInterestExpenseMember2023-01-012023-03-310001702750us-gaap:PaymentDeferralMember2024-03-310001702750us-gaap:MeasurementInputPrepaymentRateMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembersrt:MinimumMember2024-03-310001702750by:BYBPlanMembersrt:MinimumMemberby:TimeOptionsGrantsMember2024-01-012024-03-310001702750by:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMember2024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2023-12-310001702750by:AcquiredImpairedLoansMember2023-12-310001702750us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:OriginatedLoansMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2022-12-310001702750by:FederalReserveBankOfChicagoDiscountWindowLineMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMember2023-12-3100017027502021-12-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:TermModificationMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMember2023-12-310001702750by:OwnerOccupiedCommercialMember2023-12-310001702750by:FirstEvanstonBancorpTrustOneMember2024-03-310001702750us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFiveMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750us-gaap:InterestRateSwapMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberby:ForwardStartingInterestRateSwapsDueMarch2024Member2024-03-310001702750srt:MultifamilyMember2023-12-310001702750by:PurchaseCreditDeterioratedMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:RestrictedStockMemberby:OmnibusPlanMember2024-01-012024-03-310001702750us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2024-03-310001702750us-gaap:TreasuryStockCommonMember2023-03-310001702750by:ThirdAnniversaryOfGrantDateMemberus-gaap:RestrictedStockMemberus-gaap:CommonStockMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2023-12-310001702750by:FixedInterestRateSwapMemberus-gaap:CashFlowHedgingMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:SingleFamilyResidence1stLienMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMember2023-03-310001702750by:IndividuallyEvaluatedForImpairmentMember2024-01-012024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonCreditDeterioratedMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMembersrt:MultifamilyMember2023-12-310001702750by:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:OriginatedLoansMember2023-12-310001702750us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMemberby:AcquiredImpairedLoansMember2023-12-310001702750us-gaap:CommonStockMember2023-01-012023-03-310001702750us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2024-03-310001702750us-gaap:CashFlowHedgingMember2024-01-012024-03-310001702750by:PurchaseCreditDeterioratedMember2024-03-310001702750by:OmnibusPlanMember2024-01-012024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-03-310001702750us-gaap:RetainedEarningsMember2024-01-012024-03-310001702750by:ServicingAssetsMember2024-01-012024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:TotalModifiedByClassMember2024-03-310001702750us-gaap:CorporateDebtSecuritiesMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:AcquiredImpairedLoansMember2024-03-310001702750us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMember2024-03-310001702750us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-310001702750by:BusinessAssetsMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750us-gaap:BankServicingMember2023-01-012023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750srt:MinimumMemberby:OmnibusPlanMemberby:TimeOptionsGrantsMember2024-01-012024-03-310001702750us-gaap:RepurchaseAgreementsMember2024-03-310001702750by:PublicFundDepositsMember2023-12-310001702750us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001702750by:AcquiredNonImpairedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750srt:MinimumMemberus-gaap:PerformanceSharesMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750us-gaap:PassMemberus-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMember2024-03-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberby:SingleIssuerTrustPreferredSecurityMember2024-01-012024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMembersrt:MultifamilyMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SubstandardMemberby:InstallmentAndOtherPortfolioSegmentMember2024-03-310001702750us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMembersrt:MultifamilyMember2024-03-310001702750us-gaap:CommonStockMember2024-03-310001702750by:OwnerOccupiedCommercialMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750us-gaap:BankServicingMember2024-01-012024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:MetropolitanStatutoryTrustOneMemberby:ThreeMonthCmeSecuredOvernightFinancingRatePlusTenorSpreadAdjustmentMember2023-09-142023-09-140001702750us-gaap:InvestmentsMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMemberby:InlandBancorpTrustThreeMember2024-01-012024-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2023-12-310001702750srt:MinimumMember2024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2023-12-310001702750by:BYBPlanMembersrt:MaximumMember2014-10-310001702750us-gaap:ResidentialPortfolioSegmentMember2023-01-012023-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:SingleFamilyResidence1stLienMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMember2024-01-012024-03-310001702750us-gaap:MeasurementInputExpectedTermMemberby:ServicingAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-01-012024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMember2024-03-310001702750us-gaap:NondesignatedMemberby:OtherInterestRateDerivativesMember2023-12-310001702750by:AgencyResidentialMortgageBackedSecuritiesMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:CashFlowHedgingMember2024-03-310001702750us-gaap:CoreDepositsMember2024-01-012024-03-310001702750by:AvailableFederalFundsLineMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-310001702750srt:MaximumMemberby:BYBPlanMemberby:TimeOptionsGrantsMember2024-01-012024-03-310001702750by:FourthAmendmentRevolvingCreditAgreementMemberby:CorrespondentBankMemberby:RidgestoneMember2024-01-012024-03-310001702750by:NonAccrualLoansMember2024-01-012024-03-310001702750us-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:AcquiredNonImpairedLoansMember2023-12-310001702750by:OwnerOccupiedCommercialMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2023-06-300001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustTwoMember2024-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMember2024-03-310001702750by:IndividuallyEvaluatedForImpairmentMember2023-01-012023-03-310001702750by:ThreeMonthSecuredOvernightFinancingRatePlusFiveEightyEightBasisPointsMemberby:FixedToFloatingSubordinateNotesMatureOnFirstJulyTwoThousandThirtyMemberus-gaap:SubordinatedDebtMember2024-01-012024-03-310001702750by:OwnerOccupiedCommercialMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:FederalHomeLoanBankAdvancesMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancialAssetPastDueMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMember2023-12-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:OriginatedLoansMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonCreditDeterioratedMember2023-12-310001702750by:CombinationTermModificationAndInterestRateReductionMember2023-03-3100017027502024-04-300001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:OriginatedLoansMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-310001702750us-gaap:AgencySecuritiesMemberus-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:MetropolitanStatutoryTrustOneMember2023-12-310001702750by:SingleFamilyResidence1stLienMember2024-03-3100017027502023-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFourMemberby:SecuredOvernightFinancingRatePlusSpreadAdjustmentMember2024-01-012024-03-310001702750us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750srt:MaximumMember2024-03-310001702750by:TotalModifiedByClassMemberby:CommercialAndIndustrialPortfolioSegmentMember2023-03-310001702750us-gaap:FederalHomeLoanBankAdvancesMember2024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustFiveMember2024-01-012024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMember2023-12-310001702750by:TermModificationMember2024-03-310001702750by:CommercialConstructionMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:AcquiredImpairedLoansMember2024-03-310001702750us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2023-05-300001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:AcquiredImpairedLoansMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750us-gaap:ResidentialPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:InstallmentAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMember2022-12-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:OriginatedLoansMember2023-12-310001702750us-gaap:OtherCreditDerivativesMember2024-01-012024-03-310001702750by:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberby:AcquiredImpairedLoansMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-03-310001702750us-gaap:RestrictedStockMemberus-gaap:CommonStockMember2023-09-300001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:CommercialAndIndustrialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2024-03-310001702750srt:MaximumMemberus-gaap:PerformanceSharesMember2024-01-012024-03-310001702750us-gaap:RestrictedStockMemberus-gaap:CommonStockMember2024-01-012024-03-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750by:BYBPlanMember2014-10-012014-10-300001702750srt:MaximumMember2024-01-012024-03-310001702750us-gaap:AdditionalPaidInCapitalMember2023-03-310001702750us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001702750by:AcquiredNonCreditDeterioratedMember2024-03-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-310001702750us-gaap:USTreasurySecuritiesMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberby:WatchMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-310001702750us-gaap:PassMemberby:AcquiredNonImpairedAndOriginatedLoansMember2023-12-310001702750us-gaap:RestrictedStockMember2024-03-310001702750by:CommercialAndIndustrialPortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:OriginatedLoansMember2023-12-310001702750by:BYBPlanMember2023-01-012023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:MetropolitanStatutoryTrustOneMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001702750us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-03-310001702750by:AvailableFederalFundsLineMember2024-03-310001702750srt:ScenarioForecastMember2026-05-262026-05-260001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:InstallmentAndOtherPortfolioSegmentMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:SpecialMentionMemberby:ConstructionLandDevelopmentAndOtherLandPortfolioSegmentMember2023-12-310001702750us-gaap:ResidentialPortfolioSegmentMemberby:SingleFamilyResidence2ndLienMember2023-12-310001702750us-gaap:CustomerRelationshipsMember2023-12-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-310001702750us-gaap:USTreasurySecuritiesMember2024-03-310001702750us-gaap:FinanceLeasesPortfolioSegmentMemberby:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001702750us-gaap:InvestmentsMember2024-01-012024-03-310001702750by:InstallmentAndOtherPortfolioSegmentMemberby:PurchaseCreditDeterioratedMember2023-12-310001702750us-gaap:FairValueInputsLevel2Memberby:NonAgencySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001702750us-gaap:JuniorSubordinatedDebtMemberby:FirstEvanstonBancorpTrustOneMemberby:ThreeMonthCmeSecuredOvernightFinancingRatePlusTenorSpreadAdjustmentMember2024-01-012024-03-310001702750by:AcquiredNonImpairedAndOriginatedLoansMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001702750by:OtherInterestRateDerivativesMember2024-01-012024-03-310001702750us-gaap:JuniorSubordinatedDebtMemberby:InlandBancorpTrustThreeMember2024-01-012024-03-31xbrli:purexbrli:sharesby:Segmentiso4217:USDxbrli:sharesby:Securityiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number 001-38139

 

 

img62256471_0.jpg 

Byline Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

36-3012593

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification Number)

 

180 North LaSalle Street, Suite 300

Chicago, Illinois 60601

(Address of Principal Executive Offices)

(773) 244-7000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

 

Smaller reporting company

☐

 

 

 

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

BY

New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $0.01 par value, 44,124,124 shares outstanding as of April 30, 2024

 

 

 

 

BYLINE BANCORP, INC.

FORM 10-Q

March 31, 2024

INDEX

 

 

 

 

Page

 

 

 

 

 

PART I.

 

FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements. The Unaudited Interim Condensed Consolidated Financial Statements of Byline Bancorp, Inc.

 

3

 

 

Notes to Unaudited Interim Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

44

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

72

Item 4.

 

Controls and Procedures

 

73

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

74

Item 1.

 

Legal Proceedings

 

74

Item 1A.

 

Risk Factors

 

74

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

74

Item 3.

 

Defaults Upon Senior Securities

 

74

Item 4.

 

Mine Safety Disclosures

 

74

Item 5.

 

Other Information

 

74

Item 6.

 

Exhibits

 

75

 

 

2

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 

 

 

 

 

 

 

 

(dollars in thousands, except share data)

 

March 31, 2024

 

 

December 31, 2023

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

58,640

 

 

$

60,431

 

Interest bearing deposits with other banks

 

 

578,197

 

 

 

165,705

 

Cash and cash equivalents

 

 

636,837

 

 

 

226,136

 

Equity and other securities, at fair value

 

 

9,135

 

 

 

8,743

 

Securities available-for-sale, at fair value (amortized cost
   at March 31, 2024—$1,562,427, December 31, 2023—$1,516,801)

 

 

1,379,147

 

 

 

1,342,480

 

Securities held-to-maturity, at amortized cost (fair value
   at March 31, 2024—$1,149, December 31, 2023 —$1,149)

 

 

1,156

 

 

 

1,157

 

Restricted stock, at cost

 

 

22,793

 

 

 

16,304

 

Loans held for sale

 

 

23,568

 

 

 

18,005

 

Loans and leases:

 

 

 

 

 

 

Loans and leases

 

 

6,778,214

 

 

 

6,684,306

 

Allowance for credit losses - loans and leases

 

 

(102,366

)

 

 

(101,686

)

Net loans and leases

 

 

6,675,848

 

 

 

6,582,620

 

Servicing assets, at fair value

 

 

20,992

 

 

 

19,844

 

Premises and equipment, net

 

 

64,466

 

 

 

66,627

 

Goodwill and other intangible assets, net

 

 

202,133

 

 

 

203,478

 

Bank-owned life insurance

 

 

97,748

 

 

 

96,900

 

Deferred tax assets, net

 

 

53,029

 

 

 

50,058

 

Accrued interest receivable and other assets

 

 

223,651

 

 

 

249,615

 

Total assets

 

$

9,410,503

 

 

$

8,881,967

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

$

1,851,727

 

 

$

1,905,876

 

Interest-bearing deposits

 

 

5,498,475

 

 

 

5,271,123

 

Total deposits

 

 

7,350,202

 

 

 

7,176,999

 

Other borrowings

 

 

721,173

 

 

 

395,190

 

Subordinated notes, net

 

 

73,909

 

 

 

73,866

 

Junior subordinated debentures issued to capital trusts, net

 

 

70,567

 

 

 

70,452

 

Accrued interest payable and other liabilities

 

 

185,603

 

 

 

175,309

 

Total liabilities

 

 

8,401,454

 

 

 

7,891,816

 

COMMITMENTS AND CONTINGENT LIABILITIES (Note 14)

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred stock

 

 

—

 

 

 

—

 

Common stock

 

 

452

 

 

 

451

 

Additional paid-in capital

 

 

708,844

 

 

 

710,488

 

Retained earnings

 

 

455,532

 

 

 

429,036

 

Treasury stock, at cost

 

 

(48,869

)

 

 

(49,707

)

Accumulated other comprehensive loss, net of tax

 

 

(106,910

)

 

 

(100,117

)

Total stockholders’ equity

 

 

1,009,049

 

 

 

990,151

 

Total liabilities and stockholders’ equity

 

$

9,410,503

 

 

$

8,881,967

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Preferred
Shares

 

 

Common
Shares

 

 

Preferred
Shares

 

 

Common
Shares

 

Par value

 

$

0.01

 

 

$

0.01

 

 

$

0.01

 

 

$

0.01

 

Shares authorized

 

 

25,000,000

 

 

 

150,000,000

 

 

 

25,000,000

 

 

 

150,000,000

 

Shares issued

 

 

—

 

 

 

45,946,804

 

 

 

—

 

 

 

45,714,241

 

Shares outstanding

 

 

—

 

 

 

44,108,387

 

 

 

—

 

 

 

43,764,056

 

Treasury shares

 

 

—

 

 

 

1,838,417

 

 

 

—

 

 

 

1,950,185

 

 

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

3

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended

 

 

 

March 31,

 

(dollars in thousands, except share and per share data)

 

2024

 

 

2023

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

123,792

 

 

$

92,343

 

Interest on securities

 

 

9,734

 

 

 

6,600

 

Other interest and dividend income

 

 

4,795

 

 

 

1,059

 

Total interest and dividend income

 

 

138,321

 

 

 

100,002

 

INTEREST EXPENSE

 

 

 

 

 

 

Deposits

 

 

45,962

 

 

 

16,298

 

Other borrowings

 

 

3,824

 

 

 

5,888

 

Subordinated notes and debentures

 

 

2,994

 

 

 

2,098

 

Total interest expense

 

 

52,780

 

 

 

24,284

 

Net interest income

 

 

85,541

 

 

 

75,718

 

PROVISION FOR CREDIT LOSSES

 

 

6,643

 

 

 

9,825

 

Net interest income after provision
   for credit losses

 

 

78,898

 

 

 

65,893

 

NON-INTEREST INCOME

 

 

 

 

 

 

Fees and service charges on deposits

 

 

2,427

 

 

 

2,120

 

Loan servicing revenue

 

 

3,364

 

 

 

3,380

 

Loan servicing asset revaluation

 

 

(703

)

 

 

656

 

ATM and interchange fees

 

 

1,075

 

 

 

1,063

 

Change in fair value of equity securities, net

 

 

392

 

 

 

350

 

Net gains on sales of loans

 

 

5,533

 

 

 

5,148

 

Wealth management and trust income

 

 

1,157

 

 

 

924

 

Other non-interest income

 

 

2,228

 

 

 

1,504

 

Total non-interest income

 

 

15,473

 

 

 

15,145

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

Salaries and employee benefits

 

 

33,953

 

 

 

30,394

 

Occupancy and equipment expense, net

 

 

5,284

 

 

 

4,444

 

Impairment charge on assets held for sale

 

 

—

 

 

 

20

 

Loan and lease related expenses

 

 

685

 

 

 

963

 

Legal, audit and other professional fees

 

 

2,719

 

 

 

3,114

 

Data processing

 

 

4,145

 

 

 

3,783

 

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

 

 

(98

)

 

 

(103

)

Other intangible assets amortization expense

 

 

1,345

 

 

 

1,455

 

Other non-interest expense

 

 

5,776

 

 

 

4,730

 

Total non-interest expense

 

 

53,809

 

 

 

48,800

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

40,562

 

 

 

32,238

 

PROVISION FOR INCOME TAXES

 

 

10,122

 

 

 

8,293

 

NET INCOME

 

$

30,440

 

 

$

23,945

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

Basic

 

$

0.70

 

 

$

0.65

 

Diluted

 

$

0.70

 

 

$

0.64

 

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

4

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

 

Three Months Ended

 

 

 

March 31,

 

(dollars in thousands)

 

2024

 

 

2023

 

Net income

 

$

30,440

 

 

$

23,945

 

Securities available-for-sale

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(8,959

)

 

 

14,599

 

Tax effect

 

 

2,389

 

 

 

(3,900

)

Net of tax

 

 

(6,570

)

 

 

10,699

 

Cash flow hedges

 

 

 

 

 

 

Unrealized holding gains arising during the period

 

 

4,531

 

 

 

194

 

Reclassification adjustments for net gains included
   in net income

 

 

(4,836

)

 

 

(1,956

)

Tax effect

 

 

82

 

 

 

471

 

Net of tax

 

 

(223

)

 

 

(1,291

)

Total other comprehensive income (loss)

 

 

(6,793

)

 

 

9,408

 

Comprehensive income

 

$

23,647

 

 

$

33,353

 

 

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

5

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Accumulated
Other

 

 

Total

 

(dollars in thousands,

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Treasury

 

 

Comprehensive

 

 

Stockholders’

 

 except share data)

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Income (Loss)

 

 

Equity

 

Balance, January 1, 2023

 

 

37,492,775

 

 

$

389

 

 

$

598,297

 

 

$

335,794

 

 

$

(51,114

)

 

$

(117,550

)

 

$

765,816

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,945

 

 

 

—

 

 

 

—

 

 

 

23,945

 

Other comprehensive income,
   net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,408

 

 

 

9,408

 

Restricted stock activity, net

 

 

220,652

 

 

 

1

 

 

 

(1,704

)

 

 

—

 

 

 

48

 

 

 

—

 

 

 

(1,655

)

Cash dividends declared on
   common stock ($0.09 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,374

)

 

 

—

 

 

 

—

 

 

 

(3,374

)

Share-based compensation
   expense

 

 

—

 

 

 

—

 

 

 

1,510

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,510

 

Balance, March 31, 2023

 

 

37,713,427

 

 

$

390

 

 

$

598,103

 

 

$

356,365

 

 

$

(51,066

)

 

$

(108,142

)

 

$

795,650

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Accumulated
Other

 

 

Total

 

(dollars in thousands,

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Treasury

 

 

Comprehensive

 

 

Stockholders’

 

except share data)

Shares

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Income (Loss)

 

 

Equity

 

Balance, January 1, 2024

 

43,764,056

 

$

451

 

 

$

710,488

 

 

$

429,036

 

 

$

(49,707

)

 

$

(100,117

)

 

$

990,151

 

Net income

 

—

 

 

—

 

 

 

—

 

 

 

30,440

 

 

 

—

 

 

 

—

 

 

 

30,440

 

Other comprehensive loss,
   net of tax

 

—

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,793

)

 

 

(6,793

)

Issuance of common stock upon
   exercise of stock options, net

 

68,186

 

 

—

 

 

 

(331

)

 

 

—

 

 

 

(671

)

 

 

—

 

 

 

(1,002

)

Restricted stock activity, net

 

276,145

 

 

1

 

 

 

(3,159

)

 

 

—

 

 

 

1,509

 

 

 

—

 

 

 

(1,649

)

Cash dividends declared on
   common stock ($0.09 per share)

 

—

 

 

—

 

 

 

—

 

 

 

(3,944

)

 

 

—

 

 

 

—

 

 

 

(3,944

)

Share-based compensation
   expense

 

—

 

 

—

 

 

 

1,846

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,846

 

Balance, March 31, 2024

 

44,108,387

 

$

452

 

 

$

708,844

 

 

$

455,532

 

 

$

(48,869

)

 

$

(106,910

)

 

$

1,009,049

 

 

 

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

6

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

Three Months Ended

 

 

March 31,

 

(dollars in thousands)

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net income

$

30,440

 

 

$

23,945

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

Provision for credit losses

 

6,643

 

 

 

9,825

 

Impairment loss on premises and equipment

 

1,069

 

 

 

—

 

Impairment loss on operating lease right-of-use asset

 

194

 

 

 

—

 

Impairment loss on assets held for sale

 

—

 

 

 

20

 

Depreciation and amortization of premises and equipment

 

1,307

 

 

 

981

 

Net amortization (accretion) of securities

 

(481

)

 

 

856

 

Net change in fair value of equity securities

 

(392

)

 

 

(350

)

Net gains on sales and disposal of premises and equipment

 

(482

)

 

 

—

 

Net gains on sales of loans

 

(5,533

)

 

 

(5,148

)

Originations of U.S. government guaranteed loans

 

(79,089

)

 

 

(53,602

)

Proceeds from U.S. government guaranteed loans sold

 

35,005

 

 

 

46,824

 

Accretion of premiums and discounts on acquired loans, net

 

(4,284

)

 

 

(729

)

Net change in servicing assets

 

(1,148

)

 

 

(1,772

)

Net losses on sales and valuation adjustments of other real estate owned

 

18

 

 

 

296

 

Net amortization of other acquisition accounting adjustments

 

1,626

 

 

 

1,455

 

Amortization of subordinated debt issuance cost

 

43

 

 

 

44

 

Accretion of junior subordinated debentures discount

 

115

 

 

 

104

 

Share-based compensation expense

 

1,846

 

 

 

1,510

 

Deferred tax benefit

 

(501

)

 

 

(134

)

Increase in cash surrender value of bank owned life insurance

 

(848

)

 

 

(588

)

Changes in assets and liabilities:

 

 

 

 

 

Accrued interest receivable and other assets

 

(374

)

 

 

10,214

 

Accrued interest payable and other liabilities

 

77,162

 

 

 

15,384

 

Net cash provided by operating activities

 

62,336

 

 

 

49,135

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Purchases of securities available-for-sale

 

(106,623

)

 

 

(1,280

)

Proceeds from maturities and calls of securities available-for-sale

 

31,953

 

 

 

3,784

 

Proceeds from paydowns of securities available-for-sale

 

28,916

 

 

 

21,262

 

Purchases of Federal Home Loan Bank stock, net

 

(6,489

)

 

 

(10,575

)

Net change in loans and leases

 

(95,840

)

 

 

(94,571

)

Purchases of premises and equipment

 

(512

)

 

 

(281

)

Proceeds from sales of premises and equipment

 

363

 

 

 

—

 

Proceeds from sales of assets held for sale

 

1,178

 

 

 

—

 

Proceeds from sales of other real estate owned

 

402

 

 

 

764

 

Net cash used in investing activities

 

(146,652

)

 

 

(80,897

)

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

7

 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)

 

Three Months Ended

 

 

March 31,

 

(dollars in thousands)

2024

 

 

2023

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Net increase in deposits

$

172,922

 

 

$

117,531

 

Repayments of line of credit

 

(11,250

)

 

 

—

 

Repayments of term loan

 

(1,666

)

 

 

—

 

Proceeds from short-term borrowings

 

570,000

 

 

 

6,100,100

 

Repayments of short-term borrowings

 

(425,000

)

 

 

(6,100,100

)

Proceeds from BTFP advances

 

200,000

 

 

 

—

 

Net increase (decrease) in securities sold under agreements to repurchase

 

(6,101

)

 

 

22,411

 

Dividends paid on common stock

 

(3,888

)

 

 

(3,322

)

Net cash provided by financing activities

 

495,017

 

 

 

136,620

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

410,701

 

 

 

104,858

 

CASH AND CASH EQUIVALENTS, beginning of period

 

226,136

 

 

 

179,353

 

CASH AND CASH EQUIVALENTS, end of period

$

636,837

 

 

$

284,211

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for interest

$

52,724

 

 

$

19,483

 

Cash paid during the period for taxes

$

406

 

 

$

309

 

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
   FINANCING ACTIVITIES:

 

 

 

 

 

Transfer of loans to other real estate owned

$

5

 

 

$

55

 

Right-of-use assets exchanged for operating lease liabilities

$

422

 

 

$

313

 

Common share withholding

$

2,651

 

 

$

1,655

 

Common dividend declared, not paid

$

56

 

 

$

52

 

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

8

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 1—Basis of Presentation

These unaudited interim condensed consolidated financial statements include the accounts of Byline Bancorp, Inc., a Delaware corporation (the “Company,” “Byline,” “we,” “us,” “our”), a bank holding company whose principal activity is the ownership and management of its Illinois state chartered subsidiary bank, Byline Bank (the “Bank”), based in Chicago, Illinois.

These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). In preparing these financial statements, the Company has evaluated events and transactions subsequent to March 31, 2024 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Consolidated Financial Statements for the years ended December 31, 2023 and 2022.

The Company has one reportable segment. The Company’s chief operating decision makers evaluate the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. Therefore, segments disclosures are currently not required.

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent Events,” the Company’s management has evaluated subsequent events for potential recognition or disclosure through the date of the issuance of these condensed consolidated financial statements. No subsequent events were identified that would have required a change to the condensed consolidated financial statements or disclosure in the notes to the condensed consolidated financial statements.

Note 2—Accounting Pronouncements Recently Adopted or Issued

The following reflect recent accounting pronouncements that have been adopted or are pending adoption by the Company.

Adopted Accounting Pronouncements

Fair Value Measurement (Topic 820) - In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The guidance in the ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account on the equity security and, therefore, is not considered in measuring fair value. The ASU also requires additional disclosures about the restriction. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company evaluated the accounting and disclosure requirements of this update and they did not have a material effect on the consolidated financial statements.

Issued Accounting Pronouncements Pending Adoption

Business Combinations (Topic 805) - In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (JV) Formations: Recognition and Initial Measurement. The guidance requires newly-formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations. The new guidance would be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements.

Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280) – In November 2023, the FASB issued ASU 2023-07 to enhance disclosures about significant segment expenses for public entities reporting segment information under Topic 280. It requires that a public entity disclose, on an annual and interim basis, significant expense categories for each reportable segment. Significant expense categories are derived from expenses that are 1) regularly reported to an entity’s chief operating decision-maker ("CODM"), and 2) included in a segment’s reported measure of profit or loss. The disclosures should include an amount for "other segment items," reflecting the difference between 1) segment revenue less significant segment expenses, and 2) the reportable segment’s profit or loss measures. It requires that a public entity disclose the title and position of the CODM and how the CODM uses the reported measure of profit or loss to assess segment performance and to allocate resources.

9

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Further it clarifies that entities with a single reportable segment must disclose both new and existing segment reporting requirements. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt the guidance on a retrospective basis. The Company is evaluating the internal control and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements.

Income Taxes – Improvements to Income Tax Disclosures (Topic 740) –In December 2023, the FASB issued ASU 2023-09 to provide additional transparency into an entity’s income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The standard requires that public business entities disclose, on an annual basis, specific categories in the rate reconciliation and additional information for reconciling items meeting a certain quantitative threshold. The amendments also require that entities disclose on an annual basis: 1) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and 2) the income taxes paid (net of refunds received) disaggregated by individual jurisdictions exceeding 5% of total income taxes paid (net of refunds received). The amendments are effective for public business entities for annual periods beginning after December 15, 2024. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements.

Note 3—Acquisition of a Business

On July 1, 2023, the Company acquired all of the outstanding common stock of Inland Bancorp, Inc. ("Inland") and its subsidiaries pursuant to an Agreement and Plan of Merger, dated as of November 30, 2022 (the "Merger Agreement"). Inland was merged with and into Byline. As a result of the merger, Inland’s wholly owned subsidiary bank, Inland Bank and Trust, was merged with and into Byline Bank, with Byline Bank as the surviving bank. The acquisition improves the Company’s footprint in the Chicagoland market, diversifies its commercial banking business, and strengthens the core deposit base.

In a related but separate transaction, on March 31, 2023, Byline entered into a side letter agreement with the majority shareholder of Inland in which Byline agreed to purchase 2,408,992 shares of Inland common stock. The purchase price was calculated based on the terms of the Merger Agreement. The transaction was completed on June 30, 2023, which resulted in the payment of cash in the amount of $9.9 million.

At the effective time of the merger (the "Effective Time"), each share of Inland’s common stock was converted into the right to receive: (1) 0.19 shares of Byline’s common stock, par value $0.01 per share, and (2) a cash payment in the amount of $0.68 per share, with cash paid in lieu of any fractional shares. The per share cash consideration was based on the total $21.2 million divided by the outstanding shares of Inland common stock. Based on the closing price of shares of the Company’s common stock of $18.09, as reported by the New York Stock Exchange, and 5,932,323 shares of common stock issued with respect to the outstanding shares of Inland common stock, the stock consideration was valued at $107.3 million. Options to acquire 288,200 shares of Inland common stock that were outstanding at the Effective Time were canceled, at the option holders' election, in exchange for a cash payment in accordance with the Merger Agreement of $424,000, to be paid after the closing date. In addition, the 2,408,992 shares of Inland common stock purchased on June 30, 2023 were canceled as of the effective time of the transaction. The value of the total merger consideration at closing was $138.9 million. Stock issuance costs were $299,000.

The transaction resulted in goodwill of $33.4 million, which is nondeductible for tax purposes, as this acquisition was a nontaxable transaction. Goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired and reflects related synergies expected from the combined operations.

Merger-related expenses, including acquisition advisory expenses of $256,000, core system conversion expenses of $199,000, salaries and employee benefits of $18,000, and other non-interest expenses of $16,000 related to the Inland acquisition, are reflected in non-interest expense on the Consolidated Statements of Operations for the three months ended March 31, 2023.

The acquisition of Inland was accounted for using the acquisition method of accounting in accordance with ASC Topic 805. Assets acquired, liabilities assumed, and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values become available.

10

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

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

Assets

 

 

 

Cash and cash equivalents

 

$

39,731

 

Securities available-for-sale

 

 

239,602

 

Restricted stock

 

 

3,058

 

Loans

 

 

808,000

 

Allowance for credit losses

 

 

(10,596

)

Premises and equipment

 

 

11,307

 

Operating lease right-of-use asset

 

 

3,813

 

Other intangible assets

 

 

17,250

 

Bank-owned life insurance

 

 

12,455

 

Deferred tax assets, net

 

 

14,848

 

Other assets

 

 

21,023

 

Total assets acquired

 

 

1,160,491

 

Liabilities

 

 

 

Deposits

 

 

964,491

 

Federal Home Loan Bank advances

 

 

40,000

 

Securities sold under agreements to repurchase

 

 

455

 

Junior subordinated debentures

 

 

32,661

 

Operating lease liability

 

 

4,034

 

Accrued expenses and other liabilities

 

 

13,288

 

Total liabilities assumed

 

 

1,054,929

 

Net assets acquired

 

$

105,562

 

Consideration paid

 

 

 

Common stock (5,932,323 shares issued at $18.09 per share)

 

 

107,017

 

Cash paid

 

 

31,897

 

Total consideration paid

 

 

138,914

 

Goodwill

 

$

33,352

 

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

Fair value

 

$

582,831

 

Gross contractual amounts receivable

 

 

699,918

 

Estimate of contractual cash flows not expected to be collected(1)

 

 

4,239

 

Estimate of contractual cash flows expected to be collected

 

 

695,679

 

(1) Includes interest payments not expected to be collected due to loan prepayments as well as principal and interest payments not expected to be collected due to customer default.

The following table provides the unaudited pro forma information for the results of operations for the three months ended March 31, 2023, as if the acquisition had occurred on January 1, 2023. The pro forma results combine the historical results of Inland into the Company’s Consolidated Statements of Operations, including the impact of certain acquisition accounting adjustments, which includes loan discount accretion, intangible assets amortization, deposit premium accretion, fixed assets amortization, and borrowing discount amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2023. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. Recognized acquisition-related expenses and other adjustments related to the timing of expenses, are included in net income in the following table:

 

11

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

 

2023

 

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

 

$

107,807

 

Net income

 

$

22,153

 

Earnings per share—basic

 

$

0.52

 

Earnings per share—diluted

 

$

0.51

 

 

Revenues and earnings of the acquired company since the acquisition date have not been disclosed as it is not practicable as Inland was merged into the Company and separate financial information is not readily available.

Note 4—Securities

The following tables summarize the amortized cost and fair values of securities available-for-sale and securities held-to-maturity as of the dates shown and the corresponding amounts of gross unrealized gains and losses:

March 31, 2024

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

87,147

 

 

$

9

 

 

$

(1,044

)

 

$

86,112

 

U.S. Government agencies

 

 

155,659

 

 

 

22

 

 

 

(17,627

)

 

 

138,054

 

Obligations of states, municipalities, and
   political subdivisions

 

 

86,160

 

 

 

264

 

 

 

(4,715

)

 

 

81,709

 

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

825,180

 

 

 

2,060

 

 

 

(100,653

)

 

 

726,587

 

Non-agency

 

 

136,561

 

 

 

—

 

 

 

(22,852

)

 

 

113,709

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

197,171

 

 

 

—

 

 

 

(33,625

)

 

 

163,546

 

Corporate securities

 

 

40,667

 

 

 

5

 

 

 

(3,920

)

 

 

36,752

 

Asset-backed securities

 

 

33,882

 

 

 

30

 

 

 

(1,234

)

 

 

32,678

 

Total

 

$

1,562,427

 

 

$

2,390

 

 

$

(185,670

)

 

$

1,379,147

 

March 31, 2024

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states, municipalities, and
   political subdivisions

 

$

1,156

 

 

$

—

 

 

$

(7

)

 

$

1,149

 

Total

 

$

1,156

 

 

$

—

 

 

$

(7

)

 

$

1,149

 

December 31, 2023

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

116,398

 

 

$

61

 

 

$

(1,025

)

 

$

115,434

 

U.S. Government agencies

 

 

147,062

 

 

 

37

 

 

 

(16,404

)

 

 

130,695

 

Obligations of states, municipalities, and
   political subdivisions

 

 

86,022

 

 

 

396

 

 

 

(4,143

)

 

 

82,275

 

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

786,970

 

 

 

4,247

 

 

 

(95,414

)

 

 

695,803

 

Non-agency

 

 

122,359

 

 

 

—

 

 

 

(22,099

)

 

 

100,260

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

181,452

 

 

 

—

 

 

 

(34,248

)

 

 

147,204

 

Corporate securities

 

 

40,681

 

 

 

—

 

 

 

(4,510

)

 

 

36,171

 

Asset-backed securities

 

 

35,857

 

 

 

2

 

 

 

(1,221

)

 

 

34,638

 

Total

 

$

1,516,801

 

 

$

4,743

 

 

$

(179,064

)

 

$

1,342,480

 

 

12

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

December 31, 2023

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states, municipalities, and political
   subdivisions

 

$

1,157

 

 

$

—

 

 

$

(8

)

 

$

1,149

 

Total

 

$

1,157

 

 

$

—

 

 

$

(8

)

 

$

1,149

 

 

The Company did not classify securities as trading during the three months ended March 31, 2024 or during 2023.

Gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2024 and December 31, 2023, are summarized as follows:

 

 

 

 

Less than 12 Months

 

 

12 Months or Longer

 

 

Total

 

March 31, 2024

 

Number of
Securities

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

 

9

 

$

19,532

 

 

$

(95

)

 

$

31,939

 

 

$

(949

)

 

$

51,471

 

 

$

(1,044

)

U.S. Government agencies

 

 

19

 

 

10,517

 

 

 

(30

)

 

 

117,934

 

 

 

(17,597

)

 

 

128,451

 

 

 

(17,627

)

Obligations of states,
   municipalities and political
   subdivisions

 

 

76

 

 

19,232

 

 

 

(295

)

 

 

49,261

 

 

 

(4,420

)

 

 

68,493

 

 

 

(4,715

)

Residential mortgage-backed
   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

122

 

 

88,634

 

 

 

(808

)

 

 

526,201

 

 

 

(99,845

)

 

 

614,835

 

 

 

(100,653

)

Non-agency

 

 

21

 

 

16,710

 

 

 

(62

)

 

 

96,999

 

 

 

(22,790

)

 

 

113,709

 

 

 

(22,852

)

Commercial mortgage-backed
   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

49

 

 

19,677

 

 

 

(114

)

 

 

143,869

 

 

 

(33,511

)

 

 

163,546

 

 

 

(33,625

)

Corporate securities

 

 

20

 

 

—

 

 

 

—

 

 

 

35,256

 

 

 

(3,920

)

 

 

35,256

 

 

 

(3,920

)

Asset-backed securities

 

 

3

 

 

6,586

 

 

 

—

 

 

 

6,608

 

 

 

(1,234

)

 

 

13,194

 

 

 

(1,234

)

Total

 

 

319

 

$

180,888

 

 

$

(1,404

)

 

$

1,008,067

 

 

$

(184,266

)

 

$

1,188,955

 

 

$

(185,670

)

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states,
  municipalities, and
  political subdivisions

 

 

1

 

$

—

 

 

$

—

 

 

$

599

 

 

$

(7

)

 

$

599

 

 

$

(7

)

Total

 

 

1

 

$

—

 

 

$

—

 

 

$

599

 

 

$

(7

)

 

$

599

 

 

$

(7

)

 

13

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

 

 

 

 

Less than 12 Months

 

 

12 Months or Longer

 

 

Total

 

December 31, 2023

 

Number of
Securities

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

 

7

 

$

5,018

 

 

$

(4

)

 

$

31,843

 

 

$

(1,021

)

 

$

36,861

 

 

$

(1,025

)

U.S. Government agencies

 

 

18

 

 

535

 

 

 

(9

)

 

 

119,109

 

 

 

(16,395

)

 

 

119,644

 

 

 

(16,404

)

Obligations of states,
   municipalities and
   political subdivisions

 

 

61

 

 

12,267

 

 

 

(156

)

 

 

49,617

 

 

 

(3,987

)

 

 

61,884

 

 

 

(4,143

)

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

102

 

 

8,332

 

 

 

(49

)

 

 

543,648

 

 

 

(95,365

)

 

 

551,980

 

 

 

(95,414

)

Non-agency

 

 

20

 

 

636

 

 

 

—

 

 

 

99,624

 

 

 

(22,099

)

 

 

100,260

 

 

 

(22,099

)

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

48

 

 

6,765

 

 

 

(1,517

)

 

 

140,439

 

 

 

(32,731

)

 

 

147,204

 

 

 

(34,248

)

Corporate securities

 

 

21

 

 

—

 

 

 

—

 

 

 

36,171

 

 

 

(4,510

)

 

 

36,171

 

 

 

(4,510

)

Asset-backed securities

 

 

6

 

 

—

 

 

 

—

 

 

 

25,653

 

 

 

(1,221

)

 

 

25,653

 

 

 

(1,221

)

Total

 

 

283

 

$

33,553

 

 

$

(1,735

)

 

$

1,046,104

 

 

$

(177,329

)

 

$

1,079,657

 

 

$

(179,064

)

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states,
   municipalities and
   political subdivisions

 

 

2

 

$

—

 

 

$

—

 

 

$

1,149

 

 

$

(8

)

 

$

1,149

 

 

$

(8

)

Total

 

 

2

 

$

—

 

 

$

—

 

 

$

1,149

 

 

$

(8

)

 

$

1,149

 

 

$

(8

)

 

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. The Company evaluated the securities which had unrealized losses for potential credit losses and determined there were none. There were 319 securities available-for-sale with unrealized losses at March 31, 2024. There was one security held-to-maturity with unrealized losses at March 31, 2024. There was no allowance for credit losses for held-to-maturity debt securities at March 31, 2024 or December 31, 2023. The evaluation for potential credit losses is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing payment performance of the securities.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security types. The Company’s held-to-maturity portfolio contains municipal bonds that are typically rated by major rating agencies as ‘Aa’ or better. The Company uses industry historical credit loss information adjusted for current conditions to establish an allowance for credit losses. Accrued interest receivable on securities available-for-sale and held-to-maturity totaled $4.9 million and $4.5 million at March 31, 2024 and December 31, 2023, respectively, and are excluded from the estimate of credit losses.

The Company anticipates full recovery of amortized cost with respect to these securities by maturity. The Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

There were no proceeds from sales of securities available-for-sale, nor associated gains and losses on sales and calls of securities, for the three months ended March 31, 2024 and 2023, respectively.

Securities posted and pledged as collateral were $659.9 million and $464.5 million at March 31, 2024 and December 31, 2023. At March 31, 2024 and December 31, 2023, of those pledged, the carrying amounts of securities pledged as collateral for public fund deposits were $388.6 million and $390.3 million, respectively, and for customer repurchase agreements of $50.2 million and $47.8 million, respectively. At March 31, 2024, there were $194.3 million of securities pledged to the Federal Reserve Bank ("FRB"). At December 31, 2023 no securities were pledged to the FRB. At March 31, 2024 and December 31, 2023, there were no securities pledged for advances from the Federal Home Loan Bank. Other securities were pledged for letters of credit and for purposes required or permitted by law. At March 31, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

14

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

At March 31, 2024, the amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

 

 

 

Amortized
Cost

 

 

Fair
Value

 

Available-for-sale

 

 

 

 

 

 

Due in one year or less

 

$

75,272

 

 

$

74,486

 

Due from one to five years

 

 

118,834

 

 

 

113,034

 

Due from five to ten years

 

 

163,174

 

 

 

146,082

 

Due after ten years

 

 

46,235

 

 

 

41,703

 

Mortgage-backed securities

 

 

1,158,912

 

 

 

1,003,842

 

Total

 

$

1,562,427

 

 

$

1,379,147

 

Held-to-maturity

 

 

 

 

 

 

Due in one year or less

 

$

1,156

 

 

$

1,149

 

Due from one to five years

 

 

—

 

 

 

—

 

Total

 

$

1,156

 

 

$

1,149

 

 

Note 5—Loan and Lease Receivables and Allowance for Credit Losses

Loan and Lease Receivables

Outstanding loan and lease receivables as of the dates shown were categorized as follows:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Commercial real estate

 

$

2,265,195

 

 

$

2,317,289

 

Residential real estate

 

 

732,230

 

 

 

718,733

 

Construction, land development, and other land

 

 

530,320

 

 

 

528,275

 

Commercial and industrial

 

 

2,548,442

 

 

 

2,444,405

 

Installment and other

 

 

3,076

 

 

 

3,138

 

Lease financing receivables

 

 

685,763

 

 

 

659,686

 

Total loans and leases

 

 

6,765,026

 

 

 

6,671,526

 

Net unamortized deferred fees and costs

 

 

6,908

 

 

 

6,600

 

Initial direct costs

 

 

6,280

 

 

 

6,180

 

Allowance for credit losses - loans and leases

 

 

(102,366

)

 

 

(101,686

)

Net loans and leases

 

$

6,675,848

 

 

$

6,582,620

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Lease financing receivables

 

 

 

 

 

 

Net minimum lease payments

 

$

666,340

 

 

$

644,507

 

Unguaranteed residual values

 

 

101,536

 

 

 

92,127

 

Unearned income

 

 

(82,113

)

 

 

(76,948

)

Total lease financing receivables

 

 

685,763

 

 

 

659,686

 

Initial direct costs

 

 

6,280

 

 

 

6,180

 

Lease financial receivables before allowance for
   credits losses - loans and leases

 

$

692,043

 

 

$

665,866

 

15

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Total loans and leases consist of originated loans and leases, purchased credit deteriorated ("PCD") and acquired non-credit-deteriorated loans and leases. At March 31, 2024 and December 31, 2023, total loans and leases included the guaranteed amount of U.S. government guaranteed loans of $101.0 million and $93.3 million, respectively. At March 31, 2024 and December 31, 2023, the discount on the unguaranteed portion of U.S. government guaranteed loans was $25.9 million and $26.2 million, respectively, which are included in total loans and leases. At March 31, 2024 and December 31, 2023, installment and other loans included overdraft deposits of $1.2 million and $754,000, respectively, which were reclassified as loans. At March 31, 2024 and December 31, 2023, loans and leases and loans held for sale pledged as security for borrowings were $2.1 billion and $2.2 billion, respectively. Accrued interest on loans and leases were $37.8 million and $38.9 million as of March 31, 2024 and December 31, 2023, respectively, and are included in the accrued interest receivable and other assets line item on the Condensed Consolidated Statement of Financial Condition.

The minimum annual lease payments for lease financing receivables as of March 31, 2024 are summarized as follows:

 

 

Minimum Lease
Payments

 

2024

 

$

164,051

 

2025

 

 

202,138

 

2026

 

 

154,408

 

2027

 

 

96,119

 

2028

 

 

43,021

 

Thereafter

 

 

6,603

 

Total

 

$

666,340

 

Originated loans and leases represent originations excluding loans initially acquired in a business combination. However, once an acquired loan reaches its maturity date, and is re-underwritten and renewed, it is internally classified as an originated loan. PCD loans are those acquired from a business combination with evidence of credit quality deterioration and are accounted for under ASC Topic 326. Acquired non-credit-deteriorated loans and leases represent loans and leases acquired with an outstanding balance from a business combination without more than insignificant evidence of credit quality deterioration and are accounted for under ASC Topic 310-20. The following tables summarize the balances for each respective loan and lease category as of March 31, 2024 and December 31, 2023:

March 31, 2024

 

Originated

 

 

Purchased Credit Deteriorated

 

 

Acquired
Non-Credit-
Deteriorated

 

 

Total

 

Commercial real estate

 

$

1,879,149

 

 

$

117,460

 

 

$

271,720

 

 

$

2,268,329

 

Residential real estate

 

 

488,887

 

 

 

39,535

 

 

 

204,589

 

 

 

733,011

 

Construction, land development, and other land

 

 

416,996

 

 

 

26,418

 

 

 

85,553

 

 

 

528,967

 

Commercial and industrial

 

 

2,420,952

 

 

 

18,100

 

 

 

113,673

 

 

 

2,552,725

 

Installment and other

 

 

2,855

 

 

 

118

 

 

 

166

 

 

 

3,139

 

Lease financing receivables

 

 

691,617

 

 

 

—

 

 

 

426

 

 

 

692,043

 

Total loans and leases

 

$

5,900,456

 

 

$

201,631

 

 

$

676,127

 

 

$

6,778,214

 

December 31, 2023

 

Originated

 

 

Purchased Credit Deteriorated

 

 

Acquired
Non-Credit-
Deteriorated

 

 

Total

 

Commercial real estate

 

$

1,907,029

 

 

$

137,807

 

 

$

275,476

 

 

$

2,320,312

 

Residential real estate

 

 

465,133

 

 

 

42,510

 

 

 

211,887

 

 

 

719,530

 

Construction, land development, and other land

 

 

415,162

 

 

 

25,331

 

 

 

86,344

 

 

 

526,837

 

Commercial and industrial

 

 

2,311,563

 

 

 

19,460

 

 

 

117,538

 

 

 

2,448,561

 

Installment and other

 

 

2,919

 

 

 

125

 

 

 

156

 

 

 

3,200

 

Lease financing receivables

 

 

665,239

 

 

 

—

 

 

 

627

 

 

 

665,866

 

Total loans and leases

 

$

5,767,045

 

 

$

225,233

 

 

$

692,028

 

 

$

6,684,306

 

16

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

PCD loans—The unpaid principal balance and carrying amount of PCD loans excluding an allowance for credit losses - loans and leases of $10.1 million and $10.0 million at March 31, 2024 and December 31, 2023, were as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Unpaid
Principal
Balance

 

 

Carrying
Value

 

 

Unpaid
Principal
Balance

 

 

Carrying
Value

 

Commercial real estate

 

$

162,977

 

 

$

117,460

 

 

$

185,007

 

 

$

137,807

 

Residential real estate

 

 

84,559

 

 

 

39,535

 

 

 

88,036

 

 

 

42,510

 

Construction, land development, and other land

 

 

33,140

 

 

 

26,418

 

 

 

32,140

 

 

 

25,331

 

Commercial and industrial

 

 

20,400

 

 

 

18,100

 

 

 

21,870

 

 

 

19,460

 

Installment and other

 

 

783

 

 

 

118

 

 

 

789

 

 

 

125

 

Total purchased credit deteriorated loans

 

$

301,859

 

 

$

201,631

 

 

$

327,842

 

 

$

225,233

 

The following table is a reconciliation of acquired Inland PCD loans between their purchase price and their par value at the time of the acquisition. Refer to Note 3—Acquisition of a Business for further information.

Fair value of loans at acquisition

 

$

214,573

 

Allowance for credit losses - loans and leases, at acquisition

 

 

10,596

 

Non-credit discount/premium at acquisition

 

 

17,909

 

Par value of acquired PCD loans at acquisition

 

$

243,078

 

Acquired non-credit-deteriorated loans and leases—The unpaid principal balance and carrying value for acquired non-credit deteriorated loans and leases, excluding an allowance for credit losses of $4.6 million and $4.7 million at March 31, 2024 and December 31, 2023, were as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Unpaid
Principal
Balance

 

 

Carrying
Value

 

 

Unpaid
Principal
Balance

 

 

Carrying
Value

 

Commercial real estate

 

$

280,291

 

 

$

271,720

 

 

$

284,819

 

 

$

275,476

 

Residential real estate

 

 

209,952

 

 

 

204,589

 

 

 

227,392

 

 

 

211,887

 

Construction, land development, and other land

 

 

86,168

 

 

 

85,553

 

 

 

87,143

 

 

 

86,344

 

Commercial and industrial

 

 

119,197

 

 

 

113,673

 

 

 

123,540

 

 

 

117,538

 

Installment and other

 

 

179

 

 

 

166

 

 

 

170

 

 

 

156

 

Lease financing receivables

 

 

427

 

 

 

426

 

 

 

628

 

 

 

627

 

Total acquired non-credit-deteriorated
   loans and leases

 

$

696,214

 

 

$

676,127

 

 

$

723,692

 

 

$

692,028

 

The Company hedges interest rates on certain loans using interest rate swaps through which the Company pays variable amounts and receives fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

Allowance for Credit Losses

Loans and leases considered for inclusion in the allowance for credit losses include acquired non-credit-deteriorated loans and leases, purchased credit deteriorated loans, and originated loans and leases.

The Bank’s credit risk rating methodology assigns risk ratings from 1 to 10, where a higher rating represents higher risk. Risk ratings for all loans of $1.0 million or more are reviewed annually. The risk rating categories are described by the following groupings:

Pass—1‑4, risk levels of borrowers and guarantors that offer a minimal to an acceptable level of risk.

Watch—5, credit exposure that presents higher than average risk and warrants greater than routine attention.

Special Mention—6, potential weaknesses that if left uncorrected may result in deterioration of the repayment prospects.

Substandard Accrual—7, weaknesses in cash flow and collateral coverage resulting in a distinct possibility of losses if not corrected. Used in limited cases, where the borrower is current on payments and an agreed plan for credit remediation.

Substandard Non‑Accrual—8, well‑defined weakness or weaknesses in cash flow and collateral coverage resulting in the distinct possibility of losses if not corrected.

Doubtful—9, weaknesses inherent in substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

17

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Loss—10, is considered uncollectible and of such little value that its continuance as a realizable asset is not warranted.

Revolving loans that are converted to term loans are treated as new originations and are presented by year of origination. Generally, existing term loans that are re-underwritten are reflected in the table in the year of renewal.

The following tables summarize the risk rating categories of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation, as of March 31, 2024 and December 31, 2023:

 

 

Term loans amortized cost by origination year

 

 

Revolving

 

 

Total

 

March 31, 2024

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Loans

 

 

Loans

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

49,831

 

 

$

249,142

 

 

$

438,366

 

 

$

497,715

 

 

$

236,622

 

 

$

514,023

 

 

$

14,124

 

 

$

1,999,823

 

      Watch

 

 

975

 

 

 

13,665

 

 

 

19,734

 

 

 

16,039

 

 

 

37,322

 

 

 

72,490

 

 

 

—

 

 

 

160,225

 

      Special Mention

 

 

—

 

 

 

7,635

 

 

 

1,836

 

 

 

10,432

 

 

 

2,595

 

 

 

34,684

 

 

 

—

 

 

 

57,182

 

      Substandard

 

 

—

 

 

 

638

 

 

 

3,808

 

 

 

4,852

 

 

 

1,194

 

 

 

40,607

 

 

 

—

 

 

 

51,099

 

         Total

 

$

50,806

 

 

$

271,080

 

 

$

463,744

 

 

$

529,038

 

 

$

277,733

 

 

$

661,804

 

 

$

14,124

 

 

$

2,268,329

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

—

 

 

$

286

 

 

$

88

 

 

$

575

 

 

$

2,108

 

 

$

—

 

 

$

3,057

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

6,795

 

 

$

49,973

 

 

$

135,135

 

 

$

119,107

 

 

$

51,950

 

 

$

263,998

 

 

$

56,965

 

 

$

683,923

 

      Watch

 

 

—

 

 

 

—

 

 

 

5,389

 

 

 

406

 

 

 

16,848

 

 

 

12,933

 

 

 

2,392

 

 

 

37,968

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,767

 

 

 

480

 

 

 

—

 

 

 

4,247

 

      Substandard

 

 

200

 

 

 

—

 

 

 

29

 

 

 

105

 

 

 

1,077

 

 

 

4,516

 

 

 

946

 

 

 

6,873

 

         Total

 

$

6,995

 

 

$

49,973

 

 

$

140,553

 

 

$

119,618

 

 

$

73,642

 

 

$

281,927

 

 

$

60,303

 

 

$

733,011

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Construction, Land Development,
  & Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

—

 

 

$

114,072

 

 

$

124,789

 

 

$

179,184

 

 

$

37,041

 

 

$

11,126

 

 

$

826

 

 

$

467,038

 

      Watch

 

 

—

 

 

 

1,391

 

 

 

14,408

 

 

 

24,777

 

 

 

8,805

 

 

 

3,110

 

 

 

—

 

 

 

52,491

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,438

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,438

 

      Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

         Total

 

$

—

 

 

$

115,463

 

 

$

139,197

 

 

$

213,399

 

 

$

45,846

 

 

$

14,236

 

 

$

826

 

 

$

528,967

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

127,262

 

 

$

472,634

 

 

$

488,279

 

 

$

282,042

 

 

$

103,274

 

 

$

206,107

 

 

$

540,979

 

 

$

2,220,577

 

      Watch

 

 

80

 

 

 

55,427

 

 

 

21,754

 

 

 

46,969

 

 

 

2,478

 

 

 

20,120

 

 

 

40,803

 

 

 

187,631

 

      Special Mention

 

 

—

 

 

 

366

 

 

 

20,531

 

 

 

10,589

 

 

 

2,326

 

 

 

6,418

 

 

 

40,738

 

 

 

80,968

 

      Substandard

 

 

—

 

 

 

541

 

 

 

9,390

 

 

 

9,867

 

 

 

5,785

 

 

 

25,346

 

 

 

12,620

 

 

 

63,549

 

         Total

 

$

127,342

 

 

$

528,968

 

 

$

539,954

 

 

$

349,467

 

 

$

113,863

 

 

$

257,991

 

 

$

635,140

 

 

$

2,552,725

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

—

 

 

$

909

 

 

$

735

 

 

$

398

 

 

$

1,577

 

 

$

—

 

 

$

3,619

 

Installment and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

145

 

 

$

408

 

 

$

116

 

 

$

56

 

 

$

130

 

 

$

430

 

 

$

1,830

 

 

$

3,115

 

      Watch

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

24

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

         Total

 

$

145

 

 

$

408

 

 

$

116

 

 

$

79

 

 

$

130

 

 

$

430

 

 

$

1,831

 

 

$

3,139

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Lease Financing Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

87,748

 

 

$

303,606

 

 

$

187,907

 

 

$

81,700

 

 

$

24,808

 

 

$

4,149

 

 

$

—

 

 

$

689,918

 

      Watch

 

 

—

 

 

 

—

 

 

 

61

 

 

 

912

 

 

 

14

 

 

 

—

 

 

 

—

 

 

 

987

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

155

 

 

 

99

 

 

 

—

 

 

 

254

 

      Substandard

 

 

—

 

 

 

173

 

 

 

141

 

 

 

523

 

 

 

44

 

 

 

3

 

 

 

—

 

 

 

884

 

         Total

 

$

87,748

 

 

$

303,779

 

 

$

188,109

 

 

$

83,135

 

 

$

25,021

 

 

$

4,251

 

 

$

—

 

 

$

692,043

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

95

 

 

$

175

 

 

$

80

 

 

$

23

 

 

$

—

 

 

$

—

 

 

$

373

 

Total Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

271,781

 

 

$

1,189,835

 

 

$

1,374,592

 

 

$

1,159,804

 

 

$

453,825

 

 

$

999,833

 

 

$

614,724

 

 

$

6,064,394

 

      Watch

 

 

1,055

 

 

 

70,483

 

 

 

61,346

 

 

 

89,126

 

 

 

65,467

 

 

 

108,653

 

 

 

43,196

 

 

 

439,326

 

      Special Mention

 

 

—

 

 

 

8,001

 

 

 

22,367

 

 

 

30,459

 

 

 

8,843

 

 

 

41,681

 

 

 

40,738

 

 

 

152,089

 

      Substandard

 

 

200

 

 

 

1,352

 

 

 

13,368

 

 

 

15,347

 

 

 

8,100

 

 

 

70,472

 

 

 

13,566

 

 

 

122,405

 

         Total

 

$

273,036

 

 

$

1,269,671

 

 

$

1,471,673

 

 

$

1,294,736

 

 

$

536,235

 

 

$

1,220,639

 

 

$

712,224

 

 

$

6,778,214

 

Gross charge-offs for the three months
  ended March 31, 2024

 

$

—

 

 

$

95

 

 

$

1,370

 

 

$

903

 

 

$

996

 

 

$

3,685

 

 

$

—

 

 

$

7,049

 

 

18

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

 

 

Term loans amortized cost by origination year

 

 

Revolving

 

 

Total

 

December 31, 2023

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Loans

 

 

Loans

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

247,856

 

 

$

452,127

 

 

$

516,624

 

 

$

229,053

 

 

$

143,283

 

 

$

388,872

 

 

$

28,360

 

 

$

2,006,175

 

      Watch

 

 

12,501

 

 

 

22,094

 

 

 

26,408

 

 

 

46,713

 

 

 

20,364

 

 

 

68,003

 

 

 

—

 

 

 

196,083

 

      Special Mention

 

 

—

 

 

 

799

 

 

 

10,752

 

 

 

2,618

 

 

 

12,751

 

 

 

25,790

 

 

 

—

 

 

 

52,710

 

      Substandard

 

 

—

 

 

 

2,888

 

 

 

5,841

 

 

 

1,771

 

 

 

7,483

 

 

 

46,532

 

 

 

829

 

 

 

65,344

 

         Total

 

$

260,357

 

 

$

477,908

 

 

$

559,625

 

 

$

280,155

 

 

$

183,881

 

 

$

529,197

 

 

$

29,189

 

 

$

2,320,312

 

Gross charge-offs, year ended
  December 31, 2023

 

$

—

 

 

$

193

 

 

$

60

 

 

$

1,511

 

 

$

4,054

 

 

$

3,911

 

 

$

—

 

 

$

9,729

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

55,178

 

 

$

135,477

 

 

$

104,005

 

 

$

54,651

 

 

$

37,806

 

 

$

225,593

 

 

$

57,865

 

 

$

670,575

 

      Watch

 

 

—

 

 

 

4,811

 

 

 

—

 

 

 

17,417

 

 

 

7,167

 

 

 

8,708

 

 

 

1,597

 

 

 

39,700

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,594

 

 

 

127

 

 

 

1

 

 

 

413

 

 

 

4,135

 

      Substandard

 

 

—

 

 

 

—

 

 

 

107

 

 

 

189

 

 

 

349

 

 

 

3,523

 

 

 

952

 

 

 

5,120

 

         Total

 

$

55,178

 

 

$

140,288

 

 

$

104,112

 

 

$

75,851

 

 

$

45,449

 

 

$

237,825

 

 

$

60,827

 

 

$

719,530

 

Gross charge-offs, year ended
  December 31, 2023

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

21

 

 

$

—

 

 

$

21

 

Construction, Land Development, & Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

82,449

 

 

$

145,174

 

 

$

184,544

 

 

$

35,466

 

 

$

9,772

 

 

$

1,429

 

 

$

174

 

 

$

459,008

 

      Watch

 

 

1,392

 

 

 

13,990

 

 

 

21,313

 

 

 

18,716

 

 

 

3,125

 

 

 

—

 

 

 

—

 

 

 

58,536

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

9,279

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,279

 

      Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14

 

 

 

—

 

 

 

14

 

         Total

 

$

83,841

 

 

$

159,164

 

 

$

215,136

 

 

$

54,182

 

 

$

12,897

 

 

$

1,443

 

 

$

174

 

 

$

526,837

 

Gross charge-offs, year ended
  December 31, 2023

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

475,720

 

 

$

514,902

 

 

$

288,392

 

 

$

109,430

 

 

$

73,059

 

 

$

147,168

 

 

$

524,348

 

 

$

2,133,019

 

      Watch

 

 

41,027

 

 

 

33,080

 

 

 

50,407

 

 

 

1,385

 

 

 

6,951

 

 

 

18,180

 

 

 

39,531

 

 

 

190,561

 

      Special Mention

 

 

—

 

 

 

6,164

 

 

 

10,595

 

 

 

2,631

 

 

 

1,112

 

 

 

6,643

 

 

 

36,354

 

 

 

63,499

 

      Substandard

 

 

—

 

 

 

7,332

 

 

 

6,067

 

 

 

6,431

 

 

 

10,116

 

 

 

18,381

 

 

 

13,155

 

 

 

61,482

 

         Total

 

$

516,747

 

 

$

561,478

 

 

$

355,461

 

 

$

119,877

 

 

$

91,238

 

 

$

190,372

 

 

$

613,388

 

 

$

2,448,561

 

Gross charge-offs, year ended
  December 31, 2023

 

$

1,518

 

 

$

1,938

 

 

$

5,372

 

 

$

4,451

 

 

$

1,087

 

 

$

1,045

 

 

$

—

 

 

$

15,411

 

Installment and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

564

 

 

$

132

 

 

$

79

 

 

$

133

 

 

$

28

 

 

$

424

 

 

$

1,814

 

 

$

3,174

 

      Watch

 

 

—

 

 

 

—

 

 

 

25

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

26

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

         Total

 

$

564

 

 

$

132

 

 

$

104

 

 

$

133

 

 

$

28

 

 

$

425

 

 

$

1,814

 

 

$

3,200

 

Gross charge-offs, year ended
  December 31, 2023

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

3

 

 

$

—

 

 

$

3

 

Lease Financing Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

327,099

 

 

$

207,640

 

 

$

93,242

 

 

$

29,343

 

 

$

5,443

 

 

$

856

 

 

$

—

 

 

$

663,623

 

      Watch

 

 

—

 

 

 

67

 

 

 

1,008

 

 

 

16

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,091

 

      Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

179

 

 

 

101

 

 

 

36

 

 

 

—

 

 

 

316

 

      Substandard

 

 

259

 

 

 

138

 

 

 

384

 

 

 

55

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

836

 

         Total

 

$

327,358

 

 

$

207,845

 

 

$

94,634

 

 

$

29,593

 

 

$

5,544

 

 

$

892

 

 

$

—

 

 

$

665,866

 

Gross charge-offs, year ended
  December 31, 2023

 

$

734

 

 

$

886

 

 

$

549

 

 

$

139

 

 

$

75

 

 

$

54

 

 

$

—

 

 

$

2,437

 

Total Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Pass

 

$

1,188,866

 

 

$

1,455,452

 

 

$

1,186,886

 

 

$

458,076

 

 

$

269,391

 

 

$

764,342

 

 

$

612,561

 

 

$

5,935,574

 

      Watch

 

 

54,920

 

 

 

74,042

 

 

 

99,161

 

 

 

84,247

 

 

 

37,607

 

 

 

94,892

 

 

 

41,128

 

 

 

485,997

 

      Special Mention

 

 

—

 

 

 

6,963

 

 

 

30,626

 

 

 

9,022

 

 

 

14,091

 

 

 

32,470

 

 

 

36,767

 

 

 

129,939

 

      Substandard

 

 

259

 

 

 

10,358

 

 

 

12,399

 

 

 

8,446

 

 

 

17,948

 

 

 

68,450

 

 

 

14,936

 

 

 

132,796

 

         Total

 

$

1,244,045

 

 

$

1,546,815

 

 

$

1,329,072

 

 

$

559,791

 

 

$

339,037

 

 

$

960,154

 

 

$

705,392

 

 

$

6,684,306

 

Gross charge-offs, year ended
  December 31, 2023

 

$

2,252

 

 

$

3,017

 

 

$

5,981

 

 

$

6,101

 

 

$

5,216

 

 

$

5,034

 

 

$

—

 

 

$

27,601

 

At March 31, 2024 and at December 31, 2023 there were no loans or leases which were risk rated Doubtful or Loss. As of March 31, 2024 and December 31, 2023, respectively, there were $51.9 million and $52.2 million of term loans that had been converted from revolving loans.

19

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

 

The following tables summarize contractual delinquency information of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation at March 31, 2024 and December 31, 2023:

 

March 31, 2024

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Revolving
Loans

 

 

Total
Loans

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

50,806

 

 

$

270,638

 

 

$

459,995

 

 

$

524,429

 

 

$

276,731

 

 

$

635,489

 

 

$

14,124

 

 

$

2,232,212

 

      30-59 Days Past Due

 

 

—

 

 

 

442

 

 

 

1,043

 

 

 

3,809

 

 

 

595

 

 

 

2,791

 

 

 

—

 

 

 

8,680

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

2,706

 

 

 

800

 

 

 

407

 

 

 

23,524

 

 

 

—

 

 

 

27,437

 

      Total Past Due

 

 

—

 

 

 

442

 

 

 

3,749

 

 

 

4,609

 

 

 

1,002

 

 

 

26,315

 

 

 

—

 

 

 

36,117

 

         Total

 

$

50,806

 

 

$

271,080

 

 

$

463,744

 

 

$

529,038

 

 

$

277,733

 

 

$

661,804

 

 

$

14,124

 

 

$

2,268,329

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

6,995

 

 

$

49,973

 

 

$

140,035

 

 

$

119,107

 

 

$

72,402

 

 

$

276,374

 

 

$

59,007

 

 

$

723,893

 

      30-59 Days Past Due

 

 

—

 

 

 

—

 

 

 

489

 

 

 

406

 

 

 

174

 

 

 

578

 

 

 

350

 

 

 

1,997

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

461

 

 

 

—

 

 

 

461

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

29

 

 

 

105

 

 

 

1,066

 

 

 

4,514

 

 

 

946

 

 

 

6,660

 

      Total Past Due

 

 

—

 

 

 

—

 

 

 

518

 

 

 

511

 

 

 

1,240

 

 

 

5,553

 

 

 

1,296

 

 

 

9,118

 

         Total

 

$

6,995

 

 

$

49,973

 

 

$

140,553

 

 

$

119,618

 

 

$

73,642

 

 

$

281,927

 

 

$

60,303

 

 

$

733,011

 

Construction, Land Development,
   & Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

—

 

 

$

115,463

 

 

$

139,197

 

 

$

213,399

 

 

$

45,846

 

 

$

14,236

 

 

$

826

 

 

$

528,967

 

      30-59 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Total Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

         Total

 

$

—

 

 

$

115,463

 

 

$

139,197

 

 

$

213,399

 

 

$

45,846

 

 

$

14,236

 

 

$

826

 

 

$

528,967

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

127,342

 

 

$

525,182

 

 

$

530,704

 

 

$

346,250

 

 

$

108,120

 

 

$

238,084

 

 

$

632,383

 

 

$

2,508,065

 

      30-59 Days Past Due

 

 

—

 

 

 

3,246

 

 

 

1,697

 

 

 

903

 

 

 

1,454

 

 

 

3,729

 

 

 

576

 

 

 

11,605

 

      60-89 Days Past Due

 

 

—

 

 

 

127

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

128

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

413

 

 

 

7,552

 

 

 

2,314

 

 

 

4,289

 

 

 

16,178

 

 

 

2,181

 

 

 

32,927

 

      Total Past Due

 

 

—

 

 

 

3,786

 

 

 

9,250

 

 

 

3,217

 

 

 

5,743

 

 

 

19,907

 

 

 

2,757

 

 

 

44,660

 

         Total

 

$

127,342

 

 

$

528,968

 

 

$

539,954

 

 

$

349,467

 

 

$

113,863

 

 

$

257,991

 

 

$

635,140

 

 

$

2,552,725

 

Installment and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

145

 

 

$

408

 

 

$

116

 

 

$

56

 

 

$

130

 

 

$

430

 

 

$

1,831

 

 

$

3,116

 

      30-59 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Total Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

         Total

 

$

145

 

 

$

408

 

 

$

116

 

 

$

79

 

 

$

130

 

 

$

430

 

 

$

1,831

 

 

$

3,139

 

Lease Financing Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

87,703

 

 

$

301,476

 

 

$

185,879

 

 

$

81,572

 

 

$

24,672

 

 

$

4,138

 

 

$

—

 

 

$

685,440

 

      30-59 Days Past Due

 

 

45

 

 

 

1,602

 

 

 

577

 

 

 

789

 

 

 

206

 

 

 

71

 

 

 

—

 

 

 

3,290

 

      60-89 Days Past Due

 

 

—

 

 

 

528

 

 

 

1,512

 

 

 

251

 

 

 

108

 

 

 

39

 

 

 

—

 

 

 

2,438

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

173

 

 

 

141

 

 

 

523

 

 

 

35

 

 

 

3

 

 

 

—

 

 

 

875

 

      Total Past Due

 

 

45

 

 

 

2,303

 

 

 

2,230

 

 

 

1,563

 

 

 

349

 

 

 

113

 

 

 

—

 

 

 

6,603

 

         Total

 

$

87,748

 

 

$

303,779

 

 

$

188,109

 

 

$

83,135

 

 

$

25,021

 

 

$

4,251

 

 

$

—

 

 

$

692,043

 

Total Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

272,991

 

 

$

1,263,140

 

 

$

1,455,926

 

 

$

1,284,813

 

 

$

527,901

 

 

$

1,168,751

 

 

$

708,171

 

 

$

6,681,693

 

      30-59 Days Past Due

 

 

45

 

 

 

5,290

 

 

 

3,806

 

 

 

5,930

 

 

 

2,429

 

 

 

7,169

 

 

 

926

 

 

 

25,595

 

      60-89 Days Past Due

 

 

—

 

 

 

655

 

 

 

1,513

 

 

 

251

 

 

 

108

 

 

 

500

 

 

 

—

 

 

 

3,027

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

586

 

 

 

10,428

 

 

 

3,742

 

 

 

5,797

 

 

 

44,219

 

 

 

3,127

 

 

 

67,899

 

      Total Past Due

 

 

45

 

 

 

6,531

 

 

 

15,747

 

 

 

9,923

 

 

 

8,334

 

 

 

51,888

 

 

 

4,053

 

 

 

96,521

 

         Total

 

$

273,036

 

 

$

1,269,671

 

 

$

1,471,673

 

 

$

1,294,736

 

 

$

536,235

 

 

$

1,220,639

 

 

$

712,224

 

 

$

6,778,214

 

 

20

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Total non-accrual loans without an allowance included $8.4 million of commercial real estate loans, $3.6 million of residential real estate, and $3.4 million of commercial and industrial loans as of March 31, 2024. The Company recognized $255,000 of interest income on non-accrual loans and leases for the three months ended March 31, 2024.

December 31, 2023

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Revolving
Loans

 

 

Total
Loans

 

Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

259,998

 

 

$

474,878

 

 

$

558,236

 

 

$

279,098

 

 

$

178,729

 

 

$

501,620

 

 

$

29,189

 

 

$

2,281,748

 

      30-59 Days Past Due

 

 

359

 

 

 

648

 

 

 

638

 

 

 

74

 

 

 

3,176

 

 

 

484

 

 

 

—

 

 

 

5,379

 

      60-89 Days Past Due

 

 

—

 

 

 

826

 

 

 

—

 

 

 

286

 

 

 

—

 

 

 

1,208

 

 

 

—

 

 

 

2,320

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

1,556

 

 

 

751

 

 

 

697

 

 

 

1,976

 

 

 

25,885

 

 

 

—

 

 

 

30,865

 

      Total Past Due

 

 

359

 

 

 

3,030

 

 

 

1,389

 

 

 

1,057

 

 

 

5,152

 

 

 

27,577

 

 

 

—

 

 

 

38,564

 

         Total

 

$

260,357

 

 

$

477,908

 

 

$

559,625

 

 

$

280,155

 

 

$

183,881

 

 

$

529,197

 

 

$

29,189

 

 

$

2,320,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

55,178

 

 

$

136,448

 

 

$

102,973

 

 

$

75,125

 

 

$

45,050

 

 

$

230,102

 

 

$

59,476

 

 

$

704,352

 

      30-59 Days Past Due

 

 

—

 

 

 

3,840

 

 

 

1,032

 

 

 

537

 

 

 

29

 

 

 

4,122

 

 

 

399

 

 

 

9,959

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21

 

 

 

127

 

 

 

—

 

 

 

148

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

107

 

 

 

189

 

 

 

349

 

 

 

3,474

 

 

 

952

 

 

 

5,071

 

      Total Past Due

 

 

—

 

 

 

3,840

 

 

 

1,139

 

 

 

726

 

 

 

399

 

 

 

7,723

 

 

 

1,351

 

 

 

15,178

 

         Total

 

$

55,178

 

 

$

140,288

 

 

$

104,112

 

 

$

75,851

 

 

$

45,449

 

 

$

237,825

 

 

$

60,827

 

 

$

719,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction, Land Development,
  & Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

83,841

 

 

$

156,815

 

 

$

215,136

 

 

$

54,182

 

 

$

12,897

 

 

$

1,443

 

 

$

174

 

 

$

524,488

 

      30-59 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      60-89 Days Past Due

 

 

—

 

 

 

2,349

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,349

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Total Past Due

 

 

—

 

 

 

2,349

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,349

 

         Total

 

$

83,841

 

 

$

159,164

 

 

$

215,136

 

 

$

54,182

 

 

$

12,897

 

 

$

1,443

 

 

$

174

 

 

$

526,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

516,747

 

 

$

552,251

 

 

$

351,534

 

 

$

114,859

 

 

$

83,780

 

 

$

177,239

 

 

$

611,766

 

 

$

2,408,176

 

      30-59 Days Past Due

 

 

—

 

 

 

1,545

 

 

 

1,099

 

 

 

238

 

 

 

2,513

 

 

 

400

 

 

 

455

 

 

 

6,250

 

      60-89 Days Past Due

 

 

—

 

 

 

1,505

 

 

 

—

 

 

 

234

 

 

 

3,416

 

 

 

1,139

 

 

 

496

 

 

 

6,790

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

6,177

 

 

 

2,828

 

 

 

4,546

 

 

 

1,529

 

 

 

11,594

 

 

 

671

 

 

 

27,345

 

      Total Past Due

 

 

—

 

 

 

9,227

 

 

 

3,927

 

 

 

5,018

 

 

 

7,458

 

 

 

13,133

 

 

 

1,622

 

 

 

40,385

 

         Total

 

$

516,747

 

 

$

561,478

 

 

$

355,461

 

 

$

119,877

 

 

$

91,238

 

 

$

190,372

 

 

$

613,388

 

 

$

2,448,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Installment and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

564

 

 

$

132

 

 

$

104

 

 

$

133

 

 

$

28

 

 

$

425

 

 

$

1,814

 

 

$

3,200

 

      30-59 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      60-89 Days Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Total Past Due

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

         Total

 

$

564

 

 

$

132

 

 

$

104

 

 

$

133

 

 

$

28

 

 

$

425

 

 

$

1,814

 

 

$

3,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Financing Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

325,833

 

 

$

206,800

 

 

$

93,795

 

 

$

29,292

 

 

$

5,537

 

 

$

889

 

 

$

—

 

 

$

662,146

 

      30-59 Days Past Due

 

 

726

 

 

 

426

 

 

 

153

 

 

 

38

 

 

 

4

 

 

 

2

 

 

 

—

 

 

 

1,349

 

      60-89 Days Past Due

 

 

540

 

 

 

481

 

 

 

302

 

 

 

218

 

 

 

3

 

 

 

1

 

 

 

—

 

 

 

1,545

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

259

 

 

 

138

 

 

 

384

 

 

 

45

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

826

 

      Total Past Due

 

 

1,525

 

 

 

1,045

 

 

 

839

 

 

 

301

 

 

 

7

 

 

 

3

 

 

 

—

 

 

 

3,720

 

         Total

 

$

327,358

 

 

$

207,845

 

 

$

94,634

 

 

$

29,593

 

 

$

5,544

 

 

$

892

 

 

$

—

 

 

$

665,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loans and Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Current

 

$

1,242,161

 

 

$

1,527,324

 

 

$

1,321,778

 

 

$

552,689

 

 

$

326,021

 

 

$

911,718

 

 

$

702,419

 

 

$

6,584,110

 

      30-59 Days Past Due

 

 

1,085

 

 

 

6,459

 

 

 

2,922

 

 

 

887

 

 

 

5,722

 

 

 

5,008

 

 

 

854

 

 

 

22,937

 

      60-89 Days Past Due

 

 

540

 

 

 

5,161

 

 

 

302

 

 

 

738

 

 

 

3,440

 

 

 

2,475

 

 

 

496

 

 

 

13,152

 

      Greater than 90 Accruing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

      Non-accrual

 

 

259

 

 

 

7,871

 

 

 

4,070

 

 

 

5,477

 

 

 

3,854

 

 

 

40,953

 

 

 

1,623

 

 

 

64,107

 

      Total Past Due

 

 

1,884

 

 

 

19,491

 

 

 

7,294

 

 

 

7,102

 

 

 

13,016

 

 

 

48,436

 

 

 

2,973

 

 

 

100,196

 

         Total

 

$

1,244,045

 

 

$

1,546,815

 

 

$

1,329,072

 

 

$

559,791

 

 

$

339,037

 

 

$

960,154

 

 

$

705,392

 

 

$

6,684,306

 

 

21

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Total non-accrual loans without an allowance included $1.6 million of commercial real estate loans, $3.6 million of residential real estate loans, and $2.3 million of commercial and industrial loans, as of December 31, 2023. The Company recognized $970,000 of interest income on non-accrual loans and leases for the three months ended March 31, 2023.

The following table summarize the balance and activity within the allowance for credit losses - loans and leases, the components of the allowance for credit losses - loans and leases by loans and leases individually and collectively evaluated for impairment, and corresponding loan and lease balances by type for the three months ended March 31, 2024 are as follows:

March 31, 2024

 

Commercial
Real Estate

 

 

Residential
Real Estate

 

 

Construction,
Land Development,
and Other Land

 

 

Commercial
and
Industrial

 

 

Installment
and Other

 

 

Lease
Financing
Receivables

 

 

Total

 

Allowance for credit losses -
   loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

33,237

 

 

$

3,495

 

 

$

2,906

 

 

$

53,782

 

 

$

36

 

 

$

8,230

 

 

$

101,686

 

Provision/(recapture)

 

 

824

 

 

 

(148

)

 

 

24

 

 

 

5,836

 

 

 

(3

)

 

 

358

 

 

 

6,891

 

Charge-offs

 

 

(3,057

)

 

 

—

 

 

 

—

 

 

 

(3,619

)

 

 

—

 

 

 

(373

)

 

 

(7,049

)

Recoveries

 

 

436

 

 

 

1

 

 

 

—

 

 

 

232

 

 

 

—

 

 

 

169

 

 

 

838

 

Ending balance

 

$

31,440

 

 

$

3,348

 

 

$

2,930

 

 

$

56,231

 

 

$

33

 

 

$

8,384

 

 

$

102,366

 

Ending balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

8,905

 

 

$

—

 

 

$

—

 

 

$

12,772

 

 

$

—

 

 

$

—

 

 

$

21,677

 

Collectively evaluated
   for impairment

 

 

22,535

 

 

 

3,348

 

 

 

2,930

 

 

 

43,459

 

 

 

33

 

 

 

8,384

 

 

 

80,689

 

Total allowance for credit
   losses - loans and leases

 

$

31,440

 

 

$

3,348

 

 

$

2,930

 

 

$

56,231

 

 

$

33

 

 

$

8,384

 

 

$

102,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases ending balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for
   impairment

 

$

40,778

 

 

$

4,658

 

 

$

—

 

 

$

39,889

 

 

$

—

 

 

$

—

 

 

$

85,325

 

Collectively evaluated for
   impairment

 

 

2,227,551

 

 

 

728,353

 

 

 

528,967

 

 

 

2,512,836

 

 

 

3,139

 

 

 

692,043

 

 

 

6,692,889

 

Total loans and leases

 

$

2,268,329

 

 

$

733,011

 

 

$

528,967

 

 

$

2,552,725

 

 

$

3,139

 

 

$

692,043

 

 

$

6,778,214

 

 

22

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following table summarize the balance and activity within the allowance for credit losses - loans and leases, the components of the allowance for credit losses - loans and leases by loans and leases individually and collectively evaluated for impairment, loans acquired with deteriorated credit quality, and corresponding loan and lease balances by type for the three months ended March 31, 2023:

March 31, 2023

 

Commercial
Real Estate

 

 

Residential
Real Estate

 

 

Construction,
Land Development,
and Other Land

 

 

Commercial
and
Industrial

 

 

Installment
and Other

 

 

Lease
Financing
Receivables

 

 

Total

 

Allowance for credit losses -
   loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

26,061

 

 

$

3,140

 

 

$

3,134

 

 

$

41,889

 

 

$

24

 

 

$

7,676

 

 

$

81,924

 

Provision/(recapture)

 

 

(1,119

)

 

 

(453

)

 

 

364

 

 

 

10,803

 

 

 

(2

)

 

 

119

 

 

 

9,712

 

Charge-offs

 

 

(966

)

 

 

(9

)

 

 

—

 

 

 

(1,790

)

 

 

—

 

 

 

(304

)

 

 

(3,069

)

Recoveries

 

 

762

 

 

 

1

 

 

 

—

 

 

 

947

 

 

 

3

 

 

 

185

 

 

 

1,898

 

Ending balance

 

$

24,738

 

 

$

2,679

 

 

$

3,498

 

 

$

51,849

 

 

$

25

 

 

$

7,676

 

 

$

90,465

 

Ending balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

6,302

 

 

$

—

 

 

$

1,198

 

 

$

14,518

 

 

$

—

 

 

$

—

 

 

$

22,018

 

Collectively evaluated
   for impairment

 

 

18,436

 

 

 

2,679

 

 

 

2,300

 

 

 

37,331

 

 

 

25

 

 

 

7,676

 

 

 

68,447

 

Total allowance for credit losses -
   loans and leases

 

$

24,738

 

 

$

2,679

 

 

$

3,498

 

 

$

51,849

 

 

$

25

 

 

$

7,676

 

 

$

90,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases ending balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for
   impairment

 

$

31,622

 

 

$

—

 

 

$

5,541

 

 

$

34,245

 

 

$

—

 

 

$

—

 

 

$

71,408

 

Collectively evaluated for
   impairment

 

 

1,897,762

 

 

 

499,336

 

 

 

441,567

 

 

 

2,049,560

 

 

 

1,822

 

 

 

553,877

 

 

 

5,443,924

 

Total loans and leases

 

$

1,929,384

 

 

$

499,336

 

 

$

447,108

 

 

$

2,083,805

 

 

$

1,822

 

 

$

553,877

 

 

$

5,515,332

 

 

The Company increased the allowance for credit losses - loans and leases by $680,000 and $8.5 million for the three months ended March 31, 2024 and 2023, respectively. For loans individually evaluated for impairment, the Company decreased allowance for credit losses - loans and leases by $5.6 million for the three months ended March 31, 2024, and increased the allowance for loans individually evaluated by $6.7 million for the three months ended March 31, 2023. For loans and leases collectively evaluated for impairment, the Company increased the allowance by $6.2 million and $1.9 million for the three months ended March 31, 2024 and 2023, respectively. The change in allowance for credit losses - loans and leases collectively evaluated for impairment was mainly due to changes in expected losses driven by macro-economic factors, as well as growth in the loan and lease portfolio and through acquisition.

There were no borrowers receiving loan modifications during the three months ended March 31, 2024. The following table presents loans with modified terms as of March 31, 2023:

March 31, 2023

 

Payment Delay

 

 

Term Modification

 

 

Combination Term Modification and Interest Rate Reduction

 

 

Total Modified by Class

 

 

% of Class of Loans and Leases

 

Commercial and industrial

 

$

9,405

 

 

$

40,420

 

 

$

395

 

 

$

50,220

 

 

 

2.4

%

Total modified loans

 

$

9,405

 

 

$

40,420

 

 

$

395

 

 

$

50,220

 

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans reflected as having a payment delay included a general adjustment in loan terms similar to those of pass-rated credits. Loans having term modifications included extension of term as a result of a new borrower structure and other miscellaneous term adjustments. Loans having a combination of term modification and interest rate reduction reflect a longer amortization period and a reduced weighted average contractual rate from 8.85% to 7.01%.

23

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following table presents the amortized cost basis of loans that had a payment default as of March 31, 2024 and were modified in the twelve months prior to default.

March 31, 2024

 

Payment Delay

 

 

Term Modification

 

 

Combination Term Modification and Interest Rate Reduction

 

 

Total Modified by Class

 

 

% of Class of Loans and Leases

 

Commercial real estate

 

$

—

 

 

$

2,842

 

 

$

—

 

 

$

2,842

 

 

 

0.13

%

Commercial and industrial

 

 

43

 

 

 

—

 

 

 

353

 

 

 

396

 

 

 

0.02

%

Total loans and leases

 

$

43

 

 

$

2,842

 

 

$

353

 

 

$

3,238

 

 

 

0.05

%

As of December 31, 2023, the amortized cost of commercial and industrial loans that had a payment default and were modified in the twelve months prior to default was $406,000, which represented 0.02% of outstanding commercial and industrial loans.

Modified loans are either collectively assessed based on portfolio risk segment and risk rating or individually assessed for loans exceeding $500,000. Upon the Company’s determination that a modified loan has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The following table presents the amortized cost basis of collateral-dependent loans and leases, which are individually evaluated to determine expected credit losses as of March 31, 2024 and December 31, 2023:

 

March 31, 2024

 

Commercial Construction

 

 

Non-owner Occupied Commercial

 

 

Owner-Occupied Commercial

 

 

Multi-Family

 

 

Single Family Residence (1st Lien)

 

 

Single Family Residence (2nd Lien)

 

 

Business Assets

 

 

Total

 

Commercial real estate

 

$

—

 

 

$

11,590

 

 

$

29,188

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

40,778

 

Residential real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,792

 

 

 

1,866

 

 

 

—

 

 

 

—

 

 

 

4,658

 

Commercial and industrial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

39,889

 

 

 

39,889

 

Total

 

$

—

 

 

$

11,590

 

 

$

29,188

 

 

$

2,792

 

 

$

1,866

 

 

$

—

 

 

$

39,889

 

 

$

85,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

Commercial Construction

 

 

Non-owner Occupied Commercial

 

 

Owner-Occupied Commercial

 

 

Multi-Family

 

 

Single Family Residence (1st Lien)

 

 

Single Family Residence (2nd Lien)

 

 

Business Assets

 

 

Total

 

Commercial real estate

 

$

—

 

 

$

28,767

 

 

$

35,572

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

64,339

 

Residential real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,793

 

 

 

800

 

 

 

—

 

 

 

—

 

 

 

3,593

 

Construction, land development,
  and other land

 

 

813

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

813

 

Commercial and industrial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

44,749

 

 

 

44,749

 

Total

 

$

813

 

 

$

28,767

 

 

$

35,572

 

 

$

2,793

 

 

$

800

 

 

$

—

 

 

$

44,749

 

 

$

113,494

 

 

The following table presents the change in the balance of the allowance for credit losses - unfunded commitments as of March 31, 2024 and 2023:

 

 

For the Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2024

 

 

2023

 

 

Beginning balance

 

$

3,636

 

 

$

4,203

 

 

Provision/(recapture) for unfunded commitments

 

 

(248

)

 

 

113

 

 

Ending balance

 

$

3,388

 

 

$

4,316

 

 

 

24

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 6—Servicing Assets

Activity for servicing assets and the related changes in fair value for the three months ended March 31, 2024 and 2023 was as follows:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Beginning balance

 

$

19,844

 

 

$

19,172

 

Additions, net

 

 

1,851

 

 

 

1,116

 

Changes in fair value

 

 

(703

)

 

 

656

 

   Ending balance

 

$

20,992

 

 

$

20,944

 

Loans serviced for others are not included in the Condensed Consolidated Statements of Financial Condition. The unpaid principal balances of these loans serviced for others as of March 31, 2024 and December 31, 2023 were as follows:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Loan portfolios serviced for:

 

 

 

 

 

 

SBA guaranteed loans

 

$

1,524,421

 

 

$

1,530,401

 

USDA guaranteed loans

 

 

207,701

 

 

 

197,942

 

Total

 

$

1,732,122

 

 

$

1,728,343

 

Loan servicing revenue totaled $3.4 million for each of the three months ended March 31, 2024 and 2023.

Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, resulted in a downward valuation adjustment of $703,000 and an upward valuation of $656,000 for the three months ended March 31, 2024 and 2023, respectively.

The fair value of servicing rights is highly sensitive to changes in underlying assumptions. Changes in secondary market premiums and prepayment speed assumptions have the most significant impact on the fair value of servicing rights. Generally, as interest rates rise on variable rate loans, loan prepayments increase due to an increase in refinance activity, which may result in a decrease in the fair value of servicing assets. Measurement of fair value is limited to the conditions existing and the assumptions used as of a particular point in time, and those assumptions may change over time. Refer to Note 15—Fair Value Measurement for further details.

Note 7—Other Real Estate Owned

Other real estate owned ("OREO") is included in accrued interest receivable and other assets in the Company's Condensed Consolidated Statements of Financial Condition. The following table presents the change in OREO for the three months ended March 31, 2024 and 2023:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Beginning balance

 

$

1,200

 

 

$

4,717

 

Net additions to OREO

 

 

5

 

 

 

55

 

Proceeds from sales of OREO

 

 

(402

)

 

 

(764

)

Gains (losses) on sales of OREO

 

 

(18

)

 

 

35

 

Valuation adjustments

 

 

—

 

 

 

(331

)

   Ending balance

 

$

785

 

 

$

3,712

 

At March 31, 2024, and December 31, 2023, the balance of real estate owned did not include any foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At March 31, 2024, and December 31, 2023, there was a $27,000 of consumer mortgage loan secured by residential real estate properties in foreclosure.

There were no internally financed sales of OREO for the three months ended March 31, 2024 or 2023.

 

25

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 8—Leases

The Company enters into leases in the normal course of business primarily for its banking facilities and branches. The Company’s operating leases have varying maturity dates through year end 2036, some of which include renewal or termination options to extend the lease. In addition, the Company leases or subleases real estate to third parties. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less ("short-term leases") on the Company’s Condensed Consolidated Statements of Financial Condition.

Leases are classified at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The following table summarizes the amount and balance sheet line item for our operating lease right-of-use asset and liability as of the periods indicated:

 

 

Balance Sheet Line Item

 

March 31, 2024

 

 

December 31, 2023

 

Operating lease right-of-use asset

 

 Accrued interest receivable and other assets

 

$

10,352

 

 

$

12,474

 

Operating lease liability

 

 Accrued interest payable and other liabilities

 

 

12,205

 

 

 

14,268

 

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company’s incremental borrowing rate is based on the Federal Home Loan Bank regular advance rate, adjusted for the lease term and other factors. At March 31, 2024, the weighted average discount rate of operating leases was 2.75% and the weighted average remaining life of operating leases was 5.0 years, compared to 2.90% and 6.1 years as of December 31, 2023.

The following table presents components of total lease costs included as a component of occupancy expense on the Condensed Consolidated Statements of Operations for the following periods:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Operating lease cost

 

$

727

 

 

$

623

 

Short-term lease cost

 

 

87

 

 

 

69

 

Variable lease cost

 

 

423

 

 

 

412

 

Less: Sublease income

 

 

(130

)

 

 

(156

)

Total lease cost, net

 

$

1,107

 

 

$

948

 

Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $953,000 and $855,000 for the three months ended March 31, 2024 and 2023, respectively.

The Company recorded $422,000 and $313,000 of right-of-use lease assets in exchange for operating lease liabilities for the three months ended March 31, 2024 and 2023, respectively.

During the quarter ended March 31, 2024, the Company recorded $194,000 of impairment related to two branch facilities to be closed at the end of the second quarter of 2024. Impairments were recognized on operating lease right-of-use assets and are reflected in other non-interest expense.

26

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The future minimum lease payments for operating leases, subsequent to March 31, 2024, as recorded on the Condensed Consolidated Statements of Financial Condition, are summarized as follows:

 

 

Operating Lease
Commitments

 

2024

 

$

2,906

 

2025

 

 

3,266

 

2026

 

 

2,359

 

2027

 

 

1,313

 

2028

 

 

986

 

Thereafter

 

 

2,529

 

   Total undiscounted lease payments

 

 

13,359

 

Less: Imputed interest

 

 

(1,154

)

Net lease liabilities

 

$

12,205

 

The total amount of minimum rentals to be received in the future on these subleases is approximately $1.0 million, and the leases have contractual lives extending through 2028. In addition to the above required lease payments, the Company has contractual obligations related primarily to information technology contracts and other maintenance contracts.

Note 9—Goodwill, Core Deposit Intangible and Other Intangible Assets

The following tables summarize the changes in the Company’s goodwill, core deposit intangible assets, and customer relationship intangible assets for the three months ended March 31, 2024 and 2023:

 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

Goodwill

 

 

Core
Deposit
Intangible

 

 

Customer Relationship
Intangible

 

 

Goodwill

 

 

Core
Deposit
Intangible

 

 

Customer Relationship
Intangible

 

Beginning balance

 

$

181,705

 

 

$

20,393

 

 

$

1,380

 

 

$

148,353

 

 

$

8,886

 

 

$

1,648

 

Amortization

 

 

—

 

 

 

(1,278

)

 

 

(67

)

 

 

—

 

 

 

(1,388

)

 

 

(67

)

Ending balance

 

$

181,705

 

 

$

19,115

 

 

$

1,313

 

 

$

148,353

 

 

$

7,498

 

 

$

1,581

 

Accumulated amortization

 

N/A

 

 

$

53,601

 

 

$

1,903

 

 

N/A

 

 

$

47,968

 

 

$

1,635

 

Weighted average remaining
   amortization period

 

N/A

 

 

8.1 Years

 

 

4.9 Years

 

 

N/A

 

 

4.5 Years

 

 

5.9 Years

 

The following table presents the estimated amortization expense for core deposit intangible and customer relationship intangible assets remaining at March 31, 2024:

 

 

Estimated
Amortization

 

2024

 

$

4,035

 

2025

 

 

4,473

 

2026

 

 

3,566

 

2027

 

 

2,676

 

2028

 

 

2,101

 

Thereafter

 

 

3,577

 

Total

 

$

20,428

 

 

Note 10—Income Taxes

The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income, permanent tax differences and statutory tax rates.

The effective tax rate for the three months ended March 31, 2024 and 2023 was 25.0% and 25.7%, respectively. The Company recorded discrete income tax benefit of $501,000 and $134,000 related to the exercise of stock options and vesting of restricted shares for the three months ended March 31, 2024 and 2023, respectively.

Net deferred tax assets increased to $53.0 million at March 31, 2024 compared to $50.1 million at December 31, 2023, primarily as a result of the change in unrealized losses on available-for-sale securities.

27

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 11—Deposits

The composition of deposits was as follows as of March 31, 2024 and December 31, 2023:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Non-interest-bearing demand deposits

 

$

1,851,727

 

 

$

1,905,876

 

Interest-bearing checking accounts

 

 

687,142

 

 

 

577,609

 

Money market demand accounts

 

 

2,263,819

 

 

 

2,266,030

 

Other savings

 

 

524,890

 

 

 

542,532

 

Time deposits (below $250,000)

 

 

1,594,290

 

 

 

1,520,082

 

Time deposits ($250,000 and above)

 

 

428,334

 

 

 

364,870

 

Total deposits

 

$

7,350,202

 

 

$

7,176,999

 

There were $436.3 million and $480.0 million of brokered deposits included in time deposits below $250,000 at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024, the scheduled maturities of time deposits were:

 

 

Scheduled Maturities

 

2024

 

$

1,653,993

 

2025

 

 

354,598

 

2026

 

 

8,126

 

2027

 

 

4,689

 

2028

 

 

1,092

 

Thereafter

 

 

126

 

Total

 

$

2,022,624

 

The Company hedges interest rates on certain money market accounts using interest rate swaps through which the Company receives variable amounts and pays fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

Note 12—Other Borrowings

The following is a summary of the Company’s other borrowings as of the dates presented:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Federal Home Loan Bank advances

 

$

470,000

 

 

$

325,000

 

Bank Term Funding Program

 

 

200,000

 

 

 

—

 

Securities sold under agreements to repurchase

 

 

34,506

 

 

 

40,607

 

Term Loan

 

 

16,667

 

 

 

18,333

 

Line of credit

 

 

—

 

 

 

11,250

 

Total

 

$

721,173

 

 

$

395,190

 

Byline Bank has the capacity to borrow funds from the discount window of the Federal Reserve System. As of March 31, 2024 and December 31, 2023, there were no outstanding advances under the Federal Reserve Bank discount window line. The Company pledges loans and leases as collateral for the FRB discount window borrowing. Refer to Note 5—Loan and Lease Receivables and Allowance for Credit Losses for additional discussion.

On January 17, 2024, the Company entered into a Letter Agreement with the Federal Reserve Bank of Chicago that allows the Bank to access the Bank Term Funding Program ("BTFP"). On January 22, 2024, the Company opened an advance of $200.0 million from the FRB as part of the BTFP. Under the terms of the BTFP, the Bank pledges securities to FBR Chicago as collateral for available advances. The advance carries a fixed interest rate of 4.91%, and matures on January 22, 2025. Advances under the BTFP are prepayable at any time without a prepayment penalty.

28

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

At March 31, 2024, fixed-rate Federal Home Loan Bank (“FHLB”) advances totaled $220.0 million, with an interest rate of 5.45% and matured in April 2024. Total variable rate advances were $250.0 million at March 31, 2024, with an interest rate of 5.49% that may reset daily and a maturity date of June 2024. Advances from the FHLB are collateralized by residential real estate loans, commercial real estate loans, and securities. The Bank’s maximum borrowing capacity is limited to 35% of total assets. Required investment in FHLB stock is $4.50 for every $100 in advances thereafter.

Securities sold under agreements to repurchase represent a demand deposit product offered to customers that sweep balances in excess of the FDIC insurance limit into overnight repurchase agreements. The Company pledges securities as collateral for the repurchase agreements. Refer to Note 4—Securities for additional discussion.

On October 13, 2016, the Company entered into a $30.0 million revolving credit agreement with a correspondent bank. Through subsequent amendments, the revolving credit agreement was reduced to $15.0 million. The amended revolving line of credit bears interest at either the Secured Overnight Financing Rate ("SOFR") plus 205 basis points or Prime Rate minus 75 basis points, not to be less than 2.00%, based on the Company’s election, which is required to be communicated at least three business days prior to the commencement of an interest period. If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. On May 26, 2023, the Company amended the agreement with the lender, which provides for: i) the renewal of the revolving line-of-credit facility of up to $15.0 million, extending its maturity date to May 26, 2024; and ii) a new term loan facility in the principal amount of up to $20.0 million with a maturity date of May 26, 2026, each subject to the existing Negative Pledge Agreement dated October 11, 2018, as amended.

At March 31, 2024, the variable term loan had an interest rate of 7.62% and an outstanding balance of $16.7 million. At December 31, 2023, the variable term loan had an interest rate of 7.64% and an outstanding balance of $18.3 million. At March 31, 2024, the line of credit had a no outstanding balance. At December 31, 2023, the line of credit had a $11.3 million outstanding balance and an interest rate of 7.39%

The following table presents short-term credit lines available for use as of the dates presented:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Federal Home Loan Bank line

 

$

2,614,959

 

 

$

2,781,747

 

Federal Reserve Bank of Chicago discount window line

 

 

841,104

 

 

 

866,490

 

Available federal funds lines

 

 

135,000

 

 

 

123,750

 

Bank Term Funding Program

 

 

27,715

 

 

 

—

 

The Company hedges interest rates on borrowed funds using interest rate swaps through which the Company receives variable amounts and pays fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

29

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 13—Subordinated Notes and Junior Subordinated Debentures

In 2020, the Company issued $75.0 million in fixed-to-floating subordinated notes that mature on July 1, 2030. The subordinated notes bear a fixed interest rate of 6.00% until July 1, 2025 and a floating interest rate equal to a benchmark rate, which is expected to be the three-month SOFR, plus 588 basis points thereafter until maturity. The transaction resulted in debt issuance costs of approximately $1.7 million that is being amortized over 10 years.

As of March 31, 2024, the net liability outstanding of the subordinated notes was $73.9 million. The Company may, at its option, redeem the notes, in whole or in part, on a semi-annual basis beginning on July 1, 2025, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required. The subordinated notes qualify as Tier 2 capital for regulatory capital purposes.

At March 31, 2024 and December 31, 2023, the Company’s junior subordinated debentures by issuance were as follows:

 

 

 

 

Aggregate Principal Amount

 

 

 

 

 

Name of Trust

 

Stated
Maturity

 

March 31, 2024

 

 

December 31, 2023

 

 

Contractual Rate March 31, 2024

 

Interest Rate Spread(1)

Metropolitan Statutory Trust I

 

March 17, 2034

 

$

35,000

 

 

$

35,000

 

 

8.38%

 

SOFR + spread adjustment + 2.79%

First Evanston Bancorp Trust I

 

March 15, 2035

 

 

10,000

 

 

 

10,000

 

 

7.37%

 

SOFR + spread adjustment + 1.78%

AmeriMark Capital Trust I

 

April 23, 2034

 

 

5,000

 

 

 

5,000

 

 

8.33%

 

SOFR + spread adjustment + 2.75%

Inland Bancorp Trust II

 

September 15, 2035

 

 

10,000

 

 

 

10,000

 

 

7.19%

 

SOFR + spread adjustment + 1.60%

Inland Bancorp Trust III

 

December 15, 2036

 

 

10,000

 

 

 

10,000

 

 

7.24%

 

SOFR + spread adjustment + 1.65%

Inland Bancorp Trust IV

 

June 6, 2037

 

 

7,000

 

 

 

7,000

 

 

7.21%

 

SOFR + spread adjustment + 1.62%

Inland Bancorp Trust V

 

September 15, 2037

 

 

10,000

 

 

 

10,000

 

 

7.01%

 

SOFR + spread adjustment + 1.42%

Total liability, at par

 

 

 

 

87,000

 

 

 

87,000

 

 

 

 

 

Discount

 

 

 

 

(16,433

)

 

 

(16,548

)

 

 

 

 

Total liability, at carrying value

 

 

 

$

70,567

 

 

$

70,452

 

 

 

 

 

(1) SOFR is three month SOFR and the spread adjustment is 0.26161%

In 2004, the Company’s predecessor, Metropolitan Bank Group, Inc., issued $35.0 million floating rate junior subordinated debentures to Metropolitan Statutory Trust I, which was formed for the issuance of trust preferred securities. Beginning on September 14, 2023, the interest rate reset to the three-month SOFR plus a tenor spread adjustment of 0.26161% plus 2.79% (8.38% and 8.43% at March 31, 2024 and December 31, 2023, respectively). Interest is paid on a quarterly basis. The Company has the right to redeem the debentures, in whole or in part, on any interest payment date on or after March 2009.

As part of the First Evanston acquisition, the Company assumed the obligations to First Evanston Bancorp Trust I of $10.0 million in principal amount, which was formed for the issuance of trust preferred securities. Beginning on September 15, 2023, the interest rate reset to the three-month SOFR plus a tenor spread adjustment of 0.26161% plus 1.78% (7.37% and 7.43% at March 31, 2024 and December 31, 2023, respectively), which is in effect until the debentures mature in 2035. Interest is paid on a quarterly basis. The Company has the right to redeem the debentures, in whole or in part, on any interest payment date on or after March 2010. The Company has the option to defer interest payments on the debentures from time to time for a period not to exceed five consecutive years.

As part of the Inland acquisition, the Company assumed the obligations to several trust preferred securities. Refer to Note 3—Acquisition of a Business for further details. Interest rates are calculated as the three-month SOFR plus a tenor spread adjustment of 0.26161% plus negotiated additional basis points. Refer to table above for contractual rates and interest rate spread calculation. Interest is paid on a quarterly basis.

The Trusts are not consolidated with the Company. Accordingly, the Company reports the subordinated debentures held by the Trusts as liabilities. The Company owns all of the common securities of each trust. The junior subordinated debentures qualify, and are treated as, Tier 1 regulatory capital of the Company subject to regulatory limitations. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment.

30

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 14—Commitments and Contingent Liabilities

Legal contingencies—In the ordinary course of business, the Company and Bank have various outstanding commitments and contingent liabilities that are not recognized in the accompanying consolidated financial statements. In addition, the Company may be a defendant in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is currently not expected to have a material adverse effect on the Company’s Consolidated Financial Statements.

Operating lease commitments—Refer to Note 8—Leases for discussion of operating lease commitments.

Commitments to extend credit—The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Condensed Consolidated Statements of Financial Condition. The contractual or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for funded instruments. The Company does not anticipate any material losses as a result of the commitments and letters of credit.

The following table summarizes the contract or notional amount of outstanding loan and lease commitments at March 31, 2024 and December 31, 2023:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Fixed Rate

 

 

Variable Rate

 

 

Total

 

 

Fixed Rate

 

 

Variable Rate

 

 

Total

 

Commitments to extend credit

 

$

258,617

 

 

$

1,954,869

 

 

$

2,213,486

 

 

$

269,325

 

 

$

2,013,819

 

 

$

2,283,144

 

Letters of credit

 

 

640

 

 

 

65,808

 

 

 

66,448

 

 

 

612

 

 

 

67,443

 

 

 

68,055

 

Total

 

$

259,257

 

 

$

2,020,677

 

 

$

2,279,934

 

 

$

269,937

 

 

$

2,081,262

 

 

$

2,351,199

 

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral is primarily obtained in the form of commercial and residential real estate (including income producing commercial properties).

Letters of credit are conditional commitments issued by the Company to guarantee to a third-party the performance of a customer. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 1.00% to 15.00% and maturities up to 2052. Variable rate loan commitments have interest rates ranging from 4.00% to 18.50% and maturities up to 2053.

Note 15—Fair Value Measurement

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In addition, the Company has the ability to obtain fair values for markets that are not accessible.

These types of inputs create the following fair value hierarchy:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

31

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available. The Company’s own data used to develop unobservable inputs may be adjusted for market considerations when reasonably available.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to assets and liabilities.

The Company used the following methods and significant assumptions to estimate fair value for certain assets measured and carried at fair value on a recurring basis:

Securities available-for-sale—The Company obtains fair value measurements from an independent pricing service. Management reviews the procedures used by the third party, including significant inputs used in the fair value calculations. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. When market quotes are not readily accessible or available, alternative approaches are utilized, such as matrix or model pricing.

The Company’s methodology for pricing non-rated bonds focuses on three distinct inputs: equivalent rating, yield and other pricing terms. To determine the rating for a given non-rated municipal bond, the Company references a publicly issued bond by the same issuer if available as well as other additional key metrics to support the credit worthiness. Typically, pricing for these types of bonds would require a higher yield than a similar rated bond from the same issuer. A reduction in price is applied to the rating obtained from the comparable bond, as the Company believes if liquidated, a non-rated bond would be valued less than a similar bond with a verifiable rating. The reduction applied by the Company is one notch lower (i.e. a “AA” rating for a comparable bond would be reduced to “AA-” for the Company’s valuation). In 2024 and 2023, all of the ratings derived by the Company were “BBB-” or better with and without comparable bond proxies. All of the ratings of non-Agency backed bonds derived by the Company were investment grade. The fair value measurement of municipal bonds is sensitive to the rating input, as a higher rating typically results in an increased valuation. The remaining pricing inputs used in the bond valuation are observable. Based on the rating determined, the Company obtains a corresponding current market yield curve available to market participants. Other terms including coupon, maturity date, redemption price, number of coupon payments per year, and accrual method are obtained from the individual bond term sheets.

Equity and other securities—The Company utilizes the same fair value measurement methodology for equity and other securities as detailed in the securities available-sale portfolio above.

Servicing assets—Fair value is based on a loan-by-loan basis taking into consideration the original term to maturity, the current age of the loan and the remaining term to maturity. The valuation methodology utilized for the servicing assets begins with generating estimated future cash flows for each servicing asset, based on their unique characteristics and market-based assumptions for prepayment speeds and costs to service. The present value of the future cash flows are then calculated utilizing market-based discount rate assumptions.

Derivative instruments—Interest rate derivatives are valued by a third party, using models that primarily use market observable inputs, such as yield curves, and are validated by comparison with valuations provided by the respective counterparties. Derivative financial instruments are included in accrued interest receivable and other assets, and accrued interest payable and other liabilities in the Condensed Consolidated Statements of Financial Condition.

32

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following tables summarize the Company’s financial assets and liabilities that were measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023:

 

 

 

 

 

Fair Value Measurements Using

 

March 31, 2024

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

86,112

 

 

$

86,112

 

 

$

—

 

 

$

—

 

U.S. Government agencies

 

 

138,054

 

 

 

 

 

 

138,054

 

 

 

 

Obligations of states, municipalities, and political
   subdivisions

 

 

81,709

 

 

 

—

 

 

 

81,709

 

 

 

—

 

Mortgage-backed securities; residential

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

726,587

 

 

 

—

 

 

 

726,587

 

 

 

—

 

Non-Agency

 

 

113,709

 

 

 

—

 

 

 

113,709

 

 

 

—

 

Mortgage-backed securities; commercial

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

163,546

 

 

 

—

 

 

 

163,546

 

 

 

—

 

Corporate securities

 

 

36,752

 

 

 

—

 

 

 

36,752

 

 

 

—

 

Asset-backed securities

 

 

32,678

 

 

 

—

 

 

 

32,678

 

 

 

—

 

Equity and other securities, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

2,517

 

 

 

2,517

 

 

 

—

 

 

 

—

 

Equity securities

 

 

6,618

 

 

 

—

 

 

 

6,333

 

 

 

285

 

Servicing assets

 

 

20,992

 

 

 

—

 

 

 

—

 

 

 

20,992

 

Derivative assets

 

 

60,103

 

 

 

—

 

 

 

60,103

 

 

 

—

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

22,531

 

 

 

—

 

 

 

22,531

 

 

 

—

 

 

 

 

 

 

Fair Value Measurements Using

 

December 31, 2023

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

115,434

 

 

$

115,434

 

 

$

—

 

 

$

—

 

U.S. Government agencies

 

 

130,695

 

 

 

—

 

 

 

130,695

 

 

 

—

 

Obligations of states, municipalities, and political
   subdivisions

 

 

82,275

 

 

 

—

 

 

 

82,275

 

 

 

 

Mortgage-backed securities; residential

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

695,803

 

 

 

—

 

 

 

695,803

 

 

 

—

 

Non-Agency

 

 

100,260

 

 

 

—

 

 

 

100,260

 

 

 

—

 

Mortgage-backed securities; commercial

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

147,204

 

 

 

—

 

 

 

147,204

 

 

 

—

 

Corporate securities

 

 

36,171

 

 

 

—

 

 

 

36,171

 

 

 

—

 

Asset-backed securities

 

 

34,638

 

 

 

—

 

 

 

34,638

 

 

 

—

 

Equity and other securities, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

2,554

 

 

 

2,554

 

 

 

—

 

 

 

—

 

Equity securities

 

 

6,189

 

 

 

—

 

 

 

5,908

 

 

 

281

 

Servicing assets

 

 

19,844

 

 

 

—

 

 

 

—

 

 

 

19,844

 

Derivative assets

 

 

56,923

 

 

 

—

 

 

 

56,923

 

 

 

—

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

19,345

 

 

 

—

 

 

 

19,345

 

 

 

—

 

 

33

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following table presents additional information about financial assets measured at fair value on recurring basis for which the Company used significant unobservable inputs (Level 3):

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Investment Securities

 

 

Servicing Assets

 

Balance, beginning of period

$

281

 

 

$

666

 

 

$

19,844

 

 

$

19,172

 

Additions, net

 

—

 

 

 

—

 

 

 

1,851

 

 

 

1,116

 

Change in fair value

 

4

 

 

 

(36

)

 

 

(703

)

 

 

656

 

Balance, end of period

$

285

 

 

$

630

 

 

$

20,992

 

 

$

20,944

 

 

The Company did not have any transfers to or from Level 3 of the fair value hierarchy during the three months ended March 31, 2024 and 2023.

 

The following table presents additional information about the unobservable inputs used in the fair value measurements on recurring basis that were categorized within Level 3 of the fair value hierarchy as of March 31, 2024:

 

Financial Instruments

 

Valuation Technique

 

Unobservable Inputs

 

Range of
Inputs

 

Weighted
Average
Range

 

 

Impact to
Valuation from an
Increased or
Higher Input Value

Single issuer trust preferred

 

Discounted cash flow

 

Discount rate

 

7.9%

 

 

7.9

%

 

Decrease

Servicing assets

 

Discounted cash flow

 

Prepayment speeds

 

0.0% - 38.9%

 

 

15.6

%

 

Decrease

 

 

 

Discount rate

 

0.0% - 52.8%

 

 

10.6

%

 

Decrease

 

 

 

 

Expected weighted
average loan life

 

0.0 - 9.6 Years

 

3.7 Years

 

 

Increase

The Company used the following methods and significant assumptions to estimate fair value for certain assets measured and carried at fair value on a non-recurring basis:

Individually Evaluated Loans—The Company individually evaluates loans that do not share similar risk characteristics, including non-accrual loans. Specific allowance for credit losses is measured based on a discounted cash flow of ongoing operations, discounted at the loan's original effective interest rat, or a calculation of the fair value of the underlying collateral less estimated selling costs. Valuations of individually assessed loans that are collateral dependent are supported by third party appraisals in accordance with the Bank's credit policy. Accordingly, individually evaluated loans are classified as Level 3.

Assets held for sale—Assets held for sale consist of former branch locations and real estate previously purchased for expansion. Assets are considered held for sale when management has approved to sell the assets following a branch closure or other events. The properties are being actively marketed and transferred to assets held for sale based on the lower of carrying value or its fair value, less estimated costs to sell. The Company records assets held for sale on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets.

Other real estate owned—Certain assets held within other real estate owned represent real estate or other collateral that has been adjusted to its estimated fair value, less cost to sell, as a result of transferring from the loan portfolio at the time of foreclosure or repossession and based on management’s periodic impairment evaluation. From time to time, non-recurring fair value adjustments to other real estate owned are recorded to reflect partial write-downs based on an observable market price or current appraised value of property.

34

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Adjustments to fair value based on such non-recurring transactions generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment. The following tables summarize the Company’s assets that were measured at fair value on a non-recurring basis, as of March 31, 2024 and December 31, 2023:

 

 

 

 

 

Fair Value Measurements Using

 

March 31, 2024

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Non-recurring

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

31,873

 

 

$

—

 

 

$

—

 

 

$

31,873

 

Residential real estate

 

 

4,658

 

 

 

—

 

 

 

—

 

 

 

4,658

 

Commercial and industrial

 

 

27,117

 

 

 

—

 

 

 

—

 

 

 

27,117

 

Assets held for sale

 

 

3,722

 

 

 

—

 

 

 

—

 

 

 

3,722

 

Other real estate owned

 

 

785

 

 

 

—

 

 

 

—

 

 

 

785

 

 

 

 

 

 

Fair Value Measurements Using

 

December 31, 2023

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Non-recurring

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

51,978

 

 

$

—

 

 

$

—

 

 

$

51,978

 

Residential real estate

 

 

3,593

 

 

 

—

 

 

 

—

 

 

 

3,593

 

Construction, land development, and other land

 

 

813

 

 

 

—

 

 

 

—

 

 

 

813

 

Commercial and industrial

 

 

29,869

 

 

 

—

 

 

 

—

 

 

 

29,869

 

Assets held for sale

 

 

4,484

 

 

 

—

 

 

 

—

 

 

 

4,484

 

Other real estate owned

 

 

1,200

 

 

 

—

 

 

 

—

 

 

 

1,200

 

 

The following methods and assumptions were used by the Company in estimating fair values of other assets and liabilities for disclosure purposes:

Cash and cash equivalents and interest bearing deposits with other banks—For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities held-to-maturity—The Company obtains fair value measurements from an independent pricing service. Management reviews the procedures used by the third party, including significant inputs used in the fair value calculations. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. When market quotes are not readily accessible or available, alternative approaches are utilized, such as matrix or model pricing.

Restricted stock—The fair value has been determined to approximate cost.

Loans held for sale—The fair value of loans held for sale are based on quoted market prices, where available, and determined by discounted estimated cash flows using interest rates approximating the Company’s current origination rates for similar loans adjusted to reflect the inherent credit risk.

35

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Loan and lease receivables, net—For certain variable rate loans that reprice frequently and with no significant changes in credit risk, fair value is estimated at carrying value. The fair value of other types of loans is estimated using an exit price notion. It is estimated by discounting future cash flows, using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits—The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated by discounting future cash flows, using rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank advances—The fair value of FHLB advances is estimated by discounting the agreements based on maturities using rates currently offered for FHLB advances of similar remaining maturities adjusted for prepayment penalties that would be incurred if the borrowings were paid off on the measurement date.

Securities sold under agreements to repurchase—The carrying amount approximates fair value due to maturities of less than ninety days.

Term Loan—The carrying amount approximates fair value given the variable interest rate and repricing of interest.

Bank Term Funding Program—The carrying amount approximates fair value given the short-term nature of the instrument.

Line of credit—The carrying amount approximates fair value given the variable interest rate and repricing of interest.

Subordinated notes—The fair value is based on available market prices.

Junior subordinated debentures—The fair value of junior subordinated debentures, in the form of trust preferred securities, is determined using rates currently available to the Company for debt with similar terms and remaining maturities.

Accrued interest receivable and payable—The carrying amount approximates fair value.

Commitments to extend credit and letters of credit—The fair values of these off-balance sheet commitments to extend credit and commercial and letters of credit are not considered practicable to estimate because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs.

The estimated fair values of financial instruments not carried at fair value and levels within the fair value hierarchy are as follows:

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

Fair Value

 

 

2024

 

 

2023

 

 

 

Hierarchy
Level

 

 

Carrying
Amount

 

 

Estimated
Fair Value

 

 

Carrying
Amount

 

 

Estimated
Fair Value

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

1

 

 

$

58,640

 

 

$

58,640

 

 

$

60,431

 

 

$

60,431

 

Interest bearing deposits with other banks

 

 

2

 

 

 

578,197

 

 

 

578,197

 

 

 

165,705

 

 

 

165,705

 

Securities held-to-maturity

 

 

2

 

 

 

1,156

 

 

 

1,149

 

 

 

1,157

 

 

 

1,149

 

Restricted stock

 

 

2

 

 

 

22,793

 

 

 

22,793

 

 

 

16,304

 

 

 

16,304

 

Loans held for sale

 

 

3

 

 

 

23,568

 

 

 

23,983

 

 

 

18,005

 

 

 

19,136

 

Loans and lease receivables, net (less impaired
   loans at fair value)

 

 

3

 

 

 

6,612,199

 

 

 

6,371,967

 

 

 

6,496,367

 

 

 

6,326,413

 

Accrued interest receivable

 

 

3

 

 

 

43,728

 

 

 

43,728

 

 

 

43,922

 

 

 

43,922

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

 

2

 

 

 

1,851,727

 

 

 

1,851,727

 

 

 

1,905,876

 

 

 

1,905,876

 

Interest-bearing deposits

 

 

2

 

 

 

5,498,475

 

 

 

5,493,494

 

 

 

5,271,123

 

 

 

5,268,926

 

Accrued interest payable

 

 

2

 

 

 

21,713

 

 

 

21,713

 

 

 

22,233

 

 

 

22,233

 

Federal Home Loan Bank advances

 

 

2

 

 

 

470,000

 

 

 

470,000

 

 

 

325,000

 

 

 

325,000

 

Securities sold under repurchase agreement

 

 

2

 

 

 

34,506

 

 

 

34,506

 

 

 

40,607

 

 

 

40,607

 

Term Loan

 

 

2

 

 

 

16,667

 

 

 

16,667

 

 

 

18,333

 

 

 

18,333

 

Bank Term Funding Program

 

 

2

 

 

 

200,000

 

 

 

200,000

 

 

 

—

 

 

 

—

 

Line of credit

 

 

2

 

 

 

—

 

 

 

—

 

 

 

11,250

 

 

 

11,250

 

Subordinated notes

 

 

2

 

 

 

73,909

 

 

 

72,194

 

 

 

73,866

 

 

 

76,063

 

Junior subordinated debentures

 

 

3

 

 

 

70,567

 

 

 

73,772

 

 

 

70,452

 

 

 

72,701

 

 

36

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 16—Derivative Instruments and Hedge Activities

As required by ASC 815, the Company records all derivatives on the Condensed Consolidated Statements of Financial Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. The Company records derivative assets and derivative liabilities on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively. The following tables present the fair value of the Company’s derivative financial instruments and classification on the Condensed Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

Fair Value

 

 

 

 

 

Fair Value

 

 

 

Notional
Amount

 

 

Other
Assets

 

 

Other
Liabilities

 

 

Notional
Amount

 

 

Other
Assets

 

 

Other
Liabilities

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps designated as cash flow
   hedges

 

$

650,000

 

 

$

37,976

 

 

$

(582

)

 

$

650,000

 

 

$

37,475

 

 

$

—

 

Derivatives not designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest rate derivatives

 

 

691,612

 

 

 

22,124

 

 

 

(21,949

)

 

 

706,126

 

 

 

19,447

 

 

 

(19,345

)

Other credit derivatives

 

 

3,545

 

 

 

3

 

 

 

—

 

 

 

3,602

 

 

 

1

 

 

 

—

 

Total derivatives

 

$

1,345,157

 

 

$

60,103

 

 

$

(22,531

)

 

$

1,359,728

 

 

$

56,923

 

 

$

(19,345

)

As of the effective time of the transaction reported in Note 3—Acquisition of a Business, Byline acquired and assumed two types of derivative instruments. Interest rate swap agreements previously designated as cash flow hedges of certain junior subordinated debentures issued to capital trusts had notional amounts of $42.0 million and had a fair value of $3.5 million included in accrued interest receivable and other assets. In July 2023, the Company terminated the interest rate swap agreements that resulted in a net gain of $6,000. Other interest rate swap agreements not designated as hedging instruments had notional amounts of $67.7 million and fair values of $6.2 million reported in accrued interest receivable and other assets and accrued interest payable and other liabilities.

Interest rate swaps designated as cash flow hedges—Cash flow hedges of interest payments associated with certain financial instruments had notional amounts totaling $650.0 million as of March 31, 2024 and December 31, 2023, respectively. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value of the derivatives hedging instrument with the fair value of the designated hedged transactions. As of March 31, 2024, the cash flow hedges aggregating $650.0 million in notional amounts are comprised of $450.0 million pay-fixed interest rate swaps associated with certain deposits and other borrowings, and $200.0 million receive-fixed interest rate swaps associated with certain variable rate loans.

As of March 31, 2024, pay-fixed interest rate swaps are comprised of six effective hedges. Receive-fixed interest rate swaps totaling $200.0 million are comprised of three effective hedges totaling $150.0 million, and one $50.0 million forward-starting swaps that is effective in August of 2024.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivatives is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest income or expense in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest income or expense as interest payments are made on the hedged instruments. Interest recorded on these swap transactions included $4.8 million and $2.0 million of interest income recorded during the three months ended March 31, 2024, and 2023, respectively, and is reported as a component of interest expense on deposits and other borrowings. As of March 31, 2024, the Company estimates $16.9 million of the net unrealized gain to be reclassified as a net decrease to interest expense during the next twelve months.

Accumulated other comprehensive income also includes the amortization of the remaining balance related to terminated interest rate swaps designated as cash flow hedges, which are over the original life of the cash flow hedge. In March 2023, the Company terminated interest rate swaps designated as cash flow hedges totaling $100.0 million, of which $50.0 million became effective in May 2023 and $50.0 million became effective in June 2023. The transaction resulted in a gain of $4.2 million, net of tax, which was the clean value at termination date and began amortizing as a decrease to interest expense on the effective dates. The remaining unamortized balance was $3.5 million and $3.7 million as of March 31, 2024 and December 31, 2023, respectively.

37

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following table reflects the cash flow hedges as of March 31, 2024:

Notional amounts

 

$

650,000

 

Derivative assets fair value

 

 

37,976

 

Derivative liabilities fair value

 

 

582

 

Weighted average remaining maturity

 

2.7 Years

 

Receive rates are determined at the time the swaps become effective. As of March 31, 2024, the weighted average pay rates of the six effective pay-fixed hedges for $450.0 million were 1.04% and the weighted average receive rates were 5.32%. As of March 31, 2024, the weighted average pay rates of the receive-fixed interest rate swaps of $150.0 million were 8.50% and the weighted average receive rates were 7.31%.

The following table reflects the net gains (losses) recorded in accumulated other comprehensive income (loss) and the Condensed Consolidated Statements of Operations relating to the cash flow derivative instruments for the three months ended:

 

 

March 31, 2024

 

 

March 31, 2023

 

 

 

Amount of
Gain
Recognized in
AOCI

 

 

Amount of
Net Gain
Reclassified
from AOCI to
Income as an
Increase to
Net Interest
Income

 

 

Amount of
Gain (Loss)
Recognized in
Other
Non-Interest
Income

 

 

Amount of
Gain
Recognized in
OCI

 

 

Amount of
Gain
Reclassified
from OCI to
Income as a
Decrease to
Interest
Expense

 

 

Amount of
Gain (Loss)
Recognized in
Other
Non-Interest
Income

 

Interest rate swaps

 

$

4,531

 

 

$

4,836

 

 

$

—

 

 

$

194

 

 

$

1,956

 

 

$

—

 

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

Other interest rate derivatives—The total combined notional amount was $691.6 million as of March 31, 2024 with maturities ranging from August 2024 to March 2033. The fair values of the interest rate derivative agreements are reflected in other assets and other liabilities with corresponding gains or losses reflected in non-interest income. During the three months ended March 31, 2024 and 2023, there were $4,000 and $472,000 of net transaction fees, included in other non-interest income, related to these derivative instruments.

These instruments are inherently subject to market risk and credit risk. Market risk is associated with changes in interest rates and credit risk relates to the Company’s risk of loss when the counterparty to a derivative contract fails to perform according to the terms of the agreement. Market and credit risks are managed and monitored as part of the Company’s overall asset-liability management process. The credit risk related to derivatives entered into with certain qualified borrowers is managed through the Company’s loan underwriting process. The Company’s loan underwriting process also approves the Bank’s swap counterparty used to mirror the borrowers’ swap. The Company has a bilateral agreement with each swap counterparty that provides that fluctuations in derivative values are to be fully collateralized with either cash or securities.

The following table reflects other interest rate derivatives as of March 31, 2024:

Notional amounts

 

$

691,612

 

Derivative assets fair value

 

 

22,124

 

Derivative liabilities fair value

 

 

21,949

 

Weighted average pay rates

 

 

4.29

%

Weighted average receive rates

 

 

6.16

%

Weighted average remaining maturity

 

4.4 Years

 

Other derivatives— The Company has entered into risk participation agreements with counterparty banks to assume a portion of the credit risk related to borrower transactions. As of March 31, 2024 and December 31, 2023, for each period, the total notional amount of risk participated in was $1.2 million and the notional amount of risk participated out was $2.3 million and $2.4 million, respectively. The credit risk related to these other derivatives is managed through the Company’s loan underwriting process. Additionally, the Company enters into foreign currency contracts to manage foreign exchange risk associated with certain customer foreign currency transactions. These transactions were not material to the consolidated financial statements as of March 31, 2024 and December 31, 2023. The fair values of the credit derivatives is reflected in accrued interest receivable and other assets and accrued interest payable and other liabilities with corresponding gains or losses reflected in non-interest income or other comprehensive income.

38

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The Company has agreements with its derivative counterparties that contain a cross-default provision under which if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has agreements with certain derivative counterparties that contain a provision where if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations resulted in a net asset position.

The following table reflects amounts included in non-interest income in the Condensed Consolidated Statements of Operations relating to derivative instruments that are not designated in a hedging relationship for the three months ended March 31, 2024 and 2023:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Other interest rate derivatives

 

$

(73

)

 

$

(308

)

Other credit derivatives

 

 

—

 

 

 

—

 

Total

 

$

(73

)

 

$

(308

)

The Company records interest rate derivatives subject to master netting agreements at their gross value and does not offset derivative asset and liabilities on the Condensed Consolidated Statements of Financial Condition. The table below summarizes the Company’s interest rate derivatives and offsetting positions as of the periods indicated:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Derivative
Assets
Fair Value

 

 

Derivative
Liabilities
Fair Value

 

 

Derivative
Assets
Fair Value

 

 

Derivative
Liabilities
Fair Value

 

Gross amounts recognized

 

$

60,103

 

 

$

(22,531

)

 

$

56,923

 

 

$

(19,345

)

Less: Amounts offset in the Condensed Consolidated
  Statements of Financial Condition

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net amount presented in the Condensed Consolidated
  Statements of Financial Condition

 

$

60,103

 

 

$

(22,531

)

 

$

56,923

 

 

$

(19,345

)

Gross amounts not offset in the Condensed Consolidated
  Statements of Financial Condition

 

 

 

 

 

 

 

 

 

 

 

 

Offsetting derivative positions

 

 

(880

)

 

 

880

 

 

 

(925

)

 

 

925

 

Collateral posted

 

 

(57,900

)

 

 

—

 

 

 

(54,930

)

 

 

—

 

Net credit exposure

 

$

1,323

 

 

$

(21,651

)

 

$

1,068

 

 

$

(18,420

)

As of March 31, 2024, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $22.5 million. If the Company had breached any of these provisions at March 31, 2024, it could have been required to settle its obligations under the agreements at their termination value less offsetting positions of $880,000. For purposes of this disclosure, the amount of posted collateral by the Company and counterparties is limited to the amount offsetting the derivative asset and derivative liability.

 

 

Note 17 – Share-Based Compensation

In June 2017, the Company's Board of Directors adopted, and the Company's stockholder approved, the 2017 Omnibus Incentive Compensation Plan (the “Omnibus Plan”). The Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other equity-based, equity-related or cash-based awards. A total of 2,600,000 shares of our common stock have been reserved for issuance under the Omnibus Plan. As of March 31, 2024, there were 826,874 shares available for future grants under the Omnibus Plan.

The Company primarily grants time-based restricted share awards that vest over a one to four year period, subject to continued employment. The Company also grants performance-based restricted share awards. The number of shares which may be earned under the award is dependent upon the Company’s return on average assets, weighted equally over a three-year period and measured against a peer group consisting of publicly-traded bank holding companies. Results will be measured cumulatively at the end of the three years. Any earned shares will vest on the third anniversary of the grant date.

During 2024, the Company granted 347,492 shares of restricted common stock, par value $0.01 per share. Of this total, 268,595 restricted shares will vest ratably over three years on each anniversary of the grant date and 12,861 restricted shares will cliff vest on the third anniversary of the grant date, all subject to continued employment.

39

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

In addition, 66,036 performance-based restricted shares were included in the 2024 grant. The number of performance-based shares which may be earned under the award is dependent upon the Company’s total stockholder return and return on average assets, weighted equally, over a three-year period ending December 31, 2026, measured against the KBW Regional Bank Index. Results will be measured cumulatively at the end of the three years and any earned shares will vest on the third anniversary of the grant date.

The following table discloses the changes in restricted shares for the three months ended March 31, 2024:

 

 

Omnibus Plan

 

 

 

Number of Shares

 

 

Weighted Average
Grant Date Fair
Value

 

Beginning balance, January 1, 2024

 

 

627,271

 

 

$

24.24

 

Granted

 

 

347,492

 

 

 

20.89

 

Incremental performance shares issued and vested

 

 

13,632

 

 

 

 

Vested

 

 

(228,195

)

 

 

22.66

 

Forfeited

 

 

(6,505

)

 

 

25.88

 

Ending balance outstanding at March 31, 2024

 

 

753,695

 

 

$

23.07

 

A total of 228,195 restricted shares vested during the three months ended March 31, 2024. A total of 238,638 restricted shares vested during the year ended December 31, 2023. The fair value of restricted shares that vested during the three months ended March 31, 2024 was $4.8 million. The fair value of restricted shares that vested during the year ended December 31, 2023 was $5.7 million.

The Company recognizes share-based compensation based on the estimated fair value of the restricted stock at the grant date. Share-based compensation expense is included in non-interest expense in the Condensed Consolidated Statements of Operations. The fair value of the total stock return performance-based awards granted in 2024 and 2023 were calculated based on a Monte Carlo simulation, using the following assumptions:

 

 

Performance Based Grants

 

 

 

2024

 

 

2023

 

Risk-free interest rate

 

 

4.47

%

 

 

4.42

%

Expected term (years)

 

2.85 years

 

 

2.85 years

 

Expected stock price volatility

 

29.28% - 33.68%

 

 

38.11% - 39.80%

 

Weighted average grant date fair value

 

$

20.18

 

 

$

25.20

 

 

40

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following table summarizes restricted stock compensation expense for the three months ended March 31, 2024 and 2023:

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Total share-based compensation - restricted stock

 

$

1,846

 

 

$

1,510

 

Income tax benefit

 

 

511

 

 

 

406

 

Unrecognized compensation expense

 

 

14,880

 

 

 

14,416

 

Weighted average remaining amortization period

 

2.3 Years

 

 

2.5 years

 

The fair value of the unvested restricted stock awards at March 31, 2024 was $16.4 million.

In October 2014, the Company adopted the Byline Bancorp, Inc. Equity Incentive Plan (“BYB Plan”). The maximum number of shares available for grants under this plan was 2,476,122 shares. The Company granted 1,846,968 options to purchase shares under this plan. In June 2017, the Board of Directors terminated the BYB Plan and no future grants can be made under this plan. Options to purchase a total of 554,070 shares remain outstanding under the BYB Plan at March 31, 2024.

The types of stock options granted under the BYB Plan were Time Options and Performance Options. The exercise price of each option is equal to the fair value of the stock as of the date of grant. These option awards have vesting periods ranging from one to five years and have 10-year contractual terms. Stock volatility was computed as the average of the volatilities of peer group companies. All outstanding stock options were fully vested and exercisable at March 31, 2024.

The fair values of the stock options were determined using the Black-Scholes-Merton model for Time Options and a Monte Carlo simulation model for Performance Options.

The following table discloses the activity in shares subject to options and the weighted average exercise prices, in actual dollars, for the three months ended March 31, 2024:

 

 

BYB Plan

 

 

 

Number of Shares

 

 

Weighted Average Exercise Price

 

 

Intrinsic
Value

 

 

Weighted Average Remaining Contractual Term (in Years)

 

Beginning balance, January 1, 2024

 

 

768,564

 

 

$

11.31

 

 

$

9,413

 

 

 

1.5

 

Exercised

 

 

(214,494

)

 

 

11.18

 

 

$

2,587

 

 

 

 

Expired

 

 

—

 

 

 

 

 

 

 

 

 

 

Ending balance outstanding at March 31, 2024

 

 

554,070

 

 

$

11.36

 

 

$

5,738

 

 

 

1.2

 

Exercisable at March 31, 2024

 

 

554,070

 

 

$

11.36

 

 

$

5,738

 

 

 

1.2

 

A total of 214,494 stock options were exercised during the three months ended March 31, 2024. The exercise was cashless and had a related tax benefit of $690,000 for the three months ended March 31, 2024. No stock options were exercised during the during the year ended December 31, 2023. No stock options vested during the three months ended March 31, 2024 or the year ended December 31, 2023. No stock option compensation expense was recognized for the three months ended March 31, 2024 or the year ended December 31, 2023.

 

Note 18—Earnings per Share

A reconciliation of the numerators and denominators for earnings per common share computations is presented below. Incremental shares represent outstanding stock options for which the exercise price is less than the average market price of the Company’s common stock during the periods presented. Options to purchase 657,205 and 930,852 shares of common stock were outstanding as of March 31, 2024 and 2023, respectively. There were 753,695 and 693,104 restricted stock awards outstanding at March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023, no stock options outstanding were excluded from the calculation of diluted earnings per common share.

41

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

The following represent the calculation of basic and diluted earnings per share for the periods presented:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net income

 

$

30,440

 

 

$

23,945

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

Weighted-average common stock outstanding (basic)

 

 

43,258,087

 

 

 

36,955,085

 

Incremental shares

 

 

469,257

 

 

 

584,827

 

Weighted-average common stock outstanding (dilutive)

 

 

43,727,344

 

 

 

37,539,912

 

Basic earnings per common share

 

$

0.70

 

 

$

0.65

 

Diluted earnings per common share

 

$

0.70

 

 

$

0.64

 

Note 19—Stockholders’ Equity

A summary of the Company’s preferred and common stock at March 31, 2024 and December 31, 2023 is as follows:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Preferred stock

 

 

 

 

 

 

Par value

 

$

0.01

 

 

$

0.01

 

Shares authorized

 

 

25,000,000

 

 

 

25,000,000

 

Shares issued

 

 

—

 

 

 

—

 

Shares outstanding

 

 

—

 

 

 

—

 

Common stock, voting

 

 

 

 

 

 

Par value

 

$

0.01

 

 

$

0.01

 

Shares authorized

 

 

150,000,000

 

 

 

150,000,000

 

Shares issued

 

 

45,946,804

 

 

 

45,714,241

 

Shares outstanding

 

 

44,108,387

 

 

 

43,764,056

 

Treasury shares

 

 

1,838,417

 

 

 

1,950,185

 

On December 12, 2022, we announced that our Board of Directors approved a stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program was in effect from January 1, 2023 until December 31, 2023. No shares were repurchased under this program.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of the Company’s outstanding common stock. The program is in effect from January 1, 2024 until December 31, 2024, unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal requirements. The shares authorized to be repurchased represented approximately 2.9% of the Company’s outstanding common stock at December 31, 2023.

We did not purchase any shares under either stock repurchase program during the three months ended March 31, 2024 or 2023.

Repurchased shares are recorded as treasury shares on the trade date using the treasury stock method, and the cash paid is recorded as treasury stock. Treasury stock acquired is recorded at cost and is carried as a reduction of stockholders’ equity in the Condensed Consolidated Statements of Financial Condition.

For each of the three months ended March 31, 2024 and 2023, cash dividends were declared and paid to stockholders of record of our common stock of $0.09 per share.

On April 23, 2024, our Board of Directors declared a cash dividend of $0.09 per share payable on May 21, 2024 to stockholders of record of our common stock as of May 7, 2024.

 

42

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

 

Note 20—Consolidated Statements of Changes in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2024 and 2023:

(dollars in thousands)

 

Unrealized Gains
on Cash Flow Hedges

 

 

Unrealized Losses
on Available-for-Sale
Securities

 

 

Total Accumulated
Other Comprehensive
Income (Loss)

 

Balance, January 1, 2023

 

$

34,315

 

 

$

(151,865

)

 

$

(117,550

)

Other comprehensive income (loss), net of tax

 

 

(1,291

)

 

 

10,699

 

 

 

9,408

 

Balance, March 31, 2023

 

$

33,024

 

 

$

(141,166

)

 

$

(108,142

)

 

 

 

 

 

 

 

 

 

Balance, January 1, 2024

 

$

30,131

 

 

$

(130,248

)

 

$

(100,117

)

Other comprehensive loss, net of tax

 

 

(223

)

 

 

(6,570

)

 

 

(6,793

)

Balance, March 31, 2024

 

$

29,908

 

 

$

(136,818

)

 

$

(106,910

)

 

43

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of Byline Bancorp, Inc.’s financial condition and results of operations and should be read in conjunction with our Unaudited Interim Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report. The words “the Company,” “we,” “Byline,” “management,” “our” and “us” refer to Byline Bancorp, Inc. and its consolidated subsidiaries, unless we indicate otherwise. In addition to historical information, this discussion contains forward looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Special Note Regarding Forward Looking Statements” and “Risk Factors”. Byline assumes no obligation to update any of these forward looking statements.

Forward-Looking Statements

Statements contained in this report and in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”) that are not historical facts may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, strategies, predictions, forecasts, objectives or assumptions of future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “expects,” “can,” “could,” “may,” “predicts,” “potential,” “opportunity,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “seeks,” “intends” and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual strategies, actions or results to differ materially from those expressed in such statements, and are not guarantees of future results or other events or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions or results, based on management’s current expectations, assumptions and estimates on the date hereof, and there can be no assurance that actual strategies, actions or results will not differ materially from expectations, readers are cautioned not to place undue reliance on such statements.

Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results or conditions to differ materially from those reflected in forward-looking statements include:

•
uncertainty regarding domestic, foreign, and geopolitical developments and the United States and global economic outlook that may impact market conditions or affect demand for certain banking products and services, and the impact on our customers, which could impair the ability of our borrowers to repay outstanding loans and leases, impair collateral values and further increase our allowance for credit losses - loans and leases, as well as result in possible asset impairment charges;
•
unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than we have anticipated in our allowance for credit losses - loans and leases or changes in the value of our investments;
•
commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
•
deterioration in the financial condition of our borrowers resulting in significant increases in our loan and lease losses and provisions for those losses and other related adverse impacts to our results of operations and financial condition;
•
estimates of fair value estimates of certain of our assets and liabilities, which could change in value significantly from period to period;
•
competitive pressures in the financial services industry in our market areas relating to both pricing and loan and lease structures, which may impact our growth rate;
•
demand for loan products and deposit flows;
•
unanticipated developments in pending or prospective loan and/or lease transactions or greater-than-expected paydowns or payoffs of existing loans and leases;
•
inaccurate information and assumptions in our analytical and forecasting models used to manage our balance sheet;
•
unanticipated changes in monetary policies of the Federal Reserve or significant adjustments in the pace of, or market expectations for, future interest rate changes;
•
availability of sufficient and cost-effective sources of liquidity, funding, and capital as and when needed;
•
our ability to attract, retain or the loss of key personnel or an inability to recruit appropriate talent cost-effectively;
•
adverse effects on our information technology systems resulting from failures, human error or cyberattack, including the potential impact of disruptions or security breaches at our third-party service providers, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;
•
greater-than-anticipated costs to support the growth of our business, including investments in new lines of business, products and services, or technology, process improvements or other infrastructure enhancements, or greater-than-anticipated compliance or regulatory costs and burdens; the impact of possible future acquisitions, if any, including the costs and burdens of integration efforts;

44

 

•
•
the ability of the Company to receive dividends from Byline Bank;
•
legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;
•
changes in Small Business Administration (“SBA”) and U.S. Department of Agriculture (“USDA”) U.S. government guaranteed lending rules, regulations, loan and lease products and funding limits, including specifically the SBA Section 7(a) program, as well as changes in SBA or USDA standard operating procedures or changes to the status of Byline Bank as an SBA Preferred Lender;
•
changes in accounting principles, policies and guidelines applicable to bank holding companies and banking generally;
•
the impact of a possible change in the federal or state income tax rates on our deferred tax assets and provision for income tax expense;
•
our ability to implement our growth strategy, including via acquisitions;
•
the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period;
•
the risk that the integration of acquisition operations will be materially delayed or will be more costly or difficult than expected;
•
the effect of mergers on customer relationships and operating results; and
•
other risks detailed from time to time in filings we make with the SEC.

These risks and uncertainties should be considered in evaluating any forward-looking statements, and undue reliance should not be placed on such statements. Forward looking statements speak only as of the date they are made. You should also consider the risks, assumptions and uncertainties set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on March 4, 2024, as well as those set forth in the reports we file with the SEC. We assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Overview

Our Business

We are a bank holding company headquartered in Chicago, Illinois, and conduct all our business activities through our subsidiary, Byline Bank, a full service commercial bank, and Byline Bank’s subsidiaries. Through Byline Bank, we offer a broad range of banking products and services to small and medium sized businesses, commercial real estate and financial sponsors and to consumers who generally live or work near our branches. We also offer online account opening to consumer and business customers through our website and provide trust and wealth management services to our customers. In addition to our traditional commercial banking business, we provide small ticket equipment leasing solutions through Byline Financial Group, a wholly-owned subsidiary of Byline Bank, headquartered in Bannockburn, Illinois, with sales offices in Illinois, and sales representatives in Illinois, Michigan, New Jersey, and New York. We participate in U.S. government guaranteed lending programs and originate U.S. government guaranteed loans. Byline Bank is a leading originator of SBA loans and was the second most active 7(a) and 504 lender in Illinois for the quarter ended March 31, 2024.

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provision for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

We reported consolidated net income of $30.4 million, or $0.70 per basic and diluted common share, for the three months ended March 31, 2024, compared to net income of $23.9 million, or $0.65 per basic and $0.64 per diluted common share, for the three months ended March 31, 2023, an increase of $6.5 million. The increase in net income was attributable to a $9.8 million increase in net interest income. The increase in net interest income during the three months ended March 31, 2024 was primarily driven by higher yields on loans and leases, and organic growth in the loan and lease portfolio, as well as from the Inland acquisition.

Dividends declared on common shares were $3.9 million and $3.4 million for the three months ended March 31, 2024 and 2023, respectively. Dividends paid on common shares were $3.9 million and $3.3 million for the three months ended March 31, 2024 and 2023, respectively.

Our results of operations for the three months ended March 31, 2024 and 2023 yielded an annual return on average assets of 1.36% and 1.32% and a return on average stockholders’ equity of 12.26% and 12.38% respectively.

45

 

As of March 31, 2024, we had consolidated total assets of $9.4 billion, total gross loans and leases outstanding of $6.8 billion, total deposits of $7.4 billion, and total stockholders’ equity of $1.0 billion.

Inland Bancorp, Inc. Acquisition

On July 1, 2023, we completed our acquisition of Inland Bancorp, Inc., ("Inland") under the terms of a definitive merger agreement. As a result of the merger, Inland's wholly owned bank subsidiary, Inland Bank and Trust, was merged with and into Byline Bank. Refer to Note 3—Acquisition of a Business of our Unaudited Interim Condensed Financial Statements as of March 31, 2024, which is included in this report, for additional information.

Critical Accounting Policies and Significant Estimates

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the Banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes, which are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

These critical accounting policies and estimates include (i) determination of the allowance for credit losses, (ii) the valuation of intangible assets such as goodwill, and assessment of impairment, (iii) fair value estimations, and (iv) the determination and assessment of impairment for other intangible assets.

The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 of our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, that we filed with the SEC on March 4, 2024.

Allowance for credit losses

The allowance for credit losses ("ACL") represents management’s estimate of current expected credit losses over the life of a financial asset carried at amortized cost at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loss reserves.

The ACL is maintained at a level that management believes is appropriate to provide for current expected credit losses as of the dates of the Consolidated Statements of Financial Condition, and we have established methodologies for the determination of its adequacy. The methodologies are set forth in a formal policy and take into consideration relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. We increase our ACL by recording provisions for current expected credit losses against our income and decrease by charge‑offs, net of recoveries.

The evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management uses available information to recognize losses on loans and leases, changes in economic or other conditions may necessitate revision of the estimate in future periods.

For each portfolio, management estimates expected credit losses over the life of each loan and lease utilizing lifetime or cumulative loss rate methodology. The lifetime loss rates are estimated by analyzing a combination of internal and external data related to historical performance of each loan and lease pool over a complete economic cycle. Loss rates are based on historical averages for each loan and lease pool, adjusted to reflect the impact of a forward-looking forecast of certain macroeconomic variables, primarily unemployment rates, which management considers to be both reasonable and supportable. Various economic scenarios are considered and weighted to arrive at the forecast that most reflects management’s expectation of future conditions. After a one-year forecast period, a one-year reversion period adjusts loss experience to the historical average on a straight-line basis.

Management also considers qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history. Each risk factor is assigned an allowance level based on management’s judgment as to the expected impact of each risk factor on each loan and lease portfolio and is monitored quarterly. All loans and leases of $500,000 or greater with an internal risk rating of substandard or below, or on nonaccrual status are individually evaluated for impairment on a quarterly basis.

The Company also maintains an allowance for credit losses on off-balance sheet credit exposures for unfunded loan commitments. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life based on management’s consideration of past events, current conditions, and reasonable and supportable economic forecasts. Management tracks the level and trends in unused commitments and takes into consideration the same factors as those considered for purposes of the allowance for credit losses on outstanding loans.

Goodwill

Goodwill. Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in connection with our recapitalization and acquisitions using the acquisition method of accounting. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”).

Impairment testing is performed using either a qualitative or quantitative approach at the reporting unit level. Our goodwill is allocated to Byline Bank, which is our only applicable reporting unit for the purposes of testing goodwill for impairment. We have selected November 30 as the date to perform the annual goodwill impairment test.

46

 

Additionally, we perform a goodwill impairment evaluation on an interim basis when events or circumstances indicate impairment potentially exists.

Other intangible assets

Other intangible assets primarily consist of core deposit intangible assets and customer relationship intangible. In valuing intangible assets, we consider variables such as servicing costs, attrition rates and market discount rates. Intangible assets are reviewed annually, or more frequently when events or changes in circumstances occur that indicate that their carrying values may not be recoverable. If the recoverable amount of the intangible asset is determined to be less than its carrying value, we would then measure the amount of impairment based on an estimate of the fair value at that time. We also evaluate whether the events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life. Core deposit intangibles are currently amortized over an approximate ten-year period and customer intangibles are amortized over a twelve-year period.

Fair value of Financial Instruments

ASC Topic 820, Fair Value Measurement defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.

The degree of management judgment involved in determining the fair value of assets and liabilities is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not available, management judgment is necessary to estimate fair value. In addition, changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we would use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement.

See Note 15 of our Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024, included in this report, for a complete discussion of our use of fair value of financial assets and liabilities and their related measurement practices.

Recently Issued Accounting Pronouncements

Refer to Note 2 of our Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024, which is included in this report, for a description of recent accounting pronouncements, including the effective dates of adoption and anticipated effects on our results of operations and financial condition.

Primary Factors Used to Evaluate Our Business

As a financial institution, we manage and evaluate various aspects of both our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our consolidated financial statements as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance, and the final condition and performance of comparable financial institutions in our region. Comparison of our financial performance against other financial institutions is impacted by the accounting for acquired non‑credit-deteriorated and purchased credit deteriorated loans.

Results of Operations

Overview

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provisions for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

 

47

 

Selected Financial Data

 

 

As of or for the Three Months Ended

 

 

 

March 31,

 

(dollars in thousands, except share and per share data)

 

2024

 

 

2023

 

Summary of Operations

 

 

 

 

 

 

Common Share Data

 

 

 

 

 

 

Basic earnings per common share

 

$

0.70

 

 

$

0.65

 

Diluted earnings per common share

 

$

0.70

 

 

$

0.64

 

Adjusted diluted earnings per share(1)(3)

 

$

0.70

 

 

$

0.65

 

Weighted-average common shares outstanding (basic)

 

 

43,258,087

 

 

 

36,955,085

 

Weighted-average common shares outstanding (diluted)

 

 

43,727,344

 

 

 

37,539,912

 

Common shares outstanding

 

 

44,108,387

 

 

 

37,713,427

 

Cash dividends per common share

 

$

0.09

 

 

$

0.09

 

Dividend payout ratio on common stock

 

 

12.86

%

 

 

14.06

%

Book value per common share

 

$

22.88

 

 

$

21.10

 

Tangible book value per common share(1)

 

$

18.29

 

 

$

16.92

 

Key Ratios and Performance Metrics (annualized
  where applicable)

 

 

 

 

 

 

Net interest margin

 

 

4.00

%

 

 

4.38

%

Net interest margin, fully taxable equivalent (1)(4)

 

 

4.01

%

 

 

4.39

%

Average cost of deposits

 

 

2.56

%

 

 

1.15

%

Efficiency ratio(2)

 

 

51.94

%

 

 

52.10

%

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

 

 

51.75

%

 

 

51.54

%

Non-interest income to total revenues(1)

 

 

15.32

%

 

 

16.67

%

Non-interest expense to average assets

 

 

2.40

%

 

 

2.69

%

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

 

 

2.39

%

 

 

2.67

%

Return on average stockholders' equity

 

 

12.26

%

 

 

12.38

%

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

 

 

12.31

%

 

 

12.62

%

Return on average assets

 

 

1.36

%

 

 

1.32

%

Adjusted return on average assets(1)(3)

 

 

1.36

%

 

 

1.35

%

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

 

 

2.10

%

 

 

2.32

%

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

 

 

2.11

%

 

 

2.35

%

Return on average tangible common stockholders' equity(1)

 

 

15.88

%

 

 

16.20

%

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

 

 

15.95

%

 

 

16.49

%

Non-interest-bearing deposits to total deposits

 

 

25.19

%

 

 

33.58

%

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

 

 

92.54

%

 

 

95.37

%

Deposits to total liabilities

 

 

87.49

%

 

 

86.31

%

Deposits per branch

 

$

153,129

 

 

$

152,965

 

Asset Quality Ratios

 

 

 

 

 

 

Non-performing loans and leases to total loans and leases
  held for investment

 

 

1.00

%

 

 

0.84

%

Non-performing assets to total assets

 

 

0.73

%

 

 

0.67

%

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

 

 

1.51

%

 

 

1.64

%

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

 

 

0.37

%

 

 

0.09

%

Capital Ratios

 

 

 

 

 

 

Common equity to total assets

 

 

10.72

%

 

 

10.57

%

Tangible common equity to tangible assets(1)

 

 

8.76

%

 

 

8.66

%

Leverage ratio

 

 

10.91

%

 

 

10.46

%

Common equity tier 1 capital ratio

 

 

10.59

%

 

 

10.27

%

Tier 1 capital ratio

 

 

11.62

%

 

 

10.90

%

Total capital ratio

 

 

13.66

%

 

 

13.19

%

(1) Represents a non-GAAP financial measure. See “Reconciliations 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 on assets held for sale and ROU assets, and merger-related expenses.

(4) 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%.

48

 

We reported consolidated net income of $30.4 million for the three months ended March 31, 2024 compared to net income of $23.9 million for the three months ended March 31, 2023, an increase of $6.5 million. The increase in net income was primarily attributable to a $9.8 million increase in net interest income and a decrease in the provision for credit losses of $3.2 million, offset by an increase in non-interest expense of $5.0 million. Net income available to common stockholders was $0.70 per basic and per diluted common share, for the three months ended March 31, 2024 compared to $0.65 per basic and $0.64 per diluted common share, for the three months ended March 31, 2023.

The increase in net interest income during the three months ended March 31, 2024 was mainly a result of higher yields on loans and leases, organic growth in the loan and lease portfolio, as well as from the Inland acquisition.. The decrease in provision for credit losses was due to a smaller allocation for individually assessed loans. The increase in non-interest expense was primarily due to increases in salaries and employee benefits mainly due to headcount.

Our annualized return on average assets was 1.36% for the three months ended March 31, 2024 compared to 1.32% for the three months ended March 31, 2023. Our annualized return on average stockholders’ equity was 12.26% for the three months ended March 31, 2024 compared to 12.38% for the three months ended March 31, 2023. Our efficiency ratio was 51.94% for the three months ended March 31, 2024 compared to 52.10% for the three months ended March 31, 2023.

Net Interest Income

Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest and dividends on interest-earning assets, which include loans, leases and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, which include interest-bearing deposits, subordinated debt, Federal Home Loan Bank advances, junior subordinated debentures and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread, and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as the annualized net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Because of our recapitalization and acquisitions, we derive a portion of our interest income from the accretable discounts on purchase credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan and is impacted by changes in expected cash flows on the loan. This accretion will continue to have an impact on our net interest income as long as loans acquired with a discount at acquisition represent a meaningful portion of our interest-earning assets. As of March 31, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 3.0% of our total loan and lease portfolio compared to 3.4% at December 31, 2023.

Changes in the market interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. In addition, our interest income includes the accretion of the discounts on our acquired loans, which will also affect our net interest spread, net interest margin and net interest income.

49

 

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Yields have been calculated on a pre-tax basis (dollars in thousands).

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

Average
Balance(5)

 

 

Interest
Inc / Exp

 

 

Average
Yield /
Rate

 

 

Average
Balance(5)

 

 

Interest
Inc / Exp

 

 

Average
Yield /
Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

339,449

 

 

$

3,828

 

 

 

4.54

%

 

$

97,578

 

 

$

442

 

 

 

1.84

%

Loans and leases(1)

 

 

6,681,488

 

 

 

123,792

 

 

 

7.45

%

 

 

5,484,372

 

 

 

92,343

 

 

 

6.83

%

Taxable securities

 

 

1,422,661

 

 

 

9,822

 

 

 

2.78

%

 

 

1,275,377

 

 

 

6,431

 

 

 

2.04

%

Tax-exempt securities(2)

 

 

159,984

 

 

 

1,112

 

 

 

2.80

%

 

 

151,817

 

 

 

994

 

 

 

2.65

%

Total interest-earning assets

 

$

8,603,582

 

 

$

138,554

 

 

 

6.48

%

 

$

7,009,144

 

 

$

100,210

 

 

 

5.80

%

Allowance for credit losses - loans and leases

 

 

(102,256

)

 

 

 

 

 

 

 

 

(84,321

)

 

 

 

 

 

 

All other assets

 

 

529,615

 

 

 

 

 

 

 

 

 

420,328

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

9,030,941

 

 

 

 

 

 

 

 

$

7,345,151

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’
   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

590,406

 

 

$

2,429

 

 

 

1.65

%

 

$

606,008

 

 

$

2,494

 

 

 

1.67

%

Money market accounts

 

 

2,237,324

 

 

 

19,660

 

 

 

3.53

%

 

 

1,465,677

 

 

 

7,728

 

 

 

2.14

%

Savings

 

 

531,912

 

 

 

197

 

 

 

0.15

%

 

 

613,590

 

 

 

227

 

 

 

0.15

%

Time deposits

 

 

1,992,357

 

 

 

23,676

 

 

 

4.78

%

 

 

966,409

 

 

 

5,849

 

 

 

2.45

%

Total interest-bearing deposits

 

 

5,351,999

 

 

 

45,962

 

 

 

3.45

%

 

 

3,651,684

 

 

 

16,298

 

 

 

1.81

%

Other borrowings

 

 

472,644

 

 

 

3,824

 

 

 

3.25

%

 

 

573,433

 

 

 

5,852

 

 

 

4.14

%

Federal funds purchased

 

 

—

 

 

 

—

 

 

 

0.00

%

 

 

2,778

 

 

 

36

 

 

 

5.30

%

Subordinated notes and debentures

 

 

144,387

 

 

 

2,994

 

 

 

8.34

%

 

 

111,101

 

 

 

2,098

 

 

 

7.66

%

Total borrowings

 

 

617,031

 

 

 

6,818

 

 

 

4.44

%

 

 

687,312

 

 

 

7,986

 

 

 

4.71

%

Total interest-bearing liabilities

 

$

5,969,030

 

 

$

52,780

 

 

 

3.56

%

 

$

4,338,996

 

 

$

24,284

 

 

 

2.27

%

Non-interest-bearing demand deposits

 

 

1,874,322

 

 

 

 

 

 

 

 

 

2,076,613

 

 

 

 

 

 

 

Other liabilities

 

 

188,783

 

 

 

 

 

 

 

 

 

145,253

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

998,806

 

 

 

 

 

 

 

 

 

784,289

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’
   EQUITY

 

$

9,030,941

 

 

 

 

 

 

 

 

$

7,345,151

 

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

 

 

2.92

%

 

 

 

 

 

 

 

 

3.53

%

Net interest income, fully taxable equivalent

 

 

 

 

$

85,774

 

 

 

 

 

 

 

 

$

75,926

 

 

 

 

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

 

 

 

 

 

 

 

 

4.01

%

 

 

 

 

 

 

 

 

4.39

%

Reconciliation to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Tax-equivalent adjustment

 

 

 

 

 

233

 

 

 

0.01

%

 

 

 

 

 

208

 

 

 

0.01

%

Net interest income

 

 

 

 

$

85,541

 

 

 

 

 

 

 

 

$

75,718

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

 

4.00

%

 

 

 

 

 

 

 

 

4.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

 

$

4,284

 

 

 

0.20

%

 

 

 

 

$

729

 

 

 

0.04

%

 

(1)
Loan and lease balances are net of deferred origination fees and costs and initial direct 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 interest-earning assets.
(5)
Average balances are average daily balances.

50

 

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Changes applicable to both volume and rate have been allocated to volume. Yields have been calculated on a pre-tax basis. The table below is a summary of increases and decreases in interest income and interest expense resulting from changes in average balances (volume) and changes in average interest rates (dollars in thousands):

 

 

Three Months Ended March 31, 2024

 

 

 

Compared to Three Months Ended March 31, 2023

 

 

 

Increase (Decrease) Due to

 

 

 

 

 

 

Volume

 

 

Rate

 

 

Total

 

Interest income

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,731

 

 

$

655

 

 

$

3,386

 

Loans and leases(1)

 

 

22,995

 

 

 

8,454

 

 

 

31,449

 

Taxable securities

 

 

1,044

 

 

 

2,347

 

 

 

3,391

 

Tax-exempt securities

 

 

61

 

 

 

57

 

 

 

118

 

Total interest income

 

$

26,831

 

 

$

11,513

 

 

$

38,344

 

Interest expense

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Interest checking

 

$

(35

)

 

$

(30

)

 

$

(65

)

Money market accounts

 

 

6,867

 

 

 

5,065

 

 

 

11,932

 

Savings

 

 

(30

)

 

 

—

 

 

 

(30

)

Time deposits

 

 

12,228

 

 

 

5,599

 

 

 

17,827

 

Total interest-bearing deposits

 

 

19,030

 

 

 

10,634

 

 

 

29,664

 

Other borrowings

 

 

(757

)

 

 

(1,271

)

 

 

(2,028

)

Federal funds purchased

 

 

1

 

 

 

(37

)

 

 

(36

)

Subordinated notes and debentures

 

 

708

 

 

 

188

 

 

 

896

 

Total borrowings

 

 

(48

)

 

 

(1,120

)

 

 

(1,168

)

Total interest expense

 

$

18,982

 

 

$

9,514

 

 

$

28,496

 

Net interest income, fully taxable equivalent

 

$

7,849

 

 

$

1,999

 

 

$

9,848

 
(1)
Includes loans and leases on non-accrual status.

Net interest income for the three months ended March 31, 2024 was $85.5 million compared to $75.7 million during the same period in 2023, an increase of $9.8 million, or 13.0%. Interest income increased $38.3 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily a result of growth in the loan and lease portfolio, including acquired loans, and higher yields on interest earning assets. Interest expense increased by $28.5 million for the three months ended March 31, 2024 compared to the same period in 2023 mostly due growth of the deposit portfolio, including assumed deposits, change in deposit mix, and higher rates paid on interest-bearing deposits.

The net interest margin for the three months ended March 31, 2024 was 4.00%, a decrease of 38 basis points compared to 4.38% for the three months ended March 31, 2023. The decrease was primarily attributable to the rising rate environment.

Net loan accretion income was $4.3 million for the three months ended March 31, 2024 compared to $729,000 for the three months ended March 31, 2023, an increase of $3.6 million due to loans acquired in the Inland acquisition. Total net loan accretion on acquired loans contributed 20 basis points to the net interest margin for the three months ended March 31, 2024 compared to four basis points for the three months ended March 31, 2023. We expected loan accretion income to decline and projected accretion income as of March 31, 2024 is summarized as follows:

 

 

Estimated
Projected
Accretion(1)(2)

 

Remainder of 2024

 

$

6,530

 

2025

 

 

6,126

 

2026

 

 

4,469

 

2027

 

 

2,808

 

2028

 

 

1,599

 

Thereafter

 

 

13,766

 

Total

 

$

35,298

 

(1) Estimated projected accretion excludes contractual interest income on acquired loans and leases.

(2) Projections are undated quarterly, assume no prepayments, and are subject to change.

51

 

Provision for Credit Losses

The provision for credit losses reflects the amount required to maintain the ACL at an appropriate level based upon management’s evaluation of collectively and individually evaluated loss reserves. The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management’s evaluation, is appropriate to provide coverage for current expected credit losses in the loan and lease portfolio. The ACL is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior charge-offs.

The provision for credit losses was $6.6 million for the three months ended March 31, 2204, compared to $9.8 million for the three months ended March 31, 2023, a decrease of $3.2 million and is comprised of a provision for credit losses - loans and leases and a provision for credit losses - unfunded commitments. Provision for credit losses - loans and leases was $6.9 million for the three months ended March 31, 2024, compared to $9.7 million for the three months ended March 31, 2023, a decrease of $2.8 million. The decrease in provision for credit losses - loans and leases was driven by lower allocation to individually assessed loans. The provision for credit losses - unfunded commitments was a recapture of $248,000 and a provision of $113,000 for the three months ended March 31, 2024 and 2023, respectively

Non-Interest Income

The following table presents the major components of non-interest income for the three months ended March 31, 2024 and 2023, respectively (dollars in thousands):

 

Three Months Ended March 31,

 

 

QTD 2024
Compared to 2023

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Fees and service charges on deposits

$

2,427

 

 

$

2,120

 

 

$

307

 

 

 

14.5

%

Loan servicing revenue

 

3,364

 

 

 

3,380

 

 

 

(16

)

 

 

(0.5

)%

Loan servicing asset revaluation

 

(703

)

 

 

656

 

 

 

(1,359

)

 

 

(207.2

)%

ATM and interchange fees

 

1,075

 

 

 

1,063

 

 

 

12

 

 

 

1.1

%

Change in fair value of equity securities, net

 

392

 

 

 

350

 

 

 

42

 

 

 

11.9

%

Net gains on sales of loans

 

5,533

 

 

 

5,148

 

 

 

385

 

 

 

7.5

%

Wealth management and trust income

 

1,157

 

 

 

924

 

 

 

233

 

 

 

25.2

%

Other non-interest income

 

2,228

 

 

 

1,504

 

 

 

724

 

 

 

48.1

%

Total non-interest income

$

15,473

 

 

$

15,145

 

 

$

328

 

 

 

2.2

%

Fees and service charges on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but are not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $2.4 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively. The increases is primarily due to increases in deposit balances.

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of loans that we sell are retained by us. In exchange for continuing to service loans that have been sold, we receive servicing revenue from a portion of the interest cash flow of the loan. We generated $3.4 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the three months ended March 31, 2024 and 2023. At March 31, 2024 and 2023, the outstanding balance of guaranteed loans serviced was $1.7 billion.

Loan servicing asset revaluation represents net changes in the fair value of our servicing assets. Loan servicing asset revaluation had a downward adjustment of $703,000 and an upward adjustment $656,000 for the three months ended March 31, 2024 and 2023, respectively, a change of $1.4 million. Changes in the revaluation were mainly due to higher prepayment speeds and a lower average life.

Net gains on sales of loans were $5.5 million for the three months ended March 31, 2024 compared to $5.1 million for the three months ended March 31, 2023, an increase of $385,000, or 7.5%, driven mainly by higher premiums. We sold $72.5 million of U.S. government guaranteed loans during the three months ended March 31, 2024 compared to $72.2 million during the three months ended March 31, 2023.

Wealth management and trust income represents fees charged to customers for investment, trust, or wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $1.2 million for the three months ended March 31, 2024 compared to $924,000 for the three months ended March 31, 2023, an increase of $233,000 or 25.2%. Assets under administration were $654.1 million and $573.7 million as of March 31, 2024 and 2023, respectively. Assets under administration decreased $116.4 million or 15.1% from $770.5 million as of December 31, 2023, due to the loss of accounts.

Other non-interest income was $2.2 million for the three months ended March 31, 2024 compared to $1.5 million for the three months ended March 31, 2023, an increase of $724,000 or 48.1%. The increase was primarily driven by net gains on sales of leased equipment and income associated with bank owned life insurance.

52

 

Non-Interest Expense

The following table presents the major components of non-interest expense for the three months ended March 31, 2024 and 2023, respectively (dollars in thousands):

 

 

Three Months Ended March 31,

 

 

QTD 2024
Compared to 2023

 

 

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

 

Salaries and employee benefits

 

$

33,953

 

 

$

30,394

 

 

$

3,559

 

 

 

11.7

%

 

Occupancy and equipment
  expense, net

 

 

5,284

 

 

 

4,444

 

 

 

840

 

 

 

18.9

%

 

Impairment charge on assets held
  for sale

 

 

—

 

 

 

20

 

 

 

(20

)

 

 

(100.0

)%

 

Loan and lease related expenses

 

 

685

 

 

 

963

 

 

 

(278

)

 

 

(28.8

)%

 

Legal, audit and other
  professional fees

 

 

2,719

 

 

 

3,114

 

 

 

(395

)

 

 

(12.7

)%

 

Data processing

 

 

4,145

 

 

 

3,783

 

 

 

362

 

 

 

9.6

%

 

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

 

 

(98

)

 

 

(103

)

 

 

5

 

 

 

(4.9

)%

 

Other intangible assets
  amortization expense

 

 

1,345

 

 

 

1,455

 

 

 

(110

)

 

 

(7.6

)%

 

Other non-interest expense

 

 

5,776

 

 

 

4,730

 

 

 

1,046

 

 

 

22.1

%

 

Total non-interest expense

 

$

53,809

 

 

$

48,800

 

 

$

5,009

 

 

 

10.3

%

 

Salaries and employee benefits, the single largest component of our non-interest expense, totaled $34.0 million for the three months ended March 31, 2024 compared to $30.4 million for the three months ended March 31, 2023, an increase of $3.6 million, or 11.7%. The increases were primarily a result of increased headcount as a result of our acquisition of Inland. Our staffing increased from 971 full-time equivalent employees as of March 31, 2023 to 1,064 as of March 31, 2024.

Occupancy and equipment expense, net was $5.3 million for the three months ended March 31, 2024 compared to $4.4 million for the three months ended March 31, 2023, an increase of $840,000 or 18.9%. The increase is primarily due to branches acquired as a result of the Inland acquisition.

Loan and lease related expenses were $685,000 for the three months ended March 31, 2024 compared to $963,000 for the three months ended March 31, 2023, a decrease of $278,000, or 28.8%. The decrease was primarily driven by lower government guaranteed expenses.

Legal, audit, and other professional fees were $2.7 million for the three months ended March 31, 2024 compared to $3.1 million for the three months ended March 31, 2023, a decrease of $395,000, or 12.7%. The decrease was principally driven by merger-related expenses incurred during the first quarter of 2023.

Data processing was $4.1 million for the three months ended March 31, 2024, compared to $3.8 million for the three months ended March 31, 2023, an increase of $362,000 or 9.6%. The increases were driven by increased software licensing and IT infrastructure expenses.

Other non-interest expense was $5.8 million for the three months ended March 31, 2024 compared to $4.7 million for the three months ended March 31, 2023, an increase of $1.0 million or 22.1%. These increase was primarily due $1.3 million in charges taken for planned branch consolidations that will occur during the second quarter of 2024, which is inclusive of impairment on right-of-use assets.

Our efficiency ratio was 51.94% for the three months ended March 31, 2024 compared to 52.10% for the three months ended March 31, 2023. The change in our efficiency ratio for the three months ended March 31, 2024 was driven by net interest income growth. Our adjusted efficiency ratio was 51.75% for the three months ended March 31, 2024 compared to 51.54% for the three months ended March 31, 2023.

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

Income Taxes

Our provision for income taxes for the three months ended March 31, 2024 totaled $10.1 million compared to $8.3 million for the three months ended March 31, 2023, an increase of $1.8 million, or 22.0%. The increase in income tax expense was principally due to an increase in net income before provision for income taxes. Our effective tax rate was 25.0% for the three months ended March 31, 2024 and 25.7% for the three months ended March 31, 2023.

We expect our effective tax rate for 2024 to be approximately 25-27%.

53

 

Financial Condition

Condensed Consolidated Statements of Financial Condition Analysis

Our total assets increased by $528.5 million, or 6.0%, to $9.4 billion at March 31, 2024 compared to $8.9 billion at December 31, 2023. The increase in total assets was primarily due to an increase in cash and cash equivalents of $410.7 million, inclusive of $200.0 million in short term investments, an increase of $93.9 million in loans and leases, or 1.4%, from $6.7 billion at December 31, 2023 to $6.8 billion at March 31, 2024. Our originated loan and lease portfolio increased by $133.4 million and our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio decreased by $39.5 million. The increase in our originated portfolio was primarily attributed to growth in the commercial and industrial portfolio. The decrease in our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio was attributed to decreases in commercial and residential real estate resulting from resolutions and charge-offs.

Total liabilities increased by $509.6 million, or 6.5%, to $8.4 billion at March 31, 2024 compared to $7.9 billion at December 31, 2023. Total deposits increased by $173.2 million, or 2.4%, driven by growth in time deposits and money market accounts, offset by a decrease in non-interest bearing deposits. Other borrowings increased by $326.0 million, or 82.5%, mainly due to advances under the Bank Term Funding Program of $200.0 million and increased FHLB advances.

Investment Portfolio

Our investment securities portfolio consists of securities classified as available-for-sale and held-to-maturity. There were no securities classified as trading in our investment portfolio as of March 31, 2024 or December 31, 2023. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest. Securities available-for-sale consist primarily of residential mortgage-backed securities, commercial mortgage-backed securities and U.S. government agencies securities.

Securities available-for-sale increased by $36.7 million, or 2.7%, from $1.3 billion at December 31, 2023 to $1.4 billion at March 31, 2024. The increase was mainly attributed to purchases of securities, net of maturities, calls, and repayments.

At March 31, 2024, our held-to-maturity securities portfolio consists of obligations of states, municipalities and political subdivisions. We carry these securities at amortized cost. Securities held-to-maturity were $1.2 million at March 31, 2024, and at December 31, 2023, respectively.

The following table summarizes the fair value of the available-for-sale and held-to-maturity securities portfolio as of the dates presented (dollars in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

 

$

87,147

 

 

$

86,112

 

 

$

116,398

 

 

$

115,434

 

U.S. Government agencies

 

 

155,659

 

 

 

138,054

 

 

 

147,062

 

 

 

130,695

 

Obligations of states, municipalities, and
   political subdivisions

 

 

86,160

 

 

 

81,709

 

 

 

86,022

 

 

 

82,275

 

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

825,180

 

 

 

726,587

 

 

 

786,970

 

 

 

695,803

 

Non-agency

 

 

136,561

 

 

 

113,709

 

 

 

122,359

 

 

 

100,260

 

Commercial mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

197,171

 

 

 

163,546

 

 

 

181,452

 

 

 

147,204

 

Corporate securities

 

 

40,667

 

 

 

36,752

 

 

 

40,681

 

 

 

36,171

 

Asset-backed securities

 

 

33,882

 

 

 

32,678

 

 

 

35,857

 

 

 

34,638

 

Total available-for-sale

 

$

1,562,427

 

 

$

1,379,147

 

 

$

1,516,801

 

 

$

1,342,480

 

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states, municipalities, and
   political subdivisions

 

$

1,156

 

 

$

1,149

 

 

$

1,157

 

 

$

1,149

 

Total held-to-maturity

 

$

1,156

 

 

$

1,149

 

 

$

1,157

 

 

$

1,149

 

 

54

 

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At March 31, 2024, we evaluated the securities that had an unrealized loss for credit losses and determined there were none. There were 320 investment securities with unrealized losses at March 31, 2024. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

The following table (dollars in thousands) set forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of March 31, 2024. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

 

Maturity as of March 31, 2024

 

 

Due in One Year or Less

 

 

Due from One to
Five Years

 

 

Due from Five to
Ten Years

 

 

Due after Ten Years

 

 

Amortized
Cost

 

 

Weighted
Average
Yield(1)

 

 

Amortized
Cost

 

 

Weighted
Average
Yield(1)

 

 

Amortized
Cost

 

 

Weighted
Average
Yield(1)

 

 

Amortized
Cost

 

 

Weighted
Average
Yield(1)

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Notes

$

72,421

 

 

 

3.91

%

 

$

14,726

 

 

 

3.77

%

 

$

—

 

 

 

0.00

%

 

$

—

 

 

 

0.00

%

U.S. government agencies

 

—

 

 

 

0.00

%

 

 

70,171

 

 

 

2.54

%

 

 

78,352

 

 

 

1.67

%

 

 

7,136

 

 

 

4.04

%

Obligations of states,
   municipalities, and
   political subdivisions

 

2,851

 

 

 

2.99

%

 

 

20,326

 

 

 

3.09

%

 

 

23,884

 

 

 

3.76

%

 

 

39,099

 

 

 

2.47

%

Residential mortgage-
  backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

—

 

 

 

0.00

%

 

 

31,356

 

 

 

1.64

%

 

 

52,702

 

 

 

1.61

%

 

 

741,122

 

 

 

2.50

%

Non-agency

 

—

 

 

 

0.00

%

 

 

—

 

 

 

0.00

%

 

 

—

 

 

 

0.00

%

 

 

136,561

 

 

 

2.58

%

Commercial mortgage-
   backed securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

—

 

 

 

0.00

%

 

 

—

 

 

 

0.00

%

 

 

14,083

 

 

 

1.67

%

 

 

183,088

 

 

 

2.41

%

Corporate securities

 

—

 

 

 

0.00

%

 

 

13,611

 

 

 

4.85

%

 

 

27,056

 

 

 

3.78

%

 

 

—

 

 

 

0.00

%

Asset-backed securities

 

—

 

 

 

0.00

%

 

 

—

 

 

 

0.00

%

 

 

33,882

 

 

 

5.49

%

 

 

—

 

 

 

0.00

%

Total available-for-sale

$

75,272

 

 

 

3.87

%

 

$

150,190

 

 

 

2.76

%

 

$

229,959

 

 

 

2.69

%

 

$

1,107,006

 

 

 

2.50

%

Held-to-maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states,
   municipalities, and
   political subdivisions

$

1,156

 

 

 

2.75

%

 

$

—

 

 

 

0.00

%

 

$

—

 

 

 

0.00

%

 

$

—

 

 

 

0.00

%

Total held-to-maturity

$

1,156

 

 

 

2.75

%

 

$

—

 

 

 

0.00

%

 

$

—

 

 

 

0.00

%

 

$

—

 

 

 

0.00

%
(1)
The weighted average yields are based on amortized cost.

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $54.0 million at March 31, 2024, a decrease of $1.7 million from December 31, 2023.

There were no holdings of securities of any one issuer, other than U.S. government-sponsored entities and agencies, with total outstanding balances greater than 10% of our stockholders’ equity as of March 31, 2024 or December 31, 2023.

Restricted Stock

As a member of the Federal Home Loan Bank system, Byline Bank is required to maintain an investment in the capital stock of the FHLB. No market exists for this stock, and it has no quoted market value. The stock is redeemable at par by the FHLB and is, therefore, carried at cost. In addition, Byline Bank owns stock of Bankers’ Bank that was acquired as part of a bank acquisition. The stock is redeemable at par and carried at cost. As of March 31, 2024 and December 31, 2023, we held $22.8 million and $16.3 million, respectively, in FHLB and Bankers’ Bank stock. We evaluate impairment of our investment in FHLB and Bankers’ Bank based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. We did not identify any indicators of impairment of FHLB and Bankers’ Bank stock as of March 31, 2024 and December 31, 2023.

 

55

 

Loan and Lease Portfolio

Lending-related income is the most important component of our net interest income and is the main driver of the results of our operations. Total loans and leases at March 31, 2024 and December 31, 2023 were $6.8 billion and $6.7 billion, respectively, an increase of $93.9 million, or 1.4%. Originated loans and leases were $5.9 billion at March 31, 2024, an increase of $133.4 million, or 2.3%, compared to $5.8 billion at December 31, 2023. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $877.8 million at March 31, 2024, a decrease of $39.5 million, or 4.3%, compared to $917.3 million at December 31, 2023. The increase in our originated portfolio was primarily attributed to organic loan and lease growth, and renewals of acquired loans and leases that are now reflected with originated loans. The decrease in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by renewals of acquired loans and leases as well as resolutions and charge-offs.

We strive to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral. Loans, excluding leases, are typically made to real estate, manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and operations. As of March 31, 2024, the loan portfolio included $424.3 million of unguaranteed 7(a) SBA and USDA loans with exposure to the following top three industries: 17.3% retail trade, 13.2% accommodation and food services, and 11.4% manufacturing. The following table shows our allocation of originated, purchase credit deteriorated and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

Originated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,879,149

 

 

 

27.7

%

 

$

1,907,029

 

 

 

28.5

%

Residential real estate

 

 

488,887

 

 

 

7.2

%

 

 

465,133

 

 

 

7.0

%

Construction, land development, and other land

 

 

416,996

 

 

 

6.2

%

 

 

415,162

 

 

 

6.2

%

Commercial and industrial

 

 

2,420,952

 

 

 

35.7

%

 

 

2,311,563

 

 

 

34.6

%

Installment and other

 

 

2,855

 

 

 

0.0

%

 

 

2,919

 

 

 

0.0

%

Leasing financing receivables

 

 

691,617

 

 

 

10.2

%

 

 

665,239

 

 

 

10.0

%

Total originated loans and leases

 

$

5,900,456

 

 

 

87.0

%

 

$

5,767,045

 

 

 

86.3

%

Purchased credit deteriorated loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

117,460

 

 

 

1.7

%

 

$

137,807

 

 

 

2.1

%

Residential real estate

 

 

39,535

 

 

 

0.6

%

 

 

42,510

 

 

 

0.6

%

Construction, land development, and other land

 

 

26,418

 

 

 

0.4

%

 

 

25,331

 

 

 

0.4

%

Commercial and industrial

 

 

18,100

 

 

 

0.3

%

 

 

19,460

 

 

 

0.3

%

Installment and other

 

 

118

 

 

 

0.0

%

 

 

125

 

 

 

0.0

%

Total purchased credit deteriorated loans

 

$

201,631

 

 

 

3.0

%

 

$

225,233

 

 

 

3.4

%

Acquired non-credit-deteriorated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

271,720

 

 

 

4.0

%

 

$

275,476

 

 

 

4.1

%

Residential real estate

 

 

204,589

 

 

 

3.0

%

 

 

211,887

 

 

 

3.2

%

Construction, land development, and other land

 

 

85,553

 

 

 

1.3

%

 

 

86,344

 

 

 

1.3

%

Commercial and industrial

 

 

113,673

 

 

 

1.7

%

 

 

117,538

 

 

 

1.7

%

Installment and other

 

 

166

 

 

 

0.0

%

 

 

156

 

 

 

0.0

%

Leasing financing receivables

 

 

426

 

 

 

0.0

%

 

 

627

 

 

 

0.0

%

Total acquired non-credit-deteriorated
   loans and leases

 

$

676,127

 

 

 

10.0

%

 

$

692,028

 

 

 

10.3

%

Total loans and leases

 

$

6,778,214

 

 

 

100.0

%

 

$

6,684,306

 

 

 

100.0

%

Allowance for credit losses - loans and leases

 

 

(102,366

)

 

 

 

 

 

(101,686

)

 

 

 

Total loans and leases, net of allowance for credit losses -
   loans and leases

 

$

6,675,848

 

 

 

 

 

$

6,582,620

 

 

 

 

 

56

 

Loans collateralized by real estate comprised 52.1% and 53.4% of the loan and lease portfolio at March 31, 2024 and December 31, 2023, respectively. Commercial real estate loans comprised the largest portion of the real estate loan portfolio as of March 31, 2024 and December 31, 2023 and totaled $2.3 billion, or 64.3% of real estate loans and 33.5% of the total loan and lease portfolio at March 31, 2024. At December 31, 2023, commercial real estate loans totaled $2.3 billion and comprised 65.1% of real estate loans and 34.7% of the total loan and lease portfolio. Purchased credit deteriorated commercial real estate loans decreased from $137.8 million as of December 31, 2023 to $117.5 million as of March 31, 2024, a decrease of $20.3 million, or 14.8%. At March 31, 2024 and December 31, 2023, commercial real estate loans, including both owner-occupied and non-owner occupied, as a percentage of total capital were 279.7% and 299.6%, respectively. Non-owner occupied commercial real estate loans were $1.0 billion, or 86.8% and 95.9% of total capital, at March 31, 2024 and December 31, 2023, respectively.

Residential real estate loans totaled $733.0 million at March 31, 2024 compared to $719.5 million at December 31, 2023, an increase of $13.5 million, or 1.9%. The residential real estate loan portfolio comprised 20.8% and 20.2% of real estate loans as of March 31, 2024 and December 31, 2023, respectively, and 10.8% of total loans and leases at March 31, 2024 and December 31, 2023. Purchased credit deteriorated and acquired non-credit-deteriorated residential real estate loans decreased from $254.4 million at December 31, 2023 to $244.1 million at March 31, 2024, a decrease of $10.3 million, or 4.0%. Multifamily real estate loans were $421.3 million and $399.3 million, or 36.5% and 36.8% of total capital, at March 31, 2024 and December 31, 2023, respectively.

Construction, land development, and other land loans totaled $529.0 million at March 31, 2024 compared to $526.8 million at December 31, 2023, an increase of $2.1 million, or 0.4%. The construction, land development and other land loan portfolio comprised 15.0% and 14.8% of real estate loans at March 31, 2024 and December 31, 2023, respectively, and 7.9% of the total loan and lease portfolio at March 31, 2024 and December 31, 2023. The construction, land development and other land loan portfolio was 45.8% and 48.3% of total capital, at March 31, 2024 and December 31, 2023, respectively.

Our exposure to non-owner occupied commercial real estate office space as of March 31, 2024 was $205.5 million, or 3.0% of our total loan and lease portfolio.

Commercial and industrial loans totaled $2.6 billion at March 31, 2024 and $2.4 billion at December 31, 2023, an increase of $104.2 million, or 4.3%. The commercial and industrial loan portfolio comprised 37.7% and 36.6% of the total loan and lease portfolio at March 31, 2024 and December 31, 2023, respectively.

Lease financing receivables comprised 10.2% and 10.0% of the loan and lease portfolio at March 31, 2024 and December 31, 2023, respectively. Total lease financing receivables were $692.0 million and $665.9 million at March 31, 2024 and December 31, 2023, respectively, an increase of $26.2 million, or 3.9%.

 

57

 

Loan and Lease Portfolio Maturities and Interest Rate Sensitivity

The following table shows our loan and lease portfolio by scheduled maturity at March 31, 2024 (dollars in thousands):

 

 

Due in One Year or Less

 

 

Due after One Year
Through Five Years

 

 

Due after Five Years
Through Fifteen Years

 

 

Due after Fifteen Years

 

 

 

 

 

 

Fixed
Rate

 

 

Floating
Rate

 

 

Fixed
Rate

 

 

Floating
Rate

 

 

Fixed
Rate

 

 

Floating
Rate

 

 

Fixed
Rate

 

 

Floating
Rate

 

 

Total

 

Originated loans and
  leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

109,110

 

 

$

195,360

 

 

$

760,363

 

 

$

314,260

 

 

$

233,805

 

 

$

106,318

 

 

$

10,103

 

 

$

149,830

 

 

$

1,879,149

 

Residential real estate

 

 

19,160

 

 

 

64,578

 

 

 

163,009

 

 

 

74,723

 

 

 

17,331

 

 

 

87,546

 

 

 

59,798

 

 

 

2,742

 

 

 

488,887

 

Construction,
   land development,
   and other land

 

 

692

 

 

 

175,702

 

 

 

45,418

 

 

 

174,351

 

 

 

15,957

 

 

 

4,521

 

 

 

355

 

 

 

—

 

 

 

416,996

 

Commercial and
  industrial

 

 

34,089

 

 

 

472,033

 

 

 

373,251

 

 

 

1,080,767

 

 

 

151,248

 

 

 

269,175

 

 

 

31,099

 

 

 

9,290

 

 

 

2,420,952

 

Installment and other

 

 

385

 

 

 

—

 

 

 

642

 

 

 

1,633

 

 

 

195

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,855

 

Leasing financing receivables

 

 

20,630

 

 

 

—

 

 

 

618,459

 

 

 

—

 

 

 

52,528

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

691,617

 

Total originated
  loans and leases

 

$

184,066

 

 

$

907,673

 

 

$

1,961,142

 

 

$

1,645,734

 

 

$

471,064

 

 

$

467,560

 

 

$

101,355

 

 

$

161,862

 

 

$

5,900,456

 

Purchased credit
  deteriorated loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

32,254

 

 

$

7,067

 

 

$

37,898

 

 

$

24,908

 

 

$

4,450

 

 

$

10,629

 

 

$

122

 

 

$

132

 

 

$

117,460

 

Residential real estate

 

 

7,787

 

 

 

119

 

 

 

15,949

 

 

 

575

 

 

 

5,876

 

 

 

407

 

 

 

5,595

 

 

 

3,227

 

 

 

39,535

 

Construction,
   land development,
   and other land

 

 

7

 

 

 

26,403

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26,418

 

Commercial and
  industrial

 

 

230

 

 

 

741

 

 

 

8,013

 

 

 

2,659

 

 

 

—

 

 

 

6,457

 

 

 

—

 

 

 

—

 

 

 

18,100

 

Installment and other

 

 

4

 

 

 

—

 

 

 

18

 

 

 

—

 

 

 

96

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

118

 

Total purchased
  credit deteriorated
  loans

 

$

40,282

 

 

$

34,330

 

 

$

61,886

 

 

$

28,142

 

 

$

10,422

 

 

$

17,493

 

 

$

5,717

 

 

$

3,359

 

 

$

201,631

 

Acquired non-credit-
  deteriorated loans
  and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

30,991

 

 

$

27,239

 

 

$

147,626

 

 

$

18,823

 

 

$

6,528

 

 

$

22,956

 

 

$

2,477

 

 

$

15,080

 

 

$

271,720

 

Residential real estate

 

 

13,113

 

 

 

1,131

 

 

 

40,756

 

 

 

12,140

 

 

 

22,418

 

 

 

9,368

 

 

 

7,150

 

 

 

98,513

 

 

 

204,589

 

Construction, land
  development, and
  other land

 

 

—

 

 

 

17,983

 

 

 

10,616

 

 

 

40,590

 

 

 

—

 

 

 

—

 

 

 

5,111

 

 

 

11,253

 

 

 

85,553

 

Commercial and industrial

 

 

2,162

 

 

 

7,453

 

 

 

35,269

 

 

 

9,120

 

 

 

57,778

 

 

 

1,891

 

 

 

—

 

 

 

—

 

 

 

113,673

 

Installment and other

 

 

42

 

 

 

—

 

 

 

124

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

166

 

Leasing financing
  receivables

 

 

321

 

 

 

—

 

 

 

105

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

426

 

Total acquired
   non-credit-
  deteriorated loans
  and leases

 

$

46,629

 

 

$

53,806

 

 

$

234,496

 

 

$

80,673

 

 

$

86,724

 

 

$

34,215

 

 

$

14,738

 

 

$

124,846

 

 

$

676,127

 

Total loans and leases

 

$

270,977

 

 

$

995,809

 

 

$

2,257,524

 

 

$

1,754,549

 

 

$

568,210

 

 

$

519,268

 

 

$

121,810

 

 

$

290,067

 

 

$

6,778,214

 

At March 31, 2024, 47.5% of the loan and lease portfolio bears interest at fixed rates and 52.5% at floating rates. The expected life of our loan portfolio will differ from contractual maturities because borrowers may have the right to curtail or prepay their loans with or without penalties. Because a portion of the portfolio is accounted for under ASC 326, the carrying value is significantly affected by estimates and it is impracticable to allocate scheduled payments for those loans based on those estimates. Consequently, the tables presented include information limited to contractual maturities of the underlying loans.

Allowance for Credit Losses - Loans and Leases

The ACL is determined by us on a quarterly basis, although we are engaged in monitoring the appropriate level of the allowance on a more frequent basis. The ACL reflects management’s estimate of current expected credit losses inherent in the loan and lease portfolios. The computation includes elements of judgment and high levels of subjectivity.

Factors considered by us include, but are not limited to, actual loss experience, peer loss experience, changes in size and risk profile of the portfolio, identification of individual problem loan and lease situations that may affect a borrower’s ability to repay, application of a reasonable and supportable forecast, and evaluation of the prevailing economic conditions.

58

 

Changes in conditions may necessitate revision of the estimate in future periods.

We assess the ACL based on three categories: (i) originated loans and leases, (ii) acquired non-credit-deteriorated loans and leases, and (iii) purchased credit deteriorated loans.

Total ACL was $102.4 million at March 31, 2024 compared to $101.7 million at December 31, 2023, an increase of $680,000, or 0.7%. The increase was primarily due to an increase in qualitative adjustments and growth in the loan and lease portfolio, offset by charge-offs on on individually evaluated loans.. Total ACL to total loans and leases held for investment, net before ACL, was 1.51% and 1.52% of total loans and leases at March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, approximately $30.1 million of the ACL was allocated to unguaranteed portion of SBA 7(a) and USDA loans.

59

 

The following tables present an analysis of the allowance credit losses - loans and leases for the periods presented (dollars in thousands):

 

 

Commercial
Real Estate

 

 

Residential
Real
Estate

 

 

Construction,
Land
Development,
and Other
Land

 

 

Commercial
and
Industrial

 

 

Installment
and Other

 

 

Lease
Financing
Receivables

 

 

Total

 

Balance at December 31, 2023

 

$

33,237

 

 

$

3,495

 

 

$

2,906

 

 

$

53,782

 

 

$

36

 

 

$

8,230

 

 

$

101,686

 

Provision/(recapture) for PCD loans

 

 

629

 

 

 

(25

)

 

 

(61

)

 

 

(347

)

 

 

—

 

 

 

—

 

 

 

196

 

Provision/(recapture) for acquired
  non-credit-deteriorated loans

 

 

(44

)

 

 

3

 

 

 

17

 

 

 

(42

)

 

 

 

 

 

(2

)

 

 

(68

)

Provision/(recapture) for originated loans

 

 

239

 

 

 

(126

)

 

 

68

 

 

 

6,225

 

 

 

(3

)

 

 

360

 

 

 

6,763

 

Total provision/(recapture)

 

$

824

 

 

$

(148

)

 

$

24

 

 

$

5,836

 

 

$

(3

)

 

$

358

 

 

$

6,891

 

Charge-offs for PCD
   loans

 

 

(74

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(74

)

Charge-offs for acquired non-credit
   deteriorated loans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(58

)

 

 

—

 

 

 

—

 

 

 

(58

)

Charge-offs for originated loans

 

 

(2,983

)

 

 

—

 

 

 

—

 

 

 

(3,561

)

 

 

—

 

 

 

(373

)

 

 

(6,917

)

Total charge-offs

 

$

(3,057

)

 

$

—

 

 

$

—

 

 

$

(3,619

)

 

$

—

 

 

$

(373

)

 

$

(7,049

)

Recoveries for PCD
   loans

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Recoveries for acquired non-credit
   deteriorated loans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Recoveries for originated loans

 

 

432

 

 

 

1

 

 

 

—

 

 

 

232

 

 

 

—

 

 

 

169

 

 

 

834

 

Total recoveries

 

$

436

 

 

$

1

 

 

$

—

 

 

$

232

 

 

$

—

 

 

$

169

 

 

$

838

 

Net (charge-offs) recoveries

 

 

(2,621

)

 

 

1

 

 

 

—

 

 

 

(3,387

)

 

 

—

 

 

 

(204

)

 

 

(6,211

)

Balance at March 31, 2024

 

$

31,440

 

 

$

3,348

 

 

$

2,930

 

 

$

56,231

 

 

$

33

 

 

$

8,384

 

 

$

102,366

 

Ending ACL Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

PCD loans

 

$

7,392

 

 

$

877

 

 

$

150

 

 

$

1,722

 

 

$

1

 

 

$

—

 

 

$

10,142

 

Acquired non-credit-deteriorated loans

 

 

2,026

 

 

 

639

 

 

 

624

 

 

 

1,310

 

 

 

2

 

 

 

1

 

 

 

4,602

 

Originated loans

 

 

22,022

 

 

 

1,832

 

 

 

2,156

 

 

 

53,199

 

 

 

30

 

 

 

8,383

 

 

 

87,622

 

Balance at March 31, 2024

 

$

31,440

 

 

$

3,348

 

 

$

2,930

 

 

$

56,231

 

 

$

33

 

 

$

8,384

 

 

$

102,366

 

Loans individually
   evaluated for impairment

 

$

8,905

 

 

$

—

 

 

$

—

 

 

$

12,772

 

 

$

—

 

 

$

—

 

 

$

21,677

 

Loans collectively
   evaluated for impairment

 

 

22,535

 

 

 

3,348

 

 

 

2,930

 

 

 

43,459

 

 

 

33

 

 

 

8,384

 

 

 

80,689

 

Balance at March 31, 2024

 

$

31,440

 

 

$

3,348

 

 

$

2,930

 

 

$

56,231

 

 

$

33

 

 

$

8,384

 

 

$

102,366

 

Loans and leases ending balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually
   evaluated for impairment

 

$

40,778

 

 

$

4,658

 

 

$

—

 

 

$

39,889

 

 

$

—

 

 

$

—

 

 

$

85,325

 

Loans collectively
   evaluated for impairment

 

 

2,227,551

 

 

 

728,353

 

 

 

528,967

 

 

 

2,512,836

 

 

 

3,139

 

 

 

692,043

 

 

 

6,692,889

 

Total loans and leases at
  March 31, 2024, gross

 

$

2,268,329

 

 

$

733,011

 

 

$

528,967

 

 

$

2,552,725

 

 

$

3,139

 

 

$

692,043

 

 

$

6,778,214

 

Ratio of net charge-offs to average
   loans outstanding during the year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PCD loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Acquired non-credit-deteriorated loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Originated loans

 

 

0.16

%

 

 

0.00

%

 

 

0.00

%

 

 

0.20

%

 

 

0.00

%

 

 

0.01

%

 

 

0.37

%

Loans ending balance as a
   percentage of total loans, gross

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually
   evaluated for impairment

 

 

0.70

%

 

 

0.05

%

 

 

0.00

%

 

 

0.50

%

 

 

0.00

%

 

 

0.00

%

 

 

1.25

%

Loans collectively
   evaluated for impairment

 

 

32.77

%

 

 

10.76

%

 

 

7.80

%

 

 

37.16

%

 

 

0.05

%

 

 

10.21

%

 

 

98.75

%

Total

 

 

33.47

%

 

 

10.81

%

 

 

7.80

%

 

 

37.66

%

 

 

0.05

%

 

 

10.21

%

 

 

100.00

%

 

 

 

60

 

 

Commercial
Real Estate

 

 

Residential
Real
Estate

 

 

Construction,
Land
Development,
and Other
Land

 

 

Commercial
and
Industrial

 

 

Installment
and Other

 

 

Lease
Financing
Receivables

 

 

Total

 

Balance at December 31, 2022

$

26,061

 

 

$

3,140

 

 

$

3,134

 

 

$

41,889

 

 

$

24

 

 

$

7,676

 

 

$

81,924

 

Provision/(recapture) for acquired
  impaired loans

 

(560

)

 

 

(278

)

 

 

(3

)

 

 

(10

)

 

 

—

 

 

 

—

 

 

 

(851

)

Provision/(recapture) for acquired
  non-impaired loans and leases

 

(865

)

 

 

(158

)

 

 

(1

)

 

 

(346

)

 

 

—

 

 

 

(10

)

 

 

(1,380

)

Provision for originated loans

 

306

 

 

 

(17

)

 

 

368

 

 

 

11,159

 

 

 

(2

)

 

 

129

 

 

 

11,943

 

Total provision

$

(1,119

)

 

$

(453

)

 

$

364

 

 

$

10,803

 

 

$

(2

)

 

$

119

 

 

$

9,712

 

Charge-offs for acquired
  impaired loans

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Charge-offs for acquired
  non-impaired loans and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Charge-offs for originated loans
  and leases

 

(966

)

 

 

(9

)

 

 

—

 

 

 

(1,790

)

 

 

—

 

 

 

(304

)

 

 

(3,069

)

Total charge-offs

$

(966

)

 

$

(9

)

 

$

—

 

 

$

(1,790

)

 

$

—

 

 

$

(304

)

 

$

(3,069

)

Recoveries for acquired
  impaired loans

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Recoveries for acquired
  non-impaired loans and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Recoveries for originated
  loans and leases

 

762

 

 

 

1

 

 

 

—

 

 

 

947

 

 

 

3

 

 

 

185

 

 

 

1,898

 

Total recoveries

$

762

 

 

$

1

 

 

$

—

 

 

$

947

 

 

$

3

 

 

$

185

 

 

$

1,898

 

Net (charge-offs) recoveries

 

(204

)

 

 

(8

)

 

 

—

 

 

 

(843

)

 

 

3

 

 

 

(119

)

 

 

(1,171

)

Balance at March 31, 2023

$

24,738

 

 

$

2,679

 

 

$

3,498

 

 

$

51,849

 

 

$

25

 

 

$

7,676

 

 

$

90,465

 

Ending ACL Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PCD loans

 

591

 

 

 

396

 

 

 

10

 

 

 

36

 

 

 

2

 

 

 

—

 

 

 

1,035

 

Acquired non-credit-deteriorated loans

 

2,871

 

 

 

138

 

 

 

—

 

 

 

883

 

 

 

1

 

 

 

24

 

 

 

3,917

 

Originated loans

 

21,276

 

 

 

2,145

 

 

 

3,488

 

 

 

50,930

 

 

 

22

 

 

 

7,652

 

 

 

85,513

 

Balance at March 31, 2023

$

24,738

 

 

$

2,679

 

 

$

3,498

 

 

$

51,849

 

 

$

25

 

 

$

7,676

 

 

$

90,465

 

Loans individually
   evaluated for impairment

$

6,302

 

 

$

—

 

 

$

1,198

 

 

$

14,518

 

 

$

—

 

 

$

—

 

 

$

22,018

 

Loans collectively
   evaluated for impairment

 

18,436

 

 

 

2,679

 

 

 

2,300

 

 

 

37,331

 

 

 

25

 

 

 

7,676

 

 

 

68,447

 

Balance at March 31, 2023

$

24,738

 

 

$

2,679

 

 

$

3,498

 

 

$

51,849

 

 

$

25

 

 

$

7,676

 

 

$

90,465

 

Loans and leases ending balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually
   evaluated for impairment

$

31,622

 

 

$

—

 

 

$

5,541

 

 

$

34,245

 

 

$

—

 

 

$

—

 

 

$

71,408

 

Loans collectively
   evaluated for impairment

 

1,897,762

 

 

 

499,336

 

 

 

441,567

 

 

 

2,049,560

 

 

 

1,822

 

 

 

553,877

 

 

 

5,443,924

 

Total loans and leases at
  March 31, 2023, gross

$

1,929,384

 

 

$

499,336

 

 

$

447,108

 

 

$

2,083,805

 

 

$

1,822

 

 

$

553,877

 

 

$

5,515,332

 

Ratio of net charge-offs
  to average loans and leases
  outstanding during the
  period (annualized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PCD loans

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Acquired non-credit-deteriorated loans

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Originated loans

 

0.02

%

 

 

0.00

%

 

 

0.00

%

 

 

0.06

%

 

 

0.00

%

 

 

0.01

%

 

 

0.09

%

Loans and leases ending balance
  as a percentage of total loans
  and leases, gross

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually
   evaluated for impairment

 

0.57

%

 

 

0.00

%

 

 

0.10

%

 

 

0.62

%

 

 

0.00

%

 

 

0.00

%

 

 

1.29

%

Loans collectively
   evaluated for impairment

 

34.41

%

 

 

9.05

%

 

 

8.01

%

 

 

37.16

%

 

 

0.03

%

 

 

10.05

%

 

 

98.71

%

Total

 

34.98

%

 

 

9.05

%

 

 

8.11

%

 

 

37.78

%

 

 

0.03

%

 

 

10.05

%

 

 

100.00

%

Non-Performing Assets

Non-performing loans and leases include loans and leases 90 days past due and still accruing and loans and leases accounted for on a non-accrual basis. Non-performing assets consist of non-performing loans and leases plus other real estate owned. Non-performing assets at March 31, 2024 and December 31, 2023 totaled $68.7 million and $65.3 million, with the increase driven mainly by increases to non-accrual loans and leases. The U.S. government guaranteed portion of non-performing loans totaled $7.1 million at March 31, 2024 and $4.2 million at December 31, 2023.

Total OREO decreased from $1.2 million at December 31, 2023 to $785,000 at March 31, 2024. The $415,000 decrease in OREO resulted from sales.

61

 

The following table sets forth the amounts of non-performing loans and leases, non-performing assets, and OREO at the dates indicated (dollars in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Non-performing assets:

 

 

 

 

 

 

Non-accrual loans and leases(1)(2)

 

$

67,899

 

 

$

64,107

 

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

 

 

—

 

 

 

—

 

Total non-performing loans and leases

 

 

67,899

 

 

 

64,107

 

Other real estate owned

 

 

785

 

 

 

1,200

 

Total non-performing assets

 

$

68,684

 

 

$

65,307

 

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

 

 

1.00

%

 

 

0.96

%

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

 

 

1.00

%

 

 

0.96

%

Total non-performing assets as a percentage of
   total assets

 

 

0.73

%

 

 

0.74

%

Allowance for credit losses - loans and leases, as a percentage of
   non-performing loans and leases

 

 

150.76

%

 

 

158.62

%

Allowance for credit losses - loans and leases, as a percentage of
   non-accrual loans and leases

 

 

150.76

%

 

 

158.62

%

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Non-accrual loans guaranteed

 

$

7,138

 

 

$

4,154

 

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

 

 

—

 

 

 

—

 

Total non-performing loans guaranteed

 

$

7,138

 

 

$

4,154

 

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

 

 

0.90

%

 

 

0.90

%

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

 

 

0.90

%

 

 

0.62

%

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

 

 

0.65

%

 

 

0.69

%

 

(1)
Includes $8,000 and $406,000 of non-accrual loan modifications at March 31, 2024 and December 31, 2023, respectively.
(2)
For the three months ended March 31, 2024 and 2023, $1.6 million and $975,000 in interest income would have been recorded had non-accrual loans been current.

Deposits

Our loan and lease growth is funded primarily through core deposits. We gather deposits primarily through each of our 47 branch locations in the Chicago metropolitan area and one branch in Wauwatosa, Wisconsin. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, interest-bearing products, savings accounts, and certificates of deposit. We offer competitive online, mobile, and direct banking channels. Small businesses are a significant source of low cost deposits as they value convenience, flexibility, and access to local decision makers that are responsive to their needs.

Total deposits at March 31, 2024 were $7.4 billion, representing an increase of $173.2 million, or 2.4%, compared to $7.2 billion at December 31, 2023, driven by an increase in time deposits and money market demand accounts. Non-interest-bearing deposits were $1.9 billion, or 25.2% of total deposits, at March 31, 2024, a decrease of $54.1 million, or 2.8%, compared to $1.9 billion at December 31, 2023, or 26.6% of total deposits. Core deposits were 85.7% and 87.0% of total deposits at March 31, 2024 and December 31, 2023, respectively.

The following table shows the average balance amounts and the average contractual rates paid on our deposits for the periods indicated (dollars in thousands):

 

 

For Three Months Ended

 

 

For Three Months Ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

 

 

Average
Balance

 

 

Average
Rate

 

 

Average
Balance

 

 

Average
Rate

 

Non-interest-bearing demand deposits

 

$

1,874,322

 

 

 

0.00

%

 

$

2,076,613

 

 

 

0.00

%

Interest checking

 

 

590,406

 

 

 

1.65

%

 

 

606,008

 

 

 

1.67

%

Money market accounts

 

 

2,237,324

 

 

 

3.53

%

 

 

1,465,677

 

 

 

2.14

%

Savings

 

 

531,912

 

 

 

0.15

%

 

 

613,590

 

 

 

0.15

%

Time deposits (below $100,000)

 

 

982,090

 

 

 

4.84

%

 

 

529,078

 

 

 

2.64

%

Time deposits ($100,000 and above)

 

 

1,010,267

 

 

 

4.72

%

 

 

437,331

 

 

 

2.24

%

Total

 

$

7,226,321

 

 

 

2.56

%

 

$

5,728,297

 

 

 

1.15

%

 

62

 

Our average cost of deposits was 2.56% during the three months ended March 31, 2024, compared to 1.15% for the three months ended March 31, 2023. This increase was principally attributed to higher rates on interest-bearing deposits as a result of the rising interest rate environment, an increase in interest bearing deposits and corresponding decrease in non-interest bearing deposits both related to deposit flows and the impact of the Inland acquisition. The ratio of our average non-interest bearing deposits to total average deposits was 25.9% during the three months ended March 31, 2024, compared to 36.3% during the three months ended March 31, 2023. We had $436.3 million in brokered time deposits at March 31, 2024 and $480.0 million at December 31, 2023, which represented 5.9% and 6.7% of total deposits, respectively. The decrease in brokered deposits was due to increases in other sources of funding. Our loan and lease to deposit ratio was 92.54% at March 31, 2024 compared to 93.39% at December 31, 2023.

The following table shows time deposits and other time deposits of $250,000 or more by time remaining until maturity as of March 31, 2024 (dollars in thousands):

 

 

Less than $250,000

 

 

$250,000 or Greater

 

 

Total

 

 

Uninsured Portion

 

Three months or less

 

$

396,340

 

 

$

103,894

 

 

$

500,234

 

 

$

36,144

 

Over three months through six months

 

 

574,975

 

 

 

164,784

 

 

 

739,759

 

 

 

53,284

 

Over six months through 12 months

 

 

518,783

 

 

 

135,457

 

 

 

654,240

 

 

 

50,957

 

Over 12 months

 

 

104,192

 

 

 

24,199

 

 

 

128,391

 

 

 

8,949

 

Total

 

$

1,594,290

 

 

$

428,334

 

 

$

2,022,624

 

 

$

149,334

 

Total estimated uninsured deposits, were $2.1 billion and $1.9 billion as of March 31, 2024 and December 31, 2023.

Short Term and Long Term Borrowings

In addition to deposits, we also utilize FHLB advances as a supplementary funding source to finance our operations. The Bank’s advances from the FHLB are collateralized by commercial, residential and multi-family real estate loans and securities. At March 31, 2024 and December 31, 2023, we had an available borrowing capacity from the FHLB of $2.6 billion and $2.8 billion, respectively, subject to the availability of collateral. At March 31, 2024, the Company had $470.0 million of FHLB advances outstanding with a maturities ranging from April 2024 to June 2024. The company also had a $200.0 million advance taken as part of the Bank Term Funding Program ("BTFP") and a $16.7 million term loan outstanding maturing in May 2026.

On January 17, 2024, the Company entered into a Letter Agreement with the Federal Reserve Bank ("FRB") of Chicago that allows the Bank to access the BTFP. On January 22, 2024, the Company opened an advance of $200.0 million from the FRB as part of the BTFP. Under the terms of the BTFP, the bank pledges securities to FBR Chicago as collateral for available advances. The advance carries a fixed interest rate of 4.91%, and matures on January 22, 2025. Advances under the BTFP are prepayable at any time without a prepayment penalty.

The Company has the capacity to borrow funds from the discount window of the Federal Reserve System. There were no borrowings outstanding under the Federal Reserve Bank discount window line as of March 31, 2024 and December 31, 2023. The Company pledges loans as collateral for any borrowings under the Federal Reserve Bank discount window.

63

 

The following table sets forth certain information regarding our short-term borrowings at the dates and for the periods indicated (dollars in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Federal Reserve Bank discount window borrowing:

 

 

 

 

 

 

Average balance outstanding

 

$

—

 

 

$

—

 

Maximum outstanding at any month-end period during the year

 

 

—

 

 

 

—

 

Balance outstanding at end of period

 

 

—

 

 

 

—

 

Weighted average interest rate during period

 

N/A

 

 

N/A

 

Weighted average interest rate at end of period

 

N/A

 

 

N/A

 

Federal Home Loan Bank advances:

 

 

 

 

 

 

Average balance outstanding

 

$

259,176

 

 

$

551,501

 

Maximum outstanding at any month-end period during the year

 

 

470,000

 

 

 

625,000

 

Balance outstanding at end of period

 

 

470,000

 

 

 

625,000

 

Weighted average interest rate during period

 

 

1.92

%

 

 

4.25

%

Weighted average interest rate at end of period

 

 

5.47

%

 

 

4.91

%

Federal funds purchased:

 

 

 

 

 

 

Average balance outstanding

 

$

—

 

 

$

2,778

 

Maximum outstanding at any month-end period during the year

 

 

—

 

 

 

—

 

Balance outstanding at end of period

 

 

—

 

 

 

—

 

Weighted average interest rate during period

 

N/A

 

 

 

5.30

%

Weighted average interest rate at end of period

 

N/A

 

 

N/A

 

Bank Term Funding Program:

 

 

 

 

 

 

Average balance outstanding

 

$

153,846

 

 

$

—

 

Maximum outstanding at any month-end period during the year

 

 

200,000

 

 

 

—

 

Balance outstanding at end of period

 

 

200,000

 

 

 

—

 

Weighted average interest rate during period

 

 

4.92

%

 

N/A

 

Weighted average interest rate at end of period

 

 

4.91

%

 

N/A

 

Term Loan:

 

 

 

 

 

 

Average balance outstanding

 

$

16,685

 

 

$

—

 

Maximum outstanding at any month-end period during the year

 

 

16,667

 

 

 

—

 

Balance outstanding at end of period

 

 

16,667

 

 

 

—

 

Weighted average interest rate during period

 

 

7.77

%

 

N/A

 

Weighted average interest rate at end of period

 

 

7.62

%

 

N/A

 

Revolving Line of Credit:

 

 

 

 

 

 

Average balance outstanding

 

$

5,316

 

 

$

—

 

Maximum outstanding at any month-end period during the year

 

 

7,500

 

 

 

—

 

Balance outstanding at end of period

 

 

—

 

 

 

—

 

Weighted average interest rate during period

 

 

8.33

%

 

N/A

 

Weighted average interest rate at end of period

 

N/A

 

 

N/A

 

 

 

64

 

Customer Repurchase Agreements (Sweeps)

Securities sold under agreements to repurchase represent a demand deposit product offered to customers that sweep balances in excess of the FDIC insurance limit into overnight repurchase agreements. We pledge securities as collateral for the repurchase agreements. Securities sold under agreements to repurchase decreased by $6.1 million, from $40.6 million at December 31, 2023 to $34.5 million at March 31, 2024.

Liquidity

We manage liquidity based upon factors that include the amount of core deposits as a percentage of total deposits, the level of diversification of our funding sources, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the availability of assets to be readily converted into cash without undue loss, the amount of cash and liquid securities we hold and the re-pricing characteristics and maturities of our assets when compared to the re-pricing characteristics of our liabilities, the ability to securitize and sell certain pools of assets and other factors.

Our liquidity needs are primarily met by cash and investment securities positions, growth in deposits, cash flow from amortizing loan portfolios, and borrowings from the FHLB. For additional information regarding our operating, investing, and financing cash flows, see Consolidated Statements of Cash Flows in our Unaudited Interim Condensed Consolidated Financial Statements included elsewhere in this report.

As of March 31, 2024, Byline Bank had maximum advance potential from the FHLB of $3.1 billion and $868.8 million from the FRB. As of March 31, 2024, Byline Bank had open FHLB advances of $470.0 million and open letters of credit of $13.5 million. Based on collateral and securities pledged, our available aggregate borrowing capacity at March 31, 2024 was $1.4 billion. In addition, Byline Bank had uncommitted federal funds lines available of $135.0 million available at March 31, 2024.

As of December 31, 2023, Byline Bank had maximum borrowing capacity from the FHLB of $3.1 billion and $866.5 million from the FRB. As of December 31, 2023, Byline Bank had open advances of $325.0 million and open letters of credit of $19.7 million. Based on collateral and securities pledged, our available aggregate borrowing capacity at December 31, 2023 was $1.6 billion. In addition, Byline Bank had an uncommitted federal funds line available of $135.0 million available at December 31, 2023.

On October 13, 2016, the Company entered into a $30.0 million revolving credit agreement with a correspondent bank. Through subsequent amendments, the revolving credit agreement was reduced to $15.0 million. The amended revolving line of credit bears interest at either SOFR plus 205 basis points or Prime Rate minus 75 basis points, not to be less than 2.00%, based on the Company’s election, which is required to be communicated at least three business days prior to the commencement of an interest period. If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. On May 26, 2023, the Company amended the agreement with the lender, which provides for: i) the renewal of the revolving line-of-credit facility of up to $15.0 million, extending its maturity date to May 26, 2024; and ii) a new term loan facility in the principal amount of up to $20.0 million with a maturity date of May 26, 2026, each subject to the existing Negative Pledge Agreement dated October 11, 2018, as amended.

At March 31, 2024, the variable term loan had an interest rate of 7.62% and an outstanding balance of $16.7 million. At December 31, 2023, the variable term loan had an interest rate of 7.64% and an outstanding balance of $18.3 million. At March 31, 2024, the line of credit had a no outstanding balance. At December 31, 2023, the line of credit had a $11.3 million outstanding balance and an interest rate of 7.39%

There are regulatory limitations that affect the ability of Byline Bank to pay dividends to the Company. See Note 21 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.

We expect that our cash and liquidity resources will be generated by the operations of Byline Bank, which we expect to be sufficient to satisfy our liquidity and capital requirements for at least the next twelve months.

Capital Resources

Stockholders’ equity at March 31, 2024 was $1.0 billion compared to $990.2 million at December 31, 2023, an increase of $18.9 million, or 1.9%. The increase was primarily driven by an increase in retained earnings, offset by an increase in accumulated other comprehensive loss during the three months ended March 31, 2024, reflecting the unrealized losses in our available-for-sale securities portfolio of $136.8 million compared to $130.2 million as of December 31, 2023.

The Company and Byline Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.

Under applicable bank regulatory capital requirements, each of the Company and Byline Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Byline Bank must also meet certain specific capital guidelines under the prompt corrective action framework. The capital amounts and classification are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Byline Bank to maintain minimum amounts and ratios of CET1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets, (referred to as the “leverage ratio”), as defined under these capital requirements.

65

 

As of March 31, 2024, Byline Bank exceeded all applicable regulatory capital requirements and was considered “well-capitalized.” There have been no conditions or events since March 31, 2024 that management believes have changed Byline Bank’s classifications.

The regulatory capital ratios for the Company and Byline Bank to meet the minimum capital adequacy standards and for Byline Bank to be considered well capitalized under the prompt corrective action framework and the Company’s and Byline Bank’s actual capital amounts and ratios are set forth in the following tables as of the periods indicated (dollars in thousands):

 

 

Actual

 

 

Minimum Capital
Required

 

 

Required to be
Considered
Well Capitalized

 

March 31, 2024

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

1,153,483

 

 

 

13.66

%

 

$

675,398

 

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

1,113,131

 

 

 

13.22

%

 

 

673,490

 

 

 

8.00

%

 

$

841,862

 

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

981,085

 

 

 

11.62

%

 

$

506,548

 

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

 

1,015,732

 

 

 

12.07

%

 

 

505,117

 

 

 

6.00

%

 

$

673,490

 

 

 

8.00

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

894,085

 

 

 

10.59

%

 

$

379,911

 

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

1,015,732

 

 

 

12.07

%

 

 

378,838

 

 

 

4.50

%

 

$

547,210

 

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

981,085

 

 

 

10.91

%

 

$

359,579

 

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

1,015,732

 

 

 

11.31

%

 

 

359,280

 

 

 

4.00

%

 

$

449,100

 

 

 

5.00

%

 

 

 

Actual

 

 

Minimum Capital
Required

 

 

Required to be
Considered
Well Capitalized

 

December 31, 2023

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

1,123,568

 

 

 

13.38

%

 

$

671,576

 

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

1,085,915

 

 

 

12.97

%

 

 

669,904

 

 

 

8.00

%

 

$

837,380

 

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

956,027

 

 

 

11.39

%

 

$

503,682

 

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

 

993,375

 

 

 

11.86

%

 

 

502,428

 

 

 

6.00

%

 

$

669,904

 

 

 

8.00

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

869,027

 

 

 

10.35

%

 

$

377,762

 

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

993,375

 

 

 

11.86

%

 

 

376,821

 

 

 

4.50

%

 

$

544,297

 

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

956,027

 

 

 

10.86

%

 

$

352,089

 

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

993,375

 

 

 

11.30

%

 

 

351,735

 

 

 

4.00

%

 

$

439,669

 

 

 

5.00

%

The ratios above reflect the Company’s election to opt into the regulators’ joint CECL transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the next three years beginning January 1, 2022. Accordingly, capital ratios as of March 31, 2024 reflect 75% of the CECL impact and December 31, 2023 reflect 50% of the CECL impact.

The Company and Byline Bank must maintain a capital conservation buffer consisting of CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. The conservation buffers for the Company and Byline Bank exceed the minimum capital requirement as of March 31, 2024.

Provisions of state and federal banking regulations may limit, by statute, the amount of dividends that may be paid to the Company by Byline Bank without prior approval of Byline Bank’s regulatory agencies. The Company is economically dependent on the cash dividends received from Byline Bank. These dividends represent the primary cash flow from operating activities used to service obligations. For the three months ended March 31, 2024 the Company received $11.5 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note, junior subordinated debentures in connection with its trust preferred securities interest, principal and interest payments related to its term note and revolving line of credit, and to fund other Company-related activities. For the year ended December 31, 2023, the Company received $35.0 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note and junior subordinated debentures in connection with its trust preferred securities interest, principal and interest on its term loan and revolving line of credit, and to fund other Company-related activities.

 

66

 

On December 12, 2022, we announced that our Board of Directors approved a stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program was in effect from January 1, 2023 until December 31, 2023. No shares were repurchased under this program.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of the Company’s outstanding common stock. The program will be effect from January 1, 2024 until December 31, 2024, unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal requirements. The shares authorized to be repurchased represented approximately 2.9% of the Company’s outstanding common stock at December 31, 2023. No shares were repurchased under this program during the three months ended March 31, 2024.

On April 23, 2024, our Board of Directors declared a cash dividend of $0.09 per share payable on May 21, 2024 to stockholders of record of our common stock as of May 7, 2024.

Off-Balance Sheet Items and Other Financing Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Condensed Consolidated Statements of Financial Condition. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Byline Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral is primarily obtained in the form of commercial and residential real estate (including income producing commercial properties).

Letters of credit are conditional commitments issued by Byline Bank to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 1.00% to 15.00% and maturities up to 2052. Variable rate loan commitments have interest rates ranging from 4.00% to 18.00% and maturities up to 2053.

Our exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as for funded instruments. We do not anticipate any material losses as a result of the commitments and standby letters of credit.

We enter into interest rate swaps that are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and its known or expected cash payments principally related to certain variable rate loans, money market accounts and variable rate borrowings. We also enter into interest rate swaps with certain qualified borrowers to facilitate the borrowers’ risk management strategies and concurrently entered into mirror-image derivatives with a third party counterparty.

We recognize derivative financial instruments at fair value regardless of the purpose or intent for holding the instrument. We record derivative assets and derivative liabilities on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets, and accrued interest payable and other liabilities, respectively. Because the derivative assets and liabilities recorded on the balance sheet at March 31, 2024 do not represent the amounts that may ultimately be paid under these contracts, these assets and liabilities are listed in the table below (dollars in thousands):

 

 

March 31, 2024

 

 

 

 

 

 

Fair Value

 

 

 

Notional

 

 

Asset

 

 

Liability

 

Interest rate swaps designated as cash flow hedges

 

$

650,000

 

 

$

37,976

 

 

$

(582

)

Other interest rate derivatives

 

 

691,612

 

 

 

22,124

 

 

 

(21,949

)

Other credit derivatives

 

 

3,545

 

 

 

3

 

 

 

—

 

See Note 16 of our Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024, included in this report, and Note 21 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on derivatives.

67

 

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in our “Selected Financial Data” are not measures of financial performance in accordance with GAAP. Our management uses the non‑GAAP financial measures set forth below in its analysis of our performance:

•
“Adjusted net income” and “adjusted diluted earnings per share” exclude certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses, adjusted for applicable income tax. Management believes the significant items are not indicative of or useful to measure the Company’s operating performance on an ongoing basis.
•
“Net interest income, fully taxable-equivalent” and “net interest margin, fully taxable-equivalent” are adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. Management believes the metric provides useful comparable information to investors and that these measures may be useful for peer comparison.
•
“Total revenue” is the combination of net interest income and non-interest income. Management believes the metric is an important measure of the Company's operating performance on an ongoing basis.
•
“Adjusted non-interest expense” is non-interest expense excluding certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses.
•
“Adjusted efficiency ratio” is adjusted non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Adjusted non-interest expense to average assets” is adjusted non-interest expense divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Adjusted return on average stockholders’ equity” is adjusted net income divided by average stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Adjusted return on average assets” is adjusted net income divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Non-interest income to total revenues” is non-interest income divided by net interest income plus non-interest income. Management believes that it is standard practice in the industry to present non-interest income as a percentage of total revenue. Accordingly, management believes providing these measures may be useful for peer comparison.
•
“Pre‑tax pre‑provision net income” is pre‑tax income plus the provision for credit losses. Management believes this metric demonstrates income excluding the tax provision or benefit and the provision for credit losses, and enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
•
“Adjusted pre-tax pre-provision net income” is pre-tax pre-provision net income excluding certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Pre‑tax pre‑provision return on average assets” is pre-tax income plus the provision for credit losses, divided by average assets. Management believes this ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for credit losses. “Adjusted pre-tax pre-provision return on average assets” excludes certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses.
•
“Tangible common equity” is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.
•
“Tangible assets” is defined as total assets reduced by goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

68

 

•
“Tangible book value per common share” is calculated as tangible common equity, which is stockholders’ equity reduced by preferred stock and goodwill and other intangible assets, divided by total shares of common stock outstanding. Management believes this metric is important due to the relative changes in the book value per share exclusive of changes in intangible assets.
•
“Tangible common equity to tangible assets” is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this metric is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.
•
“Tangible net income available to common stockholders” is net income available to common stockholders excluding after-tax intangible asset amortization.
•
“Adjusted tangible net income available to common stockholders” is tangible net income available to common stockholders excluding certain significant items. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Return on average tangible common stockholders’ equity” is tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
•
“Adjusted return on average tangible common stockholders’ equity” is adjusted tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

We believe that these non‑GAAP financial measures provide useful information to its management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non‑GAAP financial measures have a number of limitations. As such, you should not view these disclosures 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.

Reconciliations of Non-GAAP Financial Measures

 

 

As of or For the Three Months Ended March 31,

 

(dollars in thousands, except per share data)

 

2024

 

 

2023

 

Net income and earnings per share excluding
  significant items

 

 

 

 

 

 

Reported Net Income

 

$

30,440

 

 

$

23,945

 

Significant items:

 

 

 

 

 

 

Impairment charges on assets held for sale and ROU asset

 

 

194

 

 

 

20

 

Merger-related expense

 

 

—

 

 

 

489

 

Tax benefit

 

 

(52

)

 

 

(56

)

Adjusted Net Income

 

$

30,582

 

 

$

24,398

 

Reported Diluted Earnings per Share

 

$

0.70

 

 

$

0.64

 

Significant items:

 

 

 

 

 

 

Impairment charges on assets held for sale and ROU asset

 

 

—

 

 

 

—

 

Merger-related expense

 

 

—

 

 

 

0.01

 

Tax benefit

 

 

—

 

 

 

—

 

Adjusted Diluted Earnings per Share

 

$

0.70

 

 

$

0.65

 

 

 

69

 

 

As of or For the Three Months Ended March 31,

 

(dollars in thousands, except per share data)

2024

 

 

2023

 

Adjusted non-interest expense:

 

 

 

 

 

Non-interest expense

$

53,809

 

 

$

48,800

 

Less: Impairment charges on assets held for sale and ROU asset

 

194

 

 

 

20

 

Less: Merger-related expenses

 

—

 

 

 

489

 

Adjusted non-interest expense

$

53,615

 

 

$

48,291

 

Adjusted non-interest expense excluding amortization of intangible assets:

 

 

 

 

 

Adjusted non-interest expense

$

53,615

 

 

$

48,291

 

Less: Amortization of intangible assets

 

1,345

 

 

 

1,455

 

Adjusted non-interest expense excluding amortization of intangible assets

$

52,270

 

 

$

46,836

 

Pre-tax pre-provision net income:

 

 

 

 

 

Pre-tax income

$

40,562

 

 

$

32,238

 

Add: Provision for credit losses

 

6,643

 

 

 

9,825

 

Pre-tax pre-provision net income

$

47,205

 

 

$

42,063

 

Adjusted pre-tax pre-provision net income:

 

 

 

 

 

Pre-tax pre-provision net income

$

47,205

 

 

$

42,063

 

Impairment charges on assets held for sale and ROU asset

 

194

 

 

 

20

 

Merger-related expenses

 

—

 

 

 

489

 

Adjusted pre-tax pre-provision net income

$

47,399

 

 

$

42,572

 

Taxable equivalent net interest income:

 

 

 

 

 

Net interest income

$

85,541

 

 

$

75,718

 

Add: Tax-equivalent adjustment

 

233

 

 

 

208

 

Net interest income, fully taxable equivalent

$

85,774

 

 

$

75,926

 

Total revenues:

 

 

 

 

 

Net interest income

$

85,541

 

 

$

75,718

 

Add: non-interest income

 

15,473

 

 

 

15,145

 

Total revenues

$

101,014

 

 

$

90,863

 

Tangible common stockholders' equity:

 

 

 

 

 

Total stockholders' equity

$

1,009,049

 

 

$

795,650

 

Less: Goodwill and other intangibles

 

202,133

 

 

 

157,432

 

Tangible common stockholders' equity

$

806,916

 

 

$

638,218

 

Tangible assets:

 

 

 

 

 

Total assets

$

9,410,503

 

 

$

7,530,346

 

Less: Goodwill and other intangibles

 

202,133

 

 

 

157,432

 

Tangible assets

$

9,208,370

 

 

$

7,372,914

 

Average tangible common stockholders' equity:

 

 

 

 

 

Average total stockholders' equity

$

998,806

 

 

$

784,289

 

Less: Average goodwill and other intangibles

 

202,773

 

 

 

158,181

 

Average tangible common stockholders' equity

$

796,033

 

 

$

626,108

 

Average tangible assets:

 

 

 

 

 

Average total assets

$

9,030,941

 

 

$

7,345,151

 

Less: Average goodwill and other intangibles

 

202,773

 

 

 

158,181

 

Average tangible assets

$

8,828,168

 

 

$

7,186,970

 

Tangible net income available to common stockholders:

 

 

 

 

 

Net income available to common stockholders

$

30,440

 

 

$

23,945

 

Add: After-tax intangible asset amortization

 

986

 

 

 

1,066

 

Tangible net income available to common stockholders

$

31,426

 

 

$

25,011

 

Adjusted tangible net income available to common stockholders:

 

 

 

 

 

Tangible net income available to common stockholders

$

31,426

 

 

$

25,011

 

Impairment charges on assets held for sale and ROU asset

 

194

 

 

 

20

 

Merger-related expenses

 

—

 

 

 

489

 

Tax benefit on significant items

 

(52

)

 

 

(56

)

Adjusted tangible net income available to common stockholders

$

31,568

 

 

$

25,464

 

 

70

 

 

 

As of or For the Three Months Ended March 31,

 

(dollars in thousands, except share and per share data)

2024

 

 

2023

 

Pre-tax pre-provision return on average assets:

 

 

 

 

 

Pre-tax pre-provision net income

$

47,205

 

 

$

42,063

 

Average total assets

 

9,030,941

 

 

 

7,345,151

 

Pre-tax pre-provision return on
  average assets

 

2.10

%

 

 

2.32

%

Adjusted pre-tax pre-provision return on average assets:

 

 

 

 

 

Adjusted pre-tax pre-provision net income

$

47,399

 

 

$

42,572

 

Average total assets

 

9,030,941

 

 

 

7,345,151

 

Adjusted pre-tax pre-provision return on
  average assets:

 

2.11

%

 

 

2.35

%

Net interest margin, fully taxable equivalent

 

 

 

 

 

Net interest income, fully taxable equivalent

$

85,774

 

 

$

75,926

 

Total average interest-earning assets

 

8,603,582

 

 

 

7,009,144

 

Net interest margin, fully taxable equivalent

 

4.01

%

 

 

4.39

%

Non-interest income to total revenues:

 

 

 

 

 

Non-interest income

$

15,473

 

 

$

15,145

 

Total revenues

 

101,014

 

 

 

90,863

 

Non-interest income to total revenues

 

15.32

%

 

 

16.67

%

Adjusted non-interest expense to average assets:

 

 

 

 

 

Adjusted non-interest expense

$

53,615

 

 

$

48,291

 

Average total assets

 

9,030,941

 

 

 

7,345,151

 

Adjusted non-interest expense to average assets

 

2.39

%

 

 

2.67

%

Adjusted efficiency ratio:

 

 

 

 

 

Adjusted non-interest expense excluding
  amortization of intangible assets

$

52,270

 

 

$

46,836

 

Total revenues

 

101,014

 

 

 

90,863

 

Adjusted efficiency ratio

 

51.75

%

 

 

51.54

%

Adjusted return on average assets:

 

 

 

 

 

Adjusted net income

$

30,582

 

 

$

24,398

 

Average total assets

 

9,030,941

 

 

 

7,345,151

 

Adjusted return on average assets

 

1.36

%

 

 

1.35

%

Adjusted return on average stockholders' equity:

 

 

 

 

 

Adjusted net income

$

30,582

 

 

$

24,398

 

Average stockholders' equity

 

998,806

 

 

 

784,289

 

Adjusted return on average stockholders' equity

 

12.31

%

 

 

12.62

%

Tangible common equity to tangible assets:

 

 

 

 

 

Tangible common equity

$

806,916

 

 

$

638,218

 

Tangible assets

 

9,208,370

 

 

 

7,372,914

 

Tangible common equity to tangible assets

 

8.76

%

 

 

8.66

%

Return on average tangible common
  stockholders' equity:

 

 

 

 

 

Tangible net income available to
  common stockholders

$

31,426

 

 

$

25,011

 

Average tangible common stockholders' equity

 

796,033

 

 

 

626,108

 

Return on average tangible common
  stockholders' equity

 

15.88

%

 

 

16.20

%

Adjusted return on average tangible common
  stockholders' equity:

 

 

 

 

 

Adjusted tangible net income available to
  common stockholders

$

31,568

 

 

$

25,464

 

Average tangible common stockholders' equity

 

796,033

 

 

 

626,108

 

Adjusted return on average tangible common
  stockholders' equity

 

15.95

%

 

 

16.49

%

Tangible book value per share:

 

 

 

 

 

Tangible common equity

$

806,916

 

 

$

638,218

 

Common shares outstanding

 

44,108,387

 

 

 

37,713,427

 

Tangible book value per share

$

18.29

 

 

$

16.92

 

 

71

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our primary market risk is interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates.

We seek to measure and manage the potential impact of interest rate risk. Interest rate risk occurs when interest-earning assets and interest-bearing liabilities mature or re-price at different times, on a different basis or in unequal amounts. Interest rate risk also arises when our assets, liabilities and off-balance sheet contracts each respond differently to changes in interest rates, including as a result of explicit and implicit provisions in agreements related to such assets and liabilities and in off-balance sheet contracts that alter the applicable interest rate and cash flow characteristics as interest rates change.

We are also exposed to interest rate risk through the retained portion of the U.S. government guaranteed loans we make and the related servicing rights. Our U.S. government guaranteed loan portfolio is comprised primarily of SBA 7(a) loans, virtually all of which are quarterly or monthly adjustable with the prime rate. The SBA portfolio reacts differently in a rising rate environment than our other non-guaranteed portfolios. Generally, when interest rates rise, the prepayments in the SBA portfolio tend to increase.

Our management of interest rate risk is overseen by our Board of Directors and management asset liability committees based on a risk management infrastructure approved by our Board of Directors that outline reporting and measurement requirements. Our risk management infrastructure also requires a periodic review of all key assumptions used, such as identifying appropriate interest rate scenarios, setting loan prepayment rates based on historical analysis, non-interest-bearing and interest-bearing demand deposit lives based on historical analysis and the targeted investment term of capital. The committees closely monitor our interest sensitivity exposure, asset and liability allocation decisions, liquidity and capital positions, and local and national economic conditions and attempts to structure the loan and investment portfolios and funding sources to maximize earnings within acceptable risk tolerances.

We manage the interest rate risk associated with our interest-bearing liabilities by managing the interest rates and tenors associated with our borrowings from the FHLB, and deposits from our customers that we rely on for funding. We manage the interest rate risk associated with our interest-earning assets by managing the interest rates and tenors associated with our investment and loan portfolios, from time to time purchasing and selling investment securities.

We utilize interest rate derivatives to hedge our interest rate exposure on commercial loans when it meets our customers’ and Byline Bank’s needs. As of March 31, 2024, we had a notional amount of $1.3 billion of interest rate derivatives outstanding that includes customer swaps and those on Byline Bank's balance sheet. The overall effectiveness of our hedging strategies is subject to market conditions, the quality of our execution, the accuracy of our valuation assumptions, the associated counterparty credit risk and changes in interest rates.

We do not engage in speculative trading activities relating to interest rates, foreign exchange rates, commodity prices, equities or credit.

 

Evaluation of Interest Rate Risk

We evaluate interest rate risk through the use of two different models: net interest income ("NII") simulations and economic value of equity ("EVE") simulations. The simulations provide an estimate of the impact of changes in interest rates on equity and net interest income based on a variety of assumptions. Changes in assumptions may significantly alter the results of our simulations.

We use an NII simulation model to measure and evaluate potential changes in our net interest income. We run various hypothetical interest rate scenarios at least quarterly and compare these results against a scenario with no changes in interest rates. Our NII simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) predefined credit spreads for both investment securities and loans, (3) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, and (4) the effect of interest rate limitations in our assets, such as floors and caps. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

We use an EVE simulation to analyze the Company's long-term view of interest rate risk as it analyzes the Company's future cash flows. EVE is defined as the present value of the Company's assets, less the present value of its liabilities, adjusted for off-balance sheet items, with the results showing a theoretical change in the economic value of stockholders' equity as interest rates change. Our EVE simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) deposit decay rate assumptions, (3) predefined credit spreads for both investment securities and loans (4) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, (5) amortization schedule, and (6) discount rates associated with the products on balance sheet.

 

 

 

72

 

Potential changes to our net interest income and economic value of equity in hypothetical rising and declining interest rate scenarios calculated as of March 31, 2024 are presented below.

 

 

Estimated Increase/Decrease in
  Net Interest Income

 

Estimated Percentage
Change in EVE

 

 

Year ending December 31

 

As of

Basis Point Change in Interest Rates

 

2024

 

2025

 

December 31, 2023

+300

 

13.2%

 

14.7%

 

(13.4)%

+200

 

8.8%

 

9.7%

 

(9.1)%

+100

 

4.4%

 

4.9%

 

(4.6)%

-100

 

(2.1)%

 

(2.8)%

 

5.0%

-200

 

(5.3)%

 

(7.2)%

 

8.9%

-300

 

(8.2)%

 

(10.9)%

 

11.4%

For the dynamic balance sheet and rate shift scenarios, we assume a balance sheet that reflects management's growth outlook and interest rates follow a forward yield curve. The shocks are defined as gradual shifts up and down it by 1/12th of the total change in rates each month for 12 months. For dynamic balance sheet and rate shifts, a gradual shift downward of 100 basis points would result in a 1.4% decrease to net interest income, and a gradual shift upwards of 100 and 200 basis points would result in 2.3% and 4.5% increases to net interest income, respectively, over the next 12 months.

The Bank's aggregate interest rate risk exposure is monitored and managed based on the economic outlook and under guidance of board-approved policy limits. The results of the simulations are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted including the timing, magnitude, frequency of interest rate changes, changes in market conditions, depositor behavior changes, and management strategies.

Item 4. Controls and Procedures.

The Company’s management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of March 31, 2024, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

73

 

PART II-OTHER INFORMATION

We operate in a highly regulated environment. From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in the “Risk Factors” section included in our Form 10-K for our fiscal year ended December 31, 2023 that was filed with the SEC on March 4, 2024.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program is in effect from January 1, 2024 until December 31, 2024 unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by us at our discretion and will depend on a number of factors, including the market price of our stock, general market and economic conditions and applicable legal requirements.

The table below includes information regarding purchases of our common stock during the quarter ended March 31, 2024. We did not purchase any shares of our common stock during the first quarter of 2024 under our stock repurchase program.

 

Issuer Purchases of Equity Securities

 

 

 

 

 

 

 

 

 

 

 

 

Maximum Number of

 

 

 

Total

 

 

Average

 

 

Total Number of Shares

 

 

Shares that

 

 

 

Number of

 

 

Price

 

 

Purchased as Part of a

 

 

May Yet Be

 

 

 

Shares

 

 

Paid per

 

 

Publicly Announced

 

 

Purchased Under the

 

 

 

Purchased(1)

 

 

Share

 

 

Plan or Program

 

 

Plan or Program

 

January 1 - January 31, 2024

 

 

146,308

 

 

$

23.24

 

 

 

—

 

 

 

1,250,000

 

February 1 - February 29, 2024

 

 

78,075

 

 

 

21.02

 

 

 

—

 

 

 

1,250,000

 

March 1 - March 31, 2024

 

 

399

 

 

 

20.67

 

 

 

—

 

 

 

1,250,000

 

Total

 

 

224,782

 

 

$

22.46

 

 

 

—

 

 

 

 
(1)
All shares acquired during the three months ended March 31, 2024 were acquired pursuant to the Company’s 2017 Omnibus Incentive Compensation Plan. Under the terms of the compensation plan, we can accept previously owned shares of common stock to be surrendered to satisfy the exercise price of stock options, the settlement of restricted stock awards and tax withholding obligations upon vesting and/or exercise.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

 

74

 

Item 6. Exhibits.

 

EXHIBIT

Number

Description

3.1

Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference)

3.2

Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference)

4.1

Certain instruments defining the rights of holders of long-term debt securities of the registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.

31.1

Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002

32.1(a)

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, formatted in Inline XBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Statements of Condition; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements

104

Cover Page Interactive Data File – the cover page XBRL tags are embedded with the Inline XBRL document.

 

(a)
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

 

75

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

BYLINE BANCORP, INC.

 

Date: May 3, 2024

By:

/s/

Roberto R. Herencia

Roberto R. Herencia

Chief Executive Officer

(Principal Executive Officer)

Date: May 3, 2024

By:

/s/

 Thomas J. Bell III

 Thomas J. Bell III

Executive Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

 

76

EX-31.1 2 by-ex31_1.htm EX-31.1 EX-31.1

EXHIBIT 31.1

 

Certification of Chief Executive Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

and Section 302 of the Sarbanes-Oxley Act of 2002

I, Roberto R. Herencia, certify that:

1. I have reviewed this quarterly report on Form 10-Q (the “Report”) of Byline Bancorp, Inc. (the “Registrant”):

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: May 3, 2024

 

 

 /s/ Roberto R. Herencia

 

Roberto R. Herencia

 

Chief Executive Officer

 

(Principal Executive Officer)

 

 

EX-31.2 3 by-ex31_2.htm EX-31.2 EX-31.2

EXHIBIT 31.2

 

Certification of Chief Financial Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

and Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas J. Bell III, certify that:

1. I have reviewed this quarterly report on Form 10-Q (the “Report”) of Byline Bancorp, Inc. (the “Registrant”):

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report, based on such evaluation; and

d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: May 3, 2024

 

 

 /s/ Thomas J. Bell III

 

Thomas J. Bell III

 

Executive Vice President and Chief Financial Officer and Treasurer

 

(Principal Financial Officer)

 

EX-32.1 4 by-ex32_1.htm EX-32.1 EX-32.1

EXHIBIT 32.1

 

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Byline Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer and Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge:

1. The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 

 

/s/

Roberto R. Herencia

 

 

Roberto R. Herencia

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

May 3, 2024

 

 

 

 

/s/

Thomas J. Bell III

 

 

Thomas J. Bell III

 

 

Executive Vice President, Chief Financial Officer and Treasurer

 

 

(Principal Financial Officer)

 

 

May 3, 2024