8-K
Byline Bancorp, Inc. (BY)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 26, 2023
BYLINE BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
| 001-38139 | 36-3012593 |
|---|---|
| (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
| 180 North LaSalle Street, Suite 300 | |
| Chicago, Illinois | 60601 |
| (Address of Principal Executive Offices) | (Zip Code) |
(773) 244-7000
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | BY | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On October 26, 2023, Byline Bancorp, Inc., (“Byline" or the "Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.
On October 26, 2023, the Company made available on its website a slide presentation regarding the Company’s third quarter 2023 financial results, which will be used as part of a publicly accessible conference call on October 27, 2023. A copy of the slide presentation is attached as Exhibit 99.2 and is incorporated herein by reference.
The information included in Item 2.02 this Current Report on Form 8-K (including the information in the attached exhibits 99.1 and 99.2) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br><br>No. | Description | |
|---|---|---|
| 99.1 | Third Quarter 2023 financial results press release, dated October 26, 2023 | |
| 99.2 | Slide Presentation regarding third quarter 2023 financial results | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication.
No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.
Certain risks and important factors that could affect Byline’s future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BYLINE BANCORP, INC. | ||
|---|---|---|
| Date: October 26, 2023 | By: | /s/ Roberto R. Herencia |
| Name: | Roberto R. Herencia | |
| Title: | Executive Chairman and Chief Executive Officer |
EX-99.1
Exhibit 99.1
Byline Bancorp, Inc. Reports Third Quarter 2023 Financial Results
Net income of $28.2 million, $0.65 diluted earnings per share
Chicago, IL, October 26, 2023 – Byline Bancorp, Inc. (NYSE: BY), today reported:
| For the quarter | Third Quarter Highlights | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q23 | 2Q23 | 3Q222 | ||||||
| Financial Results (in thousands) | (compared to 2Q23) | |||||||
| Net interest income | $ | 92,452 | $ | 76,166 | $ | 68,635 | Completed the acquisition and integration of Inland Bancorp, Inc. | |
| Non-interest income | 12,376 | 14,291 | 12,043 | |||||
| Total Revenue1 | 104,828 | 90,457 | 80,678 | |||||
| Noninterest expense | 57,891 | 49,328 | 46,041 | Top Illinois SBA 7(a) lender for 15th consecutive year | ||||
| Pre-tax pre-provision net income (PTPP)1 | 46,937 | 41,129 | 34,637 | |||||
| Provision for credit losses | 8,803 | 5,790 | 7,208 | |||||
| Provision for income taxes | 9,912 | 9,232 | 7,020 | Income Statement | ||||
| Net Income | $ | 28,222 | $ | 26,107 | $ | 20,409 | • NIM expanded 14 bps | |
| Per Share | • Adjusted net income1 of $33.3 million, or | |||||||
| Diluted EPS | $ | 0.65 | $ | 0.70 | $ | 0.55 | $0.77 per adjusted diluted share1 | |
| Dividends declared per common share | 0.09 | 0.09 | 0.09 | |||||
| Book value | 21.04 | 21.58 | 19.64 | • PTPP1 of $46.9 million, increase of 14.1% | ||||
| Tangible book value per share1 | 16.35 | 17.43 | 15.36 | |||||
| • Adjusted efficiency ratio1 of 47.35% | ||||||||
| Balance Sheet & Credit Quality | ||||||||
| Total loans and leases | $ | 6,620,602 | $ | 5,596,512 | $ | 5,309,101 | Balance Sheet | |
| Total deposits | 6,953,690 | 5,917,092 | 5,612,456 | • Total assets of $8.9 billion | ||||
| Net charge-offs | 5,430 | 4,267 | 1,791 | |||||
| Allowance for credit losses (ACL) to total loans and | 1.60% | 1.66% | 1.51% | • Average total loan and lease growth 17.1% | ||||
| leases held for investment | ||||||||
| Select Ratios | • Average total deposit growth 18.6% | |||||||
| Efficiency ratio1 | 53.75% | 52.92% | 55.07% | |||||
| Return on average assets (ROAA) | 1.30% | 1.41% | 1.13% | • Credit quality metrics in line with | ||||
| Return on average stockholders' equity | 12.11% | 12.99% | 10.57% | expectations; through-the-cycle approach | ||||
| Return on average tangible common equity1 | 16.15% | 16.78% | 14.17% | to credit risk management | ||||
| Net Interest Margin (NIM) | 4.46% | 4.32% | 4.03% | |||||
| Tangible common equity to tangible assets1 | 8.18% | 8.87% | 8.10% | • Regulatory capital ratios remain solid | ||||
| Common Equity Tier 1 | 10.08% | 10.58% | 10.24% | |||||
| CEO/President Commentary | ||||||||
| --- | ||||||||
| Roberto R. Herencia, Executive Chairman and CEO of Byline Bancorp, commented, “We successfully completed the core system conversion and integration of our recent acquisition of Inland Bancorp, which we believe has strengthened the return profile of the company. With the expansion of our footprint and the continued execution of our strategic priorities, we see opportunities to leverage our products and services, and deliver enhanced stockholder value for years to come."<br><br>Alberto J. Paracchini, President of Byline Bancorp, added, “Adjusted third quarter results were highlighted by robust earnings, strong profitability, net interest margin expansion, solid deposit and loan growth, and controlled expenses. I want to thank our employees, who once again enabled our strong performance through their hard work,” said Mr. Paracchini. |
(1) Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.
(2) Recast due to the adoption of ASU 2016-13 Financial Instruments - Credit Losses on December 31, 2022, which was applied retrospectively to January 1, 2022. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the adoption of the standard.
Byline Bancorp, Inc.
Page 2 of 13
STATEMENTS OF OPERATIONS HIGHLIGHTS
Net Interest Income
Net interest income for the third quarter of 2023 was $92.5 million, an increase of $16.3 million, or 21.4%, from the second quarter of 2023. The increase in net interest income was primarily due to an increase of $26.3 million in interest income and fees on loans and leases due to loans acquired and higher yields; partially offset by an increase of $12.4 million in deposit interest expense due to deposits assumed and higher rates on deposits.
Tax-equivalent net interest margin1 for the third quarter of 2023 was 4.47%, an increase of 14 basis points compared to the second quarter of 2023. Total net loan accretion income impact on the margin contributed 50 basis points to the net interest margin for the third quarter of 2023 compared to three basis points for the second quarter of 2023.
The average cost of total deposits was 2.13% for the third quarter of 2023, an increase of 43 basis points compared to the second quarter of 2023, as a result of higher rates on money market accounts and time deposits. Average non-interest-bearing demand deposits were 28.8% of average total deposits for the third quarter of 2023 compared to 31.7% during the second quarter of 2023.
Provision for Credit Losses
The provision for credit losses was $8.8 million for the third quarter of 2023, an increase of $3.0 million compared to $5.8 million for the second quarter of 2023, mainly attributed to a $2.7 million provision allocated for acquired non-credit-deteriorated loans resulting from acquisition accounting. The provision for credit losses is comprised of a provision for loan and lease losses of $7.9 million and a provision for unfunded commitments of $938,000.
Non-interest Income
Non-interest income for the third quarter of 2023 was $12.4 million, a decrease of $1.9 million, or 13.4%, compared to $14.3 million for the second quarter of 2023. The decrease in total non-interest income was primarily due to a decrease of $2.8 million in the valuation of the loan servicing asset reflecting higher discount rates and higher prepayment rates, partially offset by an increase of $769,000, or 13.5%, in the net gain on sales of loans. During the third quarter of 2023, we sold $101.6 million of U.S. government guaranteed loans compared to $85.9 million during the second quarter of 2023.
Non-interest Expense
Non-interest expense for the third quarter of 2023 was $57.9 million, an increase of $8.6 million, or 17.4%, from $49.3 million for the second quarter of 2023. The increase in total non-interest expense was mainly due to an increase of $5.3 million in salaries and employee benefits and an increase of $2.2 million in data processing, both primarily driven by merger-related expenses.
Our efficiency ratio was 53.75% for the third quarter of 2023 compared to 52.92% for the second quarter of 2023. Excluding significant items, our adjusted efficiency ratio1 for the third quarter 2023 was 47.35%, compared to 51.39% for the second quarter of 2023.
Income Taxes
We recorded income tax expense of $9.9 million during the third quarter of 2023, compared to $9.2 million during the second quarter of 2023. The effective tax rate was 26.0% and 26.1% for the third quarter of 2023 and second quarter of 2023, respectively.
(1) Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
Byline Bancorp, Inc.
Page 3 of 13
STATEMENTS OF FINANCIAL CONDITION HIGHLIGHTS
Assets
Total assets were $8.9 billion as of September 30, 2023, an increase of $1.4 billion, or 18.1%, compared to $7.6 billion at June 30, 2023.
The current quarter increase was primarily due to an increase in net loans and leases of $1.0 billion mainly due to the acquisition; an increase in securities available-for-sale of $114.2 million, driven by increases in acquired securities; and an increase in cash and cash equivalents of $108.7 million mainly to support loan and lease portfolio growth and customer-related activities.
Non-performing loans and leases were $52.1 million at September 30, 2023, an increase of $13.8 million from $38.3 million at June 30, 2023. The increase was primarily the result of $13.7 million of non-performing acquired purchased credit deteriorated (PCD) loans.
Allowance for Credit Losses ("ACL") - Loans and Leases
ACL was $105.7 million as of September 30, 2023, an increase of $13.0 million, or 14.1%, from $92.7 million at June 30, 2023. The increase includes $10.6 million for PCD loans and a $2.7 million provision for acquired non-credit-deteriorated loans, as a result of the recent acquisition. Additional provision for originated loans and leases and an increase in individually assessed impairments were reduced by net charge-offs.
Net charge-offs of loans and leases during the third quarter of 2023 were $5.4 million, or 0.33% of average loans and leases, on an annualized basis. This was an increase of $1.1 million compared to net charge-offs of $4.3 million, or 0.31% of average loans and leases, during the second quarter of 2023.
Deposits and Other Liabilities
Total deposits increased to $7.0 billion at September 30, 2023 compared to $5.9 billion at June 30, 2023. Non-interest-bearing deposits were 28.2% and 30.3% of total deposits at September 30, 2023 and June 30, 2023, respectively. Estimated total uninsured deposits were $1.8 billion and $1.5 billion as of September 30, 2023 and June 30, 2023, and represented 26.1% and 25.9% of total deposits, respectively. The increase in deposits in the current quarter was mainly due to the deposits assumed and increased deposit campaigns. The increase in time deposits of $327.9 million was principally due to increased personal time deposits. The increase in money market demand accounts of $462.2 million was due to increases in consumer and commercial deposits. The increase in non-interest-bearing demand deposits of $166.1 million was mainly due to increases in assumed commercial deposits.
Total borrowings and other liabilities were $1.1 billion at September 30, 2023, an increase of $225.1 million from $844.7 million at June 30, 2023, primarily driven by increases in Federal Home Loan Bank advances, assumed junior subordinated debentures, accrued expenses and other liabilities.
Stockholders’ Equity
Total stockholders’ equity was $919.9 million at September 30, 2023, an increase of $106.0 million from $813.9 million at June 30, 2023. The increase was primarily due to stock consideration issued in connection with the acquisition.
(1) Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
Byline Bancorp, Inc.
Page 4 of 13
Conference Call, Webcast and Slide Presentation
We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, October 27, 2023, to discuss our quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (833) 470-1428; passcode 719791. A recorded replay can be accessed through November 10, 2023, by dialing (866) 813-9403; passcode: 404695.
A slide presentation relating to our third quarter 2023 results will be accessible prior to the conference call. The slide presentation and webcast of the conference call can be accessed on our investor relations website at www.bylinebancorp.com.
About Byline Bancorp, Inc.
Headquartered in Chicago, Byline Bancorp, Inc. is the parent company of Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bank has approximately $8.9 billion in assets and operates 48 branch locations throughout the Chicago and Milwaukee metropolitan areas. Byline Bank offers a broad range of commercial and retail banking products and services including small ticket equipment leasing solutions and is one of the top Small Business Administration lenders in the United States.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgment and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication.
No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.
Certain risks and important factors that could affect Byline’s future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws.
Contacts:
| Investors/Media: |
|---|
| Brooks Rennie |
| Investor Relations Director |
| 312-660-5805 |
| brennie@bylinebank.com |
Byline Bancorp, Inc.
Page 5 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
| Recast | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | |||||||
| (dollars in thousands) | 2023 | 2023 | 2022 | ||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 71,248 | $ | 59,564 | $ | 56,546 | |||
| Interest bearing deposits with other banks | 357,640 | 260,621 | 159,744 | ||||||
| Cash and cash equivalents | 428,888 | 320,185 | 216,290 | ||||||
| Equity and other securities, at fair value | 7,902 | 18,473 | 7,279 | ||||||
| Securities available-for-sale, at fair value | 1,239,929 | 1,125,700 | 1,181,654 | ||||||
| Securities held-to-maturity, at amortized cost | 1,157 | 2,158 | 3,877 | ||||||
| Restricted stock, at cost | 30,505 | 24,377 | 27,077 | ||||||
| Loans held for sale | 7,299 | 25,995 | 33,975 | ||||||
| Loans and leases: | |||||||||
| Loans and leases | 6,613,303 | 5,570,517 | 5,275,126 | ||||||
| Allowance for credit losses - loans and leases | (105,696 | ) | (92,665 | ) | (79,704 | ) | |||
| Net loans and leases | 6,507,607 | 5,477,852 | 5,195,422 | ||||||
| Servicing assets, at fair value | 19,743 | 21,715 | 21,127 | ||||||
| Premises and equipment, net | 67,121 | 56,304 | 59,049 | ||||||
| Other real estate owned, net | 1,671 | 2,265 | 4,402 | ||||||
| Goodwill and other intangible assets, net | 205,028 | 155,977 | 160,484 | ||||||
| Bank-owned life insurance | 96,268 | 83,222 | 81,592 | ||||||
| Deferred tax assets, net | 89,841 | 66,895 | 95,831 | ||||||
| Accrued interest receivable and other assets | 240,409 | 194,572 | 179,218 | ||||||
| Total assets | $ | 8,943,368 | $ | 7,575,690 | $ | 7,267,277 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| LIABILITIES | |||||||||
| Non-interest-bearing demand deposits | $ | 1,959,855 | $ | 1,793,749 | $ | 2,142,183 | |||
| Interest-bearing deposits | 4,993,835 | 4,123,343 | 3,470,273 | ||||||
| Total deposits | 6,953,690 | 5,917,092 | 5,612,456 | ||||||
| Other borrowings | 713,233 | 574,922 | 653,954 | ||||||
| Subordinated notes, net | 73,822 | 73,778 | 73,648 | ||||||
| Junior subordinated debentures issued to <br> capital trusts, net | 70,336 | 37,557 | 37,232 | ||||||
| Accrued expenses and other liabilities | 212,342 | 158,399 | 154,182 | ||||||
| Total liabilities | 8,023,423 | 6,761,748 | 6,531,472 | ||||||
| STOCKHOLDERS’ EQUITY | |||||||||
| Common stock | 450 | 391 | 389 | ||||||
| Additional paid-in capital | 708,615 | 599,718 | 597,049 | ||||||
| Retained earnings | 403,368 | 379,078 | 314,800 | ||||||
| Treasury stock | (50,329 | ) | (50,383 | ) | (51,535 | ) | |||
| Accumulated other comprehensive loss, net of tax | (142,159 | ) | (114,862 | ) | (124,898 | ) | |||
| Total stockholders’ equity | 919,945 | 813,942 | 735,805 | ||||||
| Total liabilities and stockholders’ equity | $ | 8,943,368 | $ | 7,575,690 | $ | 7,267,277 |
Byline Bancorp, Inc.
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BYLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Recast | |||||||||
| (dollars in thousands, | September 30, | June 30, | September 30, | ||||||
| except per share data) | 2023 | 2023 | 2022 | ||||||
| INTEREST AND DIVIDEND INCOME | |||||||||
| Interest and fees on loans and leases | $ | 125,465 | $ | 99,134 | $ | 72,635 | |||
| Interest on securities | 8,415 | 6,559 | 6,402 | ||||||
| Other interest and dividend income | 2,710 | 1,579 | 626 | ||||||
| Total interest and dividend income | 136,590 | 107,272 | 79,663 | ||||||
| INTEREST EXPENSE | |||||||||
| Deposits | 37,163 | 24,723 | 5,971 | ||||||
| Other borrowings | 3,981 | 4,241 | 3,232 | ||||||
| Subordinated notes and debentures | 2,994 | 2,142 | 1,825 | ||||||
| Total interest expense | 44,138 | 31,106 | 11,028 | ||||||
| Net interest income | 92,452 | 76,166 | 68,635 | ||||||
| PROVISION FOR CREDIT LOSSES | 8,803 | 5,790 | 7,208 | ||||||
| Net interest income after provision for credit losses | 83,649 | 70,376 | 61,427 | ||||||
| NON-INTEREST INCOME | |||||||||
| Fees and service charges on deposits | 2,372 | 2,233 | 2,128 | ||||||
| Loan servicing revenue | 3,369 | 3,377 | 3,422 | ||||||
| Loan servicing asset revaluation | (3,646 | ) | (865 | ) | (2,342 | ) | |||
| ATM and interchange fees | 1,205 | 1,112 | 1,007 | ||||||
| Net realized losses on securities available-for-sale | — | — | (2 | ) | |||||
| Change in fair value of equity securities, net | (313 | ) | 193 | (581 | ) | ||||
| Net gains on sales of loans | 6,473 | 5,704 | 5,580 | ||||||
| Wealth management and trust income | 939 | 1,039 | 995 | ||||||
| Other non-interest income | 1,977 | 1,498 | 1,836 | ||||||
| Total non-interest income | 12,376 | 14,291 | 12,043 | ||||||
| NON-INTEREST EXPENSE | |||||||||
| Salaries and employee benefits | 34,969 | 29,642 | 29,587 | ||||||
| Occupancy and equipment expense, net | 5,314 | 4,404 | 3,919 | ||||||
| Impairment charge on assets held for sale | — | — | |||||||
| Loan and lease related expenses | 836 | 488 | 530 | ||||||
| Legal, audit, and other professional fees | 3,805 | 3,675 | 2,733 | ||||||
| Data processing | 6,472 | 4,272 | 3,370 | ||||||
| Net loss recognized on other real estate<br> owned and other related expenses | 111 | 288 | 275 | ||||||
| Other intangible assets amortization expense | 1,551 | 1,455 | 1,611 | ||||||
| Other non-interest expense | 4,833 | 5,104 | 4,016 | ||||||
| Total non-interest expense | 57,891 | 49,328 | 46,041 | ||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 38,134 | 35,339 | 27,429 | ||||||
| PROVISION FOR INCOME TAXES | 9,912 | 9,232 | 7,020 | ||||||
| NET INCOME | $ | 28,222 | $ | 26,107 | $ | 20,409 | |||
| EARNINGS PER COMMON SHARE | |||||||||
| Basic | $ | 0.66 | $ | 0.70 | $ | 0.55 | |||
| Diluted | $ | 0.65 | $ | 0.70 | $ | 0.55 |
Byline Bancorp, Inc.
Page 7 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (unaudited)
| As of or For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Recast | |||||||||
| (dollars in thousands, except share | September 30, | June 30, | September 30, | ||||||
| and per share data) | 2023 | 2023 | 2022 | ||||||
| Earnings per Common Share | |||||||||
| Basic earnings per common share | $ | 0.66 | $ | 0.70 | $ | 0.55 | |||
| Diluted earnings per common share | $ | 0.65 | $ | 0.70 | $ | 0.55 | |||
| Adjusted diluted earnings per common share(1)(3) | $ | 0.77 | $ | 0.73 | $ | 0.55 | |||
| Weighted average common shares outstanding (basic) | 43,025,927 | 37,034,626 | 36,851,973 | ||||||
| Weighted average common shares outstanding (diluted) | 43,458,110 | 37,337,906 | 37,371,159 | ||||||
| Common shares outstanding | 43,719,203 | 37,752,002 | 37,465,902 | ||||||
| Cash dividends per common share | $ | 0.09 | $ | 0.09 | $ | 0.09 | |||
| Dividend payout ratio on common stock | 13.85 | % | 12.86 | % | 16.36 | % | |||
| Tangible book value per common share(1) | $ | 16.35 | $ | 17.43 | $ | 15.36 | |||
| Key Ratios and Performance Metrics (annualized where applicable) | |||||||||
| Net interest margin, fully taxable equivalent (1)(4) | 4.47 | % | 4.33 | % | 4.04 | % | |||
| Average cost of deposits | 2.13 | % | 1.70 | % | 0.43 | % | |||
| Efficiency ratio(1)(2) | 53.75 | % | 52.92 | % | 55.07 | % | |||
| Adjusted efficiency ratio(1)(2)(3) | 47.35 | % | 51.39 | % | 55.07 | % | |||
| Non-interest income to total revenues(1) | 11.81 | % | 15.80 | % | 14.93 | % | |||
| Non-interest expense to average assets | 2.66 | % | 2.67 | % | 2.56 | % | |||
| Adjusted non-interest expense to average assets(1)(3) | 2.35 | % | 2.60 | % | 2.56 | % | |||
| Return on average stockholders' equity | 12.11 | % | 12.99 | % | 10.57 | % | |||
| Adjusted return on average stockholders' equity(1)(3) | 14.30 | % | 13.56 | % | 10.57 | % | |||
| Return on average assets | 1.30 | % | 1.41 | % | 1.13 | % | |||
| Adjusted return on average assets(1)(3) | 1.53 | % | 1.48 | % | 1.13 | % | |||
| Pre-tax pre-provision return on average assets(1) | 2.16 | % | 2.23 | % | 1.93 | % | |||
| Adjusted pre-tax pre-provision return on average assets(1)(3) | 2.46 | % | 2.30 | % | 1.93 | % | |||
| Return on average tangible common stockholders' equity(1) | 16.15 | % | 16.78 | % | 14.17 | % | |||
| Adjusted return on average tangible common stockholders' equity(1)(3) | 18.95 | % | 17.50 | % | 14.17 | % | |||
| Non-interest-bearing deposits to total deposits | 28.18 | % | 30.31 | % | 38.17 | % | |||
| Loans and leases held for sale and loans and lease held for investment to total deposits | 95.21 | % | 94.58 | % | 94.59 | % | |||
| Deposits to total liabilities | 86.67 | % | 87.51 | % | 85.93 | % | |||
| Deposits per branch | $ | 144,869 | $ | 155,713 | $ | 147,696 | |||
| Asset Quality Ratios | |||||||||
| Non-performing loans and leases to total loans and leases held for investment, <br> net before ACL | 0.79 | % | 0.69 | % | 0.80 | % | |||
| ACL to total loans and leases held for investment, net before ACL | 1.60 | % | 1.66 | % | 1.51 | % | |||
| Net charge-offs to average total loans and leases held for investment, <br> net before ACL - loans and leases | 0.33 | % | 0.31 | % | 0.14 | % | |||
| Capital Ratios | |||||||||
| Common equity to total assets | 10.29 | % | 10.74 | % | 10.12 | % | |||
| Tangible common equity to tangible assets(1) | 8.18 | % | 8.87 | % | 8.10 | % | |||
| Leverage ratio | 10.75 | % | 10.74 | % | 10.30 | % | |||
| Common equity tier 1 capital ratio | 10.08 | % | 10.58 | % | 10.24 | % | |||
| Tier 1 capital ratio | 11.12 | % | 11.22 | % | 10.91 | % | |||
| Total capital ratio | 13.17 | % | 13.52 | % | 13.02 | % |
(1) Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
(2) Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
(3) Calculation excludes merger-related expenses and impairment charges on assts held for sale and ROU assets
(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%.
Byline Bancorp, Inc.
Page 8 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)
| For the Three Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2023 | June 30, 2023 | Recast September 30, 2022 | ||||||||||||||||||||||
| (dollars in thousands) | Average<br>Balance(5) | Interest<br>Inc / Exp | Avg.<br>Yield /<br>Rate | Average<br>Balance(5) | Interest<br>Inc / Exp | Avg.<br>Yield /<br>Rate | Average<br>Balance(5) | Interest<br>Inc / Exp | Avg.<br>Yield /<br>Rate | |||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 195,019 | $ | 1,724 | 3.51 | % | $ | 135,003 | $ | 1,041 | 3.09 | % | $ | 77,522 | $ | 210 | 1.08 | % | ||||||
| Loans and leases(1) | 6,484,875 | 125,465 | 7.68 | % | 5,535,593 | 99,134 | 7.18 | % | 5,217,779 | 72,635 | 5.52 | % | ||||||||||||
| Taxable securities | 1,371,979 | 8,465 | 2.45 | % | 1,250,780 | 6,324 | 2.03 | % | 1,306,024 | 5,963 | 1.81 | % | ||||||||||||
| Tax-exempt securities(2) | 168,805 | 1,184 | 2.78 | % | 151,205 | 980 | 2.60 | % | 162,591 | 1,083 | 2.64 | % | ||||||||||||
| Total interest-earning assets | $ | 8,220,678 | $ | 136,838 | 6.60 | % | $ | 7,072,581 | $ | 107,479 | 6.10 | % | $ | 6,763,916 | $ | 79,891 | 4.69 | % | ||||||
| Allowance for credit losses - <br> loans and leases | (108,315 | ) | (92,804 | ) | (74,383 | ) | ||||||||||||||||||
| All other assets | 521,982 | 424,122 | 447,939 | |||||||||||||||||||||
| TOTAL ASSETS | $ | 8,634,345 | $ | 7,403,899 | $ | 7,137,472 | ||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’<br> EQUITY | ||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||
| Interest checking | $ | 579,917 | $ | 2,208 | 1.51 | % | $ | 541,036 | $ | 2,175 | 1.61 | % | $ | 583,777 | $ | 1,077 | 0.73 | % | ||||||
| Money market accounts | 2,040,476 | 16,676 | 3.24 | % | 1,534,463 | 10,799 | 2.82 | % | 1,391,923 | 3,358 | 0.96 | % | ||||||||||||
| Savings | 594,555 | 228 | 0.15 | % | 575,254 | 220 | 0.15 | % | 673,966 | 247 | 0.15 | % | ||||||||||||
| Time deposits | 1,706,531 | 18,051 | 4.20 | % | 1,328,679 | 11,529 | 3.48 | % | 687,124 | 1,289 | 0.74 | % | ||||||||||||
| Total interest-bearing <br> deposits | 4,921,479 | 37,163 | 3.00 | % | 3,979,432 | 24,723 | 2.49 | % | 3,336,790 | 5,971 | 0.71 | % | ||||||||||||
| Other borrowings | 463,561 | 3,981 | 3.41 | % | 509,419 | 4,241 | 3.34 | % | 607,471 | 3,232 | 2.11 | % | ||||||||||||
| Subordinated notes and <br> debentures | 144,171 | 2,994 | 8.24 | % | 111,255 | 2,142 | 7.72 | % | 110,799 | 1,825 | 6.54 | % | ||||||||||||
| Total borrowings | 607,732 | 6,975 | 4.55 | % | 620,674 | 6,383 | 4.12 | % | 718,270 | 5,057 | 2.79 | % | ||||||||||||
| Total interest-bearing liabilities | $ | 5,529,211 | $ | 44,138 | 3.17 | % | $ | 4,600,106 | $ | 31,106 | 2.71 | % | $ | 4,055,060 | $ | 11,028 | 1.08 | % | ||||||
| Non-interest-bearing <br> demand deposits | 1,987,996 | 1,848,538 | 2,198,095 | |||||||||||||||||||||
| Other liabilities | 192,860 | 148,983 | 118,496 | |||||||||||||||||||||
| Total stockholders’ equity | 924,278 | 806,272 | 765,821 | |||||||||||||||||||||
| TOTAL LIABILITIES AND<br> STOCKHOLDERS’ EQUITY | $ | 8,634,345 | $ | 7,403,899 | $ | 7,137,472 | ||||||||||||||||||
| Net interest spread(3) | 3.43 | % | 3.39 | % | 3.61 | % | ||||||||||||||||||
| Net interest income, fully <br> taxable equivalent | $ | 92,700 | $ | 76,373 | $ | 68,863 | ||||||||||||||||||
| Net interest margin, fully <br> taxable equivalent(2)(4) | 4.47 | % | 4.33 | % | 4.04 | % | ||||||||||||||||||
| Less: Tax-equivalent adjustment | 248 | 0.01 | % | 207 | 0.01 | % | 228 | 0.01 | % | |||||||||||||||
| Net interest income | $ | 92,452 | $ | 76,166 | $ | 68,635 | ||||||||||||||||||
| Net interest margin(4) | 4.46 | % | 4.32 | % | 4.03 | % | ||||||||||||||||||
| Net loan accretion impact <br> on margin | $ | 10,276 | 0.50 | % | $ | 611 | 0.03 | % | $ | 1,371 | 0.08 | % |
(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 earning assets.
(5) Average balances are average daily balances.
Byline Bancorp, Inc.
Page 9 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
SELECTED BALANCE SHEET TABLES AND FINANCIAL RATIOS (unaudited)
The following table presents our allocation of originated, purchased credit deteriorated (PCD), and acquired non-credit-deteriorated loans and leases at the dates indicated:
| Recast | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2023 | June 30, 2023 | September 30, 2022 | ||||||||||||||||
| (dollars in thousands) | Amount | % of Total | Amount | % of Total | Amount | % of Total | ||||||||||||
| Originated loans and leases | ||||||||||||||||||
| Commercial real estate | $ | 1,837,531 | 27.8 | % | $ | 1,806,531 | 32.4 | % | $ | 1,659,218 | 31.5 | % | ||||||
| Residential real estate | 454,456 | 6.9 | % | 453,880 | 8.1 | % | 409,926 | 7.8 | % | |||||||||
| Construction, land development, and<br> other land | 406,334 | 6.1 | % | 387,623 | 7.0 | % | 456,276 | 8.5 | % | |||||||||
| Commercial and industrial | 2,286,058 | 34.6 | % | 2,086,274 | 37.4 | % | 1,940,236 | 36.8 | % | |||||||||
| Installment and other | 2,968 | 0.0 | % | 3,582 | 0.1 | % | 999 | 0.0 | % | |||||||||
| Leasing financing receivables | 641,032 | 9.7 | % | 604,437 | 10.9 | % | 492,744 | 9.3 | % | |||||||||
| Total originated loans and leases | $ | 5,628,379 | 85.1 | % | $ | 5,342,327 | 95.9 | % | $ | 4,959,399 | 94.0 | % | ||||||
| Purchased credit deteriorated loans | ||||||||||||||||||
| Commercial real estate | $ | 154,573 | 2.3 | % | $ | 30,724 | 0.6 | % | $ | 49,649 | 0.9 | % | ||||||
| Residential real estate | 47,485 | 0.7 | % | 26,012 | 0.5 | % | 35,309 | 0.7 | % | |||||||||
| Construction, land development, and<br> other land | 29,587 | 0.5 | % | 320 | 0.0 | % | 1,131 | 0.0 | % | |||||||||
| Commercial and industrial | 21,014 | 0.3 | % | 1,726 | 0.0 | % | 2,345 | 0.1 | % | |||||||||
| Installment and other | 125 | 0.0 | % | 129 | 0.0 | % | 149 | 0.0 | % | |||||||||
| Total purchased credit deteriorated loans | $ | 252,784 | 3.8 | % | $ | 58,911 | 1.1 | % | $ | 88,583 | 1.7 | % | ||||||
| Acquired non-credit-deteriorated loans <br> and leases | ||||||||||||||||||
| Commercial real estate | $ | 296,656 | 4.5 | % | $ | 126,191 | 2.3 | % | $ | 159,928 | 3.0 | % | ||||||
| Residential real estate | 220,091 | 3.4 | % | 25,055 | 0.4 | % | 36,480 | 0.7 | % | |||||||||
| Construction, land development, and<br> other land | 87,087 | 1.3 | % | — | 0.0 | % | 187 | 0.0 | % | |||||||||
| Commercial and industrial | 127,253 | 1.9 | % | 16,750 | 0.3 | % | 27,249 | 0.5 | % | |||||||||
| Installment and other | 153 | 0.0 | % | 25 | 0.0 | % | 216 | 0.0 | % | |||||||||
| Leasing financing receivables | 900 | 0.0 | % | 1,258 | 0.0 | % | 3,084 | 0.1 | % | |||||||||
| Total acquired non-credit-deteriorated <br> loans and leases | $ | 732,140 | 11.1 | % | $ | 169,279 | 3.0 | % | $ | 227,144 | 4.3 | % | ||||||
| Total loans and leases | $ | 6,613,303 | 100.0 | % | $ | 5,570,517 | 100.0 | % | $ | 5,275,126 | 100.0 | % | ||||||
| Allowance for credit losses - loans and leases | (105,696 | ) | (92,665 | ) | (79,704 | ) | ||||||||||||
| Total loans and leases, net of allowance for<br> credit losses - loans and leases | $ | 6,507,607 | $ | 5,477,852 | $ | 5,195,422 |
The following table presents the balance and activity within the allowance for credit losses - loans and lease for the periods indicated:
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Recast | |||||||||
| September 30, | June 30, | September 30, | |||||||
| (dollars in thousands) | 2023 | 2023 | 2022 | ||||||
| ACL - loans and leases, beginning of period | $ | 92,665 | $ | 90,465 | $ | 74,048 | |||
| Adjustment for acquired PCD loans | 10,596 | — | — | ||||||
| Provision for credit losses - loans and leases | 7,865 | 6,467 | 7,447 | ||||||
| Net charge-offs - loans and leases | (5,430 | ) | (4,267 | ) | (1,791 | ) | |||
| ACL - loans and leases, end of period | $ | 105,696 | $ | 92,665 | $ | 79,704 | |||
| Net charge-offs - loans and leases to average total<br> loans and leases held for investment, net before ACL | 0.33 | % | 0.31 | % | 0.14 | % | |||
| Provision for credit losses - loans and leases <br> to net charge-offs - loans and leases during the period | 1.45 | x | 1.52 | x | 4.16 | x |
Byline Bancorp, Inc.
Page 10 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
SELECTED BALANCE SHEET TABLES AND FINANCIAL RATIOS (unaudited)
The following table presents the amounts of non-performing loans and leases and other real estate owned at the date indicated:
| September 30, 2023 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Recast | Change from | ||||||||||||||
| (dollars in thousands) | September 30, 2023 | June 30, 2023 | September 30, 2022 | June 30, 2023 | September 30, 2022 | ||||||||||
| Non-performing assets: | |||||||||||||||
| Non-accrual loans and leases | $ | 52,070 | $ | 38,273 | $ | 41,942 | 36.0 | % | 24.1 | % | |||||
| Past due loans and leases 90 days or more<br> and still accruing interest | — | — | — | —% | —% | ||||||||||
| Total non-performing loans and leases | $ | 52,070 | $ | 38,273 | $ | 41,942 | 36.0 | % | 24.1 | % | |||||
| Other real estate owned | 1,671 | 2,265 | 4,402 | (26.2 | )% | (62.0 | )% | ||||||||
| Total non-performing assets | $ | 53,741 | $ | 40,538 | $ | 46,344 | 32.6 | % | 16.0 | % | |||||
| Total non-performing loans and leases as a<br> percentage of total loans and leases | 0.79 | % | 0.69 | % | 0.80 | % | |||||||||
| Total non-performing assets as a percentage<br> of total assets | 0.60 | % | 0.54 | % | 0.64 | % | |||||||||
| Allowance for credit losses - loans and lease <br> as a percentage of non-performing<br> loans and leases | 202.99 | % | 242.12 | % | 190.03 | % | |||||||||
| Non-performing assets guaranteed by <br> U.S. government: | |||||||||||||||
| Non-accrual loans guaranteed | $ | 3,588 | $ | 2,472 | $ | 1,676 | 45.1 | % | 114.1 | % | |||||
| Past due loans 90 days or more and still<br> accruing interest guaranteed | — | — | — | —% | —% | ||||||||||
| Total non-performing loans guaranteed | $ | 3,588 | $ | 2,472 | $ | 1,676 | 45.1 | % | 114.1 | % | |||||
| Total non-performing loans and leases <br> not guaranteed as a percentage of total <br> loans and leases | 0.73 | % | 0.64 | % | 0.76 | % | |||||||||
| Total non-performing assets not guaranteed<br> as a percentage of total assets | 0.56 | % | 0.50 | % | 0.61 | % |
The following table presents the composition of deposits at the dates indicated:
| September 30, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Change from | |||||||||||
| (dollars in thousands) | June 30, 2023 | September 30, 2022 | June 30, 2023 | September 30, 2022 | |||||||
| Non-interest-bearing demand deposits | 1,959,855 | $ | 1,793,749 | $ | 2,142,183 | 9.3 | % | (8.5 | )% | ||
| Interest-bearing checking accounts | 592,771 | 530,775 | 616,139 | 11.7 | % | (3.8 | )% | ||||
| Money market demand accounts | 2,062,252 | 1,600,043 | 1,485,815 | 28.9 | % | 38.8 | % | ||||
| Other savings | 581,073 | 562,706 | 669,734 | 3.3 | % | (13.2 | )% | ||||
| Time deposits (below 250,000) | 1,446,485 | 1,214,717 | 586,198 | 19.1 | % | 146.8 | % | ||||
| Time deposits (250,000 and above) | 311,254 | 215,102 | 112,387 | 44.7 | % | 176.9 | % | ||||
| Total deposits | 6,953,690 | $ | 5,917,092 | $ | 5,612,456 | 17.5 | % | 23.9 | % |
All values are in US Dollars.
Byline Bancorp, Inc.
Page 11 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Non-GAAP Financial Measures
This release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures include adjusted net income, adjusted diluted earnings per share, adjusted efficiency ratio, adjusted non-interest expense to average assets, tax-equivalent net interest margin, total revenue, non-interest income to total revenues, adjusted return on average stockholders’ equity, adjusted return on average assets, pre-tax pre-provision return on average assets, adjusted pre-tax pre-provision return on average assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common stockholders' equity, and adjusted return on average tangible common stockholders' equity. Management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, management acknowledges that our non-GAAP financial measures have a number of limitations. As such, these disclosures should not be viewed as a substitute for results determined in accordance with GAAP financial measures that we and other companies use. Management also uses these measures for peer comparison. See below in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.
| As of or For the Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Recast | ||||||||
| September 30, | June 30, | September 30, | ||||||
| (dollars in thousands, except per share data) | 2023 | 2023 | 2022 | |||||
| Net income and earnings per share excluding significant items | ||||||||
| Reported Net Income | $ | 28,222 | $ | 26,107 | $ | 20,409 | ||
| Significant items: | ||||||||
| Impairment charges on ROU assets | 394 | — | — | |||||
| Merger-related expenses | 6,307 | 1,391 | — | |||||
| Tax benefit | (1,617 | ) | (230 | ) | — | |||
| Adjusted Net Income | $ | 33,306 | $ | 27,268 | $ | 20,409 | ||
| Reported Diluted Earnings per Share | $ | 0.65 | $ | 0.70 | $ | 0.55 | ||
| Significant items: | ||||||||
| Impairment charges on ROU assets | 0.01 | — | — | |||||
| Merger-related expenses | 0.15 | 0.04 | — | |||||
| Tax benefit | (0.04 | ) | (0.01 | ) | — | |||
| Adjusted Diluted Earnings per Share | $ | 0.77 | $ | 0.73 | $ | 0.55 |
Byline Bancorp, Inc.
Page 12 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)
| As of or For the Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Recast | ||||||||
| (dollars in thousands, except per share data, | September 30, | June 30, | September 30, | |||||
| ratios annualized, where applicable) | 2023 | 2023 | 2022 | |||||
| Adjusted non-interest expense: | ||||||||
| Non-interest expense | $ | 57,891 | $ | 49,328 | $ | 46,041 | ||
| Less: Significant items | ||||||||
| Impairment charges on ROU assets | 394 | — | — | |||||
| Merger-related expenses | 6,307 | 1,391 | — | |||||
| Adjusted non-interest expense | $ | 51,190 | $ | 47,937 | $ | 46,041 | ||
| Adjusted non-interest expense excluding <br> amortization of intangible assets: | ||||||||
| Adjusted non-interest expense | $ | 51,190 | $ | 47,937 | $ | 46,041 | ||
| Less: Amortization of intangible assets | 1,551 | 1,455 | 1,611 | |||||
| Adjusted non-interest expense excluding <br> amortization of intangible assets | $ | 49,639 | $ | 46,482 | $ | 44,430 | ||
| Pre-tax pre-provision net income: | ||||||||
| Pre-tax income | $ | 38,134 | $ | 35,339 | $ | 27,429 | ||
| Add: Provision for credit losses | 8,803 | 5,790 | 7,208 | |||||
| Pre-tax pre-provision net income | $ | 46,937 | $ | 41,129 | $ | 34,637 | ||
| Adjusted pre-tax pre-provision net income: | ||||||||
| Pre-tax pre-provision net income | $ | 46,937 | $ | 41,129 | $ | 34,637 | ||
| Add: Impairment charges on ROU assets | 394 | — | — | |||||
| Add: Merger-related expenses | 6,307 | 1,391 | — | |||||
| Adjusted pre-tax pre-provision net income | $ | 53,638 | $ | 42,520 | $ | 34,637 | ||
| Tax equivalent net interest income | ||||||||
| Net interest income | $ | 92,452 | $ | 76,166 | $ | 68,635 | ||
| Add: Tax-equivalent adjustment | 248 | 207 | 228 | |||||
| Net interest income, fully taxable equivalent | $ | 92,700 | $ | 76,373 | $ | 68,863 | ||
| Total revenue: | ||||||||
| Net interest income | $ | 92,452 | $ | 76,166 | $ | 68,635 | ||
| Add: Non-interest income | 12,376 | 14,291 | 12,043 | |||||
| Total revenue | $ | 104,828 | $ | 90,457 | $ | 80,678 | ||
| Tangible common stockholders' equity: | ||||||||
| Total stockholders' equity | $ | 919,945 | $ | 813,942 | $ | 735,805 | ||
| Less: Goodwill and other intangibles | 205,028 | 155,977 | 160,484 | |||||
| Tangible common stockholders' equity | $ | 714,917 | $ | 657,965 | $ | 575,321 | ||
| Tangible assets: | ||||||||
| Total assets | $ | 8,943,368 | $ | 7,575,690 | $ | 7,267,277 | ||
| Less: Goodwill and other intangibles | 205,028 | 155,977 | 160,484 | |||||
| Tangible assets | $ | 8,738,340 | $ | 7,419,713 | $ | 7,106,793 | ||
| Average tangible common stockholders' equity: | ||||||||
| Average total stockholders' equity | $ | 924,278 | $ | 806,272 | $ | 765,821 | ||
| Less: Average goodwill and other intangibles | 202,978 | 156,766 | 161,292 | |||||
| Average tangible common stockholders' equity | $ | 721,300 | $ | 649,506 | $ | 604,529 | ||
| Average tangible assets: | ||||||||
| Average total assets | $ | 8,634,345 | $ | 7,403,899 | $ | 7,137,472 | ||
| Less: Average goodwill and other intangibles | 202,978 | 156,766 | 161,292 | |||||
| Average tangible assets | $ | 8,431,367 | $ | 7,247,133 | $ | 6,976,180 | ||
| Tangible net income available to common stockholders: | ||||||||
| Net income available to common stockholders | $ | 28,222 | $ | 26,107 | $ | 20,409 | ||
| Add: After-tax intangible asset amortization | 1,137 | 1,067 | 1,181 | |||||
| Tangible net income available to common stockholders | $ | 29,359 | $ | 27,174 | $ | 21,590 | ||
| Adjusted tangible net income available to common stockholders: | ||||||||
| Tangible net income available to common stockholders | $ | 29,359 | $ | 27,174 | $ | 21,590 | ||
| Impairment charges on ROU assets | 394 | — | — | |||||
| Merger-related expenses | 6,307 | 1,391 | — | |||||
| Tax benefit on significant items | (1,617 | ) | (230 | ) | — | |||
| Adjusted tangible net income available to common stockholders | $ | 34,443 | $ | 28,335 | $ | 21,590 |
Byline Bancorp, Inc.
Page 13 of 13
BYLINE BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)
| As of or For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Recast | |||||||||
| (dollars in thousands, except share and per share | September 30, | June 30, | September 30, | ||||||
| data, ratios annualized, where applicable) | 2023 | 2023 | 2022 | ||||||
| Pre-tax pre-provision return on average assets: | |||||||||
| Pre-tax pre-provision net income | $ | 46,937 | $ | 41,129 | $ | 34,637 | |||
| Average total assets | 8,634,345 | 7,403,899 | 7,137,472 | ||||||
| Pre-tax pre-provision return on average assets | 2.16 | % | 2.23 | % | 1.93 | % | |||
| Adjusted pre-tax pre-provision return on average assets: | |||||||||
| Adjusted pre-tax pre-provision net income | $ | 53,638 | $ | 42,520 | $ | 34,637 | |||
| Average total assets | 8,634,345 | 7,403,899 | 7,137,472 | ||||||
| Adjusted pre-tax pre-provision return on average assets | 2.46 | % | 2.30 | % | 1.93 | % | |||
| Net interest margin, fully taxable equivalent | |||||||||
| Net interest income, fully taxable equivalent | $ | 92,700 | $ | 76,373 | $ | 68,863 | |||
| Total average interest-earning assets | 8,220,678 | 7,072,581 | 6,763,916 | ||||||
| Net interest margin, fully taxable equivalent | 4.47 | % | 4.33 | % | 4.04 | % | |||
| Non-interest income to total revenues: | |||||||||
| Non-interest income | $ | 12,376 | $ | 14,291 | $ | 12,043 | |||
| Total revenues | 104,828 | 90,457 | 80,678 | ||||||
| Non-interest income to total revenues | 11.81 | % | 15.80 | % | 14.93 | % | |||
| Adjusted non-interest expense to average assets: | |||||||||
| Adjusted non-interest expense | $ | 51,190 | $ | 47,937 | $ | 46,041 | |||
| Average total assets | 8,634,345 | 7,403,899 | 7,137,472 | ||||||
| Adjusted non-interest expense to average assets | 2.35 | % | 2.60 | % | 2.56 | % | |||
| Adjusted efficiency ratio: | |||||||||
| Adjusted non-interest expense excluding amortization of intangible assets | $ | 49,639 | $ | 46,482 | $ | 44,430 | |||
| Total revenues | 104,828 | 90,457 | 80,678 | ||||||
| Adjusted efficiency ratio | 47.35 | % | 51.39 | % | 55.07 | % | |||
| Adjusted return on average assets: | |||||||||
| Adjusted net income | $ | 33,306 | $ | 27,268 | $ | 20,409 | |||
| Average total assets | 8,634,345 | 7,403,899 | 7,137,472 | ||||||
| Adjusted return on average assets | 1.53 | % | 1.48 | % | 1.13 | % | |||
| Adjusted return on average stockholders' equity: | |||||||||
| Adjusted net income | $ | 33,306 | $ | 27,268 | $ | 20,409 | |||
| Average stockholders' equity | 924,278 | 806,272 | 765,821 | ||||||
| Adjusted return on average stockholders' equity | 14.30 | % | 13.56 | % | 10.57 | % | |||
| Tangible common equity to tangible assets: | |||||||||
| Tangible common equity | $ | 714,917 | $ | 657,965 | $ | 575,321 | |||
| Tangible assets | 8,738,340 | 7,419,713 | 7,106,793 | ||||||
| Tangible common equity to tangible assets | 8.18 | % | 8.87 | % | 8.10 | % | |||
| Return on average tangible common stockholders' equity: | |||||||||
| Tangible net income available to common stockholders | $ | 29,359 | $ | 27,174 | $ | 21,590 | |||
| Average tangible common stockholders' equity | 721,300 | 649,506 | 604,529 | ||||||
| Return on average tangible common stockholders' equity | 16.15 | % | 16.78 | % | 14.17 | % | |||
| Adjusted return on average tangible common stockholders' equity: | |||||||||
| Adjusted tangible net income available to common stockholders | $ | 34,443 | $ | 28,335 | $ | 21,590 | |||
| Average tangible common stockholders' equity | 721,300 | 649,506 | 604,529 | ||||||
| Adjusted return on average tangible common stockholders' equity | 18.95 | % | 17.50 | % | 14.17 | % | |||
| Tangible book value per share: | |||||||||
| Tangible common equity | $ | 714,917 | $ | 657,965 | $ | 575,321 | |||
| Common shares outstanding | 43,719,203 | 37,752,002 | 37,465,902 | ||||||
| Tangible book value per share | $ | 16.35 | $ | 17.43 | $ | 15.36 |
3Q23 Earnings Presentation Exhibit 99.2
2 Forward-Looking Statements Forward-Looking Statements This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication. No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication. Certain risks and important factors that could affect Byline’s future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Current Expected Credit Loss (“CECL”) Adoption On December 31, 2022, the Company adopted CECL and applied it retrospectively to the period beginning January 1, 2022 using the modified retrospective method of accounting. Results for reporting periods beginning after September 30, 2022 are presented under the new standard, while prior quarters previously reported are recast as if the new standard had been applied since January 1, 2022.
2.16% 2.46% Reported Adjusted 16.15% 18.95% Reported Adjusted ROTCE(1) $0.65 $0.77 Reported Adjusted(1) 1.30% 1.53% Reported Adjusted(1) ROAA $28.2 million $33.3 million Reported Adjusted(1) 53.75% 47.35% Reported Adjusted(1) Efficiency Ratio Third Quarter 2023 Highlights 3 Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. Represents total securities. Inland Bancorp Acquisition Strong Financial Performance Net Income Diluted EPS PTPP ROAA(1) Closed transaction and successfully completed core system conversion and integration during 3Q23 Added ~$1.0 billion in total deposits Converted over 21,000 deposit accounts Transitioned ~6,500 consumer and business customers to Byline Bank digital banking platforms Added ~$800 million in total loans Achieved employee retention targets On track to deliver against targeted cost savings GAAP EPS of $0.65; adjusted EPS(1) of $0.77 3Q23 earnings impacted by $6.4 million of merger-related expenses Record Pre-Tax Pre-Provision income (1) of $46.9 million; Pre-Tax Pre-Provision ROAA(1) of 2.16% Revenue of $104.8 million, up 16% LQ & 30% YoY Net interest income of $92.5 million, up 21% LQ & 35% YoY Net interest margin (FTE)(1) of 4.47% Loan yields expanded 50 bps Disciplined expense management with adjusted operating expenses(1): $51.2 million Adj. efficiency ratio(1): 47.35% Credit quality, post-merger, remained stable: ACL as a percent of loans and leases of 1.60%, down QoQ Deposit costs increased 43 bps Securities yields(2) expanded 39 bps Adj. NIE/AA(1): 2.35%, down 25 bps LQ & 21 bps YoY
Loan and Lease Trends ($ in millions) Total Loans & Leases and Average Yield Portfolio Composition Total loans and leases were $6.6 billion at 3Q23, an increase of $1.0 billion from the end of the prior quarter Originated $310.9 million in new loans, net of loan sales in 3Q23 Production driven by commercial and lease originations of $171.3 million and $86.5 million, respectively Payoff activity decreased by $71.6 million from 2Q23 Cumulative Loan Beta(1): 41% Highlights Utilization Rates 55% LTM Average Originations and Payoffs Cumulative Beta excluding loan accretion is calculated as the change in yield on loans and leases from 4Q21 to 3Q23 divided by the change in average Fed Funds from 4Q21 to 3Q23. 4
(1) $ Balance % of Portfolio Unguaranteed $380.2 5.7% Guaranteed 81.5 1.2% Total SBA 7(a) Loans $461.7 7.0% Unguaranteed $37.0 0.6% Guaranteed 28.3 0.4% Total USDA Loans $65.3 1.0% Unguaranteed Loan Portfolio by Industry A leading SBA 7(a) lender for Government Fiscal Year 2023 #5 SBA 7(a) lender in the United States #1 SBA 7(a) and 504 lender in Illinois Closed $113.4 million in loan commitments in 3Q23 SBA 7(a) portfolio $461.7 million, down $10.9 million from 2Q23 ACL/Unguaranteed loan balance ~8.1% $1.7 billion in serviced government guaranteed loans for investors in 3Q23 Government-Guaranteed Lending ($ in millions) On Balance Sheet SBA 7(a) & USDA Loans Total SBC Closed Loan Commitments Highlights Represents sectors with less than 5% of the total portfolio. 5
Cost of Interest Bearing Deposits Total deposits increased $1.0 billion to $7.0 billion Deposits excluding the acquisition increased $74.4 million, or 5.8% annualized Commercial deposits accounted for 47.7% of total deposits and represent 76.8% of all non-interest-bearing deposits Cost of deposits increased 43 bps in 3Q23, due to rate increases and mix changes Cumulative total deposit beta remains low at ~39% since the beginning of the current tightening cycle Deposit Trends ($ in millions) Deposit Composition Highlights Average Non-Interest Bearing Deposits Deposit Beta(1) Interest-Bearing Deposits: 55% Total Deposits: 39% 6 Beta calculation is based on change in deposit cost divided by change in Fed Funds from 4Q21 to 3Q23.
Net interest income was $92.5 million, up 21.4% from 2Q23 Net interest margin increased 14 basis points from 2Q23 to 4.46% Loan and lease yield of 7.68%, up 50 basis points from 2Q23 Interest Rate Sensitivity Added $100 million in notional forward starting cash flow hedges: Receive-fixed: rate of 7.15%; WAM ~3.4 years, with start dates in 2024 $50 million in notional cash flow hedges went effective in 3Q23 Pay-fixed: rate of 1.52%; WAM ~3.4 years NIM Bridge Net Interest Income and Net Interest Margin Trends ($ in millions) Net Interest Income Highlights NIM, Yields, and Costs 7 Repricing Mix 0.03%
Government Guaranteed Loan Sales $101.6 million of guaranteed loans sold in 3Q23 Loans held for sale decreased to $7.3 million in 3Q23 Non-interest income was $12.4 million, a decrease of $1.9 million from 2Q23 $3.6 million FV mark on loan servicing asset charge due to higher discount rates and increased prepayments Non-interest income remained stable QoQ, excluding FV mark on loan servicing asset Volume Sold and Average Net Premiums Non-Interest Income Trends ($ in millions) Total Non-Interest Income Highlights Net Gains on Sales of Loans 8 (1) Other includes net servicing losses for 4Q22 and 3Q23.
(1) Non-interest expenses increased to $57.9 million from $49.3 million in 2Q23, primarily due to merger-related expenses $5.3 million in higher salaries and employee benefits $2.2 million increase in data processing Excluding significant items of $6.7 million, adjusted non-interest expense(1) stood at $51.2 million; adjusted efficiency ratio(1): 47.35% Disciplined expense management with adjusted NIE/AA(1): 2.35%, down 25 bps LQ & 21 bps YoY Efficiency Ratio Non-Interest Expense Trends ($ in millions) Non-Interest Expense Highlights Non-Interest Expense Bridge 9 Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. ($0.7) ($0.7) $4.9 $3.0 $0.8 $0.9 $0.4 $49.3 $57.9
Note: Delinquencies represent accruing loans and leases past due 30 days or more. Delinquencies to Total Loans and Leases represent delinquencies divided by period end loans and leases. Delinquencies Asset Quality Trends ($ in millions) Net Charge-offs NPLs / Total Loans & Leases 10 Allowance for Credit Losses (ACL) 0.73% 0.56%
Median: 62% Percent of Insured Deposits(2) Liquidity Position Strong Liquidity and Securities Portfolio Cash and cash equivalents of $428.9 million $1.2 billion investment portfolio (~99.3% AFS) $1.7 billion of available borrowing capacity Liquidity coverage of uninsured deposits ~108% as of quarter end Loans/Deposits ratio: 95.2% Uninsured Deposits stood at 26.1% and trends well below all peer bank averages % of Uninsured Deposits Industry Comparisons(1) >$500B $250B - $500B $100B - $250B $50B - $100B $10B - $50B $1B - $10B Median 41.0% 32.3% 38.9% 38.3% 36.1% 30.6% Byline Bank 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 11 Source: SNL Financial, and company filings. Financial data as of quarter ended June 30, 2023 or most recent available. Source: Company’s 2Q23 Form 10-Q | Calculation: (total deposits uninsured deposits) / total consolidated deposits | Byline 2023 Proxy Peer Group. Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. AFS Portfolio by Type HTM portfolio of $1.2 million ($24,000 in unrealized losses) Securities portfolio duration: 5.1 years; net of hedges: ~4.5 years Securities portfolio annual cash flow: ~$194 million Total securities yield of 2.48%, up 39 basis points from 2Q23 AOCI / TCE(3): ~19.9% Highlights
(2) (1) Return on Average Tangible Common Equity Strong Capital Position Capital Ratios 12 As reported prior to CECL adoption. Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. Strong Capital Base Common Equity Tier 1 Capital Priorities: TCE operating target range is between 8% and 9%: currently at 8.18% $920 million total stockholders’ equity $450 million of balance sheet hedges to protect market value risk 1. Fund Organic Growth 2. Dividend 3. M&A 4. Buyback
Our Strategy Remains Consistent 13 Maintain Balance Sheet Strength Continue to Invest in the Business Capitalize on Market Opportunities Deliver Strong Financial Results Grow our Commercial Client Franchise 1 2 3 4 5 Leverage our Capabilities 6 Differentiated approach to grow loans and deposits organically in targeted market segments Maintain a strong balance sheet, ample capital flexibility and strong asset quality Continue to invest in digital capabilities to improve the customer experience and gain operational efficiencies Attract high quality talent to the organization and pursue opportunistic M&A opportunities Generate consistently strong financial results for our stockholders Leverage all our capabilities to deepen share of wallet and acquire new customers
3Q23 Earnings Presentation Appendix
Granular Deposit Base 15 Consumer Deposits, $3.1 billion Commercial Deposits, $2.8 billion ~74% of Total Deposits are FDIC Insured …with limited concentration and granular customer base providing a stable source of funding Consumer Deposits(1) $3.8 billion at 9/30/23 Granular Deposit Base ~$28,000 Average Account Balance Customer Base ~123,000 Consumer Accounts Total Franchise 48 Branches Commercial Deposits $3.2 billion at 9/30/23 Granular Deposit Base ~$120,000 Average Account Balance Customer Base ~26,000 Commercial Accounts Consumer Deposits, $3.8 billion Commercial Deposits, $3.2 billion Uninsured 7% d Total Deposits $7.0 Billion as of 9/30/23 Core banking footprint in key urban MSAs in Wisconsin and a broad footprint in Chicago, IL A strength of our franchise is our well diversified deposit base… Excludes brokered deposits.
CRE Portfolio: NOO Office Represents 3.4% of Total Loans 16 Non-Owner Occupied Commercial Real Estate Portfolio d Total Loans & Leases $6.6 Billion as of 9/30/23 ($ in millions) 9/30/23 Multi-family $555.8 8.4% Industrial / Warehouse 545.9 8.3% Retail 252.6 3.8% Office 227.7 3.4% Mixed Use 55.4 0.8% Senior Housing / Healthcare 50.7 0.8% Hotel / Motel 24.2 0.4% Other 246.7 3.7% Total $1,959.2 29.6% % of Total Loans Note: Non-Owner Occupied CRE Portfolio includes construction, land, multi-family and non-owner occupied (NOO).
9/30/23 6/30/23 Avg. Commitment $3.4 million $3.6 million ACL % 2.8% 1.6% NCO %(1) 0.95% 0.36% 30+ DLQ % Ex. PCD Loans 9.8% 3.3% 0.0% n/a NPL % Ex. PCD Loans 4.5% 2.1% 2.7% n/a Criticized % Ex. PCD Loans 17% 7% 7% n/a Office CRE Portfolio: Diversified Tenants and Markets NCOs / Average loans represents net charge-offs to average loans for the last twelve-month period. Tenant Classification ($ in millions) 9/30/23 Illinois $141.4 North Carolina 26.0 Wisconsin 14.4 New Jersey 11.0 Ohio 10.7 Florida 10.5 Iowa 5.4 Minnesota 3.1 New Mexico 2.3 West Virginia 1.1 Michigan 1.0 Tennessee 0.8 Total Office $227.7 CRE Office: Geographic Mix by State Office Portfolio Metrics Office Portfolio Market Type 17
Projected Acquisition Accounting Accretion Projections are updated quarterly, assumes no prepayments and are subject to change. 18 Projected Accretion(1) ($ in millions)
Financial Summary 19 Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. As of or For the Three Months Ended Recast (dollars in thousands, except per share data) September 30, June 30, September 30, 2023 2023 2022 Income Statement Net interest income $ 92,452 $ 76,166 $ 68,635 Provision for credit losses 8,803 5,790 7,208 Non-interest income 12,376 14,291 12,043 Non-interest expense 57,891 49,328 46,041 Income before provision for income taxes 38,134 35,339 27,429 Provision for income taxes 9,912 9,232 7,020 Net income 28,222 26,107 20,409 Diluted earnings per common share(1) $ 0.65 $ 0.70 $ 0.55 Balance Sheet Total loans and leases HFI $ 6,613,303 $ 5,570,517 $ 5,275,126 Total deposits 6,953,690 5,917,092 5,612,456 Tangible common equity(1) 714,917 657,965 575,321 Balance Sheet Metrics Loans and leases / total deposits 95.21% 94.58% 94.59% Tangible common equity / tangible assets(1) 8.18% 8.87% 8.10% Key Performance Ratios Net interest margin 4.46% 4.32% 4.03% Efficiency ratio 53.75% 52.92% 55.07% Adjusted efficiency ratio(1) 47.35% 51.39% 55.07% Non-interest income to total revenues 11.81% 15.80% 14.93% Non-interest expense to average assets 2.66% 2.67% 2.56% Return on average assets 1.30% 1.41% 1.13% Adjusted return on average assets(1) 1.53% 1.48% 1.13% Pre-tax pre-provision return on average assets (1) 2.16% 2.23% 1.93% Dividend payout ratio on common stock 13.85% 12.86% 16.36% Tangible book value per common share(1) $ 16.35 $ 17.43 $ 15.36
Non-GAAP Reconciliation 20 As of or For the Three Months Ended Recast (dollars in thousands, except per share data) September 30, 2023 June 30, 2023 September 30, 2022 Net income and earnings per share excluding significant items Reported Net Income $ 28,222 $ 26,107 $ 20,409 Significant items: Impairment charges on ROU asset 394 — — Merger-related expenses 6,307 1,391 — Tax benefit (1,617) (230) — Adjusted Net Income $ 33,306 $ 27,268 $ 20,409 Reported Diluted Earnings per Share $ 0.65 $ 0.70 $ 0.55 Significant items: Impairment charges on ROU asset 0.01 — — Merger-related expenses 0.15 0.04 — Tax benefit (0.04) (0.01) — Adjusted Diluted Earnings per Share $ 0.77 $ 0.73 $ 0.55
Non-GAAP Reconciliation (continued) 21 As of or For the Three Months Ended Recast (dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2022 Adjusted non-interest expense: Non-interest expense $ 57,891 $ 49,328 $ 46,041 Less: Significant items Impairment charges on ROU asset 394 — — Merger-related expenses 6,307 1,391 — Adjusted non-interest expense $ 51,190 $ 47,937 $ 46,041 Adjusted non-interest expense ex. amortization of intangible assets: Adjusted non-interest expense $ 51,190 $ 47,937 $ 46,041 Less: Amortization of intangible assets 1,551 1,455 1,611 Adjusted non-interest expense ex. amortization of intangible assets $ 49,639 $ 46,482 $ 44,430 Pre-tax pre-provision net income: Pre-tax income $ 38,134 $ 35,339 $ 27,429 Add: Provision for loan and lease losses 8,803 5,790 7,208 Pre-tax pre-provision net income $ 46,937 $ 41,129 $ 34,637 Adjusted pre-tax pre-provision net income: Pre-tax pre-provision net income $ 46,937 $ 41,129 $ 34,637 Add: Impairment charges on ROU asset 394 — — Add: Merger-related expenses 6,307 1,391 — Adjusted pre-tax pre-provision net income $ 53,638 $ 42,520 $ 34,637 Tax Equivalent Net Interest Income Net interest income $ 92,452 $ 76,166 $ 68,635 Add: Tax-equivalent adjustment 248 207 228 Net interest income, fully taxable equivalent $ 92,700 $ 76,373 $ 68,863 Total revenues: Net interest income $ 92,452 $ 76,166 $ 68,635 Add: Non-interest income 12,376 14,291 12,043 Total revenues $ 104,828 $ 90,457 $ 80,678
Non-GAAP Reconciliation (continued) 22 As of or For the Three Months Ended Recast (dollars in thousands) September 30, 2023 June 30, 2023 September 30, 2022 Tangible common stockholders' equity: Total stockholders' equity $ 919,945 $ 813,942 $ 735,805 Less: Goodwill and other intangibles 205,028 155,977 160,484 Tangible common stockholders' equity $ 714,917 $ 657,965 $ 575,321 Tangible assets: Total assets $ 8,943,368 $ 7,575,690 $ 7,267,277 Less: Goodwill and other intangibles 205,028 155,977 160,484 Tangible assets $ 8,738,340 $ 7,419,713 $ 7,106,793 Tangible assets, excluding accumulated other comprehensive loss: Tangible assets $ 8,738,340 $ 7,419,713 $ 7,106,793 Less: Accumulated other comprehensive loss (142,159) (114,862) (124,898) Tangible assets, excluding accumulated other comprehensive loss: $ 8,880,499 $ 7,534,575 $ 7,231,691 Tangible common stockholders' equity, excluding accumulated other comprehensive loss Tangible common stockholders' equity $ 714,917 $ 657,965 $ 575,321 Less: Accumulated other comprehensive loss (142,159) (114,862) (124,898) Tangible common stockholders' equity, excluding accumulated other comprehensive loss $ 857,076 $ 772,827 $ 700,219 Average tangible common stockholders' equity: Average total stockholders' equity $ 924,278 $ 806,272 $ 765,821 Less: Average goodwill and other intangibles 202,978 156,766 161,292 Average tangible common stockholders' equity $ 721,300 $ 649,506 $ 604,529 Average tangible assets: Average total assets $ 8,634,345 $ 7,403,899 $ 7,137,472 Less: Average goodwill and other intangibles 202,978 156,766 161,292 Average tangible assets $ 8,431,367 $ 7,247,133 $ 6,976,180 Tangible net income available to common stockholders: Net income available to common stockholders $ 28,222 $ 26,107 $ 20,409 Add: After-tax intangible asset amortization 1,137 1,067 1,181 Tangible net income available to common stockholders $ 29,359 $ 27,174 $ 21,590 Adjusted tangible net income available to common stockholders: Tangible net income available to common stockholders $ 29,359 $ 27,174 $ 21,590 Impairment charges on ROU asset 394 — — Merger-related expenses 6,307 1,391 — Tax benefit on significant items (1,617) (230) — Adjusted tangible net income available to common stockholders $ 34,443 $ 28,335 $ 21,590
Non-GAAP Reconciliation (continued) 23 As of or For the Three Months Ended Recast (dollars in thousands, except share and per share data, ratios annualized, where applicable) September 30, 2023 June 30, 2023 September 30, 2022 Pre-tax pre-provision return on average assets: Pre-tax pre-provision net income $ 46,937 $ 41,129 $ 34,637 Average total assets 8,634,345 7,403,899 7,137,472 Pre-tax pre-provision return on average assets 2.16% 2.23% 1.93% Adjusted pre-tax pre-provision return on average assets: Adjusted pre-tax pre-provision net income $ 53,638 $ 42,520 $ 34,637 Average total assets 8,634,345 7,403,899 7,137,472 Adjusted pre-tax pre-provision return on average assets 2.46% 2.30% 1.93% Net interest margin, fully taxable equivalent Net interest income, fully taxable equivalent $ 92,700 $ 76,373 $ 68,863 Total average interest-earning assets 8,220,678 7,072,581 6,763,916 Net interest margin, fully taxable equivalent 4.47% 4.33% 4.04% Non-interest income to total revenues: Non-interest income $ 12,376 $ 14,291 $ 12,043 Total revenues 104,828 90,457 80,678 Non-interest income to total revenues 11.81% 15.80% 14.93% Adjusted non-interest expense to average assets: Adjusted non-interest expense $ 51,190 $ 47,937 $ 46,041 Average total assets 8,634,345 7,403,899 7,137,472 Adjusted non-interest expense to average assets 2.35% 2.60% 2.56% Adjusted efficiency ratio: Adjusted non-interest expense excluding amortization of intangible assets $ 49,639 $ 46,482 $ 44,430 Total revenues 104,828 90,457 80,678 Adjusted efficiency ratio 47.35% 51.39% 55.07% Adjusted return on average assets: Adjusted net income $ 33,306 $ 27,268 $ 20,409 Average total assets 8,634,345 7,403,899 7,137,472 Adjusted return on average assets 1.53% 1.48% 1.13% Adjusted return on average stockholders' equity: Adjusted net income $ 33,306 $ 27,268 $ 20,409 Average stockholders' equity 924,278 806,272 765,821 Adjusted return on average stockholders' equity 14.30% 13.56% 10.57%
Non-GAAP Reconciliation (continued) 24 As of or For the Three Months Ended Recast September 30, 2023 June 30, 2023 September 30, 2022 Tangible common equity to tangible assets: Tangible common equity $ 714,917 $ 657,965 $ 575,321 Tangible assets 8,738,340 7,419,713 7,106,793 Tangible common equity to tangible assets 8.18% 8.87% 8.10% Tangible common stockholders' equity, excluding accumulated other comprehensive loss to tangible assets, excluding accumulated other comprehensive loss Tangible common stockholders' equity, excluding accumulated other comprehensive loss $ 857,076 $ 772,827 $ 700,219 Tangible assets, excluding accumulated other comprehensive loss: 8,880,499 7,534,575 7,231,691 Tangible common stockholders' equity, excluding accumulated other comprehensive loss to tangible assets, excluding accumulated other comprehensive loss 9.65% 10.26% 9.68% Return on average tangible common stockholders' equity: Tangible net income available to common stockholders $ 29,359 $ 27,174 $ 21,590 Average tangible common stockholders' equity 721,300 649,506 604,529 Return on average tangible common stockholders' equity 16.15% 16.78% 14.17% Adjusted return on average tangible common stockholders' equity: Adjusted tangible net income available to common stockholders $ 34,443 $ 28,335 $ 21,590 Average tangible common stockholders' equity 721,300 649,506 604,529 Adjusted return on average tangible common stockholders' equity 18.95% 17.50% 14.17% Tangible book value per share: Tangible common equity $ 714,917 $ 657,965 $ 575,321 Common shares outstanding 43,719,203 37,752,002 37,465,902 Tangible book value per share $ 16.35 $ 17.43 $ 15.36 Accumulated other comprehensive loss to tangible common equity: Accumulated other comprehensive loss $ 142,159 $ 114,862 $ 124,898 Tangible common equity 714,917 657,965 575,321 Accumulated other comprehensive loss to tangible common equity 19.9% 17.5% 21.7%
