Select First Quarter 2022 Financial Highlights

Net income of $22.3 million, or $0.58 per diluted share
Net interest income of $58.7 million and $19.4 million non-interest income
- Total revenue¹ of $78.2 million
Net interest margin of 3.81%
Return on average assets of 1.35%
Efficiency ratio of 54.96%
Non-interest bearing deposits 41.3% of total deposits
Originated loan and leases increased $299.5 million, total loan and lease production of $324.9 million
Common Equity Tier 1 to risk weighted assets of 10.75%

Byline Bancorp, Inc. ("Byline", the "Company", "we", "our", or "us")(NYSE:BY), the parent company of Byline Bank (the "Bank"), today reported net income of $22.3 million, or $0.58 per diluted share, for the first quarter of 2022, compared with net income of $17.2 million, or $0.45 per diluted share, for the fourth quarter of 2021, and net income of $21.8 million, or $0.56 per diluted share, for the first quarter 2021.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, "During the first quarter, we delivered strong results driven by solid loan and lease production and deposit gathering across our commercial banking platform. We continue to manage our operating expenses prudently, even as we invest for the future. Our credit quality remains strong, and we continue to approach credit decisions with a through-the-cycle lens. We continued to return capital to our stockholders, including repurchasing nearly $8 million of common stock. The year is off to a great start, and I would like to thank the Byline employees, who once again enabled our strong performance through their dedication and hard work."

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, "While the geopolitical and macro environment has become more volatile, we remain focused on executing our strategy. Despite this environment, our results during the quarter show we continued to effectively support our customers and I am encouraged that our more resilient and diversified franchise can generate solid returns in uncertain markets."

Redemption of Series B Preferred Stock

On March 31, 2022, the Company redeemed all 10,438 outstanding shares of its 7.5% fixed-to-floating noncumulative perpetual preferred stock, Series B. The redemption totaled $10.6 million, including the quarterly dividend payment.

Board Declares Cash Dividend of $0.09 per Share

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

STATEMENTS OF OPERATIONS

Net Interest Income

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

	For the Three Months Ended
	March 31, 2022									December 31, 2021									March 31, 2021
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp			Avg. Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp			Avg. Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp			Avg. Yield / Rate
ASSETS
Cash and cash equivalents	$	74,822		$	29			0.16	%	$	106,170		$	42			0.16	%	$	55,477		$	28			0.21	%
Loans and leases⁽¹⁾		4,670,070			55,426			4.81	%		4,610,608			58,570			5.04	%		4,432,246			53,808			4.92	%
Taxable securities		1,339,345			5,475			1.66	%		1,288,969			5,111			1.57	%		1,430,625			5,379			1.52	%
Tax-exempt securities⁽²⁾		169,652			1,124			2.69	%		184,015			1,217			2.62	%		179,364			1,194			2.70	%
Total interest-earning assets	$	6,253,889		$	62,054			4.02	%	$	6,189,762		$	64,940			4.16	%	$	6,097,712		$	60,409			4.02	%
Allowance for loan and lease losses		(55,885	)								(59,144	)								(66,989	)
All other assets		507,982									568,451									557,042
TOTAL ASSETS	$	6,705,986								$	6,699,069								$	6,587,765
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Interest checking	$	579,297		$	178			0.12	%	$	659,841		$	236			0.14	%	$	546,730		$	199			0.15	%
Money market accounts		1,255,431			474			0.15	%		1,089,398			345			0.13	%		1,124,101			381			0.14	%
Savings		649,269			76			0.05	%		633,469			75			0.05	%		577,504			67			0.05	%
Time deposits		662,080			359			0.22	%		688,154			381			0.22	%		777,266			774			0.40	%
Total interest-bearing deposits		3,146,077			1,087			0.14	%		3,070,862			1,037			0.13	%		3,025,601			1,421			0.19	%
Other borrowings		290,545			395			0.55	%		385,787			330			0.34	%		649,639			502			0.31	%
Subordinated notes and debentures		110,490			1,600			5.87	%		110,341			1,589			5.71	%		109,859			1,596			5.89	%
Total borrowings		401,035			1,995			2.02	%		496,128			1,919			1.53	%		759,498			2,098			1.12	%
Total interest-bearing liabilities	$	3,547,112		$	3,082			0.35	%	$	3,566,990		$	2,956			0.33	%	$	3,785,099		$	3,519			0.38	%
Non-interest-bearing demand deposits		2,248,035									2,222,583									1,924,178
Other liabilities		78,678									70,521									72,036
Total stockholders' equity		832,161									838,975									806,452
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,705,986								$	6,699,069								$	6,587,765
Net interest spread⁽³⁾								3.67	%								3.83	%								3.64	%
Net interest income, fully taxable equivalent				$	58,972								$	61,984								$	56,890
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾								3.82	%								3.97	%								3.78	%
Tax-equivalent adjustment					(236	)		0.01	%					(256	)		0.01	%					(250	)		0.01	%
Net interest income				$	58,736								$	61,728								$	56,640
Net interest margin⁽⁴⁾								3.81	%								3.96	%								3.77	%

Net loan accretion impact on margin				$	1,476			0.10	%				$	1,450			0.09	%				$	1,968			0.13	%

(1)		Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)		Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.
(3)		Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
(4)		Represents net interest income (annualized) divided by total average earning assets.
(5)		Average balances are average daily balances.

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

							March 31, 2022
	Three Months Ended						Change from
	March 31,		December 31,		March 31,		December 31,			March 31,
(dollars in thousands)	2022		2021		2021		2021			2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	55,426	$	58,570	$	53,808		(5.4	)%		3.0	%
Interest on securities		6,155		5,619		6,089		9.5	%		1.1	%
Other interest and dividend income		237		495		262		(52.2	)%		(9.6	)%
Total interest and dividend income		61,818		64,684		60,159		(4.4	)%		2.8	%
INTEREST EXPENSE
Deposits		1,087		1,037		1,421		4.8	%		(23.5	)%
Other borrowings		395		330		502		19.9	%		(21.4	)%
Subordinated notes and debentures		1,600		1,589		1,596		0.7	%		0.3	%
Total interest expense		3,082		2,956		3,519		4.3	%		(12.4	)%
Net interest income	$	58,736	$	61,728	$	56,640		(4.8	)%		3.7	%

Net interest income for the first quarter of 2022 was $58.7 million, a decrease of $3.0 million, or 4.8%, from the fourth quarter of 2021.

The decrease in net interest income was primarily due to:

A decrease of $3.1 million in interest income on loans and leases, due to lower fee income mainly due to lower volume of PPP loan forgiveness.

Partially offset by:

An increase of $536,000 in interest income on securities due to the rising interest rate environment.

Tax-equivalent net interest margin for the first quarter of 2022 was 3.82%, a decrease of 15 basis points compared to the fourth quarter of 2021. Total net accretion income on acquired loans contributed 10 basis points to the net interest margin for the first quarter of 2022 compared to nine basis points for the fourth quarter of 2021, an increase of one basis point. PPP loan interest income and net fee income combined, contributed $2.7 million to net interest income for the first quarter of 2022 compared to $4.5 million for the fourth quarter of 2021.

The average cost of total deposits was 0.08% for the first quarter of 2022, flat compared to the fourth quarter of 2021. Average non-interest-bearing demand deposits increased $25.5 million, while average money market account deposits increased by $166.0 million. Average non-interest-bearing demand deposits were 41.7% of average total deposits for the first quarter of 2022 compared to 42.0% during the fourth quarter of 2021.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $5.0 million for the first quarter of 2022, an increase of $6.3 million compared to a recapture of provision of $1.3 million for the fourth quarter of 2021. The increase in provision during the first quarter of 2022 was mainly driven by changes to qualitative factors surrounding macroeconomic environment and growth in the loan and lease portfolio.

Non-interest Income

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

	Three Months Ended									March 31, 2022 Change from
	March 31,			December 31,			March 31,			December 31,			March 31,
(dollars in thousands)	2022			2021			2021			2021			2021
NON-INTEREST INCOME
Fees and service charges on deposits	$	1,884		$	1,955		$	1,664			(3.6	)%		13.2	%
Loan servicing revenue		3,380			3,392			2,769			(0.3	)%		22.1	%
Loan servicing asset revaluation		(1,231	)		(2,510	)		(1,505	)		(50.9	)%		(18.2	)%
ATM and interchange fees		1,049			1,219			1,012			(14.0	)%		3.6	%
Net realized gains (losses) on securities available-for-sale		—			(21	)		1,462		NM			NM
Change in fair value of equity securities, net		(151	)		(98	)		(206	)		54.8	%		(26.7	)%
Net gains on sales of loans		10,827			12,924			8,319			(16.2	)%		30.1	%
Wealth management and trust income		1,048			764			768			37.3	%		36.5	%
Other non-interest income		2,620			1,389			1,459			88.7	%		79.6	%
Total non-interest income	$	19,426		$	19,014		$	15,742			2.2	%		23.4	%

Non-interest income for the first quarter of 2022 was $19.4 million, an increase of $412,000, or 2.2%, compared to $19.0 million for the fourth quarter of 2021.

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

An increase of $1.2 million in other non-interest income due to higher swap income; and
A decrease of $1.3 million in loan servicing asset revaluation charges due to lower downward asset revaluation adjustment resulting from favorable fair value adjustments due to decreased prepayment speeds and discount rates.

Partially offset by:

A decrease in net gains on sales of loans of $2.1 million due to lower volume of sales and lower premium rates.

During the first quarter of 2022, we sold $102.3 million of U.S. government guaranteed loans compared to $113.9 million during the fourth quarter of 2021.

Non-interest Expense

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

	Three Months Ended							March 31, 2022 Change from
	March 31,			December 31,		March 31,		December 31,			March 31,
(dollars in thousands)	2022			2021		2021		2021			2021
NON-INTEREST EXPENSE
Salaries and employee benefits	$	28,959		$	28,850	$	21,806		0.4	%		32.8	%
Occupancy and equipment expense, net		5,128			4,995		5,779		2.7	%		(11.3	)%
Impairment charge on assets held for sale		—			8,351		604	NM			NM
Loan and lease related expenses		(891	)		2,328		951	NM			NM
Legal, audit and other professional fees		2,600			2,376		2,214		9.5	%		17.5	%
Data processing		3,186			3,070		2,755		3.8	%		15.7	%
Net loss recognized on other real estate owned and other related expenses		54			26		621		110.9	%		(91.2	)%
Other intangible assets amortization expense		1,596			1,738		1,749		(8.1	)%		(8.7	)%
Other non-interest expense		3,923			7,234		2,363		(45.8	)%		66.0	%
Total non-interest expense	$	44,555		$	58,968	$	38,842		(24.4	)%		14.7	%

Non-interest expense for the first quarter of 2022 was $44.6 million, a decrease of $14.4 million, or 24.4%, from $59.0 million for the fourth quarter of 2021.

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

A decrease of $12.4 million in asset impairment charges, which were taken during the fourth quarter of 2021 due to branch consolidations and our real estate strategy; and
A decrease of $3.2 million in loan and lease related expenses mainly related to the recapture of government guaranteed loan expenses.

Our efficiency ratio was 54.96% for the first quarter of 2022 compared to 70.88% for the fourth quarter of 2021. Excluding asset impairment charges, our adjusted efficiency ratio¹ was 55.46% for the fourth quarter of 2021.

(1)

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

INCOME TAXES

We recorded income tax expense of $6.3 million during the first quarter of 2022, compared to $5.9 million during the fourth quarter of 2021. The effective tax rate was 22.0% and 25.5% for the first quarter of 2022 and fourth quarter of 2021, respectively. The decrease in the effective tax rate during the first quarter of 2022 was a result of income tax benefits related to share-based compensation.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $6.8 billion at March 31, 2022, an increase of $138.5 million compared to $6.7 billion at December 31, 2021.

The current quarter increase was primarily due to:

An increase in net loans and leases of $247.5 million primarily due to growth in originated commercial real estate and commercial and industrial loans.

Partially offset by:

A decrease in securities available-for-sale of $85.2 million due to changes in market values and additional paydowns received during the period.

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

March 31, 2022

December 31, 2021

Byline Bancorp, Inc. Reports First Quarter 2022 Financial Results