Select First Quarter 2023 Financial Highlights

Net income of $23.9 million, or $0.64 per diluted share
Pre-tax pre-provision return on average assets of 2.32%¹
Return on average assets of 1.32%; Return on average tangible common equity of 16.20%¹
Net interest margin of 4.38%; down one bp from the previous quarter
Efficiency ratio of 52.10%
Total loans and leases of $5.5 billion, quarterly increase of $74.6 million
Total deposits of $5.8 billion, quarterly increase of $117.5 million
Tangible Common Equity to Tangible Assets of 8.66%¹
Common Equity Tier 1 to Risk Weighted Assets of 10.27%

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 $23.9 million, or $0.64 per diluted share, for the first quarter of 2023 compared with net income of $24.4 million, or $0.65 per diluted share, for the fourth quarter of 2022, and net income of $21.4 million², or $0.56 per diluted share, for the first quarter 2022.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, "Our first quarter results reflect the resiliency of our diversified business model and prudent management, notwithstanding continued rate increases and a challenging operating environment. We remain focused on executing our strategy, supporting new and existing customers and growing the value of our franchise. I am proud of the way our bankers navigated the recent turmoil within our industry, with a focus on serving our customers and communities."

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, "We delivered solid financial results for the first quarter as our performance was both balanced and strong during a period of heightened volatility and uncertainty. During the quarter, we increased our capital position and we believe we continue to maintain a high level of liquidity given the environment. At the same time, we grew revenue by 17% year-over-year, controlled non-interest expenses, achieved positive operating leverage, maintained credit quality and delivered strong profitability. Looking forward, we believe our diversified franchise, and strong capital and liquidity, position us well for the remainder of 2023."

Board Declares Cash Dividend of $0.09 per Share

On April 25, 2023, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on May 23, 2023, to stockholders of record of the Company's common stock as of May 9, 2023.

(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.
(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. Results for 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. 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.

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, 2023							December 31, 2022							Recast March 31, 2022
(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	$	97,578		$	442	1.84	%	$	89,367		$	234	1.04	%	$	74,822		$	29	0.16	%
Loans and leases⁽¹⁾		5,484,372			92,343	6.83	%		5,389,210		$	85,720	6.31	%		4,669,047			55,138	4.79	%
Taxable securities		1,275,377			6,431	2.04	%		1,288,750		$	7,043	2.17	%		1,339,345			5,358	1.62	%
Tax-exempt securities⁽²⁾		151,817			994	2.65	%		155,562		$	1,021	2.60	%		169,652			1,124	2.69	%
Total interest-earning assets	$	7,009,144		$	100,210	5.80	%	$	6,922,889		$	94,018	5.39	%	$	6,252,866		$	61,649	4.00	%
Allowance for credit losses - loans and leases		(84,321	)						(81,815	)						(68,058	)
All other assets		420,328							424,979							512,668
TOTAL ASSETS	$	7,345,151						$	7,266,053						$	6,697,476
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Interest checking	$	606,008		$	2,494	1.67	%	$	596,627		$	1,902	1.27	%	$	579,297		$	178	0.12	%
Money market accounts		1,465,677			7,728	2.14	%		1,472,050			5,458	1.47	%		1,255,431			474	0.15	%
Savings		613,590			227	0.15	%		647,536			243	0.15	%		649,269			76	0.05	%
Time deposits		966,409			5,849	2.45	%		788,856			3,007	1.51	%		662,080			359	0.22	%
Total interest-bearing deposits		3,651,684			16,298	1.81	%		3,505,069			10,610	1.20	%		3,146,077			1,087	0.14	%
Other borrowings		573,433			5,852	4.14	%		514,518			4,598	3.55	%		290,545			395	0.55	%
Federal funds purchased		2,778			36	5.30	%		—			—	0.00	%		—			—	0.00	%
Subordinated notes and debentures		111,101			2,098	7.66	%		110,947			1,992	7.12	%		110,490			1,600	5.87	%
Total borrowings		687,312			7,986	4.71	%		625,465			6,590	4.18	%		401,035			1,995	2.02	%
Total interest-bearing liabilities	$	4,338,996		$	24,284	2.27	%	$	4,130,534		$	17,200	1.65	%	$	3,547,112		$	3,082	0.35	%
Non-interest-bearing demand deposits		2,076,613							2,235,464							2,248,035
Other liabilities		145,253							151,763							80,276
Total stockholders' equity		784,289							748,292							822,053
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,345,151						$	7,266,053						$	6,697,476
Net interest spread⁽³⁾						3.53	%						3.74	%						3.65	%
Net interest income, fully taxable equivalent				$	75,926						$	76,818						$	58,567
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾						4.39	%						4.40	%						3.80	%
Less: Tax-equivalent adjustment					208	0.01	%					214	0.01	%					236	0.02	%
Net interest income				$	75,718						$	76,604						$	58,331
Net interest margin⁽⁴⁾						4.38	%						4.39	%						3.78	%

Net loan accretion impact on margin				$	729	0.04	%				$	369	0.02	%				$	1,187	0.08	%

___________________
(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, 2023
	Three Months Ended						Change from
					Recast
	March 31,		December 31,		March 31,		December 31,			March 31,
(dollars in thousands)	2023		2022		2022		2022			2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	92,343	$	85,720	$	55,138		7.7	%		67.5	%
Interest on securities		6,600		6,569		6,155		0.5	%		7.2	%
Other interest and dividend income		1,059		1,515		120		(30.1	)%		781.5	%
Total interest and dividend income		100,002		93,804		61,413		6.6	%		62.8	%
INTEREST EXPENSE
Deposits		16,298		10,610		1,087		53.6	%		1399.7	%
Other borrowings		5,888		4,598		395		28.1	%		1391.2	%
Subordinated notes and debentures		2,098		1,992		1,600		5.3	%		31.1	%
Total interest expense		24,284		17,200		3,082		41.2	%		688.1	%
Net interest income	$	75,718	$	76,604	$	58,331		(1.2	)%		29.8	%

Net interest income for the first quarter of 2023 was $75.7 million, a decrease of $886,000, or 1.2%, from the fourth quarter of 2022. The decrease was driven by day count and rising interest rates.

The decrease in net interest income was primarily due to:

An increase of $5.7 million in deposit interest expense mainly due to higher average balances and higher rates paid on time deposits and money market accounts; and
An increase of $1.3 million in interest expense on other borrowings due to higher rates paid and average balances on borrowings.

Partially offset by:

An increase of $6.6 million in interest income and fees on loans and leases due to higher yields on loans and leases.

Tax-equivalent net interest margin for the first quarter of 2023 was 4.39%, a decrease of one basis point compared to the fourth quarter of 2022. Total net loan accretion income impact on margin contributed four basis points to the net interest margin for the first quarter of 2023 compared to two basis points for the fourth quarter of 2022.

The average cost of total deposits was 1.15% for the first quarter of 2023, an increase of 42 basis points compared to the fourth quarter of 2022. Average non-interest-bearing demand deposits were 36.3% of average total deposits for the first quarter of 2023 compared to 38.9% during the fourth quarter of 2022.

Provision for Credit Losses

The provision for credit losses was $9.8 million for the first quarter of 2023, an increase of $4.0 million compared to $5.8 million for the fourth quarter of 2022. The provision for credit losses is comprised of a provision for loan and lease losses of $9.7 million and a provision for unfunded commitments of $113,000. The increase in provision during the first quarter of 2023 was primarily driven by increases in specific reserves on loans that were individually evaluated for impairment, changes in expected losses driven by macro-economic factors, 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:

									March 31, 2023
	Three Months Ended								Change from
						Recast
	March 31,		December 31,			March 31,			December 31,			March 31,
(dollars in thousands)	2023		2022			2022			2022			2022
NON-INTEREST INCOME
Fees and service charges on deposits	$	2,120	$	2,081		$	1,884			1.9	%		12.5	%
Loan servicing revenue		3,380		3,293			3,380			2.7	%		0.0	%
Loan servicing asset revaluation		656		(3,534	)		(1,231	)	NM				(153.3	)%
ATM and interchange fees		1,063		1,250			1,049			(14.9	)%		1.3	%
Change in fair value of equity securities, net		350		710			(35	)		(50.6	)%	NM
Net gains on sales of loans		5,148		5,509			10,827			(6.6	)%		(52.4	)%
Wealth management and trust income		924		864			1,048			7.0	%		(11.9	)%
Other non-interest income		1,504		1,282			2,621			17.2	%		(42.6	)%
Total non-interest income	$	15,145	$	11,455		$	19,543			32.2	%		(22.5	)%

Non-interest income for the first quarter of 2023 was $15.1 million, an increase of $3.7 million, or 32.2%, compared to $11.5 million for the fourth quarter of 2022.

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

An increase of $4.2 million in the valuation of the loan servicing asset from favorable fair value adjustments due to improvements in market conditions.

Partially offset by:

A decrease of $361,000 in the net gain on sales of loans, due to lower volume of loan sales.

During the first quarter of 2023, we sold $72.2 million of U.S. government guaranteed loans compared to $86.0 million during the fourth quarter of 2022.

Non-interest Expense

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

									March 31, 2023
	Three Months Ended								Change from
						Recast
	March 31,			December 31,		March 31,			December 31,			March 31,
(dollars in thousands)	2023			2022		2022			2022			2022
NON-INTEREST EXPENSE
Salaries and employee benefits	$	30,394		$	31,808	$	28,959			(4.4	)%		5.0	%
Occupancy and equipment expense, net		4,444			3,532		5,128			25.8	%		(13.3	)%
Impairment charge on assets held for sale		20			372		—			(94.8	)%	NM
Loan and lease related expenses		963			1,126		(891	)		(14.4	)%		(208.1	)%
Legal, audit and other professional fees		3,114			3,204		2,600			(2.8	)%		19.8	%
Data processing		3,783			3,406		3,186			11.1	%		18.7	%
Net (gain) loss recognized on other real estate owned and other related expenses		(103	)		221		54		NM			NM
Other intangible assets amortization expense		1,455			1,596		1,596			(8.8	)%		(8.8	)%
Other non-interest expense		4,730			5,235		3,324			(9.6	)%		42.3	%
Total non-interest expense	$	48,800		$	50,500	$	43,956			(3.4	)%		11.0	%

Non-interest expense for the first quarter of 2023 was $48.8 million, a decrease of $1.7 million, or 3.4%, from $50.5 million for the fourth quarter of 2022.

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

A decrease of $1.4 million in salaries and employee benefits mainly due to decreases in incentive compensation, offset by increases in payroll taxes; and
A decrease of $505,000 in other non-interest expense, as the prior quarter included net losses of $480,000 in leasehold improvements.

Partially offset by:

An increase of $912,000 in occupancy and equipment expense, net, primarily due to increases in real estate taxes and building maintenance; and
An increase of $377,000 in data processing mainly due to merger related expenses.

Our efficiency ratio was 52.10% for the first quarter of 2023 compared to 55.53% for the fourth quarter of 2022.

INCOME TAXES

We recorded income tax expense of $8.3 million during the first quarter of 2023, compared to $7.4 million during the fourth quarter of 2022. The effective tax rate was 25.7% and 23.2% for the first quarter of 2023 and fourth quarter of 2022, respectively. The increase in the effective tax rate is primarily due to the effect of a prior quarter tax benefit related to share-based compensation.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $7.5 billion at March 31, 2023, an increase of $167.4 million compared to $7.4 billion at December 31, 2022.

The current quarter increase was primarily due to:

An increase in cash and cash equivalents of $104.9 million primarily to augment liquidity levels given the environment and support customer activities; and
An increase in net loans and leases of $85.5 million primarily due to growth in the originated loan and lease portfolio.

Partially offset by:

A decrease in loans held for sale of $19.4 million, driven mainly by lower volume of government guaranteed loans.

The following table shows our allocation of the originated, purchase credit deteriorated, and non-credit deteriorated loans and leases at the dates indicated:

													Recast
	March 31, 2023						December 31, 2022						March 31, 2022
(dollars in thousands)	Amount			% of Total			Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	1,749,808			31.7	%	$	1,712,152			31.6	%	$	1,530,703			32.0	%
Residential real estate		441,291			8.0	%		426,226			7.9	%		399,852			8.3	%
Construction, land development, and other land		446,763			8.1	%		438,617			8.1	%		351,518			7.3	%
Commercial and industrial		2,060,537			37.4	%		2,029,855			37.5	%		1,697,555			35.5	%
Paycheck Protection Program		730			0.0	%		761			0.0	%		36,260			0.8	%
Installment and other		1,603			0.0	%		1,410			0.0	%		946			0.0	%
Leasing financing receivables		552,174			10.0	%		521,689			9.6	%		379,527			7.9	%
Total originated loans and leases	$	5,252,906			95.2	%	$	5,130,710			94.7	%	$	4,396,361			91.8	%
Purchased credit deteriorated loans
Commercial real estate	$	39,000			0.7	%	$	45,143			0.8	%	$	62,480			1.3	%
Residential real estate		30,070			0.6	%		32,228			0.6	%		46,576			1.0	%
Construction, land development, and other land		345			0.0	%		372			0.0	%		1,383			0.0	%
Commercial and industrial		1,745			0.0	%		2,192			0.0	%		3,884			0.1	%
Installment and other		134			0.0	%		140			0.0	%		161			0.0	%
Total purchased credit deteriorated loans	$	71,294			1.3	%	$	80,075			1.4	%	$	114,484			2.4	%
Acquired non-credit-deteriorated loans and leases
Commercial real estate	$	140,576			2.6	%	$	152,193			2.8	%	$	185,107			3.9	%
Residential real estate		27,975			0.5	%		31,508			0.6	%		48,173			1.0	%
Construction, land development, and other land		—			0.0	%		—			0.0	%		196			0.0	%
Commercial and industrial		20,793			0.4	%		24,266			0.5	%		37,882			0.8	%
Installment and other		85			0.0	%		209			0.0	%		247			0.0	%
Leasing financing receivables		1,703			0.0	%		2,297			0.0	%		5,157			0.1	%
Total acquired non-credit-deteriorated loans and leases	$	191,132			3.5	%	$	210,473			3.9	%	$	276,762			5.8	%
Total loans and leases	$	5,515,332			100.0	%	$	5,421,258			100.0	%	$	4,787,607			100.0	%
Allowance for credit losses - loans and leases		(90,465	)					(81,924	)					(72,107	)
Total loans and leases, net of allowance for credit losses - loans and leases	$	5,424,867					$	5,339,334					$	4,715,500

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and leases and other real estate owned at the dates indicated:

							March 31, 2023
					Recast		Change from
(dollars in thousands)	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2022			March 31, 2022
Non-performing assets:
Non-accrual loans and leases	$	46,536	$	36,027	$	33,236		29.2	%

Byline Bancorp, Inc. Reports First Quarter 2023 Financial Results