Byline Bancorp, Inc. Reports First Quarter 2024 Financial Results

First quarter net income of $30.4 million, $0.70 diluted earnings per share

Byline Bancorp, Inc. (NYSE:BY), today reported:

Board Declares Cash Dividend of $0.09 per Share

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

STATEMENTS OF OPERATIONS HIGHLIGHTS

Net Interest Income

Net interest income for the first quarter of 2024 was $85.5 million, a decrease of $744,000, or 0.9%, from the fourth quarter of 2023. The decrease in net interest income was primarily due to an increase of $2.7 million in deposit interest expense primarily due to time deposit growth and higher rates paid on deposits, and an increase of $773,000 in other borrowing interest expense due to increased borrowings, offset by lower borrowing costs. The decrease was partially offset by an increase of $2.5 million in other interest and dividend income mainly due to interest income earned on funds held with the Federal Reserve Bank.

Tax-equivalent net interest margin⁽¹⁾ for the first quarter of 2024 was 4.01%, a decrease of eight basis points compared to the fourth quarter of 2023. Total net loan accretion income impact on the margin contributed 20 basis points to the net interest margin for the current quarter compared to 24 basis points for the prior quarter.

The average cost of total deposits was 2.56% for the first quarter of 2024, an increase of 14 basis points compared to the fourth quarter of 2023, as a result of higher rates on time deposits and money market accounts. Average non-interest-bearing demand deposits were 25.9% of average total deposits for the current quarter compared to 27.5% during the prior quarter.

Provision for Credit Losses

The provision for credit losses was $6.6 million for the first quarter of 2024, a decrease of $592,000 compared to $7.2 million for the fourth quarter of 2023, mainly attributed to a smaller allocation to individually assessed loans, offset by growth in the loan and lease portfolio. The provision for credit losses for the quarter is comprised of a provision for loan and lease losses of $6.9 million and a recapture for unfunded commitments of $248,000.

Non-interest Income

Non-interest income for the first quarter of 2024 was $15.5 million, an increase of $970,000, or 6.7%, compared to $14.5 million for the fourth quarter of 2023. The increase in total non-interest income was primarily due to a $1.0 million increase in other non-interest income due to increased income on derivatives and gains on the sales of leased equipment, and a $531,000 decrease in the downward valuation of the loan servicing asset reflecting lower discount rates. These were partially offset by a $449,000 decrease in the change in fair value of equity securities.

Net gains on sales of loans were $5.5 million for the current quarter, an increase of $53,000 compared to the prior quarter. During the first quarter of 2024, we sold $72.5 million of U.S. government guaranteed loans compared to $89.1 million during the fourth quarter of 2023.

Non-interest Expense

Non-interest expense for the first quarter of 2024 was $53.8 million, an increase of $225,000, or 0.4%, from $53.6 million for the fourth quarter of 2023. The increase in total non-interest expense was mainly due to an increase of $2.0 million in salaries and employee benefits primarily due to increases in payroll taxes due to annual counter resets, and an increase of $938,000 in occupancy and equipment expense, net, due to higher real estate taxes and maintenance expense. These increases were offset by a $2.0 million decrease in impairment charges on assets held for sale, and an $837,000 decrease in data processing expenses due to decreased merger-related expenses. Other non-interest expense includes $1.1 million of charges related to branch consolidations incurred during the first quarter of 2024.

Our efficiency ratio was 51.94% for the first quarter of 2024 compared to 51.63% for the fourth quarter of 2023, an increase of 31 basis points. Excluding significant items, our adjusted efficiency ratio⁽¹⁾ for the first quarter 2024 was 51.75%, compared to 48.64% for the fourth quarter of 2023.

Income Taxes

We recorded income tax expense of $10.1 million during the first quarter of 2024, compared to $10.4 million during the fourth quarter of 2023. The effective tax rates were 25.0% and 25.9% for the first quarter of 2024 and fourth quarter of 2023, respectively.

STATEMENTS OF FINANCIAL CONDITION HIGHLIGHTS

Assets

Total assets were $9.4 billion as of March 31, 2024, an increase of $528.5 million, or 6.0%, compared to $8.9 billion at December 31, 2023. The increase was primarily due to an increase in cash and cash equivalents of $410.7 million, inclusive of $200.0 million in short-term investments, and an increase in net loans and leases held for investment of $93.2 million mainly due to growth in commercial and industrial originations, offset by a decline of $52.0 million in commercial real estate.

Asset and Credit Quality

The ACL was $102.4 million as of March 31, 2024, an increase of $680,000, or 0.7%, from $101.7 million at December 31, 2023. Net charge-offs of loans and leases during the first quarter of 2024 were $6.2 million, or 0.37% of average loans and leases, on an annualized basis. This was a decrease of $6.0 million compared to net charge-offs of $12.2 million, or 0.73% of average loans and leases, during the fourth quarter of 2023. The decrease is primarily due to lower charge-offs in the commercial and industrial and commercial real estate loan portfolios.

Non-performing assets were $68.7 million, or 0.73% of total assets, as of March 31, 2024, an increase of $3.4 million from $65.3 million, or 0.74% of total assets, at December 31, 2023. The increase was primarily the result of migration within the government guaranteed loan portfolio to non-accrual status. The government guaranteed portion of non-accrual loans was $7.1 million at March 31, 2024 compared to $4.2 million at December 31, 2023.

Deposits and Other Liabilities

Total deposits increased $173.2 million to $7.4 billion at March 31, 2024 compared to $7.2 billion at December 31, 2023. The increase in deposits in the current quarter was mainly due to increases in time deposits and interest bearing checking accounts. Time deposit growth of $137.7 million was principally due to increases in consumer time deposits from deposit campaigns. Interest-bearing demand deposits increased $109.5 million primarily due to growth in commercial deposits.

Total borrowings and other liabilities were $1.1 billion at March 31, 2024, an increase of $336.4 million from $714.8 million at December 31, 2023. The increase was primarily driven by a $200.0 million advance under the Bank Term Funding Program and increases in Federal Home Loan Bank advances, offset by a decrease of $11.3 million as a result of the repayment of the amount outstanding under our revolving line of credit.

Stockholders' Equity

Total stockholders' equity grew to $1.0 billion at March 31, 2024, an increase of $18.9 million from $990.2 million at December 31, 2023. The quarterly increase was primarily due to increased retained earnings from net income.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, April 26, 2024, 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 371735. A recorded replay can be accessed through May 10, 2024, by dialing (866) 813-9403; passcode: 454029.

A slide presentation relating to our first quarter 2024 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 $9.4 billion in assets and operates 48 branch locations throughout the Chicago and Milwaukee metropolitan areas. Byline Bank offers a broad range of commercial and community 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, 2023. 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.