Byline Bancorp, Inc. Reports Second Quarter 2025 Financial Results

Second quarter net income of $30.1 million, $0.66 diluted earnings per share

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

Roberto R. Herencia, Executive Chairman and CEO of Byline Bancorp, commented, "We are pleased with our overall strategic execution for the first half of the year as we successfully completed the acquisition of First Security Bancorp, which we believe has strengthened the return profile of Byline. We believe that our position in the market remains strong and continue to be driven by our objective of becoming the preeminent commercial bank in Chicago."

Alberto J. Paracchini, President of Byline Bancorp, added, "Our performance for the quarter demonstrates the momentum and strength of our long-term strategies and the consistency of our execution. Our adjusted second quarter results were highlighted by solid earnings, strong profitability, net interest margin expansion, healthy growth in loans and deposits, and controlled expenses. Our business units continued to perform well, and we have good momentum heading into the second half of the year."

Board Declares Cash Dividend of $0.10 per Share

On July 22, 2025, the Company's Board of Directors declared a cash dividend of $0.10 per share. The dividend will be paid on August 19, 2025, to stockholders of record of the Company's common stock as of August 5, 2025.

STATEMENTS OF OPERATIONS HIGHLIGHTS

Net Interest Income

Net interest income for the second quarter of 2025 was $96.0 million, an increase of $7.8 million, or 8.8%, from the first quarter of 2025. The increase in net interest income was primarily due to higher interest income due to growth in the loan and lease portfolio, primarily due to our acquisition of First Security Bancorp, Inc. and its wholly owned bank subsidiary, First Security Trust and Savings Bank (the "First Security acquisition"), and higher yields on taxable securities, offset by higher interest expense mainly due to deposit growth, primarily due to the First Security acquisition.

Tax-equivalent net interest margin⁽¹⁾ for the second quarter of 2025 was 4.19%, an increase of 11 basis points compared to the first quarter of 2025. The increase was primarily due to higher yields on securities and cash and cash equivalents, and lower costs of borrowings. Net loan accretion income positively contributed 13 basis points to the net interest margin for the current quarter, a one basis point increase over the prior quarter.

The average cost of total deposits was 2.27% for the second quarter of 2025, a decrease of three basis points compared to the first quarter of 2025, mainly as a result of a shift in the interest-bearing deposit mix and increases in the amount of non-interest bearing deposits, both primarily due to the First Security acquisition.

Provision for Credit Losses

The provision for credit losses was $11.9 million for the second quarter of 2025, an increase of $2.7 million compared to $9.2 million for the first quarter of 2025, mainly due to additional allocation on individually assessed loans, growth in the loan and lease portfolio, and weaker macroeconomic forecast.

Non-interest Income

Non-interest income for the second quarter of 2025 was $14.5 million, a decrease of $381,000, or 2.6%, compared to $14.9 million for the first quarter of 2025. The decrease in total non-interest income was primarily due to a larger downward revaluation of the loan servicing asset and a lower gain on the change in fair value of equity securities, net. These were offset by higher other non-interest income mainly related to an increase in swap activity, and higher net gains on sales of loans. Net gains on sales of loans were $5.4 million for the current quarter, an increase of $476,000, or 9.7% compared to the prior quarter. During the second quarter of 2025, we sold $73.0 million of U.S. government guaranteed loans compared to $70.2 million during the first quarter of 2025.

Non-interest Expense

Non-interest expense for the second quarter of 2025 was $59.6 million, an increase of $3.2 million, or 5.6%, compared to $56.4 million for the first quarter of 2025. The increase in non-interest expense was mainly due to a $1.6 million increase in salaries and employee benefits mainly due to the First Security acquisition and a $1.6 million increase in legal, audit and other professional fees driven by the First Security acquisition and a secondary public offering of shares of our common stock in June 2025.

Our efficiency ratio was 52.61%⁽¹⁾ for the second quarter of 2025, compared to 53.66%⁽¹⁾ for the first quarter of 2025, an improvement of 105 basis points. Our adjusted efficiency ratio was 48.20%⁽¹⁾ for the second quarter of 2025, compared to 53.04%⁽¹⁾ for the first quarter of 2025, an improvement of 484 basis points. The improvement in the efficiency ratio was primarily driven by increases in net interest income.

Income Taxes

We recorded income tax expense of $8.8 million during the second quarter of 2025, compared to $9.2 million during the first quarter of 2025. The effective tax rates were 22.7% and 24.6% for the second quarter of 2025 and first quarter of 2025, respectively. The decrease in the effective tax rate was due to higher income tax benefits related to share-based compensation recorded in the second quarter.

STATEMENTS OF FINANCIAL CONDITION HIGHLIGHTS

Assets

Total assets were $9.7 billion as of June 30, 2025, an increase of $135.5 million, or 1.4%, compared to $9.6 billion at March 31, 2025. The increase for the current quarter was mainly due to an increase in net loans and leases of $294.9 million driven by increases to the commercial and industrial and commercial real estate loan portfolios from the First Security acquisition, and an increase in securities available-for-sale of $37.1 million, also primarily from the First Security acquisition. These were offset by a decrease in cash and cash equivalents of $203.0 million, mainly due to repayment of FHLB borrowings.

Allowance for Credit Losses

The ACL was $107.7 million as of June 30, 2025, an increase of $7.3 million, or 7.3%, from $100.4 million at March 31, 2025, due to the growth in the loan and lease portfolio and from the First Security acquisition. As result of the acquisition, the allowance for credit losses attributable to purchased credit deteriorated ("PCD") loans and non-credit-deteriorated loans increased $3.2 million and $864,000, respectively. Net charge-offs of loans and leases during the second quarter of 2025 were $7.7 million, or 0.43% of average loans and leases, on an annualized basis. This was an increase of $1.0 million compared to net charge-offs of $6.6 million, or 0.39% of average loans and leases, during the first quarter of 2025. The increase in charge-offs for the quarter was primarily due to a single PCD charge-off and increases related to the unguaranteed portion of government guaranteed loans.

Asset Quality

Non-performing assets were $72.5 million, or 0.75% of total assets, as of June 30, 2025, an increase of $12.6 million from $59.9 million, or 0.62% of total assets, at March 31, 2025. The increase was primarily driven by one commercial and industrial relationship and one commercial real estate relationship. The government guaranteed portion of non-performing loans included in non-performing assets was $8.8 million at June 30, 2025, compared to $9.4 million at March 31, 2025, a decrease of $605,000.

Deposits and Other Liabilities

Total deposits increased $257.2 million to $7.8 billion at June 30, 2025 compared to $7.6 billion at March 31, 2025. The increase in deposits in the current quarter was mainly due to increases in money market accounts and non-interest-bearing demand accounts, both due to deposit shift and from the First Security acquisition, offset by decreases to time deposits mainly due to decreased brokered time deposits.

Total borrowings and other liabilities were $717.3 million at June 30, 2025, a decrease of $183.0 million from $900.3 million at March 31, 2025. The decrease was primarily driven by decreased Federal Home Loan Bank advances due to lower liquidity needs.

Stockholders' Equity

Total stockholders' equity was $1.2 billion at June 30, 2025, an increase of $61.3 million, or 5.4%, from March 31, 2025, primarily due to the issuance of common stock related to the acquisition of First Security, and from an increase in retained earnings. During the second quarter of 2025, we purchased 543,599 shares of our common stock under our share repurchase program, at an average price of $24.09 per share.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 25, 2025, 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 014057. A recorded replay can be accessed through August 8, 2025, by dialing (866) 813-9403; passcode: 590803.

A slide presentation relating to our second quarter 2025 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 $9.7 billion in assets and operates 45 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, 2024. 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.