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home / news releases / BY - Byline Bancorp Inc. Reports Third Quarter 2018 Financial Results


BY - Byline Bancorp Inc. Reports Third Quarter 2018 Financial Results

Third Quarter 2018 Highlights

  • Third quarter of 2018 net income of $14.5 million, or $0.39 per diluted share, a record high since our initial public offering
  • Net interest margin increases to 4.73% compared to 4.43% for the second quarter of 2018
  • Originated loans and leases grew to $2.1 billion, an increase of $261.4 million, or 14.6%, from the second quarter of 2018, and $592.2 million, or 40.2%, from the third quarter of 2017
  • Efficiency ratio improves to 56.57% for the third quarter of 2018, compared to 83.35% for the second quarter of 2018, and 69.92% for the third quarter of 2017
  • Return on average assets improves to 1.20% for the third quarter of 2018, compared to 0.29% for the second quarter of 2018, and 1.17% for the third quarter of 2017
  • Return on stockholders’ equity improves to 9.22% for the third quarter of 2018, compared to 2.14% for the second quarter of 2018, and 8.44% for the third quarter of 2017

Byline Bancorp, Inc. (the “Company” or “Byline”) (NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $14.5 million, or $0.39 per diluted share, for the third quarter of 2018, compared with net income of $2.8 million, or $0.08 per diluted share, for the second quarter of 2018, and net income of $9.8 million, or $0.32 per diluted share, for the third quarter of 2017. The Company’s financial results during 2018 include certain costs associated with its acquisition and integration of First Evanston Bancorp, Inc. (“First Evanston”) and its bank subsidiary First Bank & Trust, including merger-related and core system conversion expenses. The acquisition closed on May 31, 2018. Excluding these costs and impairment charges on assets held for sale for each quarter, adjusted net income1 was $14.9 million, or $0.40 per adjusted diluted share, for the third quarter of 2018, compared with $10.6 million, or $0.32 per adjusted diluted share, for the second quarter of 2018. A reconciliation of adjusted net income and adjusted diluted earnings per share to net income and diluted earnings per share, respectively, according to accounting principles generally accepted in the United States of America (“GAAP”) is provided in the financial tables at the end of this release.

Alberto J. Paracchini, President and Chief Executive Officer of Byline, commented, “Our performance for the quarter was strong and characterized by solid organic growth, continued improvements in our operating performance, and focused execution of our strategy. The third quarter represented the first full quarter of operations subsequent to the closing of the First Evanston acquisition, which has benefited our financial performance. We continue to remain focused on ensuring a smooth transition for customers and colleagues, and expect to see continued benefits as we capture the synergies projected for this transaction.

"We are very pleased to report to you that we recently signed a definitive agreement to acquire Oak Park River Forest Bankshares, Inc. We believe this acquisition will enhance our position in an attractive Chicago metropolitan market, while also providing an important source of low-cost deposits. We believe the synergies from this combination will further enhance the value of the Byline franchise,” said Mr. Paracchini.

 
 
 
 
(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.

STATEMENTS OF OPERATIONS

Net Interest Income

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

 
Three Months Ended
 
Nine Months Ended
(dollars in thousands)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

INTEREST AND DIVIDEND INCOME

Interest and fees on loans and leases

$
55,045
$
39,627
$
33,654
$
31,896
$
30,933
$
128,326
$
88,510
Interest on taxable securities
5,076
4,572
4,055
3,679
3,720
13,703
11,213

Interest on tax-exempt securities

337
229
174
176
174
740
458

Other interest and dividend income

 
615
 
413
 
259
 
205
 
217
 
1,287
 
666

Total interest and dividend income

61,073
44,841
38,142
35,956
35,044
144,056
100,847
INTEREST EXPENSE
Deposits
5,971
3,745
2,498
2,218
2,112
12,214
5,518

Federal Home Loan Bank advances

1,723
1,360
1,358
1,009
850
4,441
2,282

Subordinated debentures and other borrowings

 
786
 
680
 
591
 
578
 
670
 
2,057
 
2,286
Total interest expense
 
8,480
 
5,785
 
4,447
 
3,805
 
3,632
 
18,712
 
10,086
Net interest income
$
52,593
$
39,056
$
33,695
$
32,151
$
31,412
$
125,344
$
90,761

The following table presents the quarter-to-date schedule of average interest-earning assets and average interest-bearing liabilities for the periods indicated:

 
For the Three Months Ended

September 30,

2018

 

June 30,

2018

(dollars in thousands)

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

ASSETS
Cash and cash equivalents
$
107,555
$
368
1.36%
$
68,019
$
199
1.17%
Loans and leases(1)
3,387,569
55,045
6.45%
2,638,757
39,627
6.02%
Securities available-for-sale
768,189
4,738
2.45%
694,154
4,203
2.43%
Securities held-to-maturity
91,892
585
2.53%
96,414
583
2.42%
Tax-exempt securities(2)
 
55,656
 
 
337
2.40%
 
36,749
 
 
229
2.50%
Total interest-earning assets
$
4,410,861
 
$
61,073
5.49%
$
3,534,093
 
$
44,841
5.09%
Allowance for loan and lease losses
(21,557
)
(18,292
)
All other assets
 
420,635
 
 
347,383
 
TOTAL ASSETS
$
4,809,939
 
$
3,863,184
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits
Interest checking
$
316,394
$
384
0.48%
$
227,760
$
124
0.22%
Money market accounts
618,213
1,200
0.77%
469,066
781
0.67%
Savings
479,837
148
0.12%
454,295
83
0.07%
Time deposits
 
1,084,550
 
 
4,239
1.55%
 
864,348
 
 
2,757
1.28%

Total interest-bearing deposits

2,498,994
5,971
0.95%
2,015,469
3,745
0.75%
Federal Home Loan Bank advances
394,588
1,723
1.73%
342,825
1,360
1.59%
Other borrowed funds
 
61,582
 
 
786
5.06%
 
57,644
 
 
680
4.73%
Total borrowings
 
456,170
 
 
2,509
2.18%
 
400,469
 
 
2,040
2.04%
Total interest-bearing liabilities
$
2,955,164
$
8,480
1.14%
$
2,415,938
$
5,785
0.96%
Non-interest bearing demand deposits
1,175,523
891,175
Other liabilities
53,631
37,524
Total stockholders’ equity
 
625,621
 
 
518,547
 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
4,809,939
 
$
3,863,184
 
Net interest spread(3)
4.35%
4.13%
Net interest income
$
52,593
$
39,056
Net interest margin(4)
4.73%
4.43%
 
Net loan accretion impact on margin
$
8,259
0.74%
$
3,604
0.41%

Net interest margin excluding loan accretion(6)

3.99%
4.02%
 
 
 
 
(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.
(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.
(6)
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.

The Company previously completed its acquisition of First Evanston in the second quarter of 2018. All references to this transaction in the following narrative are referred to as “the acquisition” or “our recent acquisition.”

Net interest income for the third quarter of 2018 was $52.6 million, an increase of $13.5 million, or 34.7%, from $39.1 million for the second quarter of 2018.

The increase in net interest income was primarily due to:

  • An increase of $15.4 million in interest and fees on loans and leases, primarily due to loans acquired in the acquisition and growth in loan and lease originations; and
  • An increase of $612,000 in interest income on securities, primarily due to additional purchases and securities acquired in the acquisition during the second quarter of 2018.

Partially offset by:

  • An increase of $2.2 million in interest expense on deposits, partially due to deposits assumed as a result of the acquisition, an increase in time deposits driven by promotional campaigns during the quarter, and an increase in average rates on deposits; and
  • An increase of $363,000 in interest expense on Federal Home Loan Bank advances, primarily due to an increase in average advances outstanding during the quarter.

Net interest margin for the third quarter of 2018 was 4.73%, an increase of 30 basis points compared to 4.43% for the second quarter of 2018. Total net accretion on acquired loans contributed 74 basis points to the net interest margin for the third quarter of 2018 compared to 41 basis points for the second quarter of 2018. The net interest margin increase was primarily driven by increased interest income due to an increase in earning assets as a result of the acquisition.

The average cost of total deposits was 0.64% for the third quarter of 2018, an increase of 12 basis points compared to the second quarter of 2018, primarily due to increased rates on interest bearing deposits and a full quarter of the inclusion of First Evanston deposits. Additionally, there was growth in average time deposits of $220.2 million and money market accounts of $149.1 million, partially offset by growth in average non-interest bearing demand deposits of $284.3 million.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $5.8 million for the third quarter of 2018, an increase of $1.8 million compared to $4.0 million for the second quarter of 2018. The third quarter provision included allocations of $3.6 million for originated loans and leases, $2.0 million for acquired non-impaired loans, and $313,000 for acquired impaired loans. The increased provision during the third quarter of 2018 was mainly due to additional specific impairment in the unguaranteed portion of the government guaranteed portfolio and increases to the general reserve driven by originated loan and lease portfolio growth.

Non-interest Income

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

 
Three Months Ended
 
Nine Months Ended
(dollars in thousands)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

NON-INTEREST INCOME

Fees and service charges on deposits

$
1,825
$
1,456
$
1,312
$
1,304
$
1,418
$
4,593
$
3,985
Net servicing fees
176
459
563
704
959
1,198
2,954
ATM and interchange fees
1,781
1,141
1,218
1,498
1,495
4,140
4,342

Net gains on sales of securities available-for-sale

4
4
8
Net gains on sales of loans
5,015
9,723
7,476
9,036
7,499
22,214
24,026

Wealth management and trust income

674
192
866
Other non-interest income
 
1,672
 
1,527
 
859
 
97
 
547
 
4,058
 
2,104
Total non-interest income
$
11,143
$
14,502
$
11,428
$
12,639
$
11,918
$
37,073
$
37,419

Non-interest income for the third quarter of 2018 was $11.1 million, a decrease of $3.4 million compared to $14.5 million for the second quarter of 2018.

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

  • A decrease of $4.7 million in net gains on sales of loans, primarily due to a decrease in loans sold coupled with a slight decrease in average premiums; and
  • A decrease of $283,000 in net servicing fees, primarily due to the change in fair value of the servicing asset as a result of changes to valuation assumptions on government guaranteed loans based on a higher interest rate environment and stronger economic growth.

Partially offset by:

  • An increase of $640,000 in ATM and interchange fees, primarily due to increased interchange fees resulting from a credit card vendor agreement signing bonus; and
  • An increase of $482,000 in wealth management and trust income, a new business line added as a result of the acquisition, in which the third quarter was the first full quarter of operations.

During the third quarter of 2018, the Company sold $59.6 million of government guaranteed loans compared to $95.0 million during the second quarter of 2018, contributing to the decrease in net gains on sale of loans for the quarter. The decrease in sales is primarily due to the timing of loans closed becoming fully funded, decreased premiums in the market, and the seasonality of our origination business.

Non-interest Expense

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

 
Three Months Ended
 
Nine Months Ended
(dollars in thousands)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

NON-INTEREST EXPENSE
Salaries and employee benefits
$
21,312
$
19,244
$
18,278
$
17,118
$
16,323
$
58,834
$
50,151
Occupancy expense, net
3,548
4,499
3,755
3,553
3,301
11,802
10,525
Equipment expense
617
558
603
663
630
1,778
1,809
Loan and lease related expenses
1,015
1,471
1,400
1,116
891
3,886
2,569

Legal, audit and other professional fees

2,358
4,418
1,851
2,658
1,608
8,627
4,369
Data processing
2,724
10,371
2,301
2,284
2,399
15,396
7,255

Net loss (gain) recognized on other real estate owned and other related expenses

(284
)
472
(1
)
(430
)
565
187
136
Regulatory assessments
675
366
241
299
326
1,282
894

Other intangible assets amortization expense

1,898
1,130
767
767
769
3,795
2,307
Advertising and promotions
537
347
249
232
196
1,133
803
Telecommunications
435
466
418
428
351
1,319
1,165
Other non-interest expense
 
3,121
 
 
2,428
 
2,057
 
 
1,670
 
 
3,706
 
7,606
 
7,182
Total non-interest expense
$
37,956
 
$
45,770
$
31,919
 
$
30,358
 
$
31,065
$
115,645
$
89,165

Non-interest expense for the third quarter of 2018 was $38.0 million, a decrease of $7.8 million from $45.8 million for the second quarter of 2018.

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

  • A decrease of $7.6 million in data processing expense, primarily due to a one-time contract termination expense incurred during the second quarter related to the Bank’s upcoming core system conversion;
  • A decrease of $2.1 million in legal, audit and other professional fees, primarily due to professional services previously incurred related to the acquisition and system conversion; and
  • A decrease of $756,000 in net loss (gain) recognized on other real estate owned and other related expenses, primarily due to net gains recorded on two other real estate owned property sales during the quarter, compared to a net loss of $472,000 incurred during the second quarter of 2018, primarily due to net losses recorded on two property sales.

Partially offset by:

  • An increase of $2.1 million in salaries and employee benefits, primarily due to additional salary and employee benefit expenses resulting from the acquisition and incentive payments for targeted achievements; and
  • An increase of $768,000 in other intangible assets amortization expense, due to a full quarter of amortization of intangible assets as a result of the acquisition.

The Company’s efficiency ratio was 56.57% for the third quarter of 2018, compared with 83.35% for the second quarter of 2018. Approximately $9.0 million of expenses were previously recognized during the second quarter of 2018 relating to the Bank’s planned core system conversion, including consulting fees and contract termination expense. Excluding merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, the Company’s adjusted efficiency ratio1 was 55.79% for the third quarter of 2018, compared with 63.48% for the second quarter of 2018.

INCOME TAXES

The Company recorded income tax expense of $5.4 million during the third quarter of 2018, an effective tax rate of 27.1%, compared to $1.1 million during the second quarter of 2018, an effective tax rate of 27.8%, an increase of $4.3 million. The increase was primarily due to the increase in net income recorded during the quarter.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $4.9 billion at September 30, 2018, an increase of $112.1 million compared to $4.8 billion at June 30, 2018, and an increase of $1.6 billion compared to $3.4 billion at December 31, 2017.

The current quarter increase was primarily due to:

  • An increase in loans and leases of $107.1 million, primarily due to an increase of $261.4 million in our originated loan portfolio, partially offset by a decrease of $154.3 million in our acquired loan portfolio; and
  • An increase in securities of $33.7 million mainly due to additional purchases during the quarter, which included U.S. Treasury securities of $15.0 million and government guaranteed mortgage-backed securities of $19.9 million.

Partially offset by:

  • A decrease in due from counterparty of $11.1 million due to the timing of the settlement of loans sold at September 30, 2018; and
  • A decrease in deferred tax assets, net of $6.6 million, primarily due to utilization of net operating loss carryforwards.

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

 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
(dollars in thousands)
Amount
 
% of Total
Amount
 
% of Total
Amount
 
% of Total
Originated loans and leases
Commercial real estate
$
619,767
17.9%
$
539,529
16.1%
$
513,622
22.5%
Residential real estate
445,717
12.9%
413,956
12.4%
400,571
17.6%

Construction, land development, and other land

140,391
4.1%
134,004
4.0%
97,638
4.3%
Commercial and industrial
696,750
20.2%
556,340
16.6%
416,499
18.3%
Installment and other
7,729
0.2%
4,898
0.1%
3,724
0.2%
Leasing financing receivables
 
155,825
 
4.5%
 
156,017
 
4.7%
 
141,329
 
6.2%
Total originated loans and leases
$
2,066,179
59.8%
$
1,804,744
53.9%
$
1,573,383
69.1%
Acquired impaired loans
Commercial real estate
$
154,108
4.5%
$
162,621
4.9%
$
166,712
7.3%
Residential real estate
120,963
3.5%
129,737
3.9%
144,562
6.4%

Construction, land development, and other land

4,203
0.1%
4,860
0.1%
5,946
0.3%
Commercial and industrial
14,436
0.4%
15,347
0.4%
10,008
0.4%
Installment and other
 
458
 
0.0%
 
521
 
0.0%
 
462
 
0.0%
Total acquired impaired loans
$
294,168
8.5%
$
313,086
9.3%
$
327,690
14.4%
Acquired non-impaired loans and leases
Commercial real estate
$
498,329
14.4%
$
532,837
15.9%
$
211,359
9.3%
Residential real estate
138,516
4.0%
155,895
4.7%
32,085
1.4%

Construction, land development, and other land

37,111
1.1%
49,752
1.5%
1,845
0.1%
Commercial and industrial
384,260
11.1%
454,133
13.6%
94,731
4.1%
Installment and other
4,007
0.1%
7,387
0.2%
42
0.0%
Leasing financing receivables
 
33,232
 
1.0%
 
30,858
 
0.9%
 
36,357
 
1.6%

Total acquired non-impaired loans and leases

$
1,095,455
 
31.7%
$
1,230,862
 
36.8%
$
376,419
 
16.5%
Total loans and leases
$
3,455,802
100.0%
$
3,348,692
100.0%
$
2,277,492
100.0%
Allowance for loan and lease losses
 
(23,424
)
 
(19,687
)
 
(16,706
)

Total loans and leases, net of allowance for loan and lease losses

$
3,432,378
 
$
3,329,005
 
$
2,260,786
 

ASSET QUALITY

Non-Performing Assets

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

(dollars in thousands)
 

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

Nonperforming assets:
Non-accrual loans and leases
$
28,643
$
25,742
$
23,626
$
15,763
$
15,121

Past due loans and leases 90 days or more and still accruing interest

291
197
Accruing troubled debt restructured loans
 
1,230
 
 
1,238
 
 
1,037
 
 
1,061
 
 
1,631
 
Total non-performing loans and leases
30,164
27,177
24,663
16,824
16,752
Other real estate owned
 
4,891
 
 
6,402
 
 
10,466
 
 
10,626
 
 
13,859
 
Total non-performing assets
$
35,055
 
$
33,579
 
$
35,129
 
$
27,450
 
$
30,611
 

Total non-performing loans and leases as a percentage of total loans and leases

0.87
%
0.81
%
1.08
%
0.74
%
0.76
%

Total non-performing assets as a percentage of total assets

0.71
%
0.70
%
1.01
%
0.82
%
0.93
%

Allowance for loan and lease losses as a percentage of non-performing loans and leases

77.66
%
72.44
%
71.52
%
99.30
%
95.39
%
 

Nonperforming assets guaranteed by U.S. government:

Non-accrual loans guaranteed
$
7,261
$
6,810
$
6,266
$
4,543
$
3,501

Past due loans 90 days or more and still accruing interest guaranteed

152

Accruing troubled debt restructured loans guaranteed

 
 
 
 
 
 
 
 
 
 
 
 

Total non-performing loans and leases guaranteed

7,261
6,962
6,266
4,543
3,501
Other real estate owned guaranteed
 
 
 
298
 
 
482
 
 
 
 
 
Total non-performing assets guaranteed
$
7,261
 
$
7,260
 
$
6,748
 
$
4,543
 
$
3,501
 

Total non-performing loans and leases not guaranteed as a percentage of total loans and leases

0.66
%
0.60
%
0.81
%
0.54
%
0.60
%

Total non-performing assets not guaranteed as a percentage of total assets

0.57
%
0.55
%
0.82
%
0.68
%
0.82
%

Variances in non-performing assets:

  • Non-performing loans and leases were $30.2 million at September 30, 2018, an increase of $3.0 million from $27.2 million at June 30, 2018; and
  • Other real estate owned was $4.9 million at September 30, 2018, a decrease of $1.5 million from $6.4 million at June 30, 2018, primarily due to sales of properties during the third quarter of 2018.

Non-performing assets included $7.3 million of government guaranteed balances at September 30, 2018 and June 30, 2018.

Allowance for Loan and Lease Losses

The following table presents the balance and activity within the allowance for loan and lease losses for the periods indicated:

 

Three Months Ended

 

Nine Months Ended

(dollars in thousands)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

Allowance for loan and lease losses, beginning of period

$
19,687
$
17,640
$
16,706
$
15,980
$
13,969
$
16,706
$
10,923
Provision for loan and lease losses
5,842
3,956
5,115
3,347
3,900
14,913
9,306
Net charge-offs of loans
 
(2,105
)
 
(1,909
)
 
(4,181
)
 
(2,621
)
 
(1,889
)
 
(8,195
)
 
(4,249
)

Allowance for loan and lease losses, end of period

$
23,424
 
$
19,687
 
$
17,640
 
$
16,706
 
$
15,980
 
$
23,424
 
$
15,980
 
 

Allowance for loan and lease losses to period end total loans held for investment

0.68
%
0.59
%
0.77
%
0.73
%
0.72
%
0.68
%
0.72
%

Net charge-offs (annualized) to average loans outstanding during the period

0.25
%
0.29
%
0.75
%
0.46
%
0.34
%
0.40
%
0.26
%

Provision for loan and lease losses to net charge-offs during the period

2.78x

2.07x

1.22x

1.28x

2.06x

1.82x

2.19x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment increased from 0.59% at June 30, 2018 to 0.68% at September 30, 2018, primarily due to loan and lease production and additional credit deterioration in the government guaranteed portfolio.

Net Charge-Offs

Net charge-offs during the third quarter of 2018 were $2.1 million, or 0.25% of average loans and leases, on an annualized basis, an increase of $196,000 compared to $1.9 million, or 0.29% of average loans, during the second quarter of 2018, and a decrease from 0.34% for the comparable quarter one year ago. The decrease as a percentage of average loans and leases was primarily due to higher loan and lease average balances during the third quarter.

Net charge-offs for the third quarter of 2018 included $1.5 million in the unguaranteed portion of government guaranteed loans while net charge-offs for the second quarter of 2018 included $1.7 million in the unguaranteed portion of government guaranteed loans.

Deposits and Other Liabilities

The following table presents the composition of deposits at the dates indicated:

(dollars in thousands)
 

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

Non-interest bearing demand deposits
$
1,175,222
$
1,193,057
$
749,892
$
760,887
$
753,662
Interest bearing checking accounts
317,145
287,330
196,802
186,611
187,232
Money market demand accounts
661,271
617,108
382,282
349,862
418,006
Other savings
476,879
487,130
439,277
437,212
435,536
Time deposits (below $250,000)
916,014
879,643
665,541
627,255
643,112
Time deposits ($250,000 and above)
 
194,236
 
180,609
 
90,753
 
81,502
 
83,381
Total deposits
$
3,740,767
$
3,644,877
$
2,524,547
$
2,443,329
$
2,520,929

Total deposits were $3.7 billion at September 30, 2018, an increase of $95.9 million compared to June 30, 2018, and an increase of $1.3 billion compared to December 31, 2017, primarily due to continued deposit promotions and assumed deposits from the acquisition. Non-interest bearing deposits to total deposits decreased from 32.7% at June 30, 2018 to 31.4% at September 30, 2018.

The increase in the current quarter was primarily due to:

  • An increase in time deposits of $50.0 million, to $1.1 billion at September 30, 2018, primarily driven by continuing promotional campaigns; and
  • An increase in money market demand deposits of $44.2 million, from $617.1 million at June 30, 2018 to $661.3 million at September 30, 2018, primarily driven by an ongoing promotional campaign.

Partially offset by:

  • A decrease in non-interest bearing demand deposits of $17.8 million, to $1.2 billion at September 30, 2018, primarily driven by a seasonal outflow from commercial customers expected to return in the fourth quarter.

Total borrowings and other liabilities were $546.8 million at September 30, 2018, an increase of $2.8 million from $544.0 million at June 30, 2018, primarily due to an increase in Federal Home Loan Bank advances slightly offset by a decrease in accrued expenses and other liabilities.

Stockholders’ Equity

Total stockholders’ equity was $629.9 million at September 30, 2018, an increase of $13.5 million from $616.4 million at June 30, 2018, primarily due to net income during the quarter. Stockholders’ equity increased $171.3 million from $458.6 million at December 31, 2017, primarily due to an increase from the acquisition.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of September 30, 2018:

 
Actual
 

Minimum Capital

Required

 

Required for the Bank

to be Considered

Well Capitalized

September 30, 2018
Amount
 
Ratio
Amount
 
Ratio
Amount
 
Ratio
Total capital to risk weighted assets:
Company
$
526,630
13.37%
$
315,218
8.00%
N/A
N/A
Bank
503,886
12.77%
315,620
8.00%
$
394,525
10.00
%
Tier 1 capital to risk weighted assets:
Company
$
500,761
12.71%
$
236,414
6.00%
N/A
N/A
Bank
478,017
12.12%
236,715
6.00%
$
315,620
8.00
%

Common Equity Tier 1 (CET1) to risk weighted assets:

Company
$
443,823
11.26%
$
177,310
4.50%
N/A
N/A
Bank
478,017
12.12%
177,536
4.50%
$
256,441
6.50
%
Tier 1 capital to average assets:
Company
$
500,761
10.78%
$
185,737
4.00%
N/A
N/A
Bank
478,017
10.28%
185,975
4.00%
$
232,468
5.00
%

Capital ratios for the period presented are based on the Basel III regulatory capital framework as applied to the Company’s current business and operations, and are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review and implementation guidance.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) on Friday, October 26, 2018 to discuss its quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (877) 512-8755. A recorded replay can be accessed through November 9, 2018 by dialing (877) 344-7529; passcode: 10124727.

A slide presentation relating to the third quarter 2018 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the News and Events page of the Company’s investor relations website at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company for Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bank has approximately $4.9 billion in assets and operates more than 50 full service 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 10 Small Business Administration lenders in the United States.

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, 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 share, tangible common equity to tangible assets, and net interest margin excluding loan accretion. 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 “Reconciliation of Non-GAAP Financial Measures” in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures.

Adjusted net income and adjusted diluted earnings per share exclude certain significant items, which include incremental income tax benefit related to Illinois corporate income tax rate increases, incremental income tax expense or benefit related to federal corporate income tax reductions, impairment charges on assets held for sale, merger related expenses, and core system conversion expenses adjusted for applicable income tax. Management believes the significant items are not indicative of or useful to measure the Company’s operating performance on an ongoing basis.

Adjusted non-interest expense is non-interest expense excluding certain significant items, which include impairment charges on assets held for sale, merger-related expenses, and core system conversion expenses.

Adjusted efficiency ratio is adjusted non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted non-interest expense to average assets is adjusted non-interest expense divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted return on average stockholders’ equity is adjusted net income divided by average stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted return on average assets is adjusted net income divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Non-interest income to total revenues is non-interest income divided by net interest income plus non-interest income. Management believes that it is standard practice in the industry to present non-interest income as a percentage of total revenue. Accordingly, management believes providing these measures may be useful for peer comparison.

Pre-tax pre-provision income is pre-tax income plus the provision for loan and lease losses. Management believes this metric is important due to the tax benefit resulting from the reversal of the deferred tax asset valuation allowance, the decrease in the federal corporate income tax rate, and the increase in the Illinois state corporate income tax rate. The metric demonstrates income excluding the tax provision or benefit and excludes the provision for loan and lease losses.

Pre-tax pre-provision return on average assets is pre-tax income plus the provision for loan and lease losses, divided by average assets. Management believes this metric is important due to the change in tax expense or benefit resulting from the recent decrease in the federal corporate income tax rate and the recent increase in the Illinois state income tax rate. The ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for loan and lease losses. Adjusted pre-tax pre-provision return on average assets excludes certain significant items, which include impairment charges on assets held for sale, merger related expenses, and core system conversion expenses.

Tangible common equity is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

Tangible assets is defined as total assets reduced by goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

Tangible book value per share is calculated as tangible common equity, which is stockholders’ equity reduced by preferred stock and goodwill and other intangible assets, divided by total shares of common stock outstanding. Management believes this metric is important due to the relative changes in the book value per share exclusive of changes in intangible assets.

Tangible common equity to tangible assets is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this measure is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.

Tangible net income available to common stockholders is net income available to common stockholders excluding after-tax intangible asset amortization.

Return on average tangible common stockholders’ equity is tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted return on average tangible common stockholders’ equity is adjusted tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Net interest margin excluding loan accretion is calculated as reported net interest margin less the effect of accretion income net of contractual interest collected on acquired loans. Management believes that this metric is important as it illustrates the impact of net accretion income from acquired loans on the net interest margin.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements about Byline’s expectations, beliefs, plans, strategies, predictions, forecasts, objectives or assumptions of future events or performance are not historical facts and may be forward-looking. These statements include, but are not limited to, the expected completion date, financial benefits and other effects of the proposed merger of Byline and Oak Park River Forest Bankshares, Inc. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “expects,” “can,” “could,” “may,” “predicts,” “potential,” “opportunity,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “seeks,” “intends” and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual strategies, actions or results to differ materially from those expressed in them, and are not guarantees of timing, future results or other events or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions or results, based on management’s current expectations, assumptions and estimates on the date hereof, and there can be no assurance that actual strategies, actions or results will not differ materially from expectations, readers are cautioned not to place undue reliance on such statements. Factors that may cause such a difference include, but are not limited to, the reaction to the transaction of the companies’ customers, employees and counterparties; customer disintermediation; inflation; expected synergies, cost savings and other financial benefits of the proposed transaction might not be realized within the expected timeframes or might be less than projected; the requisite stockholder and regulatory approvals for the proposed transaction might not be obtained; credit and interest rate risks associated with Byline’s and Oak Park River Forest Bankshares, Inc.’s respective businesses, customers, borrowings, repayment, investment, and deposit practices; general economic conditions, either nationally or in the market areas in which Byline and Oak Park River Forest Bankshares, Inc. operate or anticipate doing business, are less favorable than expected; new regulatory or legal requirements or obligations; and other risks. Certain risks and important factors that could affect Byline’s future results are identified in its Annual Report on Form 10-K for the year ended December 31, 2017 and other reports filed with the Securities and Exchange Commission, including among other things, under the heading “Risk Factors” in such Annual Report on Form 10-K. 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.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

 
(dollars in thousands)
 

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

ASSETS
Cash and due from banks
$
25,162
$
25,299
$
17,396
$
19,404
$
16,193
Interest bearing deposits with other banks
 
119,594
 
 
127,417
 
 
110,645
 
 
38,945
 
 
46,043
 
Cash and cash equivalents
144,756
152,716
128,041
58,349
62,236
Securities available-for-sale, at fair value
795,408
757,825
626,057
583,236
584,684
Securities held-to-maturity, at amortized cost
102,683
106,613
112,266
117,163
121,453
Restricted stock, at cost
19,202
18,977
17,177
16,343
10,628
Loans held for sale
8,737
5,822
8,219
5,212
2,087
Loans and leases:
Loans and leases
3,455,802
3,348,692
2,280,418
2,277,492
2,216,499
Allowance for loan and lease losses
 
(23,424
)
 
(19,687
)
 
(17,640
)
 
(16,706
)
 
(15,980
)
Net loans and leases
3,432,378
3,329,005
2,262,778
2,260,786
2,200,519
Servicing assets, at fair value
20,674
21,587
21,615
21,400
21,669
Accrued interest receivable
11,331
10,670
6,971
7,670
7,183
Premises and equipment, net
106,948
107,300
94,014
95,224
96,334
Assets held for sale
8,343
11,428
9,030
9,779
12,938
Other real estate owned, net
4,891
6,402
10,466
10,626
13,859
Goodwill
127,536
127,536
54,562
54,562
51,975
Other intangible assets, net
35,248
37,139
15,991
16,756
17,522
Bank-owned life insurance
5,923
5,886
5,838
5,718
5,680
Deferred tax assets, net
42,287
48,936
47,371
47,376
60,350
Due from counterparty
14,484
25,569
19,987
39,824
21,084
Other assets
 
36,580
 
 
31,869
 
 
21,989
 
 
16,106
 
 
15,241
 
Total assets
$
4,917,409
 
$
4,805,280
 
$
3,462,372
 
$
3,366,130
 
$
3,305,442
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing demand deposits
$
1,175,222
$
1,193,057
$
749,892
$
760,887
$
753,662
Interest bearing deposits:
NOW, savings accounts, and money market accounts
1,455,295
1,391,568
1,018,361
973,685
1,040,774
Time deposits
 
1,110,250
 
 
1,060,252
 
 
756,294
 
 
708,757
 
 
726,493
 
Total deposits
3,740,767
3,644,877
2,524,547
2,443,329
2,520,929
Accrued interest payable
2,971
2,562
1,612
1,306
1,184
Line of credit
Federal Home Loan Bank advances
425,000
420,000
380,000
361,506
234,559
Securities sold under agreements to repurchase
24,446
24,653
27,815
31,187
30,807
Junior subordinated debentures issued to capital trusts, net
36,615
36,452
27,800
27,647
27,482
Accrued expenses and other liabilities
 
57,749
 
 
60,330
 
 
37,662
 
 
42,577
 
 
30,948
 
Total liabilities
4,287,548
4,188,874
2,999,436
2,907,552
2,845,909
STOCKHOLDERS’ EQUITY
Preferred stock
10,438
10,438
10,438
10,438
10,438
Common stock
361
360
293
292
292
Additional paid-in capital
545,827
544,686
392,932
391,586
391,040
Retained earnings
85,597
71,257
68,687
61,349
62,311
Accumulated other comprehensive loss, net of tax
 
(12,362
)
 
(10,335
)
 
(9,414
)
 
(5,087
)
 
(4,548
)
Total stockholders’ equity
 
629,861
 
 
616,406
 
 
462,936
 
 
458,578
 
 
459,533
 
Total liabilities and stockholders’ equity
$
4,917,409
 
$
4,805,280
 
$
3,462,372
 
$
3,366,130
 
$
3,305,442
 
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 
 
Three Months Ended
 
Nine Months Ended
(dollars in thousands, except share and per share data)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases
$
55,045
$
39,627
$
33,654
$
31,896
$
30,933
$
128,326
$
88,510
Interest on taxable securities
5,076
4,572
4,055
3,679
3,720
13,703
11,213
Interest on tax-exempt securities
337
229
174
176
174
740
458
Other interest and dividend income
 
615
 
 
413
 
259
 
 
205
 
 
217
 
 
1,287
 
666
Total interest and dividend income
61,073
44,841
38,142
35,956
35,044
144,056
100,847
INTEREST EXPENSE
Deposits
5,971
3,745
2,498
2,218
2,112
12,214
5,518
Federal Home Loan Bank advances
1,723
1,360
1,358
1,009
850
4,441
2,282

Subordinated debentures and other borrowings

 
786
 
 
680
 
591
 
 
578
 
 
670
 
 
2,057
 
2,286
Total interest expense
 
8,480
 
 
5,785
 
4,447
 
 
3,805
 
 
3,632
 
 
18,712
 
10,086
Net interest income
52,593
39,056
33,695
32,151
31,412
125,344
90,761
PROVISION FOR LOAN AND LEASE LOSSES
 
5,842
 
 
3,956
 
5,115
 
 
3,347
 
 
3,900
 
 
14,913
 
9,306

Net interest income after provision for loan and lease losses

46,751
35,100
28,580
28,804
27,512
110,431
81,455
NON-INTEREST INCOME
Fees and service charges on deposits
1,825
1,456
1,312
1,304
1,418
4,593
3,985
Net servicing fees
176
459
563
704
959
1,198
2,954
ATM and interchange fees
1,781
1,141
1,218
1,498
1,495
4,140
4,342

Net gains on sales of securities available-for-sale

4
4
8
Net gains on sales of loans
5,015
9,723
7,476
9,036
7,499
22,214
24,026
Wealth management and trust income
674
192
866
Other non-interest income
 
1,672
 
 
1,527
 
859
 
 
97
 
 
547
 
 
4,058
 
2,104
Total non-interest income
11,143
14,502
11,428
12,639
11,918
37,073
37,419
NON-INTEREST EXPENSE
Salaries and employee benefits
21,312
19,244
18,278
17,118
16,323
58,834
50,151
Occupancy expense, net
3,548
4,499
3,755
3,553
3,301
11,802
10,525
Equipment expense
617
558
603
663
630
1,778
1,809
Loan and lease related expenses
1,015
1,471
1,400
1,116
891
3,886
2,569
Legal, audit and other professional fees
2,358
4,418
1,851
2,658
1,608
8,627
4,369
Data processing
2,724
10,371
2,301
2,284
2,399
15,396
7,255

Net loss (gain) recognized on other real estate owned and other related expenses

(284
)
472
(1
)
(430
)
565
187
136
Regulatory assessments
675
366
241
299
326
1,282
894

Other intangible assets amortization expense

1,898
1,130
767
767
769
3,795
2,307
Advertising and promotions
537
347
249
232
196
1,133
803
Telecommunications
435
466
418
428
351
1,319
1,165
Other non-interest expense
 
3,121
 
 
2,428
 
2,057
 
 
1,670
 
 
3,706
 
 
7,606
 
7,182
Total non-interest expense
 
37,956
 
 
45,770
 
31,919
 
 
30,358
 
 
31,065
 
 
115,645
 
89,165

INCOME BEFORE PROVISION FOR INCOME TAXES

19,938
3,832
8,089
11,085
8,365
31,859
29,709
PROVISION (BENEFIT) FOR INCOME TAXES
 
5,402
 
 
1,064
 
1,321
 
 
11,851
 
 
(1,390
)
 
7,787
 
7,248
NET INCOME (LOSS)
14,536
2,768
6,768
(766
)
9,755
24,072
22,461
Dividends on preferred shares
 
196
 
 
198
 
193
 
 
196
 
 
195
 
 
587
 
11,081

INCOME AVAILABLE (LOSS ATTRIBUTABLE) TO COMMON STOCKHOLDERS

$
14,340
 
$
2,570
$
6,575
 
$
(962
)
$
9,560
 
$
23,485
$
11,380
EARNINGS (LOSS) PER COMMON SHARE
Basic
$
0.40
$
0.08
$
0.22
$
(0.03
)
$
0.33
$
0.73
$
0.43
Diluted
$
0.39
$
0.08
$
0.22
$
(0.03
)
$
0.32
$
0.71
$
0.43

Weighted average common shares outstanding for basic earnings (loss) per common share

36,042,914
31,614,973
29,291,179
29,246,900
29,246,900
32,341,087
26,194,025

Diluted weighted average common shares outstanding for diluted earnings (loss) per common share

36,958,209
32,568,396
29,913,633
29,246,900
29,752,331
33,288,657
26,697,841
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA (unaudited)

 
 
As of or For the Three Months Ended
 

As of or For the Nine Months

Ended

(dollars in thousands, except share and per share data)

September 30,

2018

 

June 30,

2018

 

March 31,

2018

 

December 31,

2017

 

September 30,

2017

September 30,

2018

 

September 30,

2017

Summary of Operations
Net interest income
$
52,593
$
39,056
$
33,695
$
32,151
$
31,412
$
125,344
$
90,761
Provision for loan and lease losses
5,842
3,956
5,115
3,347
3,900
14,913
9,306
Non-interest income
11,143
14,502
11,428
12,639
11,918
37,073
37,419
Non-interest expense
 
37,956
 
 
45,770
 
 
31,919
 
 
30,358
 
 
31,065
 
 
115,645
 
 
89,165
 
Income before provision for income taxes
19,938
3,832
8,089
11,085
8,365
31,859
29,709
Provision (benefit) for income taxes
 
5,402
 
 
1,064
 
 
1,321
 
 
11,851
 
 
(1,390
)
 
7,787
 
 
7,248
 
Net income (loss)
14,536
2,768
6,768
(766
)
9,755
24,072
22,461
Dividends on preferred shares
 
196
 
 
198
 
 
193
 
 
196
 
 
195
 
 
587
 
 
11,081
 

Net income available (loss attributable) to common stockholders

$
14,340
 
$
2,570
 
$
6,575
 
$
(962
)
$
9,560
 
$
23,485
 
$
11,380
 
 
Earnings per Common Share
Basic earnings (loss) per common share
$
0.40
$
0.08
$
0.22
$
(0.03
)
$
0.33
$
0.73
$
0.43
Diluted earnings (loss) per common share
$
0.39
$
0.08
$
0.22
$
(0.03
)
$
0.32
$
0.71
$
0.43
Adjusted diluted earnings (loss) per common share(2)(3)
$
0.40
$
0.32
$
0.21
$
0.24
$
0.18
$
0.93
$
0.27

Weighted average common shares outstanding (basic)

36,042,914
31,614,973
29,291,179
29,246,900
29,246,900
32,341,087
26,194,025

Weighted average common shares outstanding (diluted)

36,958,209
32,568,396
29,913,633
29,246,900
29,752,331
33,288,657
26,697,841
Common shares outstanding
36,279,600
36,218,955
29,404,048
29,317,298
29,305,400
36,279,600
29,305,400
 

Key Ratios and performance metrics (annualized where applicable)

Net interest margin
4.73
%
4.43
%
4.45
%
4.26
%
4.18
%
4.56
%
4.07
%
Cost of deposits
0.64
%
0.52
%
0.41
%
0.35
%
0.33
%
0.54
%
0.29
%
Efficiency ratio(1)
56.57
%
83.35
%
69.04
%
66.06
%
69.92
%
68.87
%
67.76
%
Adjusted efficiency ratio(1)(2)(3)
55.79
%
63.48
%
68.77
%
63.23
%
67.72
%
61.93
%
67.02
%
Non-interest expense to average assets
3.13
%
4.75
%
3.85
%
3.64
%
3.73
%
3.85
%
3.61
%

Adjusted non-interest expense to average assets(2)(3)

3.09
%
3.65
%
3.84
%
3.49
%
3.61
%
3.47
%
3.57
%
Return (loss) on average stockholders' equity
9.22
%
2.14
%
5.97
%
(0.66
)%
8.44
%
6.01
%
7.23
%

Adjusted return on average stockholders' equity(2)(3)

9.47
%
8.18
%
5.41
%
6.22
%
4.79
%
7.90
%
5.87
%
Return (loss) on average assets
1.20
%
0.29
%
0.82
%
(0.09
)%
1.17
%
0.80
%
0.91
%
Adjusted return on average assets(2)(3)
1.23
%
1.10
%
0.74
%
0.87
%
0.66
%
1.05
%
0.74
%
Non-interest income to total revenues(2)
17.48
%
27.08
%
25.33
%
28.22
%
27.51
%
22.83
%
29.19
%
Pre-tax pre-provision return on average assets(2)
2.13
%
0.81
%
1.59
%
1.73
%
1.47
%
1.56
%
1.58
%

Adjusted pre-tax pre-provision return on average assets(2)(3)

2.17
%
1.91
%
1.61
%
1.89
%
1.59
%
1.93
%
1.62
%

Return on average tangible common stockholders' equity(2)(3)

13.81
%
3.34
%
7.65
%
(0.42
)%
10.61
%
8.51
%
5.38
%

Adjusted return on average tangible common stockholders' equity(2)(3)

14.16
%
11.05
%
6.96
%
7.88
%
6.18
%
10.96
%
3.64
%
Non-interest bearing deposits to total deposits
31.42
%
32.73
%
29.70
%
31.14
%
29.90
%
31.42
%
29.90
%
Deposits per branch
$
63,403
$
61,778
$
45,081
$
43,631
$
44,227
$
63,403
$
44,227

Loans and leases held for sale and loans and lease held for investment to total deposits

92.62
%
92.03
%
90.66
%
93.43
%
88.01
%
92.62
%
88.01
%
Deposits to total liabilities
87.25
%
87.01
%
84.17
%
84.03
%
88.58
%
87.25
%
88.58
%
Tangible book value per common share(2)
$
12.59
$
12.18
$
12.99
$
12.85
$
12.95
$
12.59
$
12.95
 
Asset Quality Ratios

Non-performing loans and leases to total loans and leases held for investment, net before ALLL

0.87
%
0.81
%
1.08
%
0.74
%
0.76
%
0.87
%
0.76
%

ALLL to total loans and leases held for investment, net before ALLL

0.68
%
0.59
%
0.77
%
0.73
%
0.72
%
0.68
%
0.72
%

Net charge-offs to average total loans and leases held for investment, net before ALLL

0.25
%
0.29
%
0.75
%
0.46
%
0.34
%
0.40
%
0.26
%
Acquisition accounting adjustments(4)
$
42,375
$
52,090
$
28,058
$
31,693
$
34,249
$
42,375
$
34,249
 
Capital Ratios
Common equity to total assets
12.60
%
12.63
%
13.07
%
13.31
%
13.59
%
12.60
%
13.59
%
Tangible common equity to tangible assets(2)
9.60
%
9.51
%
11.26
%
11.44
%
11.73
%
9.60
%
11.73
%
Leverage ratio
10.78
%
10.57
%
12.14
%
12.25
%
11.95
%
10.78
%
11.95
%
Common equity tier 1 capital ratio
11.26
%
10.88
%
13.49
%
13.77
%
13.93
%
11.26
%
13.93
%
Tier 1 capital ratio
12.71
%
12.36
%
15.30
%
15.27
%
15.38
%
12.71
%
15.38
%
Total capital ratio
13.37
%
12.92
%
16.05
%
15.98
%
16.08
%
13.37
%
16.08
%
 
 
 
 
(1)
 
Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
(2)
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.
(3)
Calculation excludes impairment charges, merger-related expenses, and core systems conversion expense.
(4)
Represents the remaining unamortized premium or unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.
 

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,
2018
 
2017
(dollars in thousands)

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

ASSETS
Cash and cash equivalents
$
107,555
$
368
1.36%
$
48,354
$
106
0.87%
Loans and leases(1)
3,387,569
55,045
6.45%
2,193,076
30,933
5.60%
Securities available-for-sale
768,189
4,738
2.45%
602,146
3,181
2.10%
Securities held-to-maturity
91,892
585
2.53%
111,345
650
2.32%
Tax-exempt securities(2)
 
55,656
 
 
337
2.40%
 
26,166
 
 
174
2.63%
Total interest-earning assets
$
4,410,861
 
$
61,073
5.49%
$
2,981,087
 
$
35,044
4.66%
Allowance for loan and lease losses
(21,557
)
(14,570
)
All other assets
 
420,635
 
 
340,669
 
TOTAL ASSETS
$
4,809,939
 
$
3,307,186
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits
Interest checking
$
316,394
$
384
0.48%
$
186,447
$
29
0.06%
Money market accounts
618,213
1,200
0.77%
388,365
275
0.28%
Savings
479,837
148
0.12%
441,096
79
0.07%
Time deposits
 
1,084,550
 
 
4,239
1.55%
 
758,518
 
 
1,729
0.90%

Total interest-bearing deposits

2,498,994
5,971
0.95%
1,774,426
2,112
0.47%
Federal Home Loan Bank advances
394,588
1,723
1.73%
222,800
850
1.51%
Other borrowed funds
 
61,582
 
 
786
5.06%
 
60,418
 
 
670
4.40%
Total borrowings
 
456,170
 
 
2,509
2.18%
 
283,218
 
 
1,520
2.13%
Total interest-bearing liabilities
$
2,955,164
$
8,480
1.14%
$
2,057,644
$
3,632
0.70%
Non-interest bearing demand deposits
1,175,523
748,523
Other liabilities
53,631
42,577
Total stockholders’ equity
 
625,621
 
 
458,442
 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
4,809,939
 
$
3,307,186
 
Net interest spread(3)
4.35%
3.96%
Net interest income
$
52,593
$
31,412
Net interest margin(4)
4.73%
4.18%
 
Net loan accretion impact on margin
$
8,259
0.74%
$
2,166
0.29%

Net interest margin excluding loan accretion(6)

3.99%
3.89%
 
 
 
 
(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.
(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.
(6)
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.
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)

 
 
For the Nine Months Ended September 30,
2018
 
2017
(dollars in thousands)

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

Average

Balance(5)

 

Interest

Inc / Exp

 

Average

Yield /

Rate

ASSETS
Cash and cash equivalents
$
71,607
$
648
1.21%
$
54,894
$
327
0.80%
Loans and leases(1)
2,771,274
128,326
6.19%
2,180,507
88,510
5.43%
Securities available-for-sale
697,584
12,563
2.41%
610,249
9,525
2.09%
Securities held-to-maturity
96,677
1,779
2.46%
116,764
2,027
2.32%
Tax-exempt securities(2)
 
40,065
 
 
740
2.47%
 
22,033
 
 
458
2.78%
Total interest-earning assets
$
3,677,207
 
$
144,056
5.24%
$
2,984,447
 
$
100,847
4.52%
Allowance for loan and lease losses
(19,085
)
(12,715
)
All other assets
 
358,793
 
 
330,209
 
TOTAL ASSETS
$
4,016,915
 
$
3,301,941
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits
Interest checking
$
244,088
$
546
0.30%
$
185,409
$
87
0.06%
Money market accounts
478,607
2,352
0.66%
376,751
712
0.25%
Savings
457,179
308
0.09%
445,082
237
0.07%
Time deposits
 
895,502
 
 
9,008
1.34%
 
782,672
 
 
4,482
0.77%

Total interest-bearing deposits

2,075,376
12,214
0.79%
1,789,914
5,518
0.41%
Federal Home Loan Bank advances
367,098
4,441
1.62%
249,630
2,282
1.22%
Other borrowed funds
 
58,585
 
 
2,057
4.70%
 
68,803
 
 
2,286
4.44%
Total borrowings
 
425,683
 
 
6,498
2.04%
 
318,433
 
 
4,568
1.92%
Total interest-bearing liabilities
$
2,501,059
$
18,712
1.00%
$
2,108,347
$
10,086
0.64%
Non-interest bearing demand deposits
938,423
736,982
Other liabilities
42,257
41,393
Total stockholders’ equity
 
535,176
 
 
415,219
 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
4,016,915
 
$
3,301,941
 
Net interest spread(3)
4.24%
3.88%
Net interest income
$
125,344
$
90,761
Net interest margin(4)
4.56%
4.07%
 
Net loan accretion impact on margin
$
14,199
0.52%
$
6,347
0.28%

Net interest margin excluding loan accretion(6)

4.04%
3.79%
 
 
 
 
(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.
(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.
(6)
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.
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

 
 

As of or For the Three Months Ended

 

As of or For the Nine Months

Ended

(dollars in thousands, except per share data)

September 30,

2018

 
June 30,

2018

 
March 31,

2018

 
December 31,

2017

 
September 30,

2017

September 30,

2018

 
September 30,

2017

Net income (loss) and earnings per share excluding significant items

Reported Net Income (Loss)
$
14,536
$
2,768
$
6,768
$
(766
)
$
9,755
$
24,072
$
22,461
Significant items:

Incremental income tax benefit of state tax rate change

(4,790
)
(4,790
)

Incremental income tax (benefit) expense attributed to federal income tax reform

(724
)
7,154
(724
)

Impairment charges on assets held for sale

139
117
951
256
951
Merger-related expense
150
1,517
123
1,272
1,790
Core system conversion expense
213
9,009
9,222
Tax benefit on significant items
 
(112
)
 
(2,832
)
 
(34
)
 
(395
)
 
(386
)
 
(2,978
)
 
(386
)
Adjusted Net Income
$
14,926
 
$
10,579
 
$
6,133
 
$
7,265
 
$
5,530
 
$
31,638
 
$
18,236
 

Reported Diluted Earnings (Loss) per Share

$
0.39
$
0.08
$
0.22
$
(0.03
)
$
0.32
$
0.71
$
0.43
Significant items:

Incremental income tax benefit of state tax rate change

(0.16
)
(0.18
)

Incremental income tax (benefit) expense attributed to federal income tax reform

(0.02
)
0.24
(0.02
)

Impairment charges on assets held for sale

0.03
0.03
Merger-related expense
0.05
0.01
0.04
0.05
Core system conversion expense
0.01
0.28
0.28
Tax benefit on significant items
 
 
 
(0.09
)
 
 
 
(0.01
)
 
(0.01
)
 
(0.09
)
 
(0.01
)

Adjusted Diluted Earnings per Share

$
0.40
 
$
0.32
 
$
0.21
 
$
0.24
 
$
0.18
 
$
0.93
 
$
0.27
 
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

 
 
As of or For the Three Months Ended
 

As of or For the Nine Months

Ended

(dollars in thousands, except share and per share data, ratios annualized, where applicable)

September 30,

2018

 
June 30,

2018

 
March 31,

2018

 
December 31,

2017

 
September 30,

2017

September 30,

2018

 
September 30,

2017

Net interest margin:
Reported net interest margin
4.73
%
4.43
%
4.45
%
4.26
%
4.18
%
4.56
%
4.07
%

Effect of accretion income on acquired loans

(0.74
)%
(0.41
)%
(0.31
)%
(0.30
)%
(0.29
)%
(0.52
)%
(0.28
)%

Net interest margin excluding accretion

3.99
%
4.02
%
4.14
%
3.96
%
3.89
%
4.04
%
3.79
%
Total revenues:
Net interest income
$
52,593
$
39,056
$
33,695
$
32,151
$
31,412
$
125,344
$
90,761
Add: Non-interest income
11,143
14,502
11,428
12,639
11,918
37,073
37,419
Total revenues
$
63,736
$
53,558
$
45,123
$
44,790
$
43,330
$
162,417
$
128,180
Adjusted efficiency ratio:

Non-interest expense excluding amortization of intangible assets

$
36,058
$
44,640
$
31,152
$
29,591
$
30,296
$
111,850
$
86,858
Total revenues
63,736
53,558
45,123
44,790
43,330
162,417
128,180
Efficiency ratio
56.57
%
83.35
%
69.04
%
66.06
%
69.92
%
68.87
%
67.76
%
Less: significant adjusted items
502
10,643
123
1,272
951
11,268
951
Adjusted efficiency ratio
55.79
%
63.48
%
68.77
%
63.23
%
67.72
%
61.93
%
67.02
%

Adjusted non-interest expense to average assets:

Total average assets
$
4,809,939
$
3,863,184
$
3,362,071
$
3,303,673
$
3,307,186
$
4,016,915
$
3,301,941
Non-interest expense
37,956
45,770
31,919
30,358
31,065
115,645
89,165
Less: significant adjusted items
502
10,643
123
1,272
951
11,268
951

Adjusted non-interest expense to average assets

3.09
%
3.65
%
3.84
%
3.49
%
3.61
%
3.47
%
3.57
%

Adjusted return on average stockholders' equity:

Average stockholders' equity
$
625,621
$
518,547
$
459,535
$
463,301
$
458,442
$
535,176
$
415,219
Net income (loss)
14,536
2,768
6,768
(766
)
9,755
24,072
22,461
Less: significant adjusted items
390
7,811
(635
)
8,031
(4,225
)
7,566
(4,225
)

Adjusted return on average stockholders' equity

9.47
%
8.18
%
5.41
%
6.22
%
4.79
%
7.90
%
5.87
%

Adjusted return on average assets:

Total average assets
$
4,809,939
$
3,863,184
$
3,362,071
$
3,303,673
$
3,307,186
$
4,016,915
$
3,301,941
Net income (loss)
14,536
$
2,768
$
6,768
$
(766
)
$
9,755
$
24,072
$
22,461
Less: significant adjusted items
390
7,811
(635
)
8,031
(4,225
)
7,566
(4,225
)

Adjusted return on average assets

1.23
%
1.10
%
0.74
%
0.87
%
0.66
%
1.05
%
0.74
%

Non-interest income to total revenues:

Non-interest income
$
11,143
$
14,502
$
11,428
$
12,639
$
11,918
$
37,073
$
37,419
Total revenues
63,736
53,558
45,123
44,790
43,330
162,417
128,180

Non-interest income to total revenues

17.48
%
27.08
%
25.33
%
28.22
%
27.51
%
22.83
%
29.19
%

Pre-tax pre-provision net income:

Pre-tax income
$
19,938
$
3,832
$
8,089
$
11,085
$
8,365
$
31,859
$
29,709

Add: Provision for loan and lease losses

5,842
3,956
5,115
3,347
3,900
14,913
9,306
Pre-tax pre-provision net income
$
25,780
$
7,788
$
13,204
$
14,432
$
12,265
$
46,772
$
39,015
 

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

 
 
As of or For the Three Months Ended
 

As of or For the Nine Months

Ended

(dollars in thousands, except share and per share data, ratios annualized, where applicable)

September 30,

2018

 
June 30,

2018

 
March 31,

2018

 
December 31,

2017

 
September 30,

2017

September 30,

2018

 
September 30,

2017

Pre-tax pre-provision return on average assets:

Total average assets
$
4,809,939
$
3,863,184
$
3,362,071
$
3,303,673
$
3,307,186
$
4,016,915
$
3,301,941
Pre-tax pre-provision net income
25,780
7,788
13,204
14,432
12,265
46,772
39,015

Pre-tax pre-provision return on average assets

2.13
%
0.81
%
1.59
%
1.73
%
1.47
%
1.56
%
1.58
%

Adjusted pre-tax pre-provision return on average assets:

Total average assets
$
4,809,939
$
3,863,184
$
3,362,071
$
3,303,673
$
3,307,186
$
4,016,915
$
3,301,941
Pre-tax pre-provision net income
25,780
7,788
13,204
14,432
12,265
46,772
39,015
Less: significant adjusted items
502
10,643
123
1,272
951
11,268
951

Adjusted pre-tax pre-provision return on average assets

2.17
%
1.91
%
1.61
%
1.89
%
1.59
%
1.93
%
1.62
%
Tangible common equity:
Total stockholders' equity
$
629,861
$
616,406
$
462,936
$
458,578
$
459,533
$
629,861
$
459,533
Less: Preferred stock
10,438
10,438
10,438
10,438
10,438
10,438
10,438
Less: Goodwill
127,536
127,536
54,562
54,562
51,975
127,536
51,975

Less: Core deposit intangibles and other intangibles

35,248
37,139
15,991
16,756
17,522
35,248
17,522
Tangible common equity
456,639
441,293
381,945
376,822
379,598
456,639
379,598
Tangible assets:
Total assets
$
4,917,409
$
4,805,280
$
3,462,372
$
3,366,130
$
3,305,442
$
4,917,409
$
3,305,442
Less: Goodwill
127,536
127,536
54,562
54,562
51,975
127,536
51,975

Less: Core deposit intangibles and other intangibles

35,248
37,139
15,991
16,756
17,522
35,248
17,522
Tangible assets
4,754,625
4,640,605
3,391,819
3,294,812
3,235,945
4,754,625
3,235,945
Tangible book value per share:
Tangible common equity
$
456,639
$
441,293
$
381,945
$
376,822
$
379,598
$
456,639
$
379,598

Shares of common stock outstanding

36,279,600
36,218,955
29,404,048
29,317,298
29,305,400
36,279,600
29,305,400
Tangible book value per share
12.59
12.18
12.99
12.85
12.95
12.59
12.95

Tangible common equity to tangible assets:

Tangible common equity
$
456,639
$
441,293
$
381,945
$
376,822
$
379,598
$
456,639
$
379,598
Tangible assets
4,754,625
4,640,605
3,391,819
3,294,812
3,235,945
4,754,625
3,235,945

Tangible common equity to tangible assets

9.60
%
9.51
%
11.26
%
11.44
%
11.73
%
9.60
%
11.73
%

Tangible net income available to common stockholders:

Net income (loss attributable) to common stockholders

$
14,340
$
2,570
$
6,575
$
(962
)
$
9,560
$
23,485
$
11,380

Add: after-tax intangible asset amortization

1,369
815
553
553
555
2,738
1,665

Tangible net income available to common stockholders

15,709
3,385
7,128
(409
)
10,115
26,223
13,045

Return on average tangible common stockholders' equity:

Average tangible common stockholders' equity

$
451,203
$
406,492
$
378,118
$
383,674
$
378,059
$
412,206
$
324,158

Tangible net income available to common stockholders

15,709
3,385
7,128
(409
)
10,115
26,223
13,045

Return on average tangible common stockholders' equity

13.81
%
3.34
%
7.65
%
-0.42
%
10.61
%
8.51
%
5.38
%

Adjusted return on average tangible common stockholders' equity:

Average tangible common stockholders' equity

$
451,203
$
406,492
$
378,118
$
383,674
$
378,059
$
412,206
$
324,158
Less: significant adjusted items
390
7,811
(635
)
8,031
(4,225
)
7,566
(4,225
)

Adjusted return on average tangible common stockholders' equity

14.16
%
11.05
%
6.96
%
7.88
%
6.18
%
10.96
%
3.64
%

View source version on businesswire.com: https://www.businesswire.com/news/home/20181025006030/en/

Investors:
Allyson Pooley/Tony Rossi
Financial Profiles, Inc.
BYIR@bylinebank.com
or
Media:
Erin O’Neill
Director of Marketing
Byline Bank
773-475-2901
eoneill@bylinebank.com

Copyright Business Wire 2018
Stock Information

Company Name: Byline Bancorp Inc.
Stock Symbol: BY
Market: NYSE
Website: bylinebancorp.com

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