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Byline Bancorp (NYSE:BY) Q3 2025 Earnings Call October 24, 2025 10:00 AM ET Company ParticipantsAlberto Paracchini - PresidentTom Bell - CFOBrooks Rennie - Head of Investor RelationsRoberto Herencia - Chairman and CEOConference Call ParticipantsMatthew Renck - AnalystDavid Long - AnalystBrian Martin - AnalystBrandon Rud - AnalystAdam Kroll - AnalystAna Casanueva - AnalystOperatorGood morning and welcome to the Byline Bancorp third quarter 2025 earnings call. My name is Carly and I'll be the conference opera ...

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $37 million or $0.82 per diluted share on revenue of $116 million, reflecting a quarter-on-quarter revenue growth of 13.6% and EPS growth of 19% year-on-year [10][11] - Pre-tax, pre-provision income was $55 million, with a pre-tax, pre-provision ROA of 2.25%, ROA of 1.5%, and ROTC of 15.1%, indicating strong profitability metrics [10][11] - The net interest margin expanded by 9 basis points to 4.27%, supported by an improved deposit mix and higher asset yields [11][15] Business Line Data and Key Metrics Changes - Total loans grew by 6% linked quarter and 11% year-to-date, ending at $7.5 billion, with originations of $264 million driven by commercial banking and equipment leasing teams [11][13] - Non-interest income totaled $15.9 million, up 9.5% from the last quarter, primarily due to a $7 million gain on the sale of loans [16] - Non-interest expense increased to $60.5 million, reflecting higher salary and employee benefits, including $2 million in higher incentive compensation accruals [16][17] Market Data and Key Metrics Changes - Deposits totaled $7.8 billion, up 1% linked quarter and 7% year-to-date, with non-interest-bearing accounts increasing by $160 million or 9% linked quarter [11][14] - The company experienced stable demand for credit, with loan commitments growing and draw activity contributing to loan growth [11][13] Company Strategy and Development Direction - The company aims to build a preeminent commercial banking franchise in Chicago, focusing on expanding its commercial payments business and onboarding customers in 2026 [19][20] - The company remains open to disciplined M&A opportunities that align with its strategic goals, emphasizing capital flexibility and the ability to fund growth [7][36] Management's Comments on Operating Environment and Future Outlook - Management noted stable to improving credit quality despite macroeconomic uncertainties and geopolitical tensions, with vigilance over potential risks [7] - The company anticipates crossing the $10 billion asset threshold in Q1 2026, which will delay the impact of the Durbin amendment until 2027 [20][38] Other Important Information - The company was recognized with multiple awards, including the 2024 SBA 7A, 504, and Expert Lender of the Year awards, and ranked as one of Chicago's best workplaces [8] - The company refinanced $75 million in subordinated debt, benefiting from improved credit ratings and market demand [12] Q&A Session Summary Question: Discussion on margin and net interest income - Management discussed the assumptions behind the model and the impact of competitive rates on deposit resets [26][27] Question: Thoughts on M&A activity - Management expressed openness to M&A opportunities, emphasizing the importance of financial and strategic attractiveness [35][36] Question: Impact of government shutdown on SBA business - Management explained that while origination continues, the shutdown affects the ability to sell and settle loans, potentially delaying gain on sale income [43][44] Question: Insights on commercial payments business - Management provided details on the commercial payments business, focusing on ACH transactions and payroll processing, with expectations for growth in 2026 [67][70] Question: Clarification on NDFI exposure - Management clarified that NDFI exposure is around $221 million, primarily consisting of commercial-related transactions [81][82]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $37 million or $0.82 per diluted share on revenue of $116 million, reflecting a year-on-year revenue growth of 13.6% [13] - Profitability metrics remained strong with a pretax pre-provision ROA of 2.25%, ROA of 1.5%, and ROTCE of 15.1%, all above the cost of capital [13] - The net interest margin expanded by nine basis points to 4.27%, supported by an improved deposit mix and higher asset yields [13][21] Business Line Data and Key Metrics Changes - Total loans increased by 6% quarter-on-quarter and 11% year-to-date, reaching $7.5 billion, with loan originations of $264 million, up 25% year-on-year [14][17] - Noninterest income totaled $15.9 million, up 9.5% from the previous quarter, primarily due to a $7 million gain from loan sales [22] - Noninterest expense increased by 1.5% to $60.5 million, driven by higher salaries and employee benefits [23] Market Data and Key Metrics Changes - Total deposits were $7.8 billion, slightly up from the prior quarter, with non-interest bearing accounts increasing by $160 million or 9% linked quarter [19] - The company experienced a decline in time deposits due to lower brokered CDs and shifts to money market accounts [19] Company Strategy and Development Direction - The company aims to build a pre-M&A commercial banking franchise in Chicago and is focused on expanding its commercial payments business [28] - The company anticipates crossing the $10 billion asset threshold in Q1 2026, which will delay the impact of Durbin and higher insurance assessments until 2027 [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to continue executing for customers and delivering results for shareholders despite macroeconomic uncertainties [30] - The company remains vigilant over risks, including the federal government shutdown, which could impact SBA loan sales [30][51] Other Important Information - The company was recognized as one of Chicago's best workplaces and received the 2024 SBA 7504 Expert Lender of the Year award [9][10] - Capital levels continued to grow, with CET1 surpassing 12%, and tangible book value per share increased by 5% linked quarter [15][26] Q&A Session Summary Question: What are the assumptions built into the margin and net interest income? - Management indicated that they have been outperforming model assumptions due to competitive rates on deposits and improved analytical capabilities [34][36] Question: What are the thoughts on M&A activity given the recent pickup? - Management remains open to M&A opportunities that are financially and strategically attractive, focusing on transactions that deliver value for shareholders [44][45] Question: How has the government shutdown impacted the SBA business? - The company continues to originate SBA loans but cannot sell and settle loans during the shutdown, which may delay gain on sale income [50][51] Question: What is the expected impact of crossing the $10 billion asset threshold? - The estimated impact from Durbin is between $4.5 million to $5 million, effective in 2027 [46][48] Question: Can you provide insights on the commercial payments business? - The commercial payments business focuses on high-volume ACH transactions and payroll processing, with expectations to see growth in 2026 [71][73]

Byline Bancorp (NYSE:BY) Q3 2025 Earnings Call October 24, 2025 10:00 AM ET Speaker5Good morning and welcome to the Byline Bancorp third quarter 2025 earnings call. My name is Carly and I'll be the conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer period. If you'd like to ask a question during that period, simply press the star button followed by one on your telephone keypad. If you'd like to withdraw ...

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3Q25 Earnings Presentation Forward-Looking Statements 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'', ''sh ...

Core Insights - Byline Bancorp reported a revenue of $115.74 million for the quarter ended September 2025, reflecting a year-over-year increase of 13.6% [1] - The company's EPS was $0.83, up from $0.70 in the same quarter last year, exceeding the consensus estimate of $0.71 by 16.9% [1] Financial Performance Metrics - Efficiency Ratio stood at 51%, slightly better than the average estimate of 51.3% from three analysts [4] - Net Interest Margin was reported at 4.3%, surpassing the estimated 4.1% [4] - Average Balance of Total Interest-Earning Assets was $9.29 billion, close to the average estimate of $9.34 billion [4] - Net charge-offs of loans and leases were at 0.4%, matching the average estimate [4] - Net Interest Income reached $99.87 million, exceeding the average estimate of $95.99 million [4] - Net gains on sales of loans were $6.98 million, higher than the average estimate of $5.26 million [4] - Total Non-Interest Income was reported at $15.86 million, above the average estimate of $14.98 million [4] - Fees and service charges on deposits amounted to $2.74 million, slightly above the estimated $2.72 million [4] - Wealth management and trust income was $1.37 million, exceeding the average estimate of $1.08 million [4] - ATM and interchange fees were reported at $1.02 million, below the estimated $1.18 million [4] Stock Performance - Byline Bancorp's shares have returned -4.7% over the past month, contrasting with the Zacks S&P 500 composite's +0.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Financial Performance - Third quarter net income was $37.2 million, with diluted earnings per share of $0.82, reflecting a strong performance compared to $30.1 million in the previous quarter[1] - Net interest income increased to $99.9 million, up $3.9 million or 4.1% from the second quarter of 2025, driven by growth in the loan and lease portfolio[4] - Non-interest income reached $15.9 million, an increase of $1.4 million or 9.5% from the previous quarter, primarily due to higher net gains on sales of loans[8] - Total revenue for Q3 2025 reached $115,735,000, representing a 4.1% increase from $110,453,000 in Q2 2025 and a 13.6% increase from $101,840,000 in Q3 2024[41] - Reported net income for Q3 2025 was $37,200,000, an increase of 23.4% from $30,082,000 in Q2 2025 and 22.7% from $30,328,000 in Q3 2024[40] Asset and Deposit Growth - Total deposits rose to $7.8 billion, an increase of $17.7 million or 0.2% from the previous quarter, mainly due to increases in non-interest-bearing demand accounts[16] - Total assets were $9.8 billion, reflecting an increase of $92.2 million or 0.9% compared to the previous quarter, driven by growth in net loans and leases[13] - Total stockholders' equity increased to $1.2 billion, up $45.3 million or 3.8% from the previous quarter, primarily due to retained earnings from net income[18] - Total deposits slightly increased to $7,828,197 thousand, a 0.2% rise from $7,810,479 thousand in June 2025, and a 4.4% increase from $7,497,887 thousand in September 2024[38] Credit Quality and Losses - The provision for credit losses decreased to $5.3 million, down $6.6 million from the previous quarter, attributed to lower non-performing loans[7] - Non-performing loans and leases to total loans and leases held for investment decreased to 0.85%, down from 1.02% in the previous year, a reduction of 16.67%[32] - The allowance for credit losses on loans and leases was $105,717 thousand as of September 30, 2025, slightly down from $107,727 thousand in the previous quarter[28] - The net charge-offs for loans and leases were $7,107 thousand for the three months ended September 30, 2025, compared to $7,656 thousand in June 2025[37] Efficiency and Ratios - The efficiency ratio improved to 51.00%, a decrease of 161 basis points from the previous quarter, driven by increased total revenues[10] - Return on average stockholders' equity rose to 12.21%, compared to 11.39% a year ago, indicating an increase of 7.22%[32] - The adjusted return on average assets for Q3 2025 was 1.54%, compared to 1.41% in Q2 2025 and 1.30% in Q3 2024[42] - Common equity tier 1 capital ratio increased to 12.15%, compared to 11.35% a year ago, reflecting a 7.06% improvement[32] Earnings and Shareholder Value - Basic earnings per share rose to $0.82 for the third quarter of 2025, compared to $0.66 in the previous quarter, marking a 24.2% increase[30] - Adjusted diluted earnings per share rose to $0.83 in Q3 2025, up 10.7% from $0.75 in Q2 2025 and 18.6% from $0.70 in Q3 2024[40] - Cash dividends per common share remained stable at $0.10, consistent with the previous quarter and up from $0.09 a year ago[32] - Tangible book value per common share increased to $22.58, up 4.7% from the previous quarter[1] Interest Income and Margin - The net interest margin expanded to 4.27%, an increase of nine basis points compared to the previous quarter[5] - Net interest income for the quarter was $99,871 thousand, up from $87,455 thousand in the same quarter last year, representing an increase of 14.26%[35] - The average yield on interest-earning assets was 6.36% for the quarter ended September 30, 2025, compared to 6.31% for the previous quarter and 6.51% for the same quarter last year[35] - Total interest-earning assets increased to $9,286.27 million for the three months ended September 30, 2025, compared to $8,961.65 million for the same period in 2024, reflecting a growth of 3.62%[35]

Core Insights - Byline Bank has been recognized for the second consecutive year as one of Chicago's Best Workplaces, ranking 5th among large companies with over 250 employees and 25th overall in the city [1][2] Company Overview - Byline Bank is headquartered in Chicago and is a subsidiary of Byline Bancorp, Inc. (NYSE:BY), offering full-service commercial banking to small- and medium-sized businesses, financial sponsors, and consumers [5] - The bank has approximately $9.7 billion in assets and operates 45 branch locations in the Chicago and Milwaukee metropolitan areas [5] - Byline Bank provides a wide range of banking products and services, including small-ticket equipment leasing solutions, and is recognized as one of the top U.S. Small Business Administration (SBA) lenders by volume for FY2024 [5] Recognition Process - The recognition as one of Chicago's Best Workplaces involves a two-part survey process: the first part evaluates workplace policies and practices, accounting for approximately 25% of the total evaluation [3] - The second part consists of an employee survey measuring the employee experience, which contributes about 75% to the overall evaluation [4] - The final rankings are determined by the combined scores from both parts of the survey, managed by Best Companies Group [4]