Core Viewpoint - Byline Bancorp (BY) has received an upgrade to Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings outlook, which is closely correlated with stock price movements [4][6]. - Rising earnings estimates for Byline Bancorp suggest an improvement in the company's underlying business, potentially leading to higher stock prices [5][10]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7][9]. - Byline Bancorp's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Byline Bancorp is expected to earn $2.68 per share, reflecting a -2.9% change from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Byline Bancorp has increased by 2.8%, indicating positive revisions from analysts [8].

Core Insights - Byline Bancorp, a regional bank based in Chicago, has expanded its fintech banking capabilities through new hires and services, indicating growth in this division [1] Company Developments - The bank's recent announcement highlights its commitment to enhancing its fintech banking operations, which are already experiencing rapid growth [1] Market Context - The financial market is characterized by efficiency, with most stocks reflecting their true value, suggesting that opportunities may exist in less-followed stocks or those mispriced in the market [1]

Core Insights - Byline Bank is expanding its Payments and Fintech Banking division, highlighting its investment in embedded finance and digital payment solutions [2][3] Group 1: Leadership and Team Expansion - Byline has appointed industry veterans David Prochnow and Joe Wolsfeld to lead the fintech banking group, who previously managed a $2 billion deposit portfolio at Fifth Third Bank [3] - The new team includes experienced professionals such as Paul Garcia, Ashley Kveton, and Joe Tarkington, bringing extensive expertise in embedded payment platforms and risk management [6][5] Group 2: Strategic Focus and Client Engagement - The bank's strategy emphasizes direct oversight and regulatory compliance, allowing fintech clients to develop custom payment solutions confidently [3][4] - Byline aims to fill the gap in the market for banks that engage directly with fintech customers, focusing on building strong relationships [5][7] Group 3: Service Offerings - The division will provide third-party payment processing, issuing and deposit sponsorship banking, and network sponsorship banking for various payment processors [6][7] - Byline's offerings are designed to streamline execution without relying on outside intermediaries, aligning with fintech clients' preferences for direct collaboration [7]

Financial Performance - Consolidated net income for the three months ended March 31, 2025, was $28.2 million, a decrease of $2.2 million compared to $30.4 million for the same period in 2024[187]. - Basic earnings per common share decreased to $0.65 for Q1 2025 from $0.70 in Q1 2024, while diluted earnings per common share also fell to $0.64 from $0.70[210]. - Reported net income for Q1 2025 was $28,248, down from $30,440 in Q1 2024, reflecting a decrease of approximately 7.2%[319]. - Adjusted net income for Q1 2025 was $28,751, compared to $30,582 in Q1 2024, indicating a decline of about 6.0%[319]. - Total revenues for Q1 2025 reached $103,080, an increase from $101,014 in Q1 2024, representing a growth of approximately 2.0%[321]. Income and Expenses - Net interest income increased by $2.7 million, primarily due to lower interest expense on deposits and other borrowings[187]. - Non-interest expenses increased by $2.6 million, primarily due to a $2.3 million rise in salaries and employee benefits[187]. - Non-interest income for Q1 2025 was $14,864, down from $15,473 in Q1 2024, a decrease of about 3.9%[322]. - Total non-interest expense increased by $2.6 million, or 4.9%, to $56.4 million for the three months ended March 31, 2025, primarily due to higher salaries and employee benefits[234]. Asset and Liability Management - Total assets as of March 31, 2025, were $9.6 billion, with total gross loans and leases outstanding at $7.0 billion and total deposits at $7.6 billion[190]. - Total liabilities increased by $48.6 million, or 0.6%, to $8.5 billion at March 31, 2025, with total deposits rising by $94.7 million, or 1.3%[245]. - Securities available-for-sale increased by $122.4 million, or 8.6%, from $1.4 billion at December 31, 2024, to $1.5 billion at March 31, 2025[247]. Credit Quality - The provision for credit losses increased by $2.5 million, attributed to growth in the loan and lease portfolio and a larger allowance for government guaranteed loans[187]. - Non-performing loans and leases to total loans and leases decreased to 0.76% from 1.00% year-over-year, indicating improved asset quality[210]. - Total non-performing loans and leases were $53.6 million at March 31, 2025, down from $62.1 million at December 31, 2024, representing a reduction of approximately 13.5%[277]. - The allowance for credit losses on loans and leases was 187.28% of non-performing loans and leases as of March 31, 2025, compared to 157.85% at December 31, 2024[277]. Capital and Liquidity - Stockholders' equity increased by $39.6 million or 3.6% to $1.1 billion as of March 31, 2025, primarily due to retained earnings from net income[298]. - Byline Bank exceeded all applicable regulatory capital requirements and was considered "well-capitalized" as of March 31, 2025[301]. - The Company expects cash and liquidity resources to be sufficient to meet liquidity and capital requirements for at least the next twelve months[297]. - The Company had $550.0 million of FHLB advances outstanding with maturities ranging from April 2025 to June 2025[284]. Loan Portfolio - Total loans and leases increased to $7.0 billion as of March 31, 2025, up by $119.0 million or 1.7% from $6.9 billion at December 31, 2024[254]. - Commercial real estate loans totaled $2.4 billion, representing 33.8% of the total loan and lease portfolio as of March 31, 2025, stable compared to 34.1% at December 31, 2024[257]. - The loan portfolio included $431.7 million of unguaranteed 7(a) SBA and USDA loans, with the top three industries being retail trade (19.9%), accommodation and food services (13.6%), and manufacturing (9.3%) as of March 31, 2025[255]. Interest Rate Risk Management - The company evaluates interest rate risk using net interest income (NII) simulations and economic value of equity (EVE) simulations, which provide estimates based on various assumptions[330]. - The company manages interest rate risk by adjusting the interest rates and tenors associated with its borrowings and investment portfolios[327]. - In a +300 basis point change in interest rates, net interest income is estimated to increase by 8.4% for the year ending March 31, 2026, while the economic value of equity (EVE) is projected to decrease by 15.5%[334].

Core Viewpoint - Byline Bancorp (BY) shares have increased by 3% recently, closing at $25.76, with analysts suggesting a potential upside of 25.8% based on a mean price target of $32.40 [1][11]. Price Targets and Analyst Estimates - The mean estimate for BY's price comprises five short-term targets with a standard deviation of $2.30, indicating a range of estimates from a low of $29 (12.6% increase) to a high of $34 (32% increase) [2][11]. - A low standard deviation suggests a strong agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [9]. Earnings Estimates and Analyst Sentiment - Analysts are optimistic about BY's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has shown a strong correlation with near-term stock price movements [4][11]. - The Zacks Consensus Estimate for the current year has risen by 1.3% over the past month, with two estimates increasing and no negative revisions [12]. Zacks Rank and Investment Potential - BY holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting a strong potential upside in the near term [13].

Financial Data and Key Metrics Changes - The company reported net income of $28.2 million or $0.64 per diluted share, with total revenue at $103 million, down slightly from the prior quarter but up 2% year-on-year [27][28] - Pre-tax pre-provision income was $47.3 million, with a pre-tax pre-provision ROA of 209 basis points, marking the 10th consecutive quarter above 200 basis points [28][31] - Net interest income was $88.2 million, flat from the prior quarter, with a net interest margin (NIM) of 407 basis points, up 6 basis points from last quarter [28][37] Business Line Data and Key Metrics Changes - Total loans increased to $7 billion, up 8% annualized, with strong origination activity of $310 million, primarily driven by commercial banking and leasing [33][34] - Total deposits rose to $7.6 billion, up 5.1% annualized, with a shift in deposit mix from time to money market accounts [35] - Non-interest income totaled $14.9 million, lower than last quarter due to seasonality and lower gains from the SBA business [39] Market Data and Key Metrics Changes - The company experienced a decline in deposit costs by 26 basis points, driven by a better deposit mix [30] - Asset quality improved, with non-performing loans decreasing by 14 basis points to 76 basis points as of quarter end [31][42] - The allowance for credit losses remained strong at 1.43% of total loans, with credit costs at $9.2 million for the quarter [32][43] Company Strategy and Development Direction - The company aims to become the preeminent commercial bank in Chicago, with aspirations to cross the $10 billion asset mark [15][47] - Management emphasized a disciplined risk management approach while navigating through heightened uncertainty and volatility in the market [22][24] - The company is focused on organic growth and potential M&A opportunities, despite market disruptions [66][69] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious sentiment among clients regarding capital expenditures and new investments due to evolving trade policies and economic uncertainty [22][23] - The company remains optimistic about its business model's resilience and its ability to support clients through the current environment [24][25] - Management expressed confidence in their capital planning and priorities, emphasizing growth support as the primary focus [14] Other Important Information - The company successfully integrated First Security, completing the transaction and systems conversion within 207 days [25][26] - Kroll Bond Rating Agency upgraded the company's debt rating, highlighting its financial strength and sound risk management practices [45][46] Q&A Session Summary Question: Current loan activity and organic growth outlook - Management reported strong demand for credit with $310 million in gross origination for the quarter, maintaining a mid-single-digit growth outlook for loans [55][59] Question: Impact of SBA underwriting changes - Management welcomed tighter standards in SBA underwriting, stating their own standards remained consistent and expressing optimism about long-term benefits [60][62][65] Question: M&A landscape and acquisition opportunities - Conversations regarding potential acquisitions are ongoing, with management optimistic about the fundamental reasons for M&A remaining intact despite market volatility [66][69] Question: Credit quality and reserve levels - Management noted no significant themes driving the increase in criticized and classified loans, emphasizing the importance of trend lines [80][84] - The reserve levels are calibrated based on economic forecasts, with potential adjustments depending on economic conditions [86][88] Question: Pre-provisioned earnings power and risks - Management highlighted the importance of managing expenses, net interest income, and non-interest income to maintain pre-tax pre-provision ROA above 2% [91][95] Question: Sponsor finance portfolio and approach - The company has a $700 million sponsor finance portfolio, focusing on lower middle-market companies with conservative leverage [98][100] Question: SBA gain on sales outlook - Management expects SBA gain on sales to average around $5 million per quarter, with current premiums close to 10% [111] Question: Integration of First Security and future expenses - Management indicated that the first clean quarter from the First Security integration would likely be the third quarter, with a focus on providing clarity on expenses [163][168]

Financial Data and Key Metrics Changes - The company reported net income of $28.2 million or $0.64 per diluted share, with total revenue at $103 million, down slightly from the prior quarter but up 2% year on year [20][21] - Net interest income was $88.2 million, flat for the quarter, with a net interest margin (NIM) of 4.07%, up six basis points from the last quarter [20][21][28] - Total loans increased by $137 million or 8% annualized, standing at $7 billion, with strong origination activity of $310 million [24][26] - Total deposits increased to $7.6 billion, up 5.1% annualized from the prior quarter [26] Business Line Data and Key Metrics Changes - The company experienced excellent growth in both loans and deposits, with loan originations driven primarily by commercial banking and leasing [21][24] - Non-interest income totaled $14.9 million, lower than the previous quarter due to seasonality and lower gains on sales from the SBA business [29] - Non-interest expenses stood at $56.4 million, down 1.7% from the prior quarter, primarily due to lower salaries and benefits [30] Market Data and Key Metrics Changes - The company noted a shift in deposit mix from time deposits to money market accounts, with non-interest bearing deposits accounting for 23% of total deposits [26] - The company’s credit quality improved, with net charge-offs declining by 14.7% to $6.6 million and non-performing loans decreasing to 76 basis points [31] Company Strategy and Development Direction - The company aims to become the preeminent commercial bank in Chicago, with aspirations to cross the $10 billion asset mark [11][35] - The management emphasized a disciplined risk management approach while navigating through heightened uncertainty and volatility in the market [17] - The company is focused on organic growth and potential M&A opportunities, despite market disruptions [46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business model's resilience despite uncertainties in the economic environment, with robust capital and solid liquidity [18] - The company anticipates a cautious approach from clients regarding capital expenditures and new investments due to evolving trade policies [17] - Management remains confident in achieving mid-single-digit loan growth for the year based on current pipelines and activity [41] Other Important Information - The company received a credit rating upgrade from Kroll, highlighting its financial strength and sound risk management practices [8][32] - The integration of the First Security transaction was completed successfully, setting the company up for a full quarter of results in the next reporting period [19] Q&A Session Summary Question: Loan activity and organic growth outlook - Management noted strong credit demand and business development activity in Q1, with a healthy loan pipeline and guidance for mid-single-digit growth for the year [38][41] Question: Impact of SBA underwriting changes - Management welcomed tighter standards in SBA underwriting, stating their own standards remained consistent and could benefit them in the long run [42][44] Question: M&A landscape and acquisition opportunities - Conversations regarding potential acquisitions are ongoing, with management optimistic about the fundamental reasons for M&A remaining intact despite market volatility [46] Question: Credit quality and reserve levels - Management indicated that criticized and classified levels increased slightly but did not reflect any significant themes across portfolios [52][53] - The reserve levels are calibrated based on economic forecasts, with potential adjustments if the economic outlook deteriorates [55] Question: Pre-provision earnings power and risks - Management highlighted the importance of managing expenses, net interest income, and non-interest income to maintain a stable pre-provision ROA above 2% [58][64] Question: Sponsored finance portfolio approach - The company has a strong track record in its sponsored finance portfolio, focusing on lower middle market companies with conservative leverage [66][70] Question: SBA gain on sales outlook - Management expects average gains on sales to remain around $5 million per quarter, with current premiums close to 10% [74] Question: Securities portfolio growth outlook - Management does not anticipate significant growth in the securities portfolio, expecting it to remain flat or potentially decrease [78]

Financial Data and Key Metrics Changes - The company reported net income of $28.2 million or $0.64 per diluted share, with total revenue at $103 million, down marginally from the prior quarter but up 2% year on year [20][21] - Net interest income was $88.2 million, flat for the quarter, with a net interest margin (NIM) of 4.07%, up six basis points from last quarter [20][21][28] - Total loans increased by $137 million or 8% annualized, standing at $7 billion, with strong origination activity of $310 million [24][26] - Total deposits increased to $7.6 billion, up 5.1% annualized from the prior quarter [26] Business Line Data and Key Metrics Changes - The company experienced excellent growth in both loans and deposits, with loan originations driven primarily by commercial banking and leasing [21][24] - Non-interest income totaled $14.9 million in the first quarter, lower than last quarter due to seasonality and lower gains on sale from the SBA business [29] - Non-interest expense stood at $56.4 million, down 1.7% from the prior quarter, primarily due to lower salaries and benefits [30] Market Data and Key Metrics Changes - The company noted a shift in deposit mix from time deposits to money market accounts, with non-interest bearing deposits accounting for 23% of total deposits [26] - The company’s credit quality improved, with net charge-offs declining by 14.7% to $6.6 million compared to the previous quarter [31] Company Strategy and Development Direction - The company aims to become the preeminent commercial bank in Chicago, with aspirations to cross the $10 billion asset mark [11][36] - The management emphasized a focus on disciplined risk management and serving clients through economic cycles [17][18] - The company is optimistic about growth opportunities despite market uncertainties, particularly in the context of M&A activities [48] Management's Comments on Operating Environment and Future Outlook - Management highlighted a mixed macroeconomic picture with heightened uncertainty and volatility, leading clients to adopt a wait-and-see approach [16][17] - The company remains confident in its business model's resilience, supported by robust capital and solid liquidity [18] - Management expressed optimism about advancing its market position and delivering value to shareholders despite economic challenges [37] Other Important Information - The company’s credit ratings were upgraded by Kroll, marking it as the only bank in its industry to receive an upgrade in the past twelve months [8] - The integration of the First Security transaction was completed successfully, setting the company up for a full quarter of results in the second quarter [19] Q&A Session Summary Question: What is the current activity in loan committees given the uncertainty? - Management noted that credit demand was good in the first quarter, with strong business development activity reflected in gross origination numbers of $310 million [39][40] Question: How are changes in the SBA complex impacting future deal flow? - Management welcomed tighter underwriting standards, stating that their own standards have remained consistent and that long-term, this could be beneficial [44][46] Question: Are acquisition opportunities hindered by market disruptions? - Conversations regarding acquisitions are ongoing, with management optimistic about the fundamental reasons for M&A remaining intact despite market volatility [48] Question: Can you provide an update on SBA gain on sales going forward? - Management indicated that the average gain on sales is expected to remain around $5 million per quarter [74] Question: What are the expectations for net interest income given potential Fed rate cuts? - Management provided guidance for net interest income in the range of $87 million to $89 million for the second quarter, excluding the impact of the acquisition [29][100]

Core Insights - Byline Bancorp reported quarterly earnings of $0.65 per share, exceeding the Zacks Consensus Estimate of $0.62 per share, but down from $0.70 per share a year ago, representing an earnings surprise of 4.84% [1] - The company achieved revenues of $103.08 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.06% and up from $101.01 million year-over-year [2] - Byline Bancorp has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The earnings surprise for the previous quarter was 15%, with actual earnings of $0.69 per share compared to an expected $0.60 [1] - The current consensus EPS estimate for the upcoming quarter is $0.66, with projected revenues of $107.3 million, and for the current fiscal year, the EPS estimate is $2.62 on revenues of $425.25 million [7] Market Position - Byline Bancorp shares have declined approximately 12.6% since the beginning of the year, compared to a decline of 8.6% for the S&P 500 [3] - The Zacks Industry Rank for Banks - Northeast is in the top 22% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The estimate revisions trend for Byline Bancorp is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [6] - The performance of Byline Bancorp's stock may be influenced by management's commentary on the earnings call and the overall industry outlook [4][5]

Chicago, IL, April 24, 2025 – Byline Bancorp, Inc. (NYSE: BY), today reported: | | | | At or for the quarter | | First Quarter Highlights | | --- | --- | --- | --- | --- | --- | | | | 1Q25 | 4Q24 | 1Q24 | (compared to 4Q24 unless specified) | | Financial Results ($ in thousands) | | | | | (1) • PTPP ROAA of 2.06% , 10th | | | | | | | consecutive | | Net interest income | $ | 88,216 $ | 88,524 $ | 85,541 | quarter greater than 2.00% | | Non-interest income | | 14,864 | 16,149 | 15,473 | | | (1) Total revenue ...