Byline Bancorp, Inc. (NYSE:BY) Q2 2023 Earnings Conference Call July 28, 2023 10:00 AM ET Company Participants Brooks Rennie - Head, IR Alberto Paracchini - President Roberto Herencia - Chairman, CEO Thomas Bell - CFO and Treasurer Mark Fucinato - Chief Credit Officer Conference Call Participants Nathan Race - Piper Sandler Ben Gerlinger - Hovde Group Terry McEvoy - Stephens Brian Martin - Janney Montgomery Scott Damon DelMonte - KBW Operator Good morning, and welcome to the Byline Bancorp Second Quarter 20 ...

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures 73 • "Total revenue" is the combination of 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. • "Tangible book value per common 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 outstandin ...

Byline Bancorp, Inc. (NYSE:BY) Q1 2023 Results Conference Call April 28, 2023 10:00 AM ET Company Participants Brooks Rennie - Head, IR Alberto Paracchini - President Roberto Herencia - Chairman, CEO Thomas Bell - CFO, Treasurer Mark Fucinato - Chief Credit Officer Conference Call Participants Ben Gerlinger - Hovde Group Brian Martin - Janney Damon DelMonte - KBW Nate Race - Piper Sandler Terry McEvoy - Stephens Operator Good morning, and welcome to Byline Bancorp First Quarter 2023 Earnings Call. My name ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) The company is a bank holding company pursuing growth via organic expansion, acquisitions, and specialized lending services Consolidated Financial Highlights (as of December 31, 2022) | Metric | Value (USD) | | :--- | :--- | | Total Assets | $7.4 billion | | Total Gross Loans and Leases | $5.5 billion | | Total Deposits | $5.7 billion | | Total Stockholders' Equity | $765.8 million | - The company's strategic growth plan involves both organic expansion and acquisitions, with a **significant pending acquisition of Inland Bancorp, Inc**[11](index=11&type=chunk)[17](index=17&type=chunk) - Byline Bank is a prominent U.S. government guaranteed lender, ranked as the **fifth most active SBA loan originator in the U.S.** for fiscal year 2022[21](index=21&type=chunk)[73](index=73&type=chunk) - The company operates as a **single reportable segment**, with performance evaluated on a consolidated basis[14](index=14&type=chunk)[137](index=137&type=chunk) - Human capital management is a key focus, with initiatives in diversity, equity, and inclusion (DEI) and a **minimum starting wage of $18/hour**[28](index=28&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk) - The company is subject to extensive regulation by the **Federal Reserve Board (FRB), FDIC, and IDFPR**[51](index=51&type=chunk)[52](index=52&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks including credit and interest rate fluctuations, liquidity, operational challenges, and cybersecurity threats - The company's business is highly dependent on managing credit risk, as underestimating the **allowance for credit losses**, a risk amplified by the CECL standard, could materially affect financial results[300](index=300&type=chunk)[314](index=314&type=chunk) - **Fluctuations in interest rates** pose a significant risk to net interest income, and the company is managing the transition from LIBOR to alternative rates like SOFR[293](index=293&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) - Liquidity risk is a key concern, as the company relies heavily on **customer deposits for funding** and dividends from its bank subsidiary[319](index=319&type=chunk)[321](index=321&type=chunk)[367](index=367&type=chunk) - The business has significant exposure to real estate markets, particularly in the **Chicago metropolitan area**, where a large portion of its loan portfolio is secured[312](index=312&type=chunk)[344](index=344&type=chunk) - **Cybersecurity threats** and reliance on third-party technology systems present major operational risks that could lead to financial loss and reputational damage[313](index=313&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - The government guaranteed lending program is vital to the business and dependent on the U.S. federal government; changes to the **SBA program** could materially harm financial results[327](index=327&type=chunk)[328](index=328&type=chunk)[348](index=348&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments from the SEC - There are **no unresolved staff comments** as of the report date[383](index=383&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) The company operates 38 branches, primarily in the Chicago area, with a mix of owned and leased properties - The company's corporate headquarters is located at **180 North LaSalle Street, Suite 300, Chicago, IL 60601**[372](index=372&type=chunk) - The network consists of **38 branch offices**, with 37 in the Chicago metropolitan area and one in Wisconsin; ten properties are leased and the rest are owned[372](index=372&type=chunk)[401](index=401&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) The company is not party to any legal proceedings expected to have a material adverse effect on its business - The company is not currently a party to any legal proceedings that are expected to have a **material adverse effect** on its business or financial condition[373](index=373&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[373](index=373&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, it paid quarterly dividends in 2022, and manages share repurchases via authorized programs - The company's common stock is listed on the New York Stock Exchange under the ticker symbol **"BY"**[385](index=385&type=chunk) - In 2022, the company paid a quarterly cash dividend of **$0.09 per common share**[387](index=387&type=chunk) - A stock repurchase program expired on December 31, 2022, after repurchasing **689,068 shares for $17.3 million** in 2022; a new program for up to 1,250,000 shares is effective for 2023[388](index=388&type=chunk) Stock Performance Comparison (Cumulative Total Return) | Index | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Byline Bancorp, Inc. | $100.00 | $72.53 | $85.33 | $68.07 | $122.05 | $104.05 | | Russel 2000 | $100.00 | $88.99 | $111.70 | $134.00 | $153.85 | $122.41 | | S&P U.S. Small Cap Bank | $100.00 | $83.44 | $104.69 | $95.08 | $132.36 | $116.69 | | KRX | $100.00 | $80.63 | $97.07 | $85.33 | $113.65 | $102.90 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income declined in 2022 due to higher credit loss provisions, despite growth in net interest income, assets, and deposits Key Performance Indicators (2022 vs. 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $88.0 million | $92.8 million | | Diluted EPS | $2.34 | $2.40 | | Net Interest Income | $265.3 million | $236.4 million | | Provision for Credit Losses | $23.9 million | $0.97 million | | Non-interest Income | $57.3 million | $74.3 million | | Return on Average Assets | 1.25% | 1.40% | | Return on Average Equity | 11.33% | 11.31% | - The company adopted the **CECL accounting standard** on December 31, 2022, resulting in a $12.2 million cumulative effective adjustment to the allowance for credit losses[314](index=314&type=chunk)[573](index=573&type=chunk) - **Net interest margin increased by 16 basis points to 4.00%** in 2022, driven by higher yields on interest-earning assets[436](index=436&type=chunk) - **Total assets grew by 10.0% to $7.4 billion**, primarily due to a $884.1 million (19.5%) increase in the loan and lease portfolio[473](index=473&type=chunk) - The **allowance for credit losses to total loans increased to 1.51%** at year-end 2022, reflecting loan growth and increased economic uncertainty[85](index=85&type=chunk)[449](index=449&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, which is actively managed using simulation models and derivatives Net Interest Income Sensitivity to Immediate Rate Shifts (Year 1) | Rate Change (basis points) | % Change in NII | Dollar Amount (in thousands) | | :--- | :--- | :--- | | +300 | 20.0% | $394,141 | | +200 | 13.7% | $373,466 | | +100 | 6.9% | $350,860 | | -100 | (5.1)% | $311,543 | | -200 | (13.4)% | $284,510 | | -300 | (22.8)% | $253,536 | - The company's primary market risk is **interest rate risk**, managed by the Board of Directors and management's asset liability committees[506](index=506&type=chunk) - As of December 31, 2022, the company had an outstanding notional amount of **$1.1 billion in interest rate derivatives** to manage interest rate exposure[506](index=506&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes audited financial statements with an unqualified opinion and notes the adoption of CECL as a Critical Audit Matter - The independent auditor, Moss Adams LLP, issued an **unqualified opinion** on the consolidated financial statements and internal controls as of December 31, 2022[513](index=513&type=chunk) - The auditor identified the adoption of the **CECL standard** and the related estimation of the allowance for credit losses as a **Critical Audit Matter**[101](index=101&type=chunk)[102](index=102&type=chunk) Consolidated Statements of Financial Condition (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total loans and leases, net | $5,339,334 | $4,482,116 | | Securities | $1,185,125 | $1,469,005 | | Goodwill | $148,353 | $148,353 | | **Total Assets** | **$7,362,941** | **$6,696,172** | | **Liabilities & Equity** | | | | Total deposits | $5,695,121 | $5,155,047 | | Borrowings | $751,428 | $630,146 | | **Total Liabilities** | **$6,597,125** | **$5,859,790** | | **Total Stockholders' Equity** | **$765,816** | **$836,382** | Consolidated Statements of Operations (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Interest Income | $265,330 | $236,387 | $214,978 | | Provision for Credit Losses | $23,879 | $973 | $56,677 | | Non-interest Income | $57,314 | $74,253 | $62,060 | | Non-interest Expense | $184,082 | $185,455 | $168,694 | | **Net Income** | **$87,954** | **$92,785** | **$37,467** | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=131&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting or financial disclosure matters - There were **no disagreements with accountants** on accounting and financial disclosure[542](index=542&type=chunk)[789](index=789&type=chunk) [Controls and Procedures](index=131&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal controls over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2022[557](index=557&type=chunk) - Based on the COSO framework, management determined that the company maintained **effective internal control over financial reporting** as of December 31, 2022[790](index=790&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fourth quarter of 2022[558](index=558&type=chunk) [Other Information](index=131&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[558](index=558&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=131&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, officers, and governance is incorporated by reference from the 2023 Proxy Statement - Information regarding directors, executive officers, and corporate governance is **incorporated by reference** from the company's upcoming 2023 Proxy Statement[746](index=746&type=chunk) [Executive Compensation](index=132&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the company's 2023 Proxy Statement - Information regarding executive compensation is **incorporated by reference** from the company's upcoming 2023 Proxy Statement[779](index=779&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2023 Proxy Statement - Information regarding security ownership is **incorporated by reference** from the company's upcoming 2023 Proxy Statement[546](index=546&type=chunk) Equity Compensation Plan Information as of December 31, 2022 | Plan Category | Securities to be issued upon exercise/vesting | Weighted-average exercise price of options | Securities remaining for future issuance | | :--- | :--- | :--- | :--- | | Plans approved by stockholders | 581,337 | N/A | 416,065 | | Plans not approved by stockholders | 930,852 | $11.40 (approx.) | — | | **Total** | **1,512,189** | | **416,065** | [Certain Relationships and Related Transactions, and Director Independence](index=133&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details on related party transactions and director independence are incorporated by reference from the 2023 Proxy Statement - Information regarding related transactions and director independence is **incorporated by reference** from the company's upcoming 2023 Proxy Statement[547](index=547&type=chunk) [Principal Accounting Fees and Services](index=133&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on fees paid to the independent auditor is incorporated by reference from the 2023 Proxy Statement - Information regarding principal accounting fees and services is **incorporated by reference** from the company's upcoming 2023 Proxy Statement[562](index=562&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=134&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the report, noting that financial schedules are omitted as they are not applicable - This item lists the financial statements and exhibits filed with the annual report; **financial statement schedules have been omitted** as they are not applicable or the information is included elsewhere[782](index=782&type=chunk) [Form 10-K Summary](index=135&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[798](index=798&type=chunk)

Byline Bancorp, Inc. (NYSE:BY) Q4 2022 Earnings Conference Call January 27, 2023 10:00 AM ET Company Participants Brooks Rennie - Director, Investor Relations Alberto Paracchini - President Tom Bell - Chief Financial Officer and Treasurer Mark Fucinato - Executive Vice President, Chief Credit Officer Conference Call Participants Ben Gerlinger - Hovde Group Terry McEvoy - Stephens Nathan Race - Piper Sandler Brian Martin - Janney Operator Good morning and welcome to the Byline Bancorp's Fourth Quarter 2022 E ...

January 26, 2023 | --- | --- | --- | |----------------|------------------------|------------------------| | Revenue | EPS | Efficiency ratio | | $322.6 million | $2.34 | 54.99% | | 4% Y/Y | 3% Y/Y | Improved 228 bps Y/Y | | Total Assets | Total Loans and Leases | Total Deposits | | $7.4 billion | $5.4 billion | $5.7 billion | | 10% Y/Y | 19% Y/Y | 10% Y/Y | In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) on the recognition ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to ______ Commission File Number 001-38139 Byline Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 36-3012593 (State or Other Juri ...

Byline Bancorp, Inc. (NYSE:BY) Q3 2022 Earnings Conference Call October 28, 2022 10:00 AM ET Company Participants Brooks Rennie - Head, IR Alberto Paracchini - President Roberto Herencia - Chairman and CEO Tom Bell - CFO and Treasurer Mark Fucinato - Chief Credit Officer Conference Call Participants Terry McEvoy - Stephens Nathan Race - Piper Sandler David Long - Raymond James Brian Martin - Janney Operator Good morning and welcome to the Byline Bancorp's Third Quarter 2022 Earnings Call. My name is Amber a ...

Financial Performance - Byline Bancorp reported consolidated net income of $20.3 million for the three months ended June 30, 2022, a decrease of $8.2 million compared to $28.5 million for the same period in 2021[219]. - Consolidated net income for the three months ended June 30, 2022, was $20.3 million, a decrease of $8.2 million from $28.5 million for the same period in 2021[252]. - Net income available to common stockholders for the three months ended June 30, 2022, was $20.3 million, or $0.55 per basic share[223]. - Basic earnings per common share for the three months ended June 30, 2022, was $0.55, down from $0.75 in the same period of 2021[254]. - Consolidated net income for the six months ended June 30, 2022, was $42.6 million, a decrease of $7.7 million from $50.3 million for the same period in 2021[256]. - Net income available to common stockholders for the six months ended June 30, 2022, was $42.4 million, or $1.14 per basic share, down from $1.31 in the same period in 2021[258]. - Adjusted diluted earnings per share for the three months ended June 30, 2022, was $0.54, compared to $0.73 for the same period in 2021[381]. - Net income available to common stockholders for the three months ended June 2022 was $20,283, down from $28,297 in the same period last year, indicating a decrease of 28.3%[383]. Asset and Liability Overview - Total assets as of June 30, 2022, were $7.1 billion, with total gross loans and leases outstanding at $5.2 billion and total deposits at $5.4 billion[225]. - Total stockholders' equity as of June 30, 2022, was $765.2 million[225]. - Total liabilities increased by $506.8 million, or 8.6%, to $6.4 billion at June 30, 2022 compared to $5.9 billion at December 31, 2021[307]. - Total stockholders' equity decreased to $780,652 thousand from $810,490 thousand[266]. - Total estimated uninsured deposits were $1.6 billion as of June 30, 2022[348]. Loan and Lease Performance - Total loans and leases increased to $5.2 billion as of June 30, 2022, up $630.9 million or 13.9% from $4.5 billion at December 31, 2021[320]. - Originated loans and leases reached $4.8 billion, reflecting an increase of $724.6 million or 17.7% compared to $4.1 billion at December 31, 2021[320]. - The allowance for loan and lease losses was $62.4 million as of June 30, 2022, compared to $55.0 million at December 31, 2021[321]. - The loan and lease portfolio includes $2.0 billion with interest rate floors, with $108.7 million at the floor or with no floor[331]. - The loan and lease to deposit ratio was 96.2% at June 30, 2022, compared to 89.3% at December 31, 2021, indicating a tighter funding environment[346]. Income and Expense Analysis - Net interest income increased by $3.5 million for the three months ended June 30, 2022, driven by growth in the loan and lease portfolio[219]. - Non-interest income decreased to $14.2 million for the three months ended June 30, 2022, a decline of $6.8 million, or 32.6%, compared to the same period in 2021[281]. - Non-interest expense was $43.8 million for Q2 2022, an increase of 1.8% from $43.0 million in Q2 2021[290]. - Salaries and employee benefits totaled $27.7 million for Q2 2022, up 12.6% from $24.6 million in Q2 2021[290]. - The efficiency ratio for the six months ended June 30, 2022, was 55.12%, up from 51.61% for the same period in 2021[259]. Provision for Loan and Lease Losses - The provision for loan and lease losses increased by $7.9 million for the three months ended June 30, 2022, primarily due to loan and lease growth[219]. - Provision for loan and lease losses was $5.9 million for the three months ended June 30, 2022, compared to a recapture of $2.0 million for the same period in 2021, an increase of $7.9 million[279]. - The allowance for loan and lease losses as a percentage of loans and leases was 1.21% at June 30, 2022[280]. - The total provision for originated loans was $15,031 million, a decrease from $10,903 million[338]. Market and Economic Conditions - The company evaluates the recoverability of deferred tax assets based on expected taxable income and establishes a valuation allowance if realization is deemed unlikely[245]. - The company monitors the appropriate level of ALLL on a quarterly basis, with more frequent assessments as needed[332]. - The bank's interest rate risk exposure is managed within board-approved policy limits, with results being hypothetical and subject to various influencing factors[391]. Capital and Dividends - Stockholders' equity at June 30, 2022 was $765.2 million, a decrease of $71.2 million or 8.5% from December 31, 2021[358]. - The Company received $12.0 million in cash dividends from Byline Bank for the six months ended June 30, 2022, and $24.0 million for the year ended December 31, 2021[364]. - A cash dividend of $0.09 per share was declared on July 26, 2022, payable on August 23, 2022[368]. Interest Rate Management - The company had a notional amount of $1.1 billion in interest rate swaps outstanding as of June 30, 2022, to manage interest rate risk[387]. - The simulation model indicates that a 300 basis point increase in interest rates could lead to a 22.8% increase in net interest income, amounting to $313,099[389]. - A gradual upward shift of 100 basis points would increase net interest income by 1.3%, while a 200 basis point increase would result in a 2.8% increase[390].

Financial Data and Key Metrics Changes - For Q2 2022, Byline Bancorp reported a net income of $20.3 million or $0.54 per diluted share, slightly lower than the previous quarter due to a $4.6 million mark on servicing assets, impacting earnings by approximately $0.12 per diluted share [16][18] - Pre-tax pre-provision revenue was $32 million, resulting in a pre-tax pre-provision return on assets (ROA) of 184 basis points, while return on assets came in at 117 basis points and return on tangible common equity (ROTC) was 14.1% [18] - Total assets grew by over $300 million, exceeding $7 billion for the first time, driven by strong loan growth [18][30] Business Line Data and Key Metrics Changes - Loans excluding PPP grew by $405 million or 34% linked quarter annualized, crossing the $5 billion mark for the portfolio, reflecting a 29% year-over-year growth [19] - The government guaranteed lending business closed $125 million in loans, remaining a market leader as the fifth largest 7(a) lender in the U.S. [21] - Non-interest income decreased to $14.2 million, primarily due to the mark on servicing assets, while net interest income increased by 5% from the prior quarter [23][47] Market Data and Key Metrics Changes - Total deposits stood at $5.4 billion, down 2.6% linked quarter but up 5.8% year-over-year, with demand deposits representing 40.5% of total balances [22] - Deposit costs increased by eight basis points to 16 basis points for the quarter, reflecting the impact of rising interest rates [22][39] - The loan-to-deposit ratio increased to 96% due to fluctuations in commercial customer deposits, expected to trend back down to the lower 90s [46] Company Strategy and Development Direction - The company emphasized a diversified business model and disciplined expense management as key to navigating the changing economic environment [15][56] - Byline Bancorp is focused on organic growth and maintaining strong capital ratios while returning capital to shareholders through dividends and share repurchases [30][54] - The management expressed optimism about future growth opportunities despite economic uncertainties, highlighting a healthy pipeline [56] Management's Comments on Operating Environment and Future Outlook - Management noted that while clients remain financially stable with good liquidity, economic activity is expected to slow, and inflation poses challenges [15][56] - The company is vigilant regarding credit quality, monitoring potential impacts from rising interest rates and inflation on clients [72][73] - Management anticipates a slower rate of loan growth in the second half of the year compared to the first half, adjusting guidance to low to mid-teens growth [34] Other Important Information - The company announced a CFO transition, with Tom Bell appointed as the new CFO effective August 16, 2022, following Lindsay Corby's departure [9][10] - The efficiency ratio remained in the 55% range, reflecting ongoing efforts to manage expenses amid inflationary pressures [26][50] - The allowance for loan losses increased to $62.4 million, driven by portfolio growth and macroeconomic uncertainties [52] Q&A Session Summary Question: Margin outlook and deposit composition - Management expects a shift towards higher-yielding deposit products due to rising interest rates, modeling about 40% for interest-bearing deposit betas in the second half of the year [60][61] Question: Impact of branch closures on customer deposits - Management noted a slight runoff in higher-yielding deposits post-branch closures, but performance has met expectations [63][64] Question: Loan growth strategy for the latter half of the year - Management emphasized focusing on market opportunities and customer relationships rather than solely targeting net interest income or margin [68] Question: Concerns regarding client pressure points - Management indicated that clients are generally performing well, but they are monitoring the potential impact of inflation and economic slowdown on credit quality [72][73] Question: Dynamics of deposit flows and funding costs - Management expects deposit costs to continue rising due to competitive pressures and the loan-to-deposit ratio fluctuations [78][80] Question: SBA loan credit quality and underwriting standards - Management reported stable credit quality in the SBA portfolio but is closely monitoring the impact of rate increases on borrowers [114]