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Byline Bancorp(BY) - 2024 Q4 - Annual Report
BYByline Bancorp(BY)2025-02-28 21:49
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Financial Condition - As of December 31, 2024, the company had goodwill of 181.7million,representing16.6181.7 million, representing 16.6% of total stockholders' equity[189] - The company may need to significantly increase the allowance for credit losses or sustain credit losses that are higher than the reserve provided, which could adversely affect financial condition[186] - The company’s ability to recognize deferred tax assets is dependent on future cash flows and taxable income, which are subject to significant estimates[193] - The company faces increased litigation and regulatory risks, which could lead to significant fines and impact financial condition[199] - The company reported a decrease in the allowance for credit losses from 101.686 million in 2023 to 97.988millionin2024,indicatingimprovedcreditquality[423]−Thecompany′sallowanceforcreditlossesforloansandleaseswas97.988 million in 2024, indicating improved credit quality[423] - The company's allowance for credit losses for loans and leases was 98 million as of December 31, 2024, reflecting a decrease from 101.686millionin2023[418]−ThecompanyhasnorecordedallowanceforcreditlossesonsecuritiesasofDecember31,2024,or2023[452]−Thecompanymaintainsanallowanceforcreditlossesonoff−balancesheetcreditexposuresforunfundedloancommitments,reflectingmanagement′sestimateofexpectedlosses[471]RegulatoryandComplianceRisks−Thecompanyissubjecttonumerouslawsdesignedtoprotectconsumers,andfailuretocomplycouldleadtosanctionsaffectinggrowthprospects[198]−Non−compliancewiththeUSAPATRIOTActandtheBankSecrecyActcouldresultinfinesorsanctions,adverselyaffectingbusinessoperations[201]−Regulatoryapprovalsforacquisitionsmaynotbegrantedonacceptableterms,whichcouldrestrictgrowth[207]GrowthandAcquisitions−Thecompanyhascontinuedtogrowthroughacquisitions,butrisksassociatedwithintegrationandrealizationofanticipatedbenefitscouldadverselyaffectprofitability[206]−OnJuly1,2023,thecompanyacquiredInlandBancorp,Inc.foratotalconsiderationof101.686 million in 2023[418] - The company has no recorded allowance for credit losses on securities as of December 31, 2024, or 2023[452] - The company maintains an allowance for credit losses on off-balance sheet credit exposures for unfunded loan commitments, reflecting management's estimate of expected losses[471] Regulatory and Compliance Risks - The company is subject to numerous laws designed to protect consumers, and failure to comply could lead to sanctions affecting growth prospects[198] - Non-compliance with the USA PATRIOT Act and the Bank Secrecy Act could result in fines or sanctions, adversely affecting business operations[201] - Regulatory approvals for acquisitions may not be granted on acceptable terms, which could restrict growth[207] Growth and Acquisitions - The company has continued to grow through acquisitions, but risks associated with integration and realization of anticipated benefits could adversely affect profitability[206] - On July 1, 2023, the company acquired Inland Bancorp, Inc. for a total consideration of 138.9 million, which included 107.0millionincommonstockand107.0 million in common stock and 31.9 million in cash[520][522][528] - The acquisition resulted in goodwill of 33.4million,reflectingthepremiumpaidoverthefairvalueofnettangibleandintangibleassetsacquired[523]−ThecompanyannouncedaproposedacquisitionofFirstSecurityBancorp,Inc.onSeptember30,2024,withrelatedacquisitionadvisoryexpensesof33.4 million, reflecting the premium paid over the fair value of net tangible and intangible assets acquired[523] - The company announced a proposed acquisition of First Security Bancorp, Inc. on September 30, 2024, with related acquisition advisory expenses of 629,000 reflected in non-interest expense for the year ended December 31, 2024[533] - The company is expanding its footprint in the Chicagoland market through the acquisition of Inland, diversifying its commercial banking business and strengthening its core deposit base[520] Financial Performance - Net income for 2024 reached 120,759,000,anincreaseof11.3120,759,000, an increase of 11.3% compared to 107,878,000 in 2023[426] - Total interest and dividend income increased to 565,929,000in2024,up18565,929,000 in 2024, up 18% from 479,478,000 in 2023[426] - Net interest income after provision for credit losses was 321,005,000,reflectingagrowthof7.4321,005,000, reflecting a growth of 7.4% from 298,968,000 in 2023[426] - Non-interest income totaled 58,851,000in2024,aslightincreaseof4.558,851,000 in 2024, a slight increase of 4.5% from 56,315,000 in 2023[426] - Total non-interest expense rose to 218,777,000,anincreaseof4.3218,777,000, an increase of 4.3% from 209,603,000 in 2023[426] - Basic earnings per common share for 2024 was 2.78,upfrom2.78, up from 2.69 in 2023, representing a 3.4% increase[426] - Comprehensive income for 2024 was 107,189,000,adecreasefrom107,189,000, a decrease from 125,311,000 in 2023, primarily due to unrealized losses in securities[428] Interest Rate Risk - Interest rate risk is a primary concern, with potential changes in net interest income (NII) and economic value of equity (EVE) based on interest rate fluctuations[392][399] - A hypothetical increase of 300 basis points in interest rates could lead to a 9.3% increase in NII for the year ending December 31, 2025[403] - The company utilizes interest rate derivatives to hedge exposure, with a notional amount of 1.5billionoutstandingasofDecember31,2024[397]−ThemanagementofinterestrateriskisoverseenbytheBoardofDirectorsandinvolvesregularsimulationstoassesspotentialimpacts[395][404]AssetandDepositGrowth−Totalassetsincreasedto1.5 billion outstanding as of December 31, 2024[397] - The management of interest rate risk is overseen by the Board of Directors and involves regular simulations to assess potential impacts[395][404] Asset and Deposit Growth - Total assets increased to 9.497 billion in 2024, up from 8.882billionin2023,representingagrowthofapproximately6.98.882 billion in 2023, representing a growth of approximately 6.9%[423] - Net loans and leases rose to 6.809 billion in 2024, compared to 6.583billionin2023,indicatinganincreaseofabout3.46.583 billion in 2023, indicating an increase of about 3.4%[423] - Total deposits reached 7.459 billion in 2024, an increase from 7.177billionin2023,markingagrowthofapproximately3.97.177 billion in 2023, marking a growth of approximately 3.9%[423] - The net increase in deposits for 2024 was 280,506,000, a decrease from 515,415,000in2023[434]ShareholderInformation−Theprincipalstockholder,MBGInvestorsI,L.P.,ownsapproximately26.6515,415,000 in 2023[434] Shareholder Information - The principal stockholder, MBG Investors I, L.P., owns approximately 26.6% of the outstanding shares, influencing key shareholder decisions[212] - The company issued 345,519 shares of common stock upon exercise of stock options in 2024, compared to 59,153 shares in 2023, reflecting a significant increase in stock option exercises[429] - Cash dividends declared on common stock were 15,894,000 for the year ended December 31, 2024, maintaining a consistent dividend of 0.36pershare[429]SecuritiesandInvestments−AsofDecember31,2024,thetotalamortizedcostofavailable−for−salesecuritieswas0.36 per share[429] Securities and Investments - As of December 31, 2024, the total amortized cost of available-for-sale securities was 1,595,583 million, with gross unrealized losses amounting to 181,659million,resultinginafairvalueof181,659 million, resulting in a fair value of 1,415,696 million[536] - The company held 334 available-for-sale securities with unrealized losses as of December 31, 2024, compared to 283 securities at the end of 2023[540] - The fair value of available-for-sale debt securities totaled 1.42billionasofDecember31,2024,downfrom1.42 billion as of December 31, 2024, down from 1.60 billion in 2023, a decrease of about 11.5%[546] - The company did not classify any securities as trading during 2024 and 2023, maintaining a focus on available-for-sale and held-to-maturity categories[536] Tax and Deferred Tax Assets - Deferred tax assets and liabilities are adjusted for changes in tax laws and rates on the date of enactment, with no material uncertain tax positions as of December 31, 2024, and 2023[494][495] - The Company evaluates the recoverability of deferred tax assets based on future expected taxable income and has no deferred tax valuation allowance recorded as of December 31, 2024, and 2023[495]