Byline Bancorp(BY) - 2025 Q2 - Quarterly Results

Financial Highlights and Executive Commentary Byline Bancorp reported strong Q2 2025 results, with net income of $30.1 million and a 4.18% NIM, boosted by the First Security acquisition Q2 2025 Financial Highlights ($ in thousands) | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net Income | $30,082 | $28,248 | $29,671 | | Diluted EPS | $0.66 | $0.64 | $0.68 | | Adjusted Diluted EPS (Non-GAAP) | $0.75 | $0.65 | $0.68 | | Net Interest Income | $95,970 | $88,216 | $86,526 | | Net Interest Margin (NIM) | 4.18% | 4.07% | 3.98% | | Total Assets | $9,720,218 | $9,584,732 | $9,633,815 | | Tangible Book Value Per Share (Non-GAAP) | $21.56 | $20.91 | $18.84 | - Successfully completed and integrated the acquisition of First Security Bancorp, Inc., which is believed to have strengthened Byline's return profile[2] - Executive commentary emphasized strong quarterly performance characterized by solid earnings, profitability, NIM expansion, healthy loan and deposit growth, and controlled expenses[2] - The Board of Directors declared a cash dividend of $0.10 per share, payable on August 19, 2025[4] - The company repurchased 543,599 shares of its common stock at an average price of $24.09 per share during the second quarter[2][19] Detailed Financial Analysis Detailed analysis of Q2 2025 operations shows increased net interest income and improved efficiency, alongside asset and deposit growth Statements of Operations Highlights Net interest income increased by 8.8% to $96.0 million, with NIM expanding to 4.18%, while expenses rose due to acquisition costs - Net interest income increased by $7.8 million (8.8%) from Q1 2025, primarily due to loan and lease portfolio growth from the First Security acquisition[5] - Tax-equivalent net interest margin expanded by 11 basis points to 4.19% compared to Q1 2025, driven by higher yields on securities and lower borrowing costs[6] - The provision for credit losses increased by $2.7 million to $11.9 million compared to Q1 2025, mainly due to loan portfolio growth and a weaker macroeconomic forecast[8] - Non-interest income decreased by $381,000 (2.6%) from Q1 2025, primarily due to a larger downward revaluation of the loan servicing asset[9] - Non-interest expense increased by $3.2 million (5.6%) from Q1 2025, mainly due to costs associated with the First Security acquisition and a secondary public stock offering[10] - The adjusted efficiency ratio (non-GAAP) improved by 484 basis points to 48.20% for Q2 2025, compared to 53.04% in Q1 2025[11] Statements of Financial Condition Highlights Total assets grew to $9.7 billion, driven by loan and deposit increases, while non-performing assets also rose - Total assets increased by $135.5 million (1.4%) to $9.7 billion at June 30, 2025, compared to March 31, 2025[14] - The Allowance for Credit Losses (ACL) increased by $7.3 million to $107.7 million, with the First Security acquisition contributing $4.1 million of the increase[15] - Net charge-offs rose to $7.7 million (0.43% of average loans) in Q2 2025, up from $6.6 million in Q1 2025[15] - Non-performing assets increased by $12.6 million to $72.5 million, representing 0.75% of total assets[16] - Total deposits grew by $257.2 million to $7.8 billion, mainly due to increases in money market and non-interest-bearing accounts from the First Security acquisition[17] - Total stockholders' equity increased by $61.3 million (5.4%) to $1.2 billion, primarily due to common stock issued for the acquisition and an increase in retained earnings[19] Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, and detailed financial ratios Consolidated Statements of Financial Condition Total assets reached $9.72 billion, driven by increased net loans and deposits, while stockholders' equity grew to $1.19 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $9,720,218 | $9,584,732 | $9,633,815 | | Net Loans and Leases | $7,220,328 | $6,925,417 | $6,791,474 | | Total Deposits | $7,810,479 | $7,553,308 | $7,347,181 | | Total Liabilities | $8,527,802 | $8,453,654 | $8,600,801 | | Total Stockholders' Equity | $1,192,416 | $1,131,078 | $1,033,014 | Consolidated Statements of Operations Q2 2025 net interest income was $96.0 million, resulting in a net income of $30.1 million, or $0.66 per diluted share Consolidated Income Statement Highlights (in thousands) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $95,970 | $88,216 | $86,526 | | Provision for Credit Losses | $11,923 | $9,179 | $6,045 | | Total Non-interest Income | $14,483 | $14,864 | $12,844 | | Total Non-interest Expense | $59,602 | $56,429 | $53,210 | | Net Income | $30,082 | $28,248 | $29,671 | | Diluted EPS | $0.66 | $0.64 | $0.68 | Selected Financial Data and Ratios Key Q2 2025 ratios include a 4.18% net interest margin, 1.25% ROAA, and an improved 48.20% adjusted efficiency ratio Key Performance Ratios (Q2 2025) | Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Margin | 4.18% | 4.07% | 3.98% | | Adjusted Efficiency Ratio (Non-GAAP) | 48.20% | 53.04% | 52.19% | | Return on Average Assets (ROAA) | 1.25% | 1.25% | 1.31% | | Return on Avg. Tangible Common Equity (Non-GAAP) | 12.83% | 12.92% | 15.27% | | Tangible Common Equity to Tangible Assets (Non-GAAP) | 10.39% | 9.95% | 8.82% | | Common Equity Tier 1 Capital Ratio | 11.85% | 11.78% | 10.84% | Analysis of Net Interest Margin Average interest-earning assets grew to $9.21 billion, with a favorable yield-cost dynamic leading to a 4.19% net interest margin Net Interest Margin Analysis | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Average Interest-Earning Assets ($ thousands) | $9,208,156 | $8,785,619 | $8,743,462 | | Average Yield on Earning Assets | 6.31% | 6.24% | 6.52% | | Average Cost of Interest-Bearing Liabilities | 3.00% | 3.07% | 3.62% | | Net Interest Spread | 3.31% | 3.17% | 2.90% | | Net Interest Margin (FTE) | 4.19% | 4.08% | 3.99% | Loan Portfolio and Credit Quality Details Total loans and leases reached $7.33 billion, with ACL at $107.7 million, while non-performing loans increased to 0.92% - Total loans and leases reached $7.33 billion, with commercial and industrial (37.4%) and commercial real estate (29.8%) being the largest components of the originated portfolio[38] Allowance for Credit Losses (ACL) Activity (in thousands) | | Q2 2025 | | :--- | :--- | | Beginning ACL | $100,420 | | Adjustment for acquired PCD loans | $3,206 | | Provision for credit losses | $11,757 | | Net charge-offs | ($7,656) | | Ending ACL | $107,727 | Non-Performing Assets (in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Non-performing loans and leases | $67,553 | $53,619 | $63,808 | | Other real estate owned | $4,946 | $6,249 | $780 | | Total non-performing assets | $72,499 | $59,868 | $64,588 | | NPLs as % of total loans | 0.92% | 0.76% | 0.93% | Deposit Composition Total deposits increased by 3.4% to $7.81 billion, driven by growth in money market and non-interest-bearing accounts Deposit Composition (in thousands) | Deposit Type | June 30, 2025 | March 31, 2025 | % Change QoQ | | :--- | :--- | :--- | :--- | | Non-interest-bearing demand | $1,773,229 | $1,715,599 | 3.4% | | Money market demand accounts | $2,996,684 | $2,759,185 | 8.6% | | Time deposits (all) | $1,682,086 | $1,755,014 | -4.2% | | Other (Checking, Savings) | $1,358,480 | $1,323,510 | 2.6% | | Total Deposits | $7,810,479 | $7,553,308 | 3.4% | Reconciliation of Non-GAAP Financial Measures This section reconciles non-GAAP financial measures, showing adjustments for merger and offering expenses to derive adjusted net income and EPS - Management uses non-GAAP financial measures to provide supplementary information on the company's financial condition and results, acknowledging they have limitations and should not be a substitute for GAAP[40] Reconciliation of Net Income and EPS (Q2 2025, in thousands) | Item | Amount | Per Share | | :--- | :--- | :--- | | Reported Net Income / Diluted EPS | $30,082 | $0.66 | | Merger-related expenses | $4,450 | $0.10 | | Secondary offering expenses | $413 | $0.01 | | Tax benefit on items | ($1,117) | ($0.02) | | Adjusted Net Income / Diluted EPS | $33,828 | $0.75 | Key Non-GAAP Reconciliations (Q2 2025) | Metric | GAAP Value | Adjustment | Non-GAAP Value | | :--- | :--- | :--- | :--- | | Non-interest Expense | $59.6M | ($4.9M) | $54.7M | | Pre-tax Pre-provision Net Income | $50.9M | $4.9M | $55.7M | | Efficiency Ratio | 52.61% | - | 48.20% (Adjusted) | | Tangible Common Equity | $1.19B | ($203.5M) | $988.9M |