Byline Bancorp(BY) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents Byline Bancorp's unaudited interim condensed consolidated financial statements, including condition, operations, and cash flows, with detailed notes Condensed Consolidated Statements of Financial Condition Total assets reached $9.72 billion by June 30, 2025, up from $9.50 billion at year-end 2024, driven by loan growth and increased deposits Condensed Consolidated Statements of Financial Condition (unaudited) | (dollars in thousands) | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total assets | $9,720,218 | $9,496,529 | | Net loans and leases | $7,220,328 | $6,808,834 | | Securities available-for-sale, at fair value | $1,575,240 | $1,415,696 | | Cash and cash equivalents | $218,350 | $563,138 | | Total liabilities | $8,527,802 | $8,405,032 | | Total deposits | $7,810,479 | $7,458,628 | | Other borrowings | $414,110 | $618,773 | | Total stockholders' equity | $1,192,416 | $1,091,497 | | Total liabilities and stockholders' equity | $9,720,218 | $9,496,529 | Condensed Consolidated Statements of Operations Q2 2025 net income was $30.1 million with $0.66 diluted EPS, driven by higher net interest income despite increased provision for credit losses Condensed Consolidated Statements of Operations (unaudited) | (dollars in thousands, except per share data) | Three Months Ended June 30, 2025 (in thousands, except per share data) | Three Months Ended June 30, 2024 (in thousands, except per share data) | Six Months Ended June 30, 2025 (in thousands, except per share data) | Six Months Ended June 30, 2024 (in thousands, except per share data) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $95,970 | $86,526 | $184,186 | $172,067 | | Provision for credit losses | $11,923 | $6,045 | $21,102 | $12,688 | | Total non-interest income | $14,483 | $12,844 | $29,347 | $28,317 | | Total non-interest expense | $59,602 | $53,210 | $116,031 | $107,019 | | Net income | $30,082 | $29,671 | $58,330 | $60,111 | | Diluted earnings per common share | $0.66 | $0.68 | $1.30 | $1.37 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $43.3 million for H1 2025, with significant cash used in investing and financing activities, leading to a $344.8 million decrease in cash Summary of Cash Flows (Six Months Ended June 30) | (dollars in thousands) | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,326 | $102,482 | | Net cash used in investing activities | ($234,160) | ($284,202) | | Net cash provided by financing activities | ($153,954) | $686,041 | | Net change in cash and cash equivalents | ($344,788) | $504,321 | | Cash and cash equivalents, beginning of period | $563,138 | $226,136 | | Cash and cash equivalents, end of period | $218,350 | $730,457 | Notes to Unaudited Interim Condensed Consolidated Financial Statements Detailed notes disclose the First Security Bancorp acquisition, a $1.6 billion securities portfolio, $7.3 billion loan portfolio, and specifics on deposits and capital - On April 1, 2025, the Company acquired First Security Bancorp, Inc. for a total consideration of approximately $41.5 million, resulting in $147,000 of goodwill. Merger-related expenses of $5.1 million were recognized in the six months ended June 30, 2025[33][34][37] - The total loan and lease portfolio grew to $7.33 billion at June 30, 2025, from $6.91 billion at December 31, 2024. The allowance for credit losses (ACL) increased to $107.7 million (1.47% of total loans) from $98.0 million (1.42% of total loans)[52][55][302] - Total deposits increased to $7.81 billion at June 30, 2025, from $7.46 billion at year-end 2024, primarily driven by growth in money market accounts and the First Security acquisition[105][273] - The Company repurchased 569,599 shares for $13.8 million during the first six months of 2025 under its authorized stock repurchase program. A quarterly dividend of $0.10 per share was declared[181][185] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 net income of $30.1 million, driven by increased net interest income and balance sheet expansion, while maintaining strong liquidity and capital Key Performance Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions, except percentages and per share data) | Q2 2024 (in millions, except percentages and per share data) | | :--- | :--- | :--- | | Net Income | $30.1M | $29.7M | | Diluted EPS | $0.66 | $0.68 | | Net Interest Margin | 4.18% | 3.98% | | Return on Average Assets | 1.25% | 1.31% | | Efficiency Ratio | 52.61% | 52.19% | | Adjusted Efficiency Ratio | 48.20% | 52.19% | - Net interest income for Q2 2025 increased by $9.4 million (10.9%) year-over-year, primarily due to lower rates paid on interest-bearing deposits and a change in deposit mix[242] - The provision for credit losses increased to $11.9 million in Q2 2025 from $6.0 million in Q2 2024, influenced by the First Security acquisition and weakening macroeconomic conditions[229][251] - Total assets grew to $9.7 billion, a 2.4% increase from year-end 2024, driven by a $421.2 million (6.1%) increase in loans and leases, reflecting both organic growth and the First Security acquisition[272] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk, its primary market risk, using NII and EVE models, showing asset sensitivity with a 4.1% NII increase for a +100 bps rate hike Interest Rate Sensitivity Analysis (as of June 30, 2025) | Basis Point Change in Interest Rates | Estimated % Change in NII (Year 1) (in percentage) | Estimated % Change in EVE (in percentage) | | :--- | :--- | :--- | | +300 | 10.1% | (14.0)% | | +200 | 7.5% | (8.9)% | | +100 | 4.1% | (4.3)% | | -100 | (2.9)% | 3.9% | | -200 | (5.6)% | 6.1% | | -300 | (6.5)% | 5.6% | - The company's primary market risk is interest rate risk, which it manages through asset-liability strategies and the use of interest rate derivatives[357][358] - As of June 30, 2025, the company had a notional amount of $1.9 billion of interest rate derivatives outstanding to manage interest rate exposure for both customers and its own balance sheet[362] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[370] - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[371] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in routine litigation, but no current proceedings are expected to have a material adverse effect on its financial condition - The company is not party to any legal proceedings expected to have a material adverse effect on its business or financial condition[375] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K were reported - No material changes to risk factors were reported since the filing of the 2024 Form 10-K[376] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 543,599 shares during Q2 2025 under its stock repurchase program, which authorizes up to 1,250,000 shares for 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share (in dollars) | Shares Purchased as Part of Program (in dollars) | | :--- | :--- | :--- | :--- | | April 2025 | 105,973 | $24.34 | 102,000 | | May 2025 | 25,390 | $26.37 | 23,364 | | June 2025 | 624,668 | $24.42 | 418,235 | | Total Q2 | 756,031 | $24.48 | 543,599 | - As of June 30, 2025, 782,401 shares remained available for repurchase under the current program[379] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - There were no defaults upon senior securities during the period[380] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable to the company[381] Item 5. Other Information No other information was reported for the period - There was no other information to report for the period[382] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL interactive data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL financial data (101)[383]