Byline Bancorp(BY) - 2021 Q4 - Annual Report

Goodwill and Impairment - As of December 31, 2021, the company reported goodwill of $148.4 million, representing 17.7% of total stockholders' equity[145] - The company evaluates goodwill for impairment at least annually, with potential adverse effects on financial condition if impairment occurs[145] Loans and Acquisitions - Loans acquired during recapitalization and subsequent acquisitions are recorded at estimated fair value, which involves subjective determinations that may impact results[147] - The company faces risks associated with acquisitions, including execution risks and integration challenges, which could adversely affect growth and profitability[172] - The integration process of any completed acquisitions may take longer or be more costly than expected, potentially adversely affecting capital and earnings[174] Regulatory Compliance - The company is subject to various laws designed to protect consumers, including the Community Reinvestment Act, with non-compliance potentially resulting in sanctions[161] - Compliance with privacy and data protection laws may increase operational costs and restrict business opportunities, potentially impacting financial results[170] - The company has foreign national stockholders, which restricts certain activities without Federal Reserve approval, potentially impacting business operations[156] Economic and Market Conditions - The Federal Reserve's monetary policies significantly affect the company's earnings and growth, influencing interest rates and credit conditions[160] - The ongoing COVID-19 pandemic has created significant economic disruption, affecting customer confidence and potentially leading to increased loan delinquencies and defaults[176] - The company anticipates that credit, operational, and other risks will remain elevated until the COVID-19 pandemic subsides[181] Financial Position and Competition - As of December 31, 2021, the company had $5.2 billion in deposits, which are subject to fluctuations in availability and pricing due to external factors[184] - The company faces significant competition from various financial institutions, including national and regional banks, credit unions, and FinTech companies, which may require higher interest rates to attract deposits[185] Interest Rate Exposure - The company has a notional amount of $439.9 million in interest rate derivatives outstanding as of December 31, 2021, to hedge interest rate exposure[301] - In a hypothetical scenario with a 300 basis point increase in interest rates, the estimated increase in net interest income for Year 1 would be 19.7%[303] - A gradual shift upwards of 100 and 200 basis points would result in 5.4% and 11.1% increases to net interest income, respectively, over the next 12 months[305] Ownership and Influence - The principal stockholder, MBG Investors I, L.P., owns approximately 30.4% of the outstanding shares, which may influence company decisions and affect other stockholders' interests[188] Trading Activities - The company does not engage in speculative trading activities related to interest rates or other financial instruments[301] Company Status - The company has opted to remain an emerging growth company, allowing it to take advantage of certain reporting exemptions until December 31, 2022[153]