Byline Bancorp(US:BY)2025-10-24 15:00Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $37 million or $0.82 per diluted share on revenue of $116 million, reflecting a year-on-year revenue growth of 13.6% [13] - Profitability metrics remained strong with a pretax pre-provision ROA of 2.25%, ROA of 1.5%, and ROTCE of 15.1%, all above the cost of capital [13] - The net interest margin expanded by nine basis points to 4.27%, supported by an improved deposit mix and higher asset yields [13][21] Business Line Data and Key Metrics Changes - Total loans increased by 6% quarter-on-quarter and 11% year-to-date, reaching $7.5 billion, with loan originations of $264 million, up 25% year-on-year [14][17] - Noninterest income totaled $15.9 million, up 9.5% from the previous quarter, primarily due to a $7 million gain from loan sales [22] - Noninterest expense increased by 1.5% to $60.5 million, driven by higher salaries and employee benefits [23] Market Data and Key Metrics Changes - Total deposits were $7.8 billion, slightly up from the prior quarter, with non-interest bearing accounts increasing by $160 million or 9% linked quarter [19] - The company experienced a decline in time deposits due to lower brokered CDs and shifts to money market accounts [19] Company Strategy and Development Direction - The company aims to build a pre-M&A commercial banking franchise in Chicago and is focused on expanding its commercial payments business [28] - The company anticipates crossing the $10 billion asset threshold in Q1 2026, which will delay the impact of Durbin and higher insurance assessments until 2027 [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to continue executing for customers and delivering results for shareholders despite macroeconomic uncertainties [30] - The company remains vigilant over risks, including the federal government shutdown, which could impact SBA loan sales [30][51] Other Important Information - The company was recognized as one of Chicago's best workplaces and received the 2024 SBA 7504 Expert Lender of the Year award [9][10] - Capital levels continued to grow, with CET1 surpassing 12%, and tangible book value per share increased by 5% linked quarter [15][26] Q&A Session Summary Question: What are the assumptions built into the margin and net interest income? - Management indicated that they have been outperforming model assumptions due to competitive rates on deposits and improved analytical capabilities [34][36] Question: What are the thoughts on M&A activity given the recent pickup? - Management remains open to M&A opportunities that are financially and strategically attractive, focusing on transactions that deliver value for shareholders [44][45] Question: How has the government shutdown impacted the SBA business? - The company continues to originate SBA loans but cannot sell and settle loans during the shutdown, which may delay gain on sale income [50][51] Question: What is the expected impact of crossing the $10 billion asset threshold? - The estimated impact from Durbin is between $4.5 million to $5 million, effective in 2027 [46][48] Question: Can you provide insights on the commercial payments business? - The commercial payments business focuses on high-volume ACH transactions and payroll processing, with expectations to see growth in 2026 [71][73]