Byline Bancorp(US:BY)2025-10-24 15:02Financial 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 quarter-on-quarter revenue growth of 13.6% and EPS growth of 19% year-on-year [10][11] - Pre-tax, pre-provision income was $55 million, with a pre-tax, pre-provision ROA of 2.25%, ROA of 1.5%, and ROTC of 15.1%, indicating strong profitability metrics [10][11] - The net interest margin expanded by 9 basis points to 4.27%, supported by an improved deposit mix and higher asset yields [11][15] Business Line Data and Key Metrics Changes - Total loans grew by 6% linked quarter and 11% year-to-date, ending at $7.5 billion, with originations of $264 million driven by commercial banking and equipment leasing teams [11][13] - Non-interest income totaled $15.9 million, up 9.5% from the last quarter, primarily due to a $7 million gain on the sale of loans [16] - Non-interest expense increased to $60.5 million, reflecting higher salary and employee benefits, including $2 million in higher incentive compensation accruals [16][17] Market Data and Key Metrics Changes - Deposits totaled $7.8 billion, up 1% linked quarter and 7% year-to-date, with non-interest-bearing accounts increasing by $160 million or 9% linked quarter [11][14] - The company experienced stable demand for credit, with loan commitments growing and draw activity contributing to loan growth [11][13] Company Strategy and Development Direction - The company aims to build a preeminent commercial banking franchise in Chicago, focusing on expanding its commercial payments business and onboarding customers in 2026 [19][20] - The company remains open to disciplined M&A opportunities that align with its strategic goals, emphasizing capital flexibility and the ability to fund growth [7][36] Management's Comments on Operating Environment and Future Outlook - Management noted stable to improving credit quality despite macroeconomic uncertainties and geopolitical tensions, with vigilance over potential risks [7] - The company anticipates crossing the $10 billion asset threshold in Q1 2026, which will delay the impact of the Durbin amendment until 2027 [20][38] Other Important Information - The company was recognized with multiple awards, including the 2024 SBA 7A, 504, and Expert Lender of the Year awards, and ranked as one of Chicago's best workplaces [8] - The company refinanced $75 million in subordinated debt, benefiting from improved credit ratings and market demand [12] Q&A Session Summary Question: Discussion on margin and net interest income - Management discussed the assumptions behind the model and the impact of competitive rates on deposit resets [26][27] Question: Thoughts on M&A activity - Management expressed openness to M&A opportunities, emphasizing the importance of financial and strategic attractiveness [35][36] Question: Impact of government shutdown on SBA business - Management explained that while origination continues, the shutdown affects the ability to sell and settle loans, potentially delaying gain on sale income [43][44] Question: Insights on commercial payments business - Management provided details on the commercial payments business, focusing on ACH transactions and payroll processing, with expectations for growth in 2026 [67][70] Question: Clarification on NDFI exposure - Management clarified that NDFI exposure is around $221 million, primarily consisting of commercial-related transactions [81][82]