Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2021

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Capital Requirements

Note 21—Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by their respective banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off‑balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Common Equity Tier 1 capital (“CET1”), Tier 1 capital and total capital to risk‑weighted assets and of Tier 1 capital to average consolidated assets, as defined in the regulations.

Note 21—Regulatory Capital Requirements (continued)

As of December 31, 2021, the most recent notification from the FDIC categorized the Bank as well‑capitalized under the framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The required regulatory capital ratios are set forth in the following tables along with the minimum capital amounts required for the Company and the Bank and the minimum capital amount required for the Bank to be considered to be well capitalized. The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2021 and 2020 are also presented.

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
2021	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	830,262		14.70	%	$	451,903		8.00	%	N/A		N/A
Bank		753,480		13.38	%		450,470		8.00	%		563,087		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	698,846		12.37	%	$	338,927		6.00	%	N/A		N/A
Bank		697,064		12.38	%		337,852		6.00	%		450,470		8.00	%
Common Equity Tier 1 (CET1) to risk weighted    assets:
Company	$	643,408		11.39	%	$	254,195		4.50	%	N/A		N/A
Bank		697,064		12.38	%		253,389		4.50	%		366,007		6.50	%
Tier 1 capital to average assets:
Company	$	698,846		10.89	%	$	256,657		4.00	%	N/A		N/A
Bank		697,064		10.87	%		256,478		4.00	%		320,597		5.00	%

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
2020	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	774,522		16.18	%	$	383,069		8.00	%	N/A		N/A
Bank		675,977		14.16	%		381,775		8.00	%		477,219		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	639,564		13.36	%	$	287,302		6.00	%	N/A		N/A
Bank		616,219		12.91	%		286,331		6.00	%		381,775		8.00	%
Common Equity Tier 1 (CET1) to risk weighted    assets:
Company	$	584,126		12.20	%	$	215,476		4.50	%	N/A		N/A
Bank		616,219		12.91	%		214,748		4.50	%		310,192		6.50	%
Tier 1 capital to average assets:
Company	$	639,564		11.12	%	$	230,056		4.00	%	N/A		N/A
Bank		616,219		10.72	%		229,870		4.00	%		287,337		5.00	%

The Company and Byline Bank must maintain a capital conservation buffer consisting of CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. The conservation buffers for the Company and Byline Bank exceed the minimum capital requirement at 6.70% and 5.38%, respectively, as of December 31, 2021.

Provisions of state and federal banking regulations may limit, by statute, the amount of dividends that may be paid to the Company by Byline Bank without prior approval of Byline Bank’s regulatory agencies. The Company is economically dependent on the cash dividends received from Byline Bank. These dividends represent the Company’s primary cash flow from operating activities used to service its obligations. For the years ended December 31, 2021 and 2020, the Company received $24.0 million and $7.5 million, respectively, in cash dividends from Byline Bank, primarily used to pay interest on the subordinated notes, subordinated debentures issued in connection with trust preferred securities, dividends on the Company’s common and preferred stock, and other corporate expenses.