10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number 001-38139

Byline Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

    Delaware 

    36-3012593

    (State or Other Jurisdiction of
Incorporation or Organization)

    (IRS Employer
Identification Number)

180 North LaSalle Street, Suite 300

Chicago, Illinois 60601

(Address of Principal Executive Offices)

(773) 244-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	BY	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $0.01 par value, 44,124,124 shares outstanding as of April 30, 2024

BYLINE BANCORP, INC.

FORM 10-Q

March 31, 2024

INDEX


		Page

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements. The Unaudited Interim Condensed Consolidated Financial Statements of Byline Bancorp, Inc.	3
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	72
Item 4.	Controls and Procedures	73

PART II.	OTHER INFORMATION	74
Item 1.	Legal Proceedings	74
Item 1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3.	Defaults Upon Senior Securities	74
Item 4.	Mine Safety Disclosures	74
Item 5.	Other Information	74
Item 6.	Exhibits	75

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)



(dollars in thousands, except share data)	March 31, 2024			December 31, 2023
ASSETS
Cash and due from banks	$	58,640		$	60,431
Interest bearing deposits with other banks		578,197			165,705
Cash and cash equivalents		636,837			226,136
Equity and other securities, at fair value		9,135			8,743
Securities available-for-sale, at fair value (amortized cost at March 31, 2024—$1,562,427, December 31, 2023—$1,516,801)		1,379,147			1,342,480
Securities held-to-maturity, at amortized cost (fair value at March 31, 2024—$1,149, December 31, 2023 —$1,149)		1,156			1,157
Restricted stock, at cost		22,793			16,304
Loans held for sale		23,568			18,005
Loans and leases:
Loans and leases		6,778,214			6,684,306
Allowance for credit losses - loans and leases		(102,366	)		(101,686	)
Net loans and leases		6,675,848			6,582,620
Servicing assets, at fair value		20,992			19,844
Premises and equipment, net		64,466			66,627
Goodwill and other intangible assets, net		202,133			203,478
Bank-owned life insurance		97,748			96,900
Deferred tax assets, net		53,029			50,058
Accrued interest receivable and other assets		223,651			249,615
Total assets	$	9,410,503		$	8,881,967
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	1,851,727		$	1,905,876
Interest-bearing deposits		5,498,475			5,271,123
Total deposits		7,350,202			7,176,999
Other borrowings		721,173			395,190
Subordinated notes, net		73,909			73,866
Junior subordinated debentures issued to capital trusts, net		70,567			70,452
Accrued interest payable and other liabilities		185,603			175,309
Total liabilities		8,401,454			7,891,816
COMMITMENTS AND CONTINGENT LIABILITIES (Note 14)
STOCKHOLDERS’ EQUITY
Preferred stock		—			—
Common stock		452			451
Additional paid-in capital		708,844			710,488
Retained earnings		455,532			429,036
Treasury stock, at cost		(48,869	)		(49,707	)
Accumulated other comprehensive loss, net of tax		(106,910	)		(100,117	)
Total stockholders’ equity		1,009,049			990,151
Total liabilities and stockholders’ equity	$	9,410,503		$	8,881,967


	March 31, 2024				December 31, 2023
	Preferred Shares		Common Shares		Preferred Shares		Common Shares
Par value	$	0.01	$	0.01	$	0.01	$	0.01
Shares authorized		25,000,000		150,000,000		25,000,000		150,000,000
Shares issued		—		45,946,804		—		45,714,241
Shares outstanding		—		44,108,387		—		43,764,056
Treasury shares		—		1,838,417		—		1,950,185

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended
	March 31,
(dollars in thousands, except share and per share data)	2024			2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	123,792		$	92,343
Interest on securities		9,734			6,600
Other interest and dividend income		4,795			1,059
Total interest and dividend income		138,321			100,002
INTEREST EXPENSE
Deposits		45,962			16,298
Other borrowings		3,824			5,888
Subordinated notes and debentures		2,994			2,098
Total interest expense		52,780			24,284
Net interest income		85,541			75,718
PROVISION FOR CREDIT LOSSES		6,643			9,825
Net interest income after provision for credit losses		78,898			65,893
NON-INTEREST INCOME
Fees and service charges on deposits		2,427			2,120
Loan servicing revenue		3,364			3,380
Loan servicing asset revaluation		(703	)		656
ATM and interchange fees		1,075			1,063
Change in fair value of equity securities, net		392			350
Net gains on sales of loans		5,533			5,148
Wealth management and trust income		1,157			924
Other non-interest income		2,228			1,504
Total non-interest income		15,473			15,145
NON-INTEREST EXPENSE
Salaries and employee benefits		33,953			30,394
Occupancy and equipment expense, net		5,284			4,444
Impairment charge on assets held for sale		—			20
Loan and lease related expenses		685			963
Legal, audit and other professional fees		2,719			3,114
Data processing		4,145			3,783
Net gain recognized on other real estate owned and other related expenses		(98	)		(103	)
Other intangible assets amortization expense		1,345			1,455
Other non-interest expense		5,776			4,730
Total non-interest expense		53,809			48,800
INCOME BEFORE PROVISION FOR INCOME TAXES		40,562			32,238
PROVISION FOR INCOME TAXES		10,122			8,293
NET INCOME	$	30,440		$	23,945
EARNINGS PER COMMON SHARE
Basic	$	0.70		$	0.65
Diluted	$	0.70		$	0.64

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended
	March 31,
(dollars in thousands)	2024			2023
Net income	$	30,440		$	23,945
Securities available-for-sale
Unrealized holding gains (losses) arising during the period		(8,959	)		14,599
Tax effect		2,389			(3,900	)
Net of tax		(6,570	)		10,699
Cash flow hedges
Unrealized holding gains arising during the period		4,531			194
Reclassification adjustments for net gains included in net income		(4,836	)		(1,956	)
Tax effect		82			471
Net of tax		(223	)		(1,291	)
Total other comprehensive income (loss)		(6,793	)		9,408
Comprehensive income	$	23,647		$	33,353

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)


					Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock				Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares		Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, January 1, 2023		37,492,775	$	389	$	598,297		$	335,794		$	(51,114	)	$	(117,550	)	$	765,816
Net income		—		—		—			23,945			—			—			23,945
Other comprehensive income, net of tax		—		—		—			—			—			9,408			9,408
Restricted stock activity, net		220,652		1		(1,704	)		—			48			—			(1,655	)
Cash dividends declared on common stock ($0.09 per share)		—		—		—			(3,374	)		—			—			(3,374	)
Share-based compensation expense		—		—		1,510			—			—			—			1,510
Balance, March 31, 2023		37,713,427	$	390	$	598,103		$	356,365		$	(51,066	)	$	(108,142	)	$	795,650


					Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock				Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares		Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, January 1, 2024		43,764,056	$	451	$	710,488		$	429,036		$	(49,707	)	$	(100,117	)	$	990,151
Net income		—		—		—			30,440			—			—			30,440
Other comprehensive loss, net of tax		—		—		—			—			—			(6,793	)		(6,793	)
Issuance of common stock upon exercise of stock options, net		68,186		—		(331	)		—			(671	)		—			(1,002	)
Restricted stock activity, net		276,145		1		(3,159	)		—			1,509			—			(1,649	)
Cash dividends declared on common stock ($0.09 per share)		—		—		—			(3,944	)		—			—			(3,944	)
Share-based compensation expense		—		—		1,846			—			—			—			1,846
Balance, March 31, 2024		44,108,387	$	452	$	708,844		$	455,532		$	(48,869	)	$	(106,910	)	$	1,009,049

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended
	March 31,
(dollars in thousands)	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	30,440		$	23,945
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		6,643			9,825
Impairment loss on premises and equipment		1,069			—
Impairment loss on operating lease right-of-use asset		194			—
Impairment loss on assets held for sale		—			20
Depreciation and amortization of premises and equipment		1,307			981
Net amortization (accretion) of securities		(481	)		856
Net change in fair value of equity securities		(392	)		(350	)
Net gains on sales and disposal of premises and equipment		(482	)		—
Net gains on sales of loans		(5,533	)		(5,148	)
Originations of U.S. government guaranteed loans		(79,089	)		(53,602	)
Proceeds from U.S. government guaranteed loans sold		35,005			46,824
Accretion of premiums and discounts on acquired loans, net		(4,284	)		(729	)
Net change in servicing assets		(1,148	)		(1,772	)
Net losses on sales and valuation adjustments of other real estate owned		18			296
Net amortization of other acquisition accounting adjustments		1,626			1,455
Amortization of subordinated debt issuance cost		43			44
Accretion of junior subordinated debentures discount		115			104
Share-based compensation expense		1,846			1,510
Deferred tax benefit		(501	)		(134	)
Increase in cash surrender value of bank owned life insurance		(848	)		(588	)
Changes in assets and liabilities:
Accrued interest receivable and other assets		(374	)		10,214
Accrued interest payable and other liabilities		77,162			15,384
Net cash provided by operating activities		62,336			49,135
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available-for-sale		(106,623	)		(1,280	)
Proceeds from maturities and calls of securities available-for-sale		31,953			3,784
Proceeds from paydowns of securities available-for-sale		28,916			21,262
Purchases of Federal Home Loan Bank stock, net		(6,489	)		(10,575	)
Net change in loans and leases		(95,840	)		(94,571	)
Purchases of premises and equipment		(512	)		(281	)
Proceeds from sales of premises and equipment		363			—
Proceeds from sales of assets held for sale		1,178			—
Proceeds from sales of other real estate owned		402			764
Net cash used in investing activities		(146,652	)		(80,897	)

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS O