3Q23 Earnings Presentation
Forward-Looking Statements
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ''may'', ''might'', ''should'', ''could'', ''predict'', ''potential'', ''believe'', ''expect'', ''continue'', ''will'', ''anticipate'', ''seek'', ''estimate'', ''intend'', ''plan'', ''projection'', ''would'', ''annualized'', "target" and ''outlook'', or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward- looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication.
No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.
Certain risks and important factors that could affect Byline's future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Current Expected Credit Loss ("CECL") Adoption
On December 31, 2022, the Company adopted CECL and applied it retrospectively to the period beginning January 1, 2022 using the modified retrospective method of accounting. Results for reporting periods beginning after September 30, 2022 are presented under the new standard, while prior quarters previously reported are recast as if the new standard had been applied since January 1, 2022.
2
Third Quarter 2023 Highlights
Net Income
$28.2 million | $33.3 million |
Reported | Adjusted(1) |
Efficiency Ratio | |
53.75% | 47.35% |
Reported | Adjusted(1) |
Diluted EPS | |
$0.65 | $0.77 |
Reported | Adjusted(1) |
ROAA | |
1.30% | 1.53% |
Reported | Adjusted(1) |
PTPP ROAA(1)
2.16% | 2.46% |
Reported | Adjusted |
ROTCE(1) | |
16.15% | 18.95% |
Reported | Adjusted |
Inland Bancorp Acquisition
- Closed transaction and successfully completed core system conversion and integration during 3Q23
- Added ~$1.0 billion in total deposits
- Converted over 21,000 deposit accounts
- Transitioned ~6,500 consumer and business customers to Byline Bank digital banking platforms
- Added ~$800 million in total loans
- Achieved employee retention targets
- On track to deliver against targeted cost savings
- Represents a non-GAAP financial measure. See "Non-GAAP Reconciliation" in the appendix.
- Represents total securities.
Strong Financial Performance
- GAAP EPS of $0.65; adjusted EPS(1) of $0.77
- 3Q23 earnings impacted by $6.4 million of merger-related expenses
Record Pre-TaxPre-Provision income (1) of $46.9 million; Pre-TaxPre-Provision ROAA(1) of 2.16%
Revenue of $104.8 million, up 16% LQ & 30% YoY Net interest income of $92.5 million, up 21% LQ & 35% YoY
- Net interest margin (FTE)(1) of 4.47%
Loan yields expanded 50 bps Deposit costs increased 43 bps Securities yields(2) expanded 39 bps Disciplined expense management with adjusted operating expenses(1): $51.2 million
Adj. efficiency ratio(1): 47.35% Adj. NIE/AA(1): 2.35%, down 25 bps LQ & 21 bps YoY
Credit quality, post-merger, remained stable: ACL as a percent of loans and leases of 1.60%, down QoQ
3
Loan and Lease Trends ($ in millions)
Total Loans & Leases and Average Yield | Highlights |
$6,621 | | ||||||||||||||||||||||||||||||||||||||||||||
$5,309 | $5,469 | $5,544 | $5,597 | 7.68% | |||||||||||||||||||||||||||||||||||||||||
6.83% | 7.18% | ||||||||||||||||||||||||||||||||||||||||||||
6.31% | |||||||||||||||||||||||||||||||||||||||||||||
5.52% | | ||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | |||||||||||||||||||||||||||||||||||||||||
Total Loans and Leases | Average Loan and Lease Yield | ||||||||||||||||||||||||||||||||||||||||||||
Portfolio Composition | Utilization Rates | ||||||||||||||||||||||||||||||||||||||||||||
65% | |||||||||||||||||||||||||||||||||||||||||||||
Resi | 55% | ||||||||||||||||||||||||||||||||||||||||||||
63% | |||||||||||||||||||||||||||||||||||||||||||||
LTM Average | |||||||||||||||||||||||||||||||||||||||||||||
11% | 61% | ||||||||||||||||||||||||||||||||||||||||||||
C&D | |||||||||||||||||||||||||||||||||||||||||||||
8% | C&I | 59% | |||||||||||||||||||||||||||||||||||||||||||
57% | 55.2% | ||||||||||||||||||||||||||||||||||||||||||||
37% | |||||||||||||||||||||||||||||||||||||||||||||
55% | |||||||||||||||||||||||||||||||||||||||||||||
Commercial | 53% | ||||||||||||||||||||||||||||||||||||||||||||
51% | |||||||||||||||||||||||||||||||||||||||||||||
Real Estate | 49% | ||||||||||||||||||||||||||||||||||||||||||||
34% | Leasing | ||||||||||||||||||||||||||||||||||||||||||||
47% | |||||||||||||||||||||||||||||||||||||||||||||
10% | 1Q | 3Q | 1Q | 3Q | 1Q | 3Q | 1Q | 3Q | |||||||||||||||||||||||||||||||||||||
2020 | 2020 | 2021 | 2021 | 2022 | 2022 | 2023 | 2023 |
(1) Cumulative Beta excluding loan accretion is calculated as the change in yield on loans and leases from 4Q21 to 3Q23 divided by the change in average Fed Funds from 4Q21 to 3Q23.
Total loans and leases were $6.6 billion at 3Q23, an increase of $1.0 billion from the end of the prior quarter
- Originated $310.9 million in new loans, net of loan sales in 3Q23
- Production driven by commercial and lease originations of $171.3 million and $86.5 million, respectively
Payoff activity decreased by $71.6 million from 2Q23
Cumulative Loan Beta(1): 41%
Originations and Payoffs
$303 | $269 | $312 | $311 | ||
$249 | $231 | $256 | |||
$216 | |||||
$185 | |||||
$174 |
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||
Loan & Lease Originations | Loan & Lease Payoffs | |||||
4
Government-Guaranteed Lending ($ in millions)
On Balance Sheet SBA 7(a) & USDA Loans
$ Balance | % of Portfolio | |
Unguaranteed | $380.2 | 5.7% |
Guaranteed | 81.5 | 1.2% |
Total SBA 7(a) Loans | $461.7 | 7.0% |
Unguaranteed | $37.0 | 0.6% |
Guaranteed | 28.3 | 0.4% |
Total USDA Loans | $65.3 | 1.0% |
Highlights
- A leading SBA 7(a) lender for Government Fiscal Year 2023
- #5 SBA 7(a) lender in the United States
- #1 SBA 7(a) and 504 lender in Illinois
- Closed $113.4 million in loan commitments in 3Q23
- SBA 7(a) portfolio $461.7 million, down $10.9 million from 2Q23
- ACL/Unguaranteed loan balance ~8.1%
- $1.7 billion in serviced government guaranteed loans for investors in 3Q23
Unguaranteed Loan Portfolio by Industry
Total SBC Closed Loan Commitments
Retail Trade
All Other Industries (1)
Food Services
Manufacturing
Health Care
Transportation
Wholesale Trade
Other Services
Professional
Construction
Finance and Insurance
6% 5%
5%
5%
5%
7%
8%
17%
16%
14%
12%
$151.4 | $140.5 | |
$120.9 | ||
$113.4 | ||
$71.2 |
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
(1) Represents sectors with less than 5% of the total portfolio.
5
Deposit Trends ($ in millions)
Deposit Composition
$5,612 | $5,695 | $5,813 | $5,917 | $6,954 | |||||||||||||||
2.0% | 2.8% | 2.9% | 3.6% | 4.5% | |||||||||||||||
10.4% | 13.4% | ||||||||||||||||||
18.7% | 20.5% | 20.8% | |||||||||||||||||
38.4% | 35.8% | 35.2% | |||||||||||||||||
36.6% | |||||||||||||||||||
38.0% | |||||||||||||||||||
11.0% | 10.4% | 9.6% | 9.0% | ||||||||||||||||
8.5% | |||||||||||||||||||
38.2% | 37.6% | 33.6% | 30.3% | 28.2% | |||||||||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | |||||||||||||||
Non Interest Checking | Interest Checking | MMDA & Savings | Time <$250K | Time >$250K | |||||||||||||||
Average Non-Interest Bearing Deposits |
Highlights
Total deposits increased $1.0 billion to $7.0 billion
- Deposits excluding the acquisition increased $74.4 million, or 5.8% annualized
- Commercial deposits accounted for 47.7% of total deposits and represent 76.8% of all non-interest-bearing deposits
- Cost of deposits increased 43 bps in 3Q23, due to rate increases and mix changes
- Cumulative total deposit beta remains low at ~39% since the beginning of the current tightening cycle
Cost of Interest Bearing Deposits
$2,198 | $2,235 | $2,077 | ||
$1,849 | $1,988 | |||
Deposit Beta(1)
Interest-Bearing Deposits: 55%
Total Deposits: 39%
1.20%
0.71%
3.00%
2.49%
1.81%
2.13%
1.70%
1.15%
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
- Beta calculation is based on change in deposit cost divided by change in Fed Funds from 4Q21 to 3Q23.
0.43% | 0.73% | ||||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | |||||||
Cost of Interest Bearing Deposits | Cost of Deposits | ||||||||||
6
Net Interest Income and Net Interest Margin Trends ($ in millions)
Net Interest Income
$92,452
$76,604 | $75,718 | $76,166 |
$68,635
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
Highlights
- Net interest income was $92.5 million, up 21.4% from 2Q23
- Net interest margin increased 14 basis points from 2Q23 to 4.46%
- Loan and lease yield of 7.68%, up 50 basis points from 2Q23
Interest Rate Sensitivity
- Added $100 million in notional forward starting cash flow hedges:
- Receive-fixed:rate of 7.15%; WAM ~3.4 years, with start dates in 2024
- $50 million in notional cash flow hedges went effective in 3Q23
- Pay-fixed:rate of 1.52%; WAM ~3.4 years
Repricing Mix | NIM, Yields, and Costs | NIM Bridge | |||||
7.18% | 7.68% | 0.03% | |||||
Libor | 6.31% | 6.83% | |||||
4% | |||||||
5.52% | |||||||
Prime | Fixed | 4.03% | 4.39% | 4.38% | 4.32% | 4.46% | |
25% | |||||||
42% |
1.81% | 2.17% | 2.04% | 2.03% | 2.45% | |
2.13% | |||||
1.15% | 1.70% | ||||
SOFR | 0.43% | 0.73% | |||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | |
29% |
Average Loan and Lease Yield | Net Interest Margin | |||
Taxable Securities Yield | Cost of Deposits | 7 | ||
Non-Interest Income Trends ($ in millions)
Total Non-Interest Income
$15.1 | $14.3 | |||||||||||||||||
12% | $12.4 | |||||||||||||||||
$12.0 | $11.5 | 12% | ||||||||||||||||
6% | 11% | |||||||||||||||||
10% | 15% | 7% | ||||||||||||||||
8% | ||||||||||||||||||
8% | 34% | |||||||||||||||||
8% | 40% | |||||||||||||||||
47% | 48% | 7% | 8% | 52% | ||||||||||||||
8% | 27% | |||||||||||||||||
11% | 18% | 10% | ||||||||||||||||
9% | ||||||||||||||||||
18% | 18% | 14% | 16% | 19% | ||||||||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||||||||||||||
Fees and service charges on deposits | Net servicing fees | ATM and interchange fees | ||||||||||||||||
Net gains on sales of loans | Wealth management and trust income | Other (1) | ||||||||||||||||
Net Gains on Sales of Loans
Highlights
- Non-interestincome was $12.4 million, a decrease of $1.9 million from 2Q23
- $3.6 million FV mark on loan servicing asset charge due to higher discount rates and increased prepayments
- Non-interestincome remained stable QoQ, excluding FV mark on loan servicing asset
Government Guaranteed Loan Sales
- $101.6 million of guaranteed loans sold in 3Q23
- Loans held for sale decreased to $7.3 million in 3Q23
Volume Sold and Average Net Premiums
$6.5 | $120 | 15.00% | ||||||||
$5.6 | $5.7 | $101.6 | ||||||||
$5.5 | $5.1 | $100 | $86.0 | $85.9 | ||||||
$75.4 | ||||||||||
$72.2 | ||||||||||
$80 | 12.00% | |||||||||
$60 | ||||||||||
$40 | 9.09% | 9.00% | ||||||||
8.43% | 8.64% | |||||||||
$20 | 8.02% | 8.01% | ||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | $0 | 6.00% | ||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||||||
10 year loans | 25 year loans | USDA | Other | Average Net Premiums | ||||||
(1) Other includes net servicing losses for 4Q22 and 3Q23. | 8 |
Non-Interest Expense Trends ($ in millions)
Non-Interest Expense
$57.9
$50.5 | $48.8 | $49.3 |
$46.0 |
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||||||||
Salaries and employee benefits | Occupancy and equipment | Impairment charge on assets held for sale | ||||||||||
Data processing | Legal, audit and other | Loan and lease related | ||||||||||
Intangible assets amortization | All other | |||||||||||
Non-Interest Expense Bridge | ||||||||||||
$0.9 | $0.8 | $0.4 | ||||||||||
$3.0 | $57.9 | |||||||||||
$4.9 | ||||||||||||
$49.3 | ||||||||||||
($0.7) | ($0.7) | |||||||||||
(1) Represents a non-GAAP financial measure. See "Non-GAAP Reconciliation" in the appendix.
Highlights
- Non-interestexpenses increased to $57.9 million from $49.3 million in 2Q23, primarily due to merger-related expenses
- $5.3 million in higher salaries and employee benefits
- $2.2 million increase in data processing
- Excluding significant items of $6.7 million, adjusted non-interest expense(1) stood at $51.2 million; adjusted efficiency ratio(1): 47.35%
- Disciplined expense management with adjusted NIE/AA(1): 2.35%, down 25 bps LQ & 21 bps YoY
Efficiency Ratio
55.07% | 55.53% | 52.92% | 53.75% |
52.10% |
55.07% 54.50%
51.54% 51.39%
47.35%
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||
Adjusted Efficiency Ratio(1) | Efficiency Ratio | |||||
9
Asset Quality Trends ($ in millions)
Net Charge-offs | Allowance for Credit Losses (ACL) |
$5.4 | $92.7 | $105.7 | |||||||
$90.5 | |||||||||
$4.3 | $79.7 | $81.9 | |||||||
$3.2 | |||||||||
$1.8 | 0.33% | 1.64% | 1.66% | 1.60% | |||||
$1.2 | 0.31% | ||||||||
0.24% | 1.51% | 1.51% | |||||||
0.14% | 0.09% | ||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
Net charge-offs of loans and leases | Net charge-offs (annualized %) | ACL | ACL as % of Total Loans & Leases |
NPLs / Total Loans & Leases | Delinquencies | ||||||||
0.84% | $36.9 | ||||||||
0.80% | 0.79% | ||||||||
0.04% | 0.69% | ||||||||
0.04% | 0.66% | 0.06% | |||||||
0.76% | 0.04% | 0.80% | 0.05% | ||||||
$15.4 | $14.4 | ||||||||
0.73% | 0.56% | ||||||||
0.62% | 0.64% | $9.6 | |||||||
$5.8 | |||||||||
0.28% | 0.26% | ||||||||
0.17% | |||||||||
0.11% | |||||||||
Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 |
Government Guaranteed NPLs | Inland Acquired NPLS | NPLs ex. Government Guaranteed | Inland | Delinquencies (30-89 Days) | Delinquencies / Total Loans and Leases | ||||
Note: Delinquencies represent accruing loans and leases past due 30 days or more. Delinquencies to Total Loans and Leases represent delinquencies divided by period end loans and leases. | 10 |
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Byline Bancorp Inc. published this content on 26 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2023 20:22:09 UTC.