BYLINE BANCORP, INC. Q3 FY2024 earnings call

• Roberto Herencia highlighted solid overall performance, top quartile peer group rankings, and excitement about the merger with First Security, as well as workplace awards earned.
• Alberto Paracchini discussed third quarter results including net income, revenue, profitability metrics, loan and deposit figures, expense management, and the merger with First Security, which adds $355 million in assets, $201 million in loans, and $323 million in deposits.
• Thomas Bell detailed loan and lease portfolio, deposit growth, net interest income, non-interest expense, provision expenses, cash position, and capital levels, emphasizing strong results despite changing interest rates.

For the third quarter, Byline Bancorp reported net income of $30.3 million or $0.69 per diluted share on revenue of $102 million. Total loans stood at $6.9 billion, flat from the prior quarter. Total deposits increased to $7.5 billion, up 8.2% annualized from the second quarter. ROA was 129 basis points and return on tangible common equity was 14.5%. Net interest income was $87.5 million, up 1% from the prior quarter. Non-interest income was $14.4 million, up 12% linked quarter. Expenses excluding transaction-related charges were $53.9 million.

• Net interest income for Q4 expected in the $85 million to $87 million range.
• Q4 expenses expected between $55 million and $57 million.
• 2025 expenses expected to range in the $54 million to $57 million area.
• Anticipates loan growth in the mid-single-digits for 2025.
• Merger with First Security expected to complete in the first half of 2025.

• Potential impact of interest rate changes on net interest income and margins.
• Credit risks in the SBA loan portfolio, though management remains prepared with appropriate allowances.

Q: Alberto, could you expand on enthusiasm from strategic planning and organic business aspects, and tie into acquisition optimism?

A: Alberto mentioned continued opportunities for similar acquisitions, being the largest publicly traded commercial bank under $10 billion in the market, and optimism about attracting banking talent and executing the strategy.

Q: Damon asked about loan growth outlook, commercial real estate behavior, credit net charge-offs, and capital management.

A: Alberto noted higher commercial real estate pipeline, charge-offs excluding PCD in 35 basis point range, and capital management including flexibility in returning excess capital via dividends, buybacks, or acquisitions.

Q: Terry McEvoy inquired about deposit market pricing strategy, loan originations, and BTFP maturity.

A: Thomas Bell discussed deposit pricing beta adjustments, loan origination pipelines, and BTFP being off the balance sheet.

Q: Brendan Nosal asked about profitability holding the line and SBA portfolio stress.

A: Alberto discussed potential margin dips but expected return to consistent profitability, and cautious yet attractive approach to SBA portfolio with normalized stress and appropriate reserves.

Q: Brian Martin asked about deal size outlook, margin competitiveness, and BTFP impact.

A: Alberto mentioned continued interest in $350 million to couple billion dollar range acquisitions, stable loan pricing, and BTFP impact on margin being around 6-7 basis points.