Byline Bancorp, Inc. Q3 FY2025 earnings call

• The quarter showed strong financial performance with net income and revenue growth. - Balance sheet saw loan and deposit growth, with originations driven by commercial banking. - Credit quality improved with lower provisions and better asset quality metrics. - Capital levels remained robust. - Recognized for employee engagement and workplace awards. - Expanding commercial payments business and anticipating crossing $10 billion asset mark in Q1 2026, delaying Durbin and insurance impacts.

For the third quarter, Byline Bancorp delivered net income of $37 million or $0.82 per diluted share on revenue of $116 million. Revenue grew 13.6% quarter on quarter and 19% year on year. Pretax pre-provision income was $55 million, pretax pre-provision ROA 2.25%, ROA 1.5%, and ROTCE 1%. The margin expanded to 4.27% due to an improved deposit mix and higher asset yields. Loans grew 6% quarter on quarter to $7.5 billion, deposits were $7.8 billion, up 1% quarter on quarter. Credit costs declined with a provision of $5.3 million, a decrease of $6.6 million from the prior quarter. Asset quality metrics improved. Capital levels remained robust with CET1 surpassing 12%, and tangible book value per share up 5% quarter on quarter and 12% year on year.

• Expect loan growth in mid-single digits in Q4. - Net interest income expected to be $97 million to $99 million in Q4. - Durbin amendment impact estimated at $4.5 million to $5 million, effective July 2027. - Government shutdown may delay SBA loan gain on sale income to Q1 if shutdown persists.

• Government shutdown affecting SBA loan sales in secondary market. - Competitive landscape with tight spreads impacting loan and deposit pricing. - Regulatory impacts from Durbin amendment and FDIC insurance costs once crossing $10 billion asset threshold.

Q: Talk about margin and net interest income assumptions.

A: Thomas J. Bell and Alberto Paracchini discussed beating model assumptions due to competitive environment and better analytics, outperforming model with disciplined rate adjustments.

Q: Impact of government shutdown on SBA business.

A: Alberto Paracchini mentioned continued origination activity, but gain on sale income timing affected, with potential delay to Q1 if shutdown persists.

Q: Durbin amendment impact.

A: Alberto Paracchini stated Durbin impact around $4.5 million to $5 million, effective July 2027.

Q: Credit reserves and SBA shutdown impact on reserving.

A: Alberto Paracchini said reserves released due to loan resolution, and for SBA loans held longer, would reserve based on unguaranteed exposure.