Market Overview

Byline Bancorp, Inc. Reports Third Quarter 2017 Financial Results

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Third Quarter 2017 Summary

  • Net income of $9.8 million
  • Net interest margin improves to 4.18%
  • Loan originations of $135.8 million
  • Return on average assets improves to 1.17%
  • Loan to deposit ratio increases to 88.01%

Byline Bancorp, Inc. (NYSE:BY), the parent company of Byline Bank,
today reported net income of $9.8 million, or $0.32 per diluted share,
for the third quarter of 2017, compared with net income of $6.1 million,
or $(0.18) per diluted share, for the second quarter of 2017, and net
income of $1.6 million, or $0.08 per diluted share, for the third
quarter of 2016.

"We delivered a strong quarter driven by solid loan and lease growth and
an expanding net interest margin," said Alberto J. Paracchini, President
and Chief Executive Officer of Byline Bancorp, Inc. "We are gaining more
traction with our business development efforts as we've moved through
the year. We had $135.8 million in gross loan originations during the
third quarter, which resulted in double-digit annualized loan and lease
growth despite consistent elevated pay-off activity. Our net interest
margin is benefiting from a better mix of earning assets, higher loan
yields and relatively stable funding costs. As a result, we are seeing a
positive impact on our margin and a higher level of net interest
income," said Mr. Paracchini.

STATEMENTS OF OPERATIONS

Net Interest Income

The following table presents net interest income for the periods
indicated:

  Three Months Ended     Nine Months Ended
September 30,     June 30,     March 31,     September 30, September 30,     September 30,
(dollars in thousands) 2017 2017 2017 2016 2017 2016
INTEREST AND DIVIDEND

INCOME

Interest and fees on loans and

leases

$ 30,933 $ 29,181 $ 28,396 $ 19,081 $ 88,510 $ 56,334
Interest on taxable securities 3,720 3,703 3,790 3,312 11,213 10,492
Interest on tax-exempt securities 174 151 133 152 458 509
Other interest and dividend

income

  217   280   169   112   666   254
Total interest and dividend

income

35,044 33,315 32,488 22,657 100,847 67,589
INTEREST EXPENSE
Deposits 2,112 1,923 1,483 1,063 5,518 3,281
Federal Home Loan Bank advances 850 772 660 200 2,282 371
Subordinated debentures and other

borrowings

  670   809   807   529   2,286   1,571
Total interest expense   3,632   3,504   2,950   1,792   10,086   5,223
Net interest income $ 31,412 $ 29,811 $ 29,538 $ 20,865 $ 90,761 $ 62,366
 

The following table presents the quarter-to-date schedule of average
interest-earning assets and average interest-bearing liabilities for the
periods indicated:

  For the Three Months Ended
September 30,     June 30,
2017 2017
(dollars in thousands) Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

ASSETS    
Cash and cash equivalents $ 48,354 $ 106 0.87 % $ 80,327 $ 174 0.87 %
Loans and leases(1) 2,193,076 30,933 5.60 % 2,153,482 29,181 5.44 %
Securities available-for-sale(2) 602,146 3,181 2.10 % 605,688 3,134 2.08 %
Securities held-to-maturity 111,345 650 2.32 % 116,931 675 2.32 %
Tax-exempt securities   26,166   174 2.63 %   21,413   151 2.83 %
Total interest-earning assets $ 2,981,087 $ 35,044 4.66 % $ 2,977,841 $ 33,315 4.49 %
Allowance for loan and lease losses (14,570 ) (12,377 )
All other assets   340,669   319,201
TOTAL ASSETS $ 3,307,186 $ 3,284,665
LIABILITIES AND STOCKHOLDERS'

EQUITY

Deposits
Interest checking $ 186,447 $ 29 0.06 % $ 187,825 $ 31 0.07 %
Money market accounts 388,365 275 0.28 % 374,383 226 0.24 %
Savings 441,096 79 0.07 % 447,324 79 0.07 %
Time deposits   758,518   1,729 0.90 %   799,285   1,587 0.80 %
Total interest bearing deposits   1,774,426   2,112 0.47 %   1,808,817   1,923 0.43 %
Federal Home Loan Bank advances 222,800 850 1.51 % 225,579 772 1.37 %
Other borrowed funds   60,418   670 4.40 %   76,255   809 4.26 %
Total borrowings   283,218   1,520 2.13 %   301,834   1,581 2.10 %
Total interest bearing liabilities $ 2,057,644 $ 3,632 0.70 % $ 2,110,651 $ 3,504 0.67 %
Non-interest checking 748,523 745,907
Other liabilities 42,577 31,290
Total stockholders' equity   458,442   396,817
TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$ 3,307,186 $ 3,284,665
Net interest spread(3)   3.96 %   3.82 %
Net interest income $ 31,412 $ 29,811
Net interest margin(4)   4.18 %   4.02 %
 
Net loan accretion impact on margin $ 2,166   0.29 % $ 2,471   0.33 %
Net interest margin excluding loan

accretion(6)

  3.89 %   3.69 %
        (1)   Loan and lease balances are net of deferred origination fees and
costs and initial indirect costs. Non-accrual loans and leases are
included in total loan and lease balances.
(2) Interest income and rates exclude the effects of a tax equivalent
adjustment to adjust tax exempt investment income on tax-exempt
investment securities to a fully taxable basis due to immateriality.
(3) Represents the average rate earned on interest-earning assets minus
the average rate paid on interest-bearing liabilities.
(4) Represents net interest income (annualized) divided by total average
earning assets.
(5) Average balances are average daily balances.
(6) Represents a non-GAAP financial measure. See "Reconciliation of
non-GAAP Financial Measures" for a reconciliation of our non-GAAP
measures to the most directly comparable GAAP financial measure.

Net interest income for the third quarter of 2017 was $31.4 million, an
increase of $1.6 million from $29.8 million for the second quarter of
2017.

The increase in net interest income was primarily due to:

  • An increase of $1.8 million in interest and fees on loans and leases,
    primarily due to the growth in the originated loan and lease portfolio
    and increased average yields; and
  • A decrease of $139,000 in interest expense on other borrowings,
    primarily due to the repayment of the outstanding balance of $16.2
    million under the Company's line of credit during the quarter.

Partially offset by:

  • An increase of $189,000 in interest expense on deposits, primarily due
    to higher rates on interest-bearing deposit accounts; and
  • An increase of $78,000 in interest expense on Federal Home Loan Bank
    advances, primarily due to higher rates.

Net interest margin for the third quarter of 2017 was 4.18%, an increase
of 16 basis points from the second quarter of 2017. The primary driver
of the increase in the net interest margin was due to the mix of earning
assets, driven by the increased volume of, and related yields on, loans
and leases during the quarter.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $3.9 million for the third
quarter of 2017, an increase of $385,000 compared to $3.5 million for
the second quarter of 2017. This increase was primarily driven by the
growth in the loan and lease portfolio.

Non-interest Income

The following table presents the components of non-interest income for
the periods indicated:

  Three Months Ended     Nine Months Ended
September 30,       June 30,       March 31,       September 30, September 30,       September 30,
(dollars in thousands) 2017 2017 2017 2016 2017 2016
NON-INTEREST INCOME
Fees and service charges on

deposits

$ 1,418 $ 1,348 $ 1,219 $ 1,465 $ 3,985 $ 4,227
Servicing fees 959 1,076 919 2,954
ATM and interchange fees 1,495 1,499 1,348 1,470 4,342 4,392
Net gains on sales of securities

available-for-sale

8 802 8 3,231
Net gains (losses) on sales of loans 7,499 8,445 8,082 (60 ) 24,026 (39 )
Fees on mortgage loan sales, net 2 46 2 101
Other non-interest income   547   825   730   1,053   2,102   3,350
Total non-interest income $ 11,918 $ 13,193 $ 12,308 $ 4,776 $ 37,419 $ 15,262
 

Non-interest income for the third quarter of 2017 was $11.9 million, a
decrease of $1.3 million from $13.2 million for the second quarter of
2017, primarily due to:

  • A decrease of $946,000 in net gains on sales of loans; and
  • A decrease of $117,000 in servicing fees, primarily due to loan
    prepayments.

During the third quarter of 2017, the Company sold $71.8 million of
government guaranteed loans compared to $75.1 million during the second
quarter of 2017, contributing to the decline in net gains on sale of
loans for the quarter.

Non-interest Expense

The following table presents the components of non-interest expense for
the periods indicated:

    Three Months Ended       Nine Months Ended
September 30,       June 30,       March 31,     September 30, September 30,       September 30,
(dollars in thousands) 2017 2017 2017 2016 2017 2016
NON-INTEREST EXPENSE
Salaries and employee benefits $ 16,323 $ 17,226 $ 16,602 $ 11,266 $ 50,151 $ 34,206
Occupancy expense, net 3,301 3,485 3,739 3,358 10,525 10,511
Equipment expense 630 616 563 516 1,809 1,519
Loan and lease related expenses 891 801 877 443 2,569 1,090
Legal, audit and other professional fees 1,608 1,090 1,671 1,065 4,369 3,785
Data processing 2,399 2,447 2,409 1,990 7,255 5,760
Net (gain) loss recognized on other real estate

owned and other related expenses

565 141 (570 ) 292 136 1,386
Regulatory assessments 326 384 184 502 894 1,930
Other intangible assets amortization expense 769 769 769 747 2,307 2,242
Advertising and promotions 196 318 289 156 803 454
Telecommunications 351 396 418 370 1,165 1,284
Other non-interest expense   3,706   1,576   1,900   1,679   7,182   5,521
Total non-interest expense $ 31,065 $ 29,249 $ 28,851 $ 22,384 $ 89,165 $ 69,688
 

Non-interest expense for the third quarter of 2017 was $31.1 million, an
increase of $1.8 million from $29.2 million for the second quarter of
2017.

The increase in total non-interest expense was primarily due to:

  • Impairment charges, included in other non-interest expense, of
    $951,000 during the third quarter of 2017, primarily related to the
    planned disposition of the former headquarters of Byline Bank;
  • An increase of $518,000 in legal, audit and other professional fees,
    primarily due to the increased costs associated with being a public
    company;
  • An increase of $424,000 in net loss recognized on other real estate
    owned and other related expenses, primarily due to lower gains on
    sales of other real estate owned properties; and
  • An increase of $376,000 in provision for unfunded commitments,
    included in other non-interest expense, primarily due to growth in
    unfunded loan and lease commitments.

Partially offset by:

  • A decrease of $903,000 in salaries and employee benefits, primarily
    due to decreased recruitment costs and increased deferred loan
    origination costs, mainly salary expense, due to increased loan and
    lease originations; and
  • A decrease of $184,000 in occupancy expense, net, primarily due to
    reductions in real estate tax expenses.

The Company's efficiency ratio was 69.92% for the third quarter of 2017,
compared with 66.23% for the second quarter of 2017 and 84.38% for the
third quarter of 2016.

INCOME TAXES

The Company recorded an income tax benefit of $1.4 million during the
third quarter of 2017 compared to a provision of $4.1 million during the
second quarter of 2017, a decrease of $5.5 million. As part of a budget
package passed by the Legislature of the State of Illinois, the
corporate income tax rate increased from 5.25% to 7.00% effective July
1, 2017. The Company recorded a state income tax benefit of $4.6
million, or $0.16 per diluted share during the quarter ended September
30, 2017, as a result of increased value to the deferred tax asset
related to the Company's Illinois net loss deduction.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $3.3 billion at September 30, 2017, a decrease of
$54.7 million from $3.4 billion at June 30, 2017, and stable compared to
$3.3 billion at December 31, 2016.

The decrease in the current quarter was primarily due to:

  • The receipt of net proceeds due of $82.7 million in connection with
    the Company's initial public offering;
  • The completion of the repurchase of all of the Company's Series A
    Preferred Stock for $25.5 million; and
  • The repayment, in full, of the amount outstanding under the Company's
    line of credit of $16.2 million.

Partially offset by:

  • An increase in loans and leases of $67.1 million from $2.1 billion at
    June 30, 2017 to $2.2 billion at September 30, 2017.

The following table shows our allocation of the originated, acquired
impaired and acquired non-impaired loans and leases at the dates
indicated:

    September 30, 2017     June 30, 2017     December 31, 2016
(dollars in thousands) Amount     % of Total Amount     % of Total Amount     % of Total
Originated loans and leases      
Commercial real estate $ 463,020 20.9 % $ 407,173 18.9 % $ 338,752 15.8 %
Residential real estate 398,062 18.0 % 384,545 17.9 % 394,168 18.3 %
Construction, land development, and

other land

85,666 3.9 % 83,618 3.9 % 119,357 5.6 %
Commercial and industrial 390,331 17.6 % 348,341 16.2 % 309,097 14.4 %
Installment and other 2,726 0.1 % 2,595 0.1 % 2,021 0.1 %
Leasing financing receivables   134,193   6.0 %   129,005   6.0 %   118,493   5.5 %
Total originated loans and leases $ 1,473,998 66.5 % $ 1,355,277 63.0 % $ 1,281,888 59.7 %
Acquired impaired loans
Commercial real estate $ 173,106 7.8 % $ 188,161 8.8 % $ 207,303 9.7 %
Residential real estate 152,149 6.9 % 162,349 7.6 % 175,717 8.2 %
Construction, land development, and

other land

5,424 0.2 % 5,830 0.3 % 6,979 0.3 %
Commercial and industrial 11,433 0.5 % 12,400 0.5 % 13,464 0.6 %
Installment and other   488   0.0 %   555   0.0 %   574   0.0 %
Total acquired impaired loans $ 342,600 15.4 % $ 369,295 17.2 % $ 404,037 18.8 %
Acquired non-impaired loans and leases
Commercial real estate $ 225,759 10.2 % $ 233,855 10.9 % $ 250,289 11.6 %
Residential real estate 32,451 1.5 % 37,822 1.8 % 40,853 1.9 %
Construction, land development, and

other land

3,214 0.2 % 3,187 0.1 % 14,430 0.7 %
Commercial and industrial 100,291 4.5 % 107,433 5.0 % 115,677 5.4 %
Installment and other 38 0.0 % 365 0.0 % 364 0.0 %
Leasing financing receivables   38,148   1.7 %   42,156   2.0 %   40,473   1.9 %
Total acquired non-impaired loans

and leases

$ 399,901   18.1 % $ 424,818   19.8 % $ 462,086   21.5 %
Total loans and leases $ 2,216,499   100.0 % $ 2,149,390   100.0 % $ 2,148,011   100.0 %
Allowance for loan and lease losses   (15,980 )   (13,969 )   (10,923 )
Total loans and leases, net of allowance for

loan and lease losses

$ 2,200,519 $ 2,135,421 $ 2,137,088
 

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and
leases, non-performing assets, and other real estate owned at the dates
indicated:

(dollars in thousands)     September 30, 2017     June 30, 2017     March 31, 2017     December 31, 2016     September 30, 2016
Non-accrual loans and leases $ 15,121 $ 15,291 $ 7,843 $ 6,784 $ 7,105
Past due loans and leases 90 days or more

and still accruing interest

77
Accruing troubled debt restructured loans   1,631   981   1,004   602   686
Total non-performing loans and leases 16,752 16,272 8,847 7,386 7,868
Other real estate owned   13,859   12,684   13,173   16,570   15,274
Total non-performing assets $ 30,611 $ 28,956 $ 22,020 $ 23,956 $ 23,142
Total non-performing loans and leases as a

percentage of total loans and leases

0.76 % 0.76 % 0.41 % 0.34 % 0.46 %
Total non-performing assets as a percentage

of total assets

0.93 % 0.86 % 0.67 % 0.73 % 0.84 %
Allowance for loan and lease losses as a

percentage of non-performing loans and

leases

95.39 % 85.85 % 133.57 % 147.88 % 82.63 %
 

Variances in credit quality metrics:

  • Non-performing assets were $30.6 million at September 30, 2017, an
    increase of $1.7 million from $29.0 million at June 30, 2017;
  • Non-performing loans and leases were $16.8 million at September 30,
    2017, an increase of $480,000 from $16.3 million at June 30, 2017; and
  • Other real estate owned was $13.9 million at September 30, 2017, an
    increase of $1.2 million from $12.7 million at June 30, 2017.

Allowance for Loan and Lease Losses

The following table presents the balance and activity within the
allowance for loan and lease losses for the periods indicated:

    Three Months Ended     Nine Months Ended
September 30,     June 30,     March 31,     September 30, September 30,   September 30,
(dollars in thousands) 2017 2017 2017 2016 2017 2016
Allowance for loan and lease losses,

beginning of period

$ 13,969 $ 11,817 $ 10,923 $ 6,490 $ 10,923 $ 7,632
Provision for loan and lease losses 3,900 3,515 1,891 1,683 9,306 5,348
Net (charge-offs) recoveries of loans   (1,889 )   (1,363 )   (997 )   (1,672 )   (4,249 )   (6,479 )
Allowance for loan and lease losses,

end of period

$ 15,980 $ 13,969 $ 11,817 $ 6,501 $ 15,980 $ 6,501
 
Allowance for loan and lease losses to

period end total loans held for

investment

0.72 % 0.65 % 0.55 % 0.38 % 0.72 % 0.65 %
Net charge-offs (annualized) to average

loans outstanding during the period

0.34 % 0.26 % 0.19 % 0.40 % 0.26 % 0.56 %
Provision for loan and lease losses to

net charge-offs during the period

2.06 x 2.58 x 1.90 x 1.01 x 2.19 x 0.83 x
 

The allowance for loan and lease losses as a percentage of total loans
and leases held for investment increased from 0.65% at June 30, 2017 to
0.72% at September 30, 2017. This increase was primarily driven by the
growth in the loan and lease portfolio.

Net Charge-Offs

Net charge-offs during the third quarter of 2017 were $1.9 million, or
0.34% of average loans and leases, on an annualized basis, an increase
of $526,000 compared to $1.4 million, or 0.26%, during the second
quarter of 2017, primarily due to increased Small Business
Administration loan charge-off activity.

Deposits and Other Liabilities

The following table presents the composition of deposits at the dates
indicated:

    September 30,       June 30,       March 31,       December 31,       September 30,
(dollars in thousands) 2017 2017 2017 2016 2016
Non-interest bearing demand deposits $ 753,662 $ 781,636 $ 732,267 $ 724,457 $ 673,823
Interest bearing checking accounts 187,232 182,351 192,317 173,929 190,732
Money market demand accounts 418,006 353,304 393,372 369,074 423,929
Other savings 435,536 445,220 446,847 446,418 438,015
Time deposits (below $100,000) 377,929 395,385 407,471 392,854 292,065
Time deposits ($100,000 and above)   348,564   382,702   403,565   383,662   224,279
Total deposits $ 2,520,929 $ 2,540,598 $ 2,575,839 $ 2,490,394 $ 2,242,843
 

Total deposits were $2.5 billion at September 30, 2017, a decrease of
$19.7 million compared to the previous quarter but an increase of $30.5
million compared to December 31, 2016.

The decrease in the current quarter was primarily due to:

  • A decrease in total time deposits of $51.6 million, from $778.1
    million at June 30, 2017 to $726.5 million at September 30, 2017,
    primarily due to run-off of higher priced time deposits;
  • A decrease in non-interest bearing demand deposits of $28.0 million,
    from $781.6 million at June 30, 2017 to $753.7 million at
    September 30, 2017, primarily due to the settlement of a new deposit
    relationship related to a new loan funding that occurred at the end of
    the prior quarter, as previously disclosed; and
  • A decrease in other savings deposits of $9.7 million, from $445.2
    million at June 30, 2017 to $435.5 million at September 30, 2017,
    primarily related to seasonal fluctuations.

Partially offset by:

  • An increase in money market demand accounts of $64.7 million, from
    $353.3 million at June 30, 2017 to $418.0 million at September 30,
    2017, primarily due to seasonal fluctuations from a deposit
    relationship; and
  • An increase in interest bearing checking deposits of $4.9 million,
    from $182.4 million at June 30, 2017 to $187.2 million at
    September 30, 2017.

Total borrowings and other liabilities were $325.0 million at
September 30, 2017, a decrease of $46.8 million from $371.8 million at
June 30, 2017, and a decrease of $97.8 million from $422.8 million at
December 31, 2016.

The decrease was primarily due to:

  • The settlement of the repurchase of all of the Company's Series A
    Preferred Stock for $25.5 million; and
  • The repayment, in full, of the amount outstanding under the Company's
    line of credit of $16.2 million.

Partially offset by:

  • An increase in Federal Home Loan Bank advances of $14.9 million,
    primarily due to the Bank's ongoing funding needs as a result of
    increased loan demand.

Stockholders' Equity

Total stockholders' equity was $459.5 million at September 30, 2017, an
increase of $11.8 million from $447.7 million at June 30, 2017, and an
increase of $76.9 million from $382.7 million at December 31, 2016.

The following table presents the actual regulatory capital dollar
amounts and ratios of the Company and Byline Bank as of September 30,
2017:

    Actual       Minimum Capital

Required

      Required for the Bank

to be Considered

Well Capitalized

(dollars in thousands)   Amount       Ratio Amount       Ratio Amount     Ratio
Total capital to risk weighted assets:        
Company $ 399,542 16.08 % $ 198,807 8.00 % N/A N/A
Bank 356,132 14.30 % 199,306 8.00 % 249,133 10.00 %
Tier 1 capital to risk weighted assets:
Company $ 381,934 15.37 % $ 149,105 6.00 % N/A N/A
Bank 338,524 13.59 % 149,480 6.00 % 199,306 8.00 %
Common Equity Tier 1 (CET1) to

risk weighted assets:

Company $ 346,052 13.93 % $ 111,829 4.50 % N/A N/A
Bank 338,524 13.59 % 112,110 4.50 % 161,937 6.50 %
Tier 1 capital to average assets:
Company $ 381,934 11.95 % $ 127,796 4.00 % N/A N/A
Bank 338,524 10.57 % 128,135 4.00 % 160,169 5.00 %
 

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 9:00 a.m. Central
Time (10:00 a.m. Eastern Time) on Friday, October 27, 2017 to discuss
its quarterly financial results. Analysts and investors may participate
in the question-and-answer session. The call can be accessed via
telephone at (888) 317-6016. A recorded replay can be accessed through
November 10, 2017 by dialing (877) 344-7529; passcode: 10113038.

A slide presentation relating to the third quarter 2017 results will be
accessible prior to the scheduled conference call. The slide
presentation and webcast of the conference call can be accessed on the Events
and Presentations
page of the Company's investor relations website
at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company for
Byline Bank, a full service commercial bank serving small- and
medium-sized businesses, financial sponsors, and consumers. Byline Bank
has approximately $3.3 billion in assets and operates more than 50 full
service branch locations throughout the Chicago and Milwaukee
metropolitan areas. Byline Bank offers a broad range of commercial and
retail banking products and services including small ticket equipment
leasing solutions and is one of the top 10 Small Business Administration
lenders in the United States.

Non-GAAP Financial Measures

This release contains certain financial information determined by
methods other than in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). These measures
include non-interest income to total revenues, pre-tax pre-provision
return on average assets, tangible book value per share and tangible
common equity to tangible assets. Management believes that these
non-GAAP financial measures provide useful information to management and
investors that is supplementary to the Company's financial condition,
results of operations and cash flows computed in accordance with GAAP;
however, management acknowledges that our non-GAAP financial measures
have a number of limitations. As such, these disclosures should not be
viewed as a substitute for results determined in accordance with GAAP
financial measures that we and other companies use. Management also uses
these measures for peer comparison. See "Reconciliation of Non-GAAP
Financial Measures" in the financial schedules included in this press
release for a reconciliation of the non- GAAP financial measures to the
comparable GAAP financial measures.

Non-interest income to total revenues is non-interest income divided by
net interest income plus non-interest income. Management believes that
it is standard practice in the industry to present non-interest income
as a percentage of total revenue. Accordingly, management believes
providing these measures may be useful for peer comparison.

Pre-tax pre-provision return on average assets is pre-tax income plus
the provision for loan and lease losses, divided by average assets.
Management believes this metric is important due to the tax benefit
resulting from the reversal of the net deferred tax asset valuation
allowance and demonstrates profitability excluding the tax benefit and
excludes the provision for loan and lease losses.

Tangible book value per share is calculated as tangible common equity,
which is stockholders' equity reduced by preferred stock and goodwill
and other intangible assets, divided by total shares of common stock
outstanding. Management believes this metric is important due to the
relative changes in the book value per share exclusive of changes in
intangible assets.

Tangible common equity to tangible assets is calculated as tangible
common equity divided by tangible assets, which is total assets reduced
by goodwill and other intangible assets. Management believes this
measure is important to investors and analysts interested in relative
changes in the ratio of total stockholders' equity to total assets, each
exclusive of changes in intangible assets.

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 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.
Forward-looking statements speak only as of the date they are made, and
we assume no obligation to update any of these statements in light of
new information, future events or otherwise unless required under the
federal securities laws.

         
BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

 
(dollars in thousands) September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
ASSETS
Cash and due from banks $ 16,193 $ 17,740 $ 15,541 $ 17,735 $ 15,972
Interest bearing deposits with other banks   46,043   62,081   67,726   28,798   34,988
Cash and cash equivalents 62,236 79,821 83,267 46,533 50,960
Securities available-for-sale, at fair value 584,684 591,933 590,507 608,560 628,619
Securities held-to-maturity, at amortized cost 121,453 127,397 132,897 138,846 147,441
Restricted stock, at cost 10,628 11,978 9,503 14,993 11,250
Loans held for sale 2,087 6,835 23,492 23,976 1,278
Loans and leases:
Loans and leases 2,216,499 2,149,390 2,143,534 2,148,011 1,717,509
Allowance for loan and lease losses   (15,980 )   (13,969 )   (11,817 )   (10,923 )   (6,501 )
Net loans and leases 2,200,519 2,135,421 2,131,717 2,137,088 1,711,008
Servicing assets, at fair value 21,669 21,424 21,223 21,091
Accrued interest receivable 7,183 6,961 7,498 6,866 5,937
Premises and equipment, net 96,334 98,891 99,563 102,074 105,301
Assets held for sale 12,938 13,666 13,666 14,748 11,178
Other real estate owned, net 13,859 12,684 13,173 16,570 15,274
Goodwill 51,975 51,975 51,975 51,975 25,688
Other intangible assets, net 17,522 18,290 19,058 19,826 20,100
Bank-owned life insurance 5,680 5,643 6,676 6,557 4,166
Deferred tax assets, net 60,350 58,784 62,925 67,760
Due from broker 82,699
Due from counterparty 21,084 19,257
Other assets   15,241   16,463   17,573   18,367   9,729
Total assets $ 3,305,442 $ 3,360,122 $ 3,284,713 $ 3,295,830 $ 2,747,929
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Non-interest bearing demand deposits $ 753,662 $ 781,636 $ 732,267 $ 724,457 $ 673,823
Interest bearing deposits:
NOW, savings accounts, and money market accounts 1,040,774 980,875 1,032,536 989,421 1,052,676
Time deposits   726,493   778,087   811,036   776,516   516,344
Total deposits 2,520,929 2,540,598 2,575,839 2,490,394 2,242,843
Accrued interest payable 1,184 1,562 1,893 2,427 484
Line of credit 16,150 18,150 20,650
Federal Home Loan Bank advances 234,559 219,611 209,663 313,715 183,000
Securities sold under agreements to repurchase 30,807 32,429 31,940 17,249 14,094
Junior subordinated debentures issued to capital trusts, net 27,482 27,309 27,130 26,926 25,371
Accrued expenses and other liabilities   30,948   74,732   30,415   41,811   31,033
Total liabilities 2,845,909 2,912,391 2,895,030 2,913,172 2,496,825
STOCKHOLDERS' EQUITY
Preferred stock 10,438 10,438 25,441 25,441 15,003
Common stock 292 292
Additional paid-in capital 391,040 390,660 313,838 313,552 245,345
Retained earnings (accumulated deficit) 62,311 52,753 57,304 50,933 (12,982 )
Accumulated other comprehensive income (loss), net of tax   (4,548 )   (6,412 )   (6,900 )   (7,268 )   3,738
Total stockholders' equity   459,533   447,731   389,683   382,658   251,104
Total liabilities and stockholders' equity $ 3,305,442 $ 3,360,122 $ 3,284,713 $ 3,295,830 $ 2,747,929
 
       
BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 
Three Months Ended Nine Months Ended
September 30,     June 30,     March 31,     September 30, September 30,       September 30,
(dollars in thousands, except share and per share data) 2017 2017 2017 2016 2017 2016
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases $ 30,933 $ 29,181 $ 28,396 $ 19,081 $ 88,510 $ 56,334
Interest on taxable securities 3,720 3,703 3,790 3,312 11,213 10,492
Interest on tax-exempt securities 174 151 133 152 458 509
Other interest and dividend income   217   280   169   112   666   254
Total interest and dividend income 35,044 33,315 32,488 22,657 100,847 67,589
INTEREST EXPENSE
Deposits 2,112 1,923 1,483 1,063 5,518 3,281
Federal Home Loan Bank advances 850 772 660 200 2,282 371
Subordinated debentures and other borrowings   670   809   807   529   2,286   1,571
Total interest expense   3,632   3,504   2,950   1,792   10,086   5,223
Net interest income 31,412 29,811 29,538 20,865 90,761 62,366
PROVISION FOR LOAN AND LEASE LOSSES   3,900   3,515   1,891   1,683   9,306   5,348
Net interest income after provision for

loan and lease losses

  27,512   26,296   27,647   19,182   81,455   57,018
NON-INTEREST INCOME
Fees and service charges on deposits 1,418 1,348 1,219 1,465 3,985 4,227
Servicing fees 959 1,076 919 2,954
ATM and interchange fees 1,495 1,499 1,348 1,470 4,342 4,392
Net gains on sales of securities available-for-

sale

8 802 8 3,231
Net gains (losses) on sales of loans 7,499 8,445 8,082 (60 ) 24,026 (39 )
Fees on mortgage loan sales, net 2 46 2 101
Other non-interest income   547   825   730   1,053   2,102   3,350
Total non-interest income   11,918   13,193   12,308   4,776   37,419   15,262
NON-INTEREST EXPENSE
Salaries and employee benefits 16,323 17,226 16,602 11,266 50,151 34,206
Occupancy expense, net 3,301 3,485 3,739 3,358 10,525 10,511
Equipment expense 630 616 563 516 1,809 1,519
Loan and lease related expenses 891 801 877 443 2,569 1,090
Legal, audit and other professional fees 1,608 1,090 1,671 1,065 4,369 3,785
Data processing 2,399 2,447 2,409 1,990 7,255 5,760
Net (gain) loss recognized on other real estate

owned and other related expenses

565 141 (570 ) 292 136 1,386
Regulatory assessments 326 384 184 502 894 1,930
Other intangible assets amortization expense 769 769 769 747 2,307 2,242
Advertising and promotions 196 318 289 156 803 454
Telecommunications 351 396 418 370 1,165 1,284
Other non-interest expense   3,706   1,576   1,900   1,679   7,182   5,521
Total non-interest expense   31,065   29,249   28,851   22,384   89,165   69,688
INCOME BEFORE PROVISION FOR INCOME

TAXES

8,365 10,240 11,104 1,574 29,709 2,592
PROVISION (BENEFIT) FOR INCOME TAXES   (1,390 )   4,094   4,544   9   7,248   (222 )
NET INCOME 9,755 6,146 6,560 1,565 22,461 2,814
Dividends on preferred shares   195   10,697   189     11,081  
INCOME AVAILABLE (LOSS

ATTRIBUTABLE) TO COMMON

STOCKHOLDERS

$ 9,560 $ (4,551 ) $ 6,371 $ 1,565 $ 11,380 $ 2,814
EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.33 $ (0.18 ) $ 0.26 $ 0.08 $ 0.43 $ 0.15
Diluted $ 0.32 $ (0.18 ) $ 0.25 $ 0.08 $ 0.43 $ 0.15
Weighted average common shares

outstanding for basic earnings (loss) per

common share

29,246,900 24,667,587 24,616,706 19,497,811 26,194,025 18,838,354
Diluted weighted average common shares

outstanding for diluted earnings (loss) per

common share

29,752,331 24,667,587 25,078,427 19,763,434 26,697,841 19,103,977
 
       
BYLINE BANCORP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA (unaudited)

 
As of or For the Three Months Ended As of or For the Nine Months Ended
September 30,     June 30,     March 31,     September 30, September 30,     September 30,
(dollars in thousands, except share and per share data) 2017 2017 2017 2016 2017 2016
Summary of Operations
Net interest income $ 31,412 $ 29,811 $ 29,538 $ 20,865 $ 90,761 $ 62,366
Provision for loan and lease losses 3,900 3,515 1,891 1,683 9,306 5,348
Non-interest income 11,918 13,193 12,308 4,776 37,419 15,262
Non-interest expense   31,065   29,249   28,851   22,384   89,165   69,688
Income before provision for income taxes 8,365 10,240 11,104 1,574 29,709 2,592
Provision (benefit) for income taxes   (1,390 )   4,094   4,544   9   7,248   (222 )
Net income   9,755   6,146   6,560   1,565   22,461   2,814
Dividends on preferred shares   195   10,697   189     11,081  
Net income (loss) available (attributable) to

common stockholders

$ 9,560 $ (4,551 ) $ 6,371 $ 1,565 $ 11,380 $ 2,814
 
Earnings per Common Share
Basic earnings (loss) per common share $ 0.33 $ (0.18 ) $ 0.26 $ 0.08 $ 0.43 $ 0.15
Diluted earnings (loss) per common share $ 0.32 $ (0.18 ) $ 0.25 $ 0.08 $ 0.43 $ 0.15
Weighted average common shares outstanding

(basic)

29,246,900 24,667,587 24,616,706 19,497,811 26,194,025 18,838,354
Weighted average common shares outstanding

(diluted)

29,752,331 24,667,587 25,078,427 19,763,434 26,697,841 19,103,977
Common shares outstanding 29,305,400 29,246,900 24,616,706 20,410,850 29,305,400 20,410,850
 
Key Ratios (annualized where applicable)
Net interest margin 4.18 % 4.02 % 4.00 % 3.37 % 4.07 % 3.46 %
Cost of deposits 0.33 % 0.30 % 0.24 % 0.19 % 0.29 % 0.20 %
Efficiency ratio(1) 69.92 % 66.23 % 67.11 % 84.38 % 67.76 % 86.88 %
Non-interest expense to average assets 3.73 % 3.57 % 3.53 % 3.33 % 3.61 % 3.55 %
Return on average stockholders' equity 8.44 % 6.21 % 6.83 % 2.63 % 7.23 % 1.70 %
Return on average assets 1.17 % 0.75 % 0.80 % 0.23 % 0.91 % 0.14 %
Non-interest income to total revenues(2) 27.51 % 30.68 % 29.41 % 18.62 % 29.19 % 19.66 %
Pre-tax pre-provision return on average assets(2) 1.47 % 1.68 % 1.59 % 0.48 % 1.58 % 0.40 %
Non-interest bearing deposits to total deposits 29.90 % 30.77 % 28.43 % 30.04 % 29.90 % 30.04 %
Deposits per branch $ 44,227 $ 44,572 $ 45,190 $ 33,475 $ 44,227 $ 33,475
Loans and leases held for sale and loans and lease

held for investment to total deposits

88.01 % 84.87 % 84.13 % 76.63 % 88.01 % 76.63 %
Deposits to total liabilities 88.58 % 87.23 % 88.97 % 89.83 % 88.58 % 89.83 %
Tangible book value per common share(2) $ 12.95 $ 12.55 $ 11.91 $ 9.32 $ 12.95 $ 9.32
 
Asset Quality Ratios
Non-performing loans and leases to total loan and

leases held for investment, net before ALLL

0.76 % 0.76 % 0.41 % 0.46 % 0.76 % 0.46 %
ALLL to total loans and leases held for investment,

net before ALLL

0.72 % 0.65 % 0.55 % 0.38 % 0.72 % 0.38 %
Net charge-offs to average total loans and leases

held for investment, net before ALLL

0.34 % 0.26 % 0.19 % 0.40 % 0.26 % 0.56 %
Acquisition accounting adjustments(3) $ 34,249 $ 37,713 $ 41,024 $ 15,864 $ 34,249 $ 15,864
 
Capital Ratios
Common equity to assets 13.59 % 13.01 % 11.09 % 8.59 % 13.59 % 8.59 %
Tangible common equity to tangible assets(2) 11.73 % 11.16 % 9.12 % 7.04 % 11.73 % 7.04 %
Leverage ratio 11.95 % 11.73 % 9.59 % 9.29 % 11.95 % 9.29 %
Common equity tier 1 capital ratio 13.93 % 13.61 % 10.85 % 10.22 % 13.93 % 10.22 %
Tier 1 capital ratio 15.37 % 15.06 % 12.94 % 12.84 % 15.37 % 12.84 %
Total capital ratio 16.08 % 15.68 % 13.49 % 13.22 % 16.08 % 13.22 %
        (1)   Represents non-interest expense less amortization of intangible
assets divided by net interest income and non-interest income.
(2) Represents a non-GAAP financial measure. See Reconciliation of
non-GAAP Financial Measures" for a reconciliation of our non-GAAP
measures to the most directly comparable GAAP financial measure.
(3) Represents the remaining unamortized premium or unaccreted discount
as a result of applying the fair value adjustment at the time of the
business combination on acquired loans.
 
   
BYLINE BANCORP, INC. AND SUBSIDIARIES

QUARTER-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND
AVERAGE INTEREST-BEARING LIABILITIES

(unaudited)

 
For the Three Months Ended September 30,
2017     2016
(dollars in thousands) Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

ASSETS    
Cash and cash equivalents $ 48,354 $ 106 0.87 % $ 31,794 $ 25 0.31 %
Loans and leases(1) 2,193,076 30,933 5.60 % 1,660,323 19,081 4.57 %
Securities available-for-sale(2) 602,146 3,181 2.10 % 614,285 2,750 1.78 %
Securities held-to-maturity 111,345 650 2.32 % 134,989 649 1.91 %
Tax-exempt securities   26,166   174 2.63 %   19,953   152 3.03 %
Total interest-earning assets $ 2,981,087 $ 35,044 4.66 % $ 2,461,344 $ 22,657 3.66 %
Allowance for loan and lease losses (14,570 ) (6,938 )
All other assets   340,669   220,494
TOTAL ASSETS $ 3,307,186 $ 2,674,900
LIABILITIES AND STOCKHOLDERS'

EQUITY

Deposits
Interest checking $ 186,447 $ 29 0.06 % $ 185,583 $ 33 0.07 %
Money market accounts 388,365 275 0.28 % 406,531 261 0.27 %
Savings 441,096 79 0.07 % 442,269 76 0.07 %
Time deposits   758,518   1,729 0.90 %   507,570   693 0.54 %
Total interest bearing deposits   1,774,426   2,112 0.47 %   1,541,953   1,063 0.27 %
Federal Home Loan Bank advances 222,800 850 1.51 % 173,141 200 0.46 %
Other borrowed funds   60,418   670 4.40 %   38,482   529 5.46 %
Total borrowings   283,218   1,520 2.13 %   211,623   729 1.37 %
Total interest bearing liabilities $ 2,057,644 $ 3,632 0.70 % $ 1,753,576 $ 1,792 0.41 %
Non-interest checking 748,523 653,642
Other liabilities 42,577 30,913
Total stockholders' equity   458,442   236,769
TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$ 3,307,186 $ 2,674,900
Net interest spread(3)   3.96 %   3.25 %
Net interest income $ 31,412 $ 20,865
Net interest margin(4)   4.18 %   3.37 %
 
Net loan accretion impact on margin $ 2,166   0.29 % $ 1,185   0.19 %
Net interest margin excluding loan

accretion(6)

  3.89 %   3.18 %
        (1)   Loan and lease balances are net of deferred origination fees and
costs and initial indirect costs. Non-accrual loans and leases are
included in total loan and lease balances.
(2) Interest income and rates exclude the effects of a tax equivalent
adjustment to adjust tax exempt investment income on tax exempt
investment securities to a fully taxable basis due to immateriality.
(3) Represents the average rate earned on interest-earning assets minus
the average rate paid on interest-bearing liabilities.
(4) Represents net interest income (annualized) divided by total average
earning assets.
(5) Average balances are average daily balances.
(6) Represents a non-GAAP financial measure. See "Reconciliation of
non-GAAP Financial Measures" for a reconciliation of our non-GAAP
measures to the most directly comparable GAAP financial measure.
   
BYLINE BANCORP, INC. AND SUBSIDIARIES

YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND
AVERAGE INTEREST-BEARING LIABILITIES (unaudited)

 
For the Nine Months Ended September 30,
2017     2016
(dollars in thousands) Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

Average

Balance(5)

    Interest

Inc / Exp

      Average

Yield /

Rate

ASSETS