Byline Bancorp, Inc. Reports Second Quarter 2023 Financial Results

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07/27/2023 - 04:15 PM

Select Second Quarter 2023 Financial Highlights

Net income of $26.1 million, or $0.70 per diluted share
Pre-tax pre-provision return on average assets of 2.23%¹
Return on average assets of 1.41%; Return on average tangible common equity of 16.78%¹
Net interest margin of 4.32%
Efficiency ratio of 52.92%
Total loans and leases of $5.6 billion, quarterly increase of $55.2 million
Total deposits of $5.9 billion, quarterly increase of $104.4 million
Tangible Common Equity to Tangible Assets of 8.87%¹
Common Equity Tier 1 to Risk Weighted Assets of 10.58%

CHICAGO--(BUSINESS WIRE)-- Byline Bancorp, Inc. ("Byline", the “Company”, "we", "our", or "us") (NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $26.1 million, or $0.70 per diluted share, for the second quarter of 2023 compared with net income of $23.9 million, or $0.64 per diluted share, for the first quarter of 2023, and net income of $21.8 million², or $0.58 per diluted share, for the second quarter 2022.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “We reported solid results for the second quarter and continued to execute our time tested strategy well. Notwithstanding the challenging operating environment, our business units continued to perform well and we have good momentum heading into the second half of the year.”

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “We delivered record earnings, strong profitability, balanced deposit and loan growth and solid credit quality. Our strong capital and liquidity levels position us well to continue to prudently grow our franchise.”

Board Declares Cash Dividend of $0.09 per Share

On July 25, 2023, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on August 22, 2023, to stockholders of record of the Company's common stock as of August 8, 2023.

Inland Acquisition

On July 1, 2023, Byline completed its acquisition of Inland Bancorp, Inc. ("Inland Bancorp") to solidify Byline's position as Chicago's largest community bank. The transaction brings Byline’s combined total assets to approximately $8.8 billion, $6.4 billion in loans and $6.9 billion in deposits, with 47 branches across the greater Chicago metropolitan area, based on information as of June 30, 2023.

(1)

Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

(2)

Recast due to the adoption of ASU 2016-13 Financial Instruments - Credit Losses on December 31, 2022, which was applied retrospectively to January 1, 2022. Results for 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. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the adoption of the standard.

STATEMENTS OF OPERATIONS

Net Interest Income

The following table presents the average interest-earning assets and average interest-bearing liabilities for the periods indicated. Net interest income and margin are adjusted to reflect tax-exempt interest income on a tax-equivalent basis using tax rates effective as of the end of the period:

	For the Three Months Ended
	June 30, 2023								March 31, 2023								Recast June 30, 2022
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp		Avg. Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp		Avg. Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp		Avg. Yield / Rate
ASSETS
Cash and cash equivalents	$	135,003		$	1,041		3.09	%	$	97,578		$	442		1.84	%	$	66,034		$	74		0.45	%
Loans and leases⁽¹⁾		5,535,593			99,134		7.18	%		5,484,372			92,343		6.83	%		5,007,615			59,919		4.80	%
Taxable securities		1,250,780			6,324		2.03	%		1,275,377			6,431		2.04	%		1,331,136			5,792		1.75	%
Tax-exempt securities⁽²⁾		151,205			980		2.60	%		151,817			994		2.65	%		168,567			1,131		2.69	%
Total interest-earning assets	$	7,072,581		$	107,479		6.10	%	$	7,009,144		$	100,210		5.80	%	$	6,573,352		$	66,916		4.08	%
Allowance for credit losses - loans and leases		(92,804	)							(84,321	)							(72,521	)
All other assets		424,122								420,328								465,733
TOTAL ASSETS	$	7,403,899							$	7,345,151							$	6,966,564
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	541,036		$	2,175		1.61	%	$	606,008		$	2,494		1.67	%	$	615,831		$	415		0.27	%
Money market accounts		1,534,463			10,799		2.82	%		1,465,677			7,728		2.14	%		1,307,320			1,194		0.37	%
Savings		575,254			220		0.15	%		613,590			227		0.15	%		664,954			83		0.05	%
Time deposits		1,328,679			11,529		3.48	%		966,409			5,849		2.45	%		627,199			436		0.28	%
Total interest-bearing deposits		3,979,432			24,723		2.49	%		3,651,684			16,298		1.81	%		3,215,304			2,128		0.27	%
Other borrowings		509,419			4,241		3.34	%		573,433			5,852		4.14	%		497,082			1,083		0.87	%
Federal funds purchased		—			—		0.00	%		2,778			36		5.30	%		2,527			14		2.32	%
Subordinated notes and debentures		111,255			2,142		7.72	%		111,101			2,098		7.66	%		110,649			1,694		6.14	%
Total borrowings		620,674			6,383		4.12	%		687,312			7,986		4.71	%		610,258			2,791		1.83	%
Total interest-bearing liabilities	$	4,600,106		$	31,106		2.71	%	$	4,338,996		$	24,284		2.27	%	$	3,825,562		$	4,919		0.52	%
Non-interest-bearing demand deposits		1,848,538								2,076,613								2,265,426
Other liabilities		148,983								145,253								105,918
Total stockholders’ equity		806,272								784,289								769,658
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,403,899							$	7,345,151							$	6,966,564
Net interest spread⁽³⁾							3.39	%							3.53	%							3.56	%
Net interest income, fully taxable equivalent				$	76,373							$	75,926							$	61,997
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾							4.33	%							4.39	%							3.78	%
Less: Tax-equivalent adjustment					207		0.01	%					208		0.01	%					237		0.01	%
Net interest income				$	76,166							$	75,718							$	61,760
Net interest margin⁽⁴⁾							4.32	%							4.38	%							3.77	%

Net loan accretion impact on margin				$	611		0.03	%				$	729		0.04	%				$	1,628		0.10	%

(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 include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, using a federal income tax rate of 21%.
(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.

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

							June 30, 2023
	Three Months Ended						Change from
					Recast
	June 30,		March 31,		June 30,		March 31,			June 30,
(dollars in thousands)	2023		2023		2022		2023			2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	99,134	$	92,343	$	59,919		7.4	%		65.4	%
Interest on securities		6,559		6,600		6,264		(0.6	)%		4.7	%
Other interest and dividend income		1,579		1,059		496		49.1	%		218.7	%
Total interest and dividend income		107,272		100,002		66,679		7.3	%		60.9	%
INTEREST EXPENSE
Deposits		24,723		16,298		2,128		51.7	%	NM
Other borrowings		4,241		5,888		1,097		(28.0	)%		286.4	%
Subordinated notes and debentures		2,142		2,098		1,694		2.1	%		26.4	%
Total interest expense		31,106		24,284		4,919		28.1	%		532.3	%
Net interest income	$	76,166	$	75,718	$	61,760		0.6	%		23.3	%

Net interest income for the second quarter of 2023 was $76.2 million, an increase of $448,000, or 0.6%, from the first quarter of 2023.

The increase in net interest income was primarily due to:

An increase of $6.8 million in interest income and fees on loans and leases due to higher yields and growth in the loan and lease portfolio; and
A decrease of $1.6 million in other borrowings interest expense mainly due to lower average balances of FHLB borrowings.

Partially offset by:

An increase of $8.4 million in deposit interest expense mainly due to growth in time deposits and higher rates paid on money market accounts and time deposits.

Tax-equivalent net interest margin for the second quarter of 2023 was 4.33%, a decrease of six basis points compared to the first quarter of 2023. Total net loan accretion income impact on margin contributed three basis points to the net interest margin for the second quarter of 2023 compared to four basis points for the first quarter of 2023.

The average cost of total deposits was 1.70% for the second quarter of 2023, an increase of 55 basis points compared to the first quarter of 2023, as a result of increased cost of interest-bearing deposits and a decrease in average non-interest bearing deposits. Average non-interest-bearing demand deposits were 31.7% of average total deposits for the second quarter of 2023 compared to 36.3% during the first quarter of 2023.

Provision for Credit Losses

The provision for credit losses was $5.8 million for the second quarter of 2023, a decrease of $4.0 million compared to $9.8 million for the first quarter of 2023, which was mainly attributable to lower impairments for individually assessed loans and lower non-performing loans. The provision for credit losses during the quarter is comprised of a provision for loan and lease losses of $6.5 million driven by individually assessed loan impairments and lease growth, partially offset by a recapture for unfunded commitments of $677,000.

Non-interest Income

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

									June 30, 2023
	Three Months Ended								Change from
						Recast
	June 30,			March 31,		June 30,			March 31,			June 30,
(dollars in thousands)	2023			2023		2022			2023			2022
NON-INTEREST INCOME
Fees and service charges on deposits	$	2,233		$	2,120	$	2,059			5.3	%		8.5	%
Loan servicing revenue		3,377			3,380		3,384			(0.1	)%		(0.2	)%
Loan servicing asset revaluation		(865	)		656		(4,636	)	NM				(81.3	)%
ATM and interchange fees		1,112			1,063		1,131			4.6	%		(1.7	)%
Net realized gains (losses) on securities available-for-sale		—			—		52			0.0	%		(100.0	)%
Change in fair value of equity securities, net		193			350		(697	)		(45.0	)%	NM
Net gains on sales of loans		5,704			5,148		9,983			10.8	%		(42.9	)%
Wealth management and trust income		1,039			924		900			12.5	%		15.5	%
Other non-interest income		1,498			1,504		2,097			(0.3	)%		(28.5	)%
Total non-interest income	$	14,291		$	15,145	$	14,273			(5.6	)%		0.1	%

Non-interest income for the second quarter of 2023 was $14.3 million, a decrease of $854,000, or 5.6%, compared to $15.1 million for the first quarter of 2023.

The decrease in total non-interest income was primarily due to:

A decrease of $1.5 million in the valuation of the loan servicing asset reflecting increased prepayments in the second quarter while the prior quarter reflected an improvement in market conditions.

Partially offset by:

An increase of $556,000 in the net gain on sales of loans, due to higher volume and net premiums on sale.

During the second quarter of 2023, we sold $85.9 million of U.S. government guaranteed loans compared to $72.2 million during the first quarter of 2023.

Non-interest Expense

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

								June 30, 2023
	Three Months Ended							Change from
						Recast
	June 30,		March 31,			June 30,		March 31,			June 30,
(dollars in thousands)	2023		2023			2022		2023			2022
NON-INTEREST EXPENSE
Salaries and employee benefits	$	29,642	$	30,394		$	27,697		(2.5	)%		7.0	%
Occupancy and equipment expense, net		4,404		4,444			4,409		(0.9	)%		(0.1	)%
Impairment charge on assets held for sale		—		20			—		(100.0	)%		0.0	%
Loan and lease related expenses		488		963			942		(49.3	)%		(48.1	)%
Legal, audit and other professional fees		3,675		3,114			1,820		18.0	%		101.9	%
Data processing		4,272		3,783			3,396		12.9	%		25.8	%
Net (gain) loss recognized on other real estate owned and other related expenses		288		(103	)		158	NM				82.4	%
Other intangible assets amortization expense		1,455		1,455			1,868		0.0	%		(22.1	)%
Other non-interest expense		5,104		4,730			3,295		7.9	%		54.8	%
Total non-interest expense	$	49,328	$	48,800		$	43,585		1.1	%		13.2	%

Non-interest expense for the second quarter of 2023 was $49.3 million, an increase of $528,000, or 1.1%, from $48.8 million for the first quarter of 2023.

The increase in total non-interest expense was primarily due to merger-related expenses, resulting in:

An increase of $561,000 in legal, audit and other professional fees; and
An increase of $489,000 in data processing.

Partially offset by:

A decrease of $752,000 in salaries and employee benefits mainly due to lower payroll taxes and higher deferred salary costs, offset by higher salaries and incentives; and
A decrease of $475,000 in loan and lease related expense, due to lower expenses related to government guaranteed loans.

Our efficiency ratio was 52.92% for the second quarter of 2023 compared to 52.10% for the first quarter of 2023.

INCOME TAXES

We recorded income tax expense of $9.2 million during the second quarter of 2023, compared to $8.3 million during the first quarter of 2023. The effective tax rate was 26.1% and 25.7% for the second quarter of 2023 and first quarter of 2023, respectively.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $7.6 billion at June 30, 2023, an increase of $45.3 million compared to $7.5 billion at March 31, 2023.

The current quarter increase was primarily due to:

An increase in net loans and leases of $53.0 million primarily due to growth in the commercial loan portfolio and the lease financing portfolio; and
An increase in cash and cash equivalents of $36.0 million primarily to support customer activity and complete the acquisition of Inland Bancorp.

Partially offset by:

A decrease in securities available-for-sale of $38.7 million, driven mainly by principal payments and changes in market values.

The following table shows our allocation of the originated, purchase credit deteriorated, and non-credit deteriorated loans and leases at the dates indicated:

													Recast
	June 30, 2023						March 31, 2023						June 30, 2022
(dollars in thousands)	Amount			% of Total			Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	1,806,531			32.4	%	$	1,749,808			31.7	%	$	1,676,149			32.4	%
Residential real estate		453,880			8.1	%		441,291			8.0	%		401,773			7.8	%
Construction, land development, and other land		387,623			7.0	%		446,763			8.1	%		434,132			8.4	%
Commercial and industrial		2,086,274			37.4	%		2,061,267			37.4	%		1,873,128			36.2	%
Installment and other		3,582			0.1	%		1,603			0.0	%		927			0.0	%
Leasing financing receivables		604,437			10.9	%		552,174			10.0	%		438,379			8.5	%
Total originated loans and leases	$	5,342,327			95.9	%	$	5,252,906			95.2	%	$	4,824,488			93.3	%
Purchased credit deteriorated loans
Commercial real estate	$	30,724			0.6	%	$	39,000			0.7	%	$	54,739			1.1	%
Residential real estate		26,012			0.5	%		30,070			0.6	%		39,209			0.8	%
Construction, land development, and other land		320			0.0	%		345			0.0	%		1,181			0.0	%
Commercial and industrial		1,726			0.0	%		1,745			0.0	%		2,557			0.0	%
Installment and other		129			0.0	%		134			0.0	%		155			0.0	%
Total purchased credit deteriorated loans	$	58,911			1.1	%	$	71,294			1.3	%	$	97,841			1.9	%
Acquired non-credit-deteriorated loans and leases
Commercial real estate	$	126,191			2.3	%	$	140,576			2.6	%	$	168,938			3.3	%
Residential real estate		25,055			0.4	%		27,975			0.5	%		40,257			0.8	%
Construction, land development, and other land		—			0.0	%		—			0.0	%		191			0.0	%
Commercial and industrial		16,750			0.3	%		20,793			0.4	%		31,783			0.6	%
Installment and other		25			0.0	%		85			0.0	%		226			0.0	%
Leasing financing receivables		1,258			0.0	%		1,703			0.0	%		3,992			0.1	%
Total acquired non-credit-deteriorated loans and leases	$	169,279			3.0	%	$	191,132			3.5	%	$	245,387			4.8	%
Total loans and leases	$	5,570,517			100.0	%	$	5,515,332			100.0	%	$	5,167,716			100.0	%
Allowance for credit losses - loans and leases		(92,665	)					(90,465	)					(74,048	)
Total loans and leases, net of allowance for credit losses - loans and leases	$	5,477,852					$	5,424,867					$	5,093,668

ASSET QUALITY

Non-Performing Assets

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

										June 30, 2023
							Recast			Change from
(dollars in thousands)	June 30, 2023			March 31, 2023			June 30, 2022			March 31, 2023			June 30, 2022
Non-performing assets:
Non-accrual loans and leases	$	38,273		$	46,536		$	42,979			(17.8	)%		(10.9	)%
Past due loans and leases 90 days or more and still accruing interest		—			—			—		—%			—%
Total non-performing loans and leases	$	38,273		$	46,536		$	42,979			(17.8	)%		(10.9	)%
Other real estate owned		2,265			3,712			4,749			(39.0	)%		(52.3	)%
Total non-performing assets	$	40,538		$	50,248		$	47,728			(19.3	)%		(15.1	)%
Total non-performing loans and leases as a percentage of total loans and leases		0.69	%		0.84	%		0.83	%
Total non-performing assets as a percentage of total assets		0.54	%		0.67	%		0.67	%
Allowance for credit losses - loans and lease as a percentage of non-performing loans and leases		242.12	%		194.40	%		172.29	%

Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	2,472		$	2,335		$	1,731			5.9	%		42.8	%
Past due loans 90 days or more and still accruing interest guaranteed		—			—			—		—%			—%
Total non-performing loans guaranteed	$	2,472		$	2,335		$	1,731			5.9	%		42.8	%
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.64	%		0.80	%		0.80	%
Total non-performing assets not guaranteed as a percentage of total assets		0.50	%		0.64	%		0.65	%

Variances in non-performing assets were:

Non-performing loans and leases were $38.3 million at June 30, 2023, a decrease of $8.3 million from $46.5 million at March 31, 2023, primarily due to the resolution of impaired loans.
Other real estate owned was $2.3 million at June 30, 2023, a decrease of $1.4 million from $3.7 million at March 31, 2023, primarily due to sales of properties.

Allowance for Credit Losses ("ACL") - Loans and Leases

The following table presents the balance and activity within the allowance for credit losses - loans and leases for the periods indicated:

	Three Months Ended
							Recast
	June 30,			March 31,			June 30,
(dollars in thousands)	2023			2023			2022
ACL - loans and leases, beginning of period	$	90,465		$	81,924		$	72,107
Provision for credit losses - loans and leases		6,467			9,712			4,105
Net charge-offs - loans and leases		(4,267	)		(1,171	)		(2,164	)
ACL - loans and leases, end of period	$	92,665		$	90,465		$	74,048
Net charge-offs - loans and leases to average total loans and leases held for investment, net before ACL		0.31	%		0.09	%		0.17	%
Provision for credit losses - loans and leases to net charge-offs - loans and leases during the period		1.52	x		8.29	x		1.90	x

Net charge-offs of loans and leases during the second quarter of 2023 were $4.3 million, or 0.31% of average loans and leases, on an annualized basis, an increase of $3.1 million compared to $1.2 million, or 0.09% of average loans and leases, during the first quarter of 2023, and an increase of $2.1 million from $2.2 million or 0.17% of average loans and leases from the comparable period a year ago.

Net charge-offs for the second quarter of 2023 included $1.7 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the first quarter of 2023 and second quarter of 2022 included $1.1 million and $2.7 million, respectively.

Deposits and Other Liabilities

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

							June 30, 2023
							Change from
(dollars in thousands)	June 30, 2023		March 31, 2023		June 30, 2022		March 31, 2023			June 30, 2022
Non-interest-bearing demand deposits	$	1,793,749	$	1,952,045	$	2,180,927		(8.1	)%		(17.8	)%
Interest-bearing checking accounts		530,775		560,837		535,856		(5.4	)%		(0.9	)%
Money market demand accounts		1,600,043		1,453,688		1,323,287		10.1	%		20.9	%
Other savings		562,706		590,231		669,164		(4.7	)%		(15.9	)%
Time deposits (below $250,000)		1,214,717		1,089,785		544,759		11.5	%		123.0	%
Time deposits ($250,000 and above)		215,102		166,066		134,384		29.5	%		60.1	%
Total deposits	$	5,917,092	$	5,812,652	$	5,388,377		1.8	%		9.8	%

Total deposits increased to $5.9 billion at June 30, 2023 compared to $5.8 billion at March 31, 2023. Non-interest-bearing deposits were 30.3% and 33.6% of total deposits at June 30, 2023 and March 31, 2023, respectively. Estimated total uninsured deposits were $1.5 billion and $1.6 billion as of June 30, 2023 and March 31, 2023, and represented 25.9% and 27.9% of total deposits, respectively.

The increase in deposits in the current quarter was due to:

An increase in time deposits of $174.0 million, principally due to changes in deposit mix and higher rates offered; and
An increase in money market demand accounts of $146.4 million, mainly due to increases in business accounts.

Partially offset by:

A decrease in non-interest-bearing demand deposits of $158.3 million, due to higher alternative rates and seasonality.

Total borrowings and other liabilities were $844.7 million at June 30, 2023, a decrease of $77.4 million from $922.0 million at March 31, 2023, primarily driven by maturities of FHLB borrowings.

Stockholders’ Equity

Total stockholders’ equity was $813.9 million at June 30, 2023, an increase of $18.3 million from $795.7 million at March 31, 2023. The increase was primarily due to increased retained earnings due to net income.

The following table presents actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June 30, 2023:

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
June 30, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	959,688		13.52	%	$	567,924		8.00	%	N/A		N/A
Bank		911,331		12.89	%		565,528		8.00	%	$	706,910		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	796,359		11.22	%	$	425,943		6.00	%	N/A		N/A
Bank		823,002		11.64	%		424,146		6.00	%	$	565,528		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	751,359		10.58	%	$	319,457		4.50	%	N/A		N/A
Bank		823,002		11.64	%		318,110		4.50	%	$	459,492		6.50	%
Tier 1 capital to average assets:
Company	$	796,359		10.74	%	$	296,702		4.00	%	N/A		N/A
Bank		823,002		11.12	%	$	296,100		4.00	%	$	370,125		5.00	%

Capital ratios for the period presented are based on the Basel III regulatory capital framework as applied to our current business and operations, and are subject to, among other things, completion and filing of our regulatory reports and ongoing regulatory review and implementation guidance. The ratios above reflect the Company’s election to opt into the regulators’ joint current expected credit losses ("CECL") transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the next three years beginning January 1, 2022. Accordingly, capital ratios as of June 30, 2023 reflect 50% of the CECL impact.

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. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the adoption of the standard.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 28, 2023 to discuss our quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (833) 470-1428; passcode 993003. A recorded replay can be accessed through August 11, 2023 by dialing (866) 813-9403; passcode: 452045.

A slide presentation relating to our second quarter 2023 results will be accessible prior to the conference call. The slide presentation and webcast of the conference call can be accessed on our investor relations website at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company of Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bancorp, Inc. completed its acquisition of Inland Bancorp, Inc. on July 1, 2023, with the combined entity operating as Byline Bank and as a result has approximately $8.8 billion in assets and operates 48 total 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 Small Business Administration lenders in the United States.

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 judgment 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.

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

										Recast			Recast
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2023			2023			2022			2022			2022
ASSETS
Cash and due from banks	$	59,564		$	52,725		$	62,274		$	56,546		$	58,844
Interest bearing deposits with other banks		260,621			231,486			117,079			159,744			83,057
Cash and cash equivalents		320,185			284,211			179,353			216,290			141,901
Equity and other securities, at fair value		18,473			8,339			7,989			7,279			7,860
Securities available-for-sale, at fair value		1,125,700			1,164,387			1,174,431			1,181,654			1,273,138
Securities held-to-maturity, at amortized cost		2,158			2,704			2,705			3,877			3,880
Restricted stock, at cost		24,377			38,777			28,202			27,077			30,002
Loans held for sale		25,995			28,379			47,823			33,975			17,284
Loans and leases:
Loans and leases		5,570,517			5,515,332			5,421,258			5,275,126			5,167,716
Allowance for credit losses - loans and leases		(92,665	)		(90,465	)		(81,924	)		(79,704	)		(74,048	)
Net loans and leases		5,477,852			5,424,867			5,339,334			5,195,422			5,093,668
Servicing assets, at fair value		21,715			20,944			19,172			21,127			22,155
Premises and equipment, net		56,304			56,098			56,798			59,049			60,773
Other real estate owned, net		2,265			3,712			4,717			4,402			4,749
Goodwill and other intangible assets, net		155,977			157,432			158,887			160,484			162,094
Bank-owned life insurance		83,222			82,693			82,093			81,592			81,100
Deferred tax assets, net		66,895			64,918			68,213			95,831			82,412
Accrued interest receivable and other assets		194,572			192,885			193,224			179,218			143,014
Total assets	$	7,575,690		$	7,530,346		$	7,362,941		$	7,267,277		$	7,124,030
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	1,793,749		$	1,952,045		$	2,138,645		$	2,142,183		$	2,180,927
Interest-bearing deposits		4,123,343			3,860,607			3,556,476			3,470,273			3,207,450
Total deposits		5,917,092			5,812,652			5,695,121			5,612,456			5,388,377
Other borrowings		574,922			662,810			640,399			653,954			748,092
Subordinated notes, net		73,778			73,735			73,691			73,648			73,604
Junior subordinated debentures issued to capital trusts, net		37,557			37,442			37,338			37,232			37,123
Accrued expenses and other liabilities		158,399			148,057			150,576			154,182			121,186
Total liabilities		6,761,748			6,734,696			6,597,125			6,531,472			6,368,382
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—			—			—
Common stock		391			390			389			389			388
Additional paid-in capital		599,718			598,103			598,297			597,049			595,938
Retained earnings		379,078			356,365			335,794			314,800			297,765
Treasury stock		(50,383	)		(51,066	)		(51,114	)		(51,535	)		(47,181	)
Accumulated other comprehensive loss, net of tax		(114,862	)		(108,142	)		(117,550	)		(124,898	)		(91,262	)
Total stockholders’ equity		813,942			795,650			765,816			735,805			755,648
Total liabilities and stockholders’ equity	$	7,575,690		$	7,530,346		$	7,362,941		$	7,267,277		$	7,124,030

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended															Six Months Ended
										Recast			Recast						Recast
(dollars in thousands,	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
except per share data)	2023			2023			2022			2022			2022			2023			2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	99,134		$	92,343		$	85,720		$	72,635		$	59,919		$	191,477		$	115,057
Interest on securities		6,559			6,600			6,569			6,402			6,264			13,159			12,419
Other interest and dividend income		1,579			1,059			1,515			626			496			2,638			616
Total interest and dividend income		107,272			100,002			93,804			79,663			66,679			207,274			128,092
INTEREST EXPENSE
Deposits		24,723			16,298			10,610			5,971			2,128			41,021			3,215
Other borrowings		4,241			5,888			4,598			3,232			1,097			10,129			1,492
Subordinated notes and debentures		2,142			2,098			1,992			1,825			1,694			4,240			3,294
Total interest expense		31,106			24,284			17,200			11,028			4,919			55,390			8,001
Net interest income		76,166			75,718			76,604			68,635			61,760			151,884			120,091
PROVISION FOR CREDIT LOSSES		5,790			9,825			5,826			7,208			4,286			15,615			10,845
Net interest income after provision for credit losses		70,376			65,893			70,778			61,427			57,474			136,269			109,246
NON-INTEREST INCOME
Fees and service charges on deposits		2,233			2,120			2,081			2,128			2,059			4,353			3,943
Loan servicing revenue		3,377			3,380			3,293			3,422			3,384			6,757			6,764
Loan servicing asset revaluation		(865	)		656			(3,534	)		(2,342	)		(4,636	)		(209	)		(5,867	)
ATM and interchange fees		1,112			1,063			1,250			1,007			1,131			2,175			2,180
Net realized gains (losses) on securities available-for-sale		—			—			—			(2	)		52			—			52
Change in fair value of equity securities, net		193			350			710			(581	)		(697	)		543			(732	)
Net gains on sales of loans		5,704			5,148			5,509			5,580			9,983			10,852			20,810
Wealth management and trust income		1,039			924			864			995			900			1,963			1,948
Other non-interest income		1,498			1,504			1,282			1,836			2,097			3,002			4,718
Total non-interest income		14,291			15,145			11,455			12,043			14,273			29,436			33,816
NON-INTEREST EXPENSE
Salaries and employee benefits		29,642			30,394			31,808			29,587			27,697			60,036			56,656
Occupancy and equipment expense, net		4,404			4,444			3,532			3,919			4,409			8,848			9,537
Impairment charge on assets held for sale		—			20			372			—			—			20			—
Loan and lease related expenses		488			963			1,126			530			942			1,451			51
Legal, audit, and other professional fees		3,675			3,114			3,204			2,733			1,820			6,789			4,420
Data processing		4,272			3,783			3,406			3,370			3,396			8,055			6,582
Net (gain) loss recognized on other real estate owned and other related expenses		288			(103	)		221			275			158			185			212
Other intangible assets amortization expense		1,455			1,455			1,596			1,611			1,868			2,910			3,464
Other non-interest expense		5,104			4,730			5,235			4,016			3,295			9,834			6,619
Total non-interest expense		49,328			48,800			50,500			46,041			43,585			98,128			87,541
INCOME BEFORE PROVISION FOR INCOME TAXES		35,339			32,238			31,733			27,429			28,162			67,577			55,521
PROVISION FOR INCOME TAXES		9,232			8,293			7,366			7,020			6,382			17,525			12,343
NET INCOME		26,107			23,945			24,367			20,409			21,780			50,052			43,178
Dividends on preferred shares		—			—			—			—			—			—			196
INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	26,107		$	23,945		$	24,367		$	20,409		$	21,780		$	50,052		$	42,982
EARNINGS PER COMMON SHARE
Basic	$	0.70		$	0.65		$	0.66		$	0.55		$	0.59		$	1.35		$	1.16
Diluted	$	0.70		$	0.64		$	0.65		$	0.55		$	0.58		$	1.34		$	1.14

BYLINE BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (unaudited)

	As of or For the Three Months Ended															As of or For the Six Months Ended
										Recast			Recast						Recast
(dollars in thousands, except share	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
and per share data)	2023			2023			2022			2022			2022			2023			2022
Earnings per Common Share
Basic earnings per common share	$	0.70		$	0.65		$	0.66		$	0.55		$	0.59		$	1.35		$	1.16
Diluted earnings per common share	$	0.70		$	0.64		$	0.65		$	0.55		$	0.58		$	1.34		$	1.14
Adjusted diluted earnings per common share⁽¹⁾⁽³⁾	$	0.73		$	0.65		$	0.67		$	0.55		$	0.58		$	1.38		$	1.14
Weighted average common shares outstanding (basic)		37,034,626			36,955,085			36,856,221			36,851,973			37,064,795			36,995,075			37,093,816
Weighted average common shares outstanding (diluted)		37,337,906			37,539,912			37,360,113			37,371,159			37,612,268			37,444,381			37,740,682
Common shares outstanding		37,752,002			37,713,427			37,492,775			37,465,902			37,669,102			37,752,002			37,669,102
Cash dividends per common share	$	0.09		$	0.09		$	0.09		$	0.09		$	0.09		$	0.18		$	0.18
Dividend payout ratio on common stock		12.86	%		14.06	%		13.85	%		16.36	%		15.52	%		13.43	%		15.79	%
Tangible book value per common share⁽¹⁾	$	17.43		$	16.92		$	16.19		$	15.36		$	15.76		$	17.43		$	15.76
Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin, fully taxable equivalent ⁽¹⁾⁽⁴⁾		4.33	%		4.39	%		4.40	%		4.04	%		3.78	%		4.36	%		3.79	%
Average cost of deposits		1.70	%		1.15	%		0.73	%		0.43	%		0.16	%		1.43	%		0.12	%
Efficiency ratio⁽²⁾		52.92	%		52.10	%		55.53	%		55.07	%		54.87	%		52.51	%		54.63	%
Adjusted efficiency ratio^(1)(2)(3)		51.39	%		51.54	%		54.50	%		55.07	%		54.87	%		51.47	%		54.63	%
Non-interest income to total revenues⁽¹⁾		15.80	%		16.67	%		13.01	%		14.93	%		18.77	%		16.23	%		21.97	%
Non-interest expense to average assets		2.67	%		2.69	%		2.76	%		2.56	%		2.51	%		2.68	%		2.58	%
Adjusted non-interest expense to average assets⁽¹⁾⁽³⁾		2.60	%		2.67	%		2.71	%		2.56	%		2.51	%		2.63	%		2.58	%
Return on average stockholders' equity		12.99	%		12.38	%		12.92	%		10.57	%		11.35	%		12.69	%		10.94	%
Adjusted return on average stockholders' equity⁽¹⁾⁽³⁾		13.56	%		12.62	%		13.34	%		10.57	%		11.35	%		13.10	%		10.94	%
Return on average assets		1.41	%		1.32	%		1.33	%		1.13	%		1.25	%		1.37	%		1.27	%
Adjusted return on average assets⁽¹⁾⁽³⁾		1.48	%		1.35	%		1.37	%		1.13	%		1.25	%		1.41	%		1.27	%
Pre-tax pre-provision return on average assets⁽¹⁾		2.23	%		2.32	%		2.05	%		1.93	%		1.87	%		2.27	%		1.96	%
Adjusted pre-tax pre-provision return on average assets⁽¹⁾⁽³⁾		2.30	%		2.35	%		2.10	%		1.93	%		1.87	%		2.33	%		1.96	%
Return on average tangible common stockholders' equity⁽¹⁾		16.78	%		16.20	%		17.21	%		14.17	%		15.31	%		16.50	%		14.65	%
Adjusted return on average tangible common stockholders' equity⁽¹⁾⁽³⁾		17.50	%		16.49	%		17.75	%		14.17	%		15.31	%		17.01	%		14.65	%
Non-interest-bearing deposits to total deposits		30.31	%		33.58	%		37.55	%		38.17	%		40.47	%		30.31	%		40.47	%
Loans and leases held for sale and loans and lease held for investment to total deposits		94.58	%		95.37	%		96.03	%		94.59	%		96.23	%		94.58	%		96.23	%
Deposits to total liabilities		87.51	%		86.31	%		86.33	%		85.93	%		84.61	%		87.51	%		84.61	%
Deposits per branch	$	155,713		$	152,965		$	149,872		$	147,696		$	141,799		$	155,713		$	141,799
Asset Quality Ratios
Non-performing loans and leases to total loans and leases held for investment, net before ACL		0.69	%		0.84	%		0.66	%		0.80	%		0.83	%		0.69	%		0.83	%
ACL to total loans and leases held for investment, net before ACL		1.66	%		1.64	%		1.51	%		1.51	%		1.43	%		1.66	%		1.43	%
Net charge-offs to average total loans and leases held for investment, net before ACL - loans and leases		0.31	%		0.09	%		0.24	%		0.14	%		0.17	%		0.20	%		0.12	%
Capital Ratios
Common equity to total assets		10.74	%		10.57	%		10.40	%		10.12	%		10.61	%		10.74	%		10.61	%
Tangible common equity to tangible assets⁽¹⁾		8.87	%		8.66	%		8.42	%		8.10	%		8.53	%		8.87	%		8.53	%
Leverage ratio		10.74	%		10.46	%		10.29	%		10.30	%		10.34	%		10.74	%		10.34	%
Common equity tier 1 capital ratio		10.58	%		10.27	%		10.20	%		10.24	%		10.26	%		10.58	%		10.26	%
Tier 1 capital ratio		11.22	%		10.90	%		10.85	%		10.91	%		10.95	%		11.22	%		10.95	%
Total capital ratio		13.52	%		13.19	%		13.00	%		13.02	%		13.09	%		13.52	%		13.09	%

(1)	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.
(2)	Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
(3)	Calculation excludes impairment charges on asset held for sale and merger-related expenses.
(4)	Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

BYLINE BANCORP, INC. AND SUBSIDIARIES YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTERST-BEARING LIABILITIES (unaudited)

	For the Six Months Ended
	June 30, 2023								Recast June 30, 2022
(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	$	116,394		$	1,483		2.57	%	$	70,404		$	103		0.29	%
Loans and leases⁽¹⁾		5,510,124			191,477		7.01	%		4,839,266			115,057		4.79	%
Taxable securities		1,263,010			12,755		2.04	%		1,335,218			11,150		1.68	%
Tax-exempt securities⁽²⁾		151,509			1,974		2.63	%		169,107			2,255		2.69	%
Total interest-earning assets	$	7,041,037		$	207,689		5.95	%	$	6,413,995		$	128,565		4.04	%
Allowance for credit losses - loans and leases		(88,586	)							(70,302	)
All other assets		422,236								489,070
TOTAL ASSETS	$	7,374,687							$	6,832,763
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	573,342		$	4,669		1.64	%	$	597,665		$	593		0.20	%
Money market accounts		1,500,260			18,527		2.49	%		1,281,519			1,668		0.26	%
Savings		594,316			447		0.15	%		657,155			159		0.05	%
Time deposits		1,148,545			17,378		3.05	%		644,543			795		0.25	%
Total interest-bearing deposits		3,816,463			41,021		2.17	%		3,180,882			3,215		0.20	%
Other borrowings		541,249			10,093		3.76	%		394,385			1,478		0.76	%
Federal funds purchased		1,381			36		5.30	%		1,271			14		2.32	%
Subordinated notes and debentures		111,178			4,240		7.69	%		110,570			3,294		6.01	%
Total borrowings		653,808			14,369		4.43	%		506,226			4,786		1.91	%
Total interest-bearing liabilities	$	4,470,271		$	55,390		2.50	%	$	3,687,108		$	8,001		0.44	%
Non-interest-bearing demand deposits		1,961,945								2,256,778
Other liabilities		147,130								93,166
Total stockholders’ equity		795,341								795,711
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,374,687							$	6,832,763
Net interest spread⁽³⁾							3.45	%							3.60	%
Net interest income, fully taxable equivalent				$	152,299							$	120,564
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾							4.36	%							3.79	%
Less: Tax-equivalent adjustment					415		0.01	%					473		0.01	%
Net interest income				$	151,884							$	120,091
Net interest margin⁽⁴⁾							4.35	%							3.78	%

Net loan accretion impact on margin				$	1,340		0.04	%				$	2,815		0.09	%

(1)	Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)	Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.
(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.

BYLINE BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

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 adjusted net income, adjusted diluted earnings per share, adjusted efficiency ratio, adjusted non-interest expense to average assets, tax-equivalent net interest margin, total revenue, non-interest income to total revenues, adjusted return on average stockholders’ equity, adjusted return on average assets, pre-tax pre-provision return on average assets, adjusted pre-tax pre-provision return on average assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common stockholders' equity, and adjusted return on average tangible common stockholders' equity. 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 below in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.

	As of or For the Three Months Ended													As of or For the Six Months Ended
										Recast		Recast					Recast
	June 30,			March 31,			December 31,			September 30,		June 30,		June 30,			June 30,
(dollars in thousands, except per share data)	2023			2023			2022			2022		2022		2023			2022
Net income and earnings per share excluding significant items
Reported Net Income	$	26,107		$	23,945		$	24,367		$	20,409	$	21,780	$	50,052		$	43,178
Significant items:
Impairment charges on assets held for sale		—			20			372			—		—		20			—
Merger-related expenses		1,391			489			538			—		—		1,880			—
Tax benefit		(230	)		(56	)		(118	)		—		—		(286	)		—
Adjusted Net Income	$	27,268		$	24,398		$	25,159		$	20,409	$	21,780	$	51,666		$	43,178
Reported Diluted Earnings per Share	$	0.70		$	0.64		$	0.65		$	0.55	$	0.58	$	1.34		$	1.14
Significant items:
Impairment charges on assets held for sale		—			—			0.01			—		—		—			—
Merger-related expenses		0.04			0.01			0.01			—		—		0.05			—
Tax benefit		(0.01	)		—			—			—		—		(0.01	)		—
Adjusted Diluted Earnings per Share	$	0.73		$	0.65		$	0.67		$	0.55	$	0.58	$	1.38		$	1.14

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

	As of or For the Three Months Ended													As of or For the Six Months Ended
										Recast		Recast					Recast
(dollars in thousands, except per share data,	June 30,			March 31,			December 31,			September 30,		June 30,		June 30,			June 30,
ratios annualized, where applicable)	2023			2023			2022			2022		2022		2023			2022
Adjusted non-interest expense:
Non-interest expense	$	49,328		$	48,800		$	50,500		$	46,041	$	43,585	$	98,128		$	87,541
Less: Significant items
Impairment charges on assets held for sale		—			20			372			—		—		20			—
Merger-related expenses		1,391			489			538			—		—		1,880			—
Adjusted non-interest expense	$	47,937		$	48,291		$	49,590		$	46,041	$	43,585	$	96,228		$	87,541
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense	$	47,937		$	48,291		$	49,590		$	46,041	$	43,585	$	96,228		$	87,541
Less: Amortization of intangible assets		1,455			1,455			1,596			1,611		1,868		2,910			3,464
Adjusted non-interest expense excluding amortization of intangible assets	$	46,482		$	46,836		$	47,994		$	44,430	$	41,717	$	93,318		$	84,077
Pre-tax pre-provision net income:
Pre-tax income	$	35,339		$	32,238		$	31,733		$	27,429	$	28,162	$	67,577		$	55,521
Add: Provision for credit losses		5,790			9,825			5,826			7,208		4,286		15,615			10,845
Pre-tax pre-provision net income	$	41,129		$	42,063		$	37,559		$	34,637	$	32,448	$	83,192		$	66,366
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income	$	41,129		$	42,063		$	37,559		$	34,637	$	32,448	$	83,192		$	66,366
Add: Impairment charges on assets held for sale		—			20			372			—		—		20			—
Add: Merger-related expenses		1,391			489			538			—		—		1,880			—
Adjusted pre-tax pre-provision net income	$	42,520		$	42,572		$	38,469		$	34,637	$	32,448	$	85,092		$	66,366
Tax equivalent net interest income
Net interest income	$	76,166		$	75,718		$	76,604		$	68,635	$	61,760	$	151,884		$	120,091
Add: Tax-equivalent adjustment		207			208			214			228		237		415			473
Net interest income, fully taxable equivalent	$	76,373		$	75,926		$	76,818		$	68,863	$	61,997	$	152,299		$	120,564
Total revenue:
Net interest income	$	76,166		$	75,718		$	76,604		$	68,635	$	61,760	$	151,884		$	120,091
Add: Non-interest income		14,291			15,145			11,455			12,043		14,273		29,436			33,816
Total revenue	$	90,457		$	90,863		$	88,059		$	80,678	$	76,033	$	181,320		$	153,907
Tangible common stockholders' equity:
Total stockholders' equity	$	813,942		$	795,650		$	765,816		$	735,805	$	755,648	$	813,942		$	755,648
Less: Preferred stock		—			—			—			—		—		—			—
Less: Goodwill and other intangibles		155,977			157,432			158,887			160,484		162,094		155,977			162,094
Tangible common stockholders' equity	$	657,965		$	638,218		$	606,929		$	575,321	$	593,554	$	657,965		$	593,554
Tangible assets:
Total assets	$	7,575,690		$	7,530,346		$	7,362,941		$	7,267,277	$	7,124,030	$	7,575,690		$	7,124,030
Less: Goodwill and other intangibles		155,977			157,432			158,887			160,484		162,094		155,977			162,094
Tangible assets	$	7,419,713		$	7,372,914		$	7,204,054		$	7,106,793	$	6,961,936	$	7,419,713		$	6,961,936
Average tangible common stockholders' equity:
Average total stockholders' equity	$	806,272		$	784,289		$	748,292		$	765,821	$	769,658	$	795,341		$	795,711
Less: Average preferred stock		—			—			—			—		—		—			4,959
Less: Average goodwill and other intangibles		156,766			158,181			159,680			161,292		163,068		157,469			163,948
Average tangible common stockholders' equity	$	649,506		$	626,108		$	588,612		$	604,529	$	606,590	$	637,872		$	626,804
Average tangible assets:
Average total assets	$	7,403,899		$	7,345,151		$	7,266,053		$	7,137,472	$	6,966,564	$	7,374,687		$	6,832,763
Less: Average goodwill and other intangibles		156,766			158,181			159,680			161,292		163,068		157,469			163,948
Average tangible assets	$	7,247,133		$	7,186,970		$	7,106,373		$	6,976,180	$	6,803,496	$	7,217,218		$	6,668,815
Tangible net income available to common stockholders:
Net income available to common stockholders	$	26,107		$	23,945		$	24,367		$	20,409	$	21,780	$	50,052		$	42,982
Add: After-tax intangible asset amortization		1,067			1,066			1,170			1,181		1,369		2,133			2,539
Tangible net income available to common stockholders	$	27,174		$	25,011		$	25,537		$	21,590	$	23,149	$	52,185		$	45,521
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders	$	27,174		$	25,011		$	25,537		$	21,590	$	23,149	$	52,185		$	45,521
Impairment charges on assets held for sale		—			20			372			—		—		20			—
Merger-related expenses		1,391			489			538			—		—		1,880			—
Tax benefit on significant items		(230	)		(56	)		(118	)		—		—		(286	)		—
Adjusted tangible net income available to common stockholders	$	28,335		$	25,464		$	26,329		$	21,590	$	23,149	$	53,799		$	45,521

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

	As of or For the Three Months Ended															As of or For the Six Months Ended
										Recast			Recast						Recast
(dollars in thousands, except share and per share	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
data, ratios annualized, where applicable)	2023			2023			2022			2022			2022			2023			2022
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income	$	41,129		$	42,063		$	37,559		$	34,637		$	32,448		$	83,192		$	66,366
Average total assets		7,403,899			7,345,151			7,266,053			7,137,472			6,966,564			7,374,687			6,832,763
Pre-tax pre-provision return on average assets		2.23	%		2.32	%		2.05	%		1.93	%		1.87	%		2.27	%		1.96	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income	$	42,520		$	42,572		$	38,469		$	34,637		$	32,448		$	85,092		$	66,366
Average total assets		7,403,899			7,345,151			7,266,053			7,137,472			6,966,564			7,374,687			6,832,763
Adjusted pre-tax pre-provision return on average assets		2.30	%		2.35	%		2.10	%		1.93	%		1.87	%		2.33	%		1.96	%
Net interest margin, fully taxable equivalent
Net interest income, fully taxable equivalent	$	76,373		$	75,926		$	76,818		$	68,863		$	61,997		$	152,299		$	120,564
Total average interest-earning assets		7,072,581			7,009,144			6,922,889			6,763,916			6,573,352			7,041,037			6,413,995
Net interest margin, fully taxable equivalent		4.33	%		4.39	%		4.40	%		4.04	%		3.78	%		4.36	%		3.79	%
Non-interest income to total revenues:
Non-interest income	$	14,291		$	15,145		$	11,455		$	12,043		$	14,273		$	29,436		$	33,816
Total revenues		90,457			90,863			88,059			80,678			76,033			181,320			153,907
Non-interest income to total revenues		15.80	%		16.67	%		13.01	%		14.93	%		18.77	%		16.23	%		21.97	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense	$	47,937		$	48,291		$	49,590		$	46,041		$	43,585		$	96,228		$	87,541
Average total assets		7,403,899			7,345,151			7,266,053			7,137,472			6,966,564			7,374,687			6,832,763
Adjusted non-interest expense to average assets		2.60	%		2.67	%		2.71	%		2.56	%		2.51	%		2.63	%		2.58	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets	$	46,482		$	46,836		$	47,994		$	44,430		$	41,717		$	93,318		$	84,077
Total revenues		90,457			90,863			88,059			80,678			76,033			181,320			153,907
Adjusted efficiency ratio		51.39	%		51.54	%		54.50	%		55.07	%		54.87	%		51.47	%		54.63	%
Adjusted return on average assets:
Adjusted net income	$	27,268		$	24,398		$	25,159		$	20,409		$	21,780		$	51,666		$	43,178
Average total assets		7,403,899			7,345,151			7,266,053			7,137,472			6,966,564			7,374,687			6,832,763
Adjusted return on average assets		1.48	%		1.35	%		1.37	%		1.13	%		1.25	%		1.41	%		1.27	%
Adjusted return on average stockholders' equity:
Adjusted net income	$	27,268		$	24,398		$	25,159		$	20,409		$	21,780		$	51,666		$	43,178
Average stockholders' equity		806,272			784,289			748,292			765,821			769,658			795,341			795,711
Adjusted return on average stockholders' equity		13.56	%		12.62	%		13.34	%		10.57	%		11.35	%		13.10	%		10.94	%
Tangible common equity to tangible assets:
Tangible common equity	$	657,965		$	638,218		$	606,929		$	575,321		$	593,554		$	657,965		$	593,554
Tangible assets		7,419,713			7,372,914			7,204,054			7,106,793			6,961,936			7,419,713			6,961,936
Tangible common equity to tangible assets		8.87	%		8.66	%		8.42	%		8.10	%		8.53	%		8.87	%		8.53	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders	$	27,174		$	25,011		$	25,537		$	21,590		$	23,149		$	52,185		$	45,521
Average tangible common stockholders' equity		649,506			626,108			588,612			604,529			606,590			637,872			626,804
Return on average tangible common stockholders' equity		16.78	%		16.20	%		17.21	%		14.17	%		15.31	%		16.50	%		14.65	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders	$	28,335		$	25,464		$	26,329		$	21,590		$	23,149		$	53,799		$	45,521
Average tangible common stockholders' equity		649,506			626,108			588,612			604,529			606,590			637,872			626,804
Adjusted return on average tangible common stockholders' equity		17.50	%		16.49	%		17.75	%		14.17	%		15.31	%		17.01	%		14.65	%
Tangible book value per share:
Tangible common equity	$	657,965		$	638,218		$	606,929		$	575,321		$	593,554		$	657,965		$	593,554
Common shares outstanding		37,752,002			37,713,427			37,492,775			37,465,902			37,669,102			37,752,002			37,669,102
Tangible book value per share	$	17.43		$	16.92		$	16.19		$	15.36		$	15.76		$	17.43		$	15.76

View source version on businesswire.com: https://www.businesswire.com/news/home/20230727800032/en/

Investors:

Brooks Rennie

Investor Relations Director

312-660-5805

brennie@bylinebank.com

Media:

Erin O’Neill

Marketing Director

773-475-2901

eoneill@bylinebank.com

Source: Byline Bancorp, Inc.

Byline Bancorp, Inc. Reports Second Quarter 2023 Financial Results

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Byline Bancorp, Inc. Reports Second Quarter 2023 Financial Results

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