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Section 1: 8-K (8-K)

by-8k_20190425.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 25, 2019

 

BYLINE BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or Other Jurisdiction

of Incorporation)

 

 

 

 

001-38139

 

36-3012593

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

 

180 North LaSalle Street, Suite 300

 

 

Chicago, Illinois

 

60601

(Address of Principal Executive Offices)

 

(Zip Code)

(773) 244-7000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


 

 

Item 2.02.

Results of Operations and Financial Condition.

On April 25, 2019, Byline Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2019. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.

The information included under this Item 2.02 of Form 8-K and the attached exhibit are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

 

 

 

Exhibit

No.

  

Description

 

 

99.1

  

First Quarter 2019 Financial Results Press Release, dated April 25, 2019

 

 

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication. No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.

 

In addition, this communication contains forward-looking statements related to the pending merger of Byline and Oak Park River Forest Bankshares, Inc., including, but not limited to, with respect to the expected completion date, financial benefits and other effects of the transaction. Factors that could cause actual results to differ materially from those presented in this communication regarding the pending merger may include, but are not limited to, the reaction to the transaction of the companies’ customers, employees, and counterparties; customer disintermediation; inflation; expected synergies, costs savings, and other financial benefits of the proposed transaction that might not be realized within the expected timeframes or might be less than projected; credit and interest rate risks associated with Byline’s and Oak Park River Forest Bankshares, Inc.’s respective businesses, customers, borrowings, repayment, investment, and deposit practices; general economic conditions, either nationally or in the market areas in which Byline and Oak Park River Forest Bankshares, Inc. operate or anticipate doing business, are less favorable than expected; new regulatory or legal requirements or obligations, and other risks.

 

Certain risks and important factors that could affect Byline’s future results are identified in its Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in such Annual Report on Form 10-K.  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.

 

 

2


 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

 

 

 

BYLINE BANCORP, INC.

 

 

 

 

Date: April 25, 2019

 

 

 

By:

/s/ Alberto J. Paracchini

 

 

 

 

Name:

Alberto J. Paracchini

 

 

 

 

Title:

President and Chief Executive Officer

 

 

 

3

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Section 2: EX-99.1 (EX-99.1)

by-ex991_6.htm

EX-99.1

 

                                      

 

Byline Bancorp, Inc. Reports First Quarter 2019 Financial Results

 

First Quarter 2019 Highlights

 

Net income of $12.6 million, or $0.34 per diluted share

 

o

Adjusted net income1 of $14.0 million, or $0.38 per adjusted diluted share

 

Net interest margin of 4.43% for the first quarter of 2019, compared to 4.69% for the fourth quarter of 2018, and 4.45% for the first quarter of 2018

 

o

Net interest margin, excluding accretion income,1 of 3.97% for the first quarter of 2019, compared to 4.13% for the fourth quarter of 2018, and 4.14% for the first quarter of 2018

 

 

 

Originated loans and leases grew to $2.5 billion at March 31, 2019, an increase of $249.7 million, or 11.2%, from December 31, 2018

 

 

Efficiency ratio of 62.68% for the first quarter of 2019, compared to 56.63% for the fourth quarter of 2018, and 68.83% for the first quarter of 2018

 

o

Adjusted efficiency ratio1 of 59.55% for the first quarter of 2019, compared to 54.76% for the fourth quarter of 2018, and 68.55% for the first quarter of 2018

 

Return on average assets of 1.03% for the first quarter of 2019, compared to 1.39% for the fourth quarter of 2018, and 0.82% for the first quarter of 2018

 

Return on average stockholders’ equity of 7.75% for the first quarter of 2019, compared to 10.61% for the fourth quarter of 2018, and 5.97% for the first quarter of 2018

 

Reached $5.0 billion in total assets for the first time in franchise history

 

 

Chicago, IL, April 25, 2019 – Byline Bancorp, Inc. (the “Company” or “Byline”)(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $12.6 million, or $0.34 per diluted share, for the first quarter of 2019, compared with net income of $17.1 million, or $0.46 per diluted share, for the fourth quarter of 2018, and net income of $6.8 million, or $0.22 per diluted share, for the first quarter of 2018. The Company’s financial results include certain costs associated with its integration of First Evanston Bancorp, Inc. (“First Evanston”) and its bank subsidiary First Bank & Trust, and its pending acquisition of Oak Park River Forest Bankshares, Inc. Excluding these merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, adjusted net income1 was $14.0 million, or $0.38 per adjusted diluted share, for the first quarter of 2019, compared with $18.1 million, or $0.49 per adjusted diluted share, for the fourth quarter of 2018, and $6.1 million, or $0.21 per adjusted diluted share, for the first quarter of 2018. A reconciliation of adjusted net income and adjusted diluted earnings per share to net income and diluted earnings per share, respectively, according to accounting principles generally accepted in the United States of America (“GAAP”) is provided in the financial tables at the end of this release.

Alberto J. Paracchini, President and Chief Executive Officer of Byline, commented, “We are pleased to report another quarter of strong results driven by solid organic growth, stable asset quality and operating performance despite challenges in the operating environment.

 

 

 

(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.

 

 


Byline Bancorp, Inc.

Page 2 of 20

“During the quarter, and thanks to our bankers and team members, we continued to experience healthy growth in our loan and deposit portfolio and eclipsed $5.0 billion in total assets. We also successfully completed a core system conversion during the quarter, an important milestone, which reflects positively on the hard work and dedication of our employees.

“We remain focused on executing our strategy of pursuing disciplined organic growth in 2019. We believe our pending acquisition of Oak Park River Forest Bankshares, Inc. will enhance our position in an attractive Chicago metropolitan market, provide an important source of low-cost deposits, and further enhance the value of the Byline franchise. Oak Park River Forest recently received its stockholders’ approval for the transaction, which we expect to close this quarter. Completing the acquisition and ensuring a smooth transition for customers and colleagues is a top priority for the remainder of 2019,” said Mr. Paracchini.

STATEMENTS OF OPERATIONS

Net Interest Income

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

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

(dollars in thousands)

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2018

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and leases

 

$

54,383

 

 

$

56,646

 

 

$

55,045

 

 

$

39,627

 

 

$

33,654

 

Interest on taxable securities

 

 

5,759

 

 

 

5,334

 

 

 

5,076

 

 

 

4,572

 

 

 

4,055

 

Interest on tax-exempt securities

 

 

343

 

 

 

355

 

 

 

337

 

 

 

229

 

 

 

174

 

Other interest and dividend income

 

 

625

 

 

 

560

 

 

 

615

 

 

 

413

 

 

 

259

 

Total interest and dividend

   income

 

 

61,110

 

 

 

62,895

 

 

 

61,073

 

 

 

44,841

 

 

 

38,142

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

8,076

 

 

 

7,115

 

 

 

5,971

 

 

 

3,745

 

 

 

2,498

 

Federal Home Loan Bank advances

 

 

2,099

 

 

 

1,719

 

 

 

1,723

 

 

 

1,360

 

 

 

1,358

 

Subordinated debentures and other

   borrowings

 

 

850

 

 

 

800

 

 

 

786

 

 

 

680

 

 

 

591

 

Total interest expense

 

 

11,025

 

 

 

9,634

 

 

 

8,480

 

 

 

5,785

 

 

 

4,447

 

Net interest income

 

$

50,085

 

 

$

53,261

 

 

$

52,593

 

 

$

39,056

 

 

$

33,695

 


Byline Bancorp, Inc.

Page 3 of 20

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

 

 

 

March 31, 2019

 

 

December 31, 2018

 

(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

 

$

66,765

 

 

$

301

 

 

 

1.83

%

 

$

91,852

 

 

$

316

 

 

 

1.37

%

Loans and leases(1)

 

 

3,533,973

 

 

 

54,383

 

 

 

6.24

%

 

 

3,470,264

 

 

 

56,646

 

 

 

6.48

%

Taxable securities

 

 

926,129

 

 

 

6,083

 

 

 

2.66

%

 

 

886,349

 

 

 

5,578

 

 

 

2.50

%

Tax-exempt securities(2)

 

 

55,198

 

 

 

343

 

 

 

2.52

%

 

 

56,649

 

 

 

355

 

 

 

2.48

%

Total interest-earning assets

 

$

4,582,065

 

 

$

61,110

 

 

 

5.41

%

 

$

4,505,114

 

 

$

62,895

 

 

 

5.54

%

Allowance for loan and lease losses

 

 

(25,354

)

 

 

 

 

 

 

 

 

 

 

(24,215

)

 

 

 

 

 

 

 

 

All other assets

 

 

406,995

 

 

 

 

 

 

 

 

 

 

 

415,535

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

4,963,706

 

 

 

 

 

 

 

 

 

 

$

4,896,434

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’

   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

293,049

 

 

$

413

 

 

 

0.57

%

 

$

308,821

 

 

$

407

 

 

 

0.52

%

Money market accounts

 

 

613,001

 

 

 

1,460

 

 

 

0.97

%

 

 

653,141

 

 

 

1,505

 

 

 

0.91

%

Savings

 

 

471,206

 

 

 

138

 

 

 

0.12

%

 

 

489,486

 

 

 

157

 

 

 

0.13

%

Time deposits

 

 

1,195,417

 

 

 

6,065

 

 

 

2.06

%

 

 

1,130,308

 

 

 

5,046

 

 

 

1.77

%

Total interest-bearing

   deposits

 

 

2,572,673

 

 

 

8,076

 

 

 

1.27

%

 

 

2,581,756

 

 

 

7,115

 

 

 

1.09

%

Federal Home Loan Bank advances

 

 

433,372

 

 

 

2,099

 

 

 

1.96

%

 

 

360,891

 

 

 

1,719

 

 

 

1.89

%

Other borrowed funds

 

 

71,280

 

 

 

850

 

 

 

4.84

%

 

 

65,226

 

 

 

800

 

 

 

4.86

%

Total borrowings

 

 

504,652

 

 

 

2,949

 

 

 

2.37

%

 

 

426,117

 

 

 

2,519

 

 

 

2.35

%

Total interest-bearing liabilities

 

$

3,077,325

 

 

$

11,025

 

 

 

1.45

%

 

$

3,007,873

 

 

$

9,634

 

 

 

1.27

%

Non-interest-bearing demand deposits

 

 

1,185,981

 

 

 

 

 

 

 

 

 

 

 

1,194,445

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

41,244

 

 

 

 

 

 

 

 

 

 

 

54,231

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

659,156

 

 

 

 

 

 

 

 

 

 

 

639,885

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND

   STOCKHOLDERS’ EQUITY

 

$

4,963,706

 

 

 

 

 

 

 

 

 

 

$

4,896,434

 

 

 

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

 

 

 

 

3.96

%

 

 

 

 

 

 

 

 

 

 

4.27

%

Net interest income

 

 

 

 

 

$

50,085

 

 

 

 

 

 

 

 

 

 

$

53,261

 

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

 

 

 

4.43

%

 

 

 

 

 

 

 

 

 

 

4.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

 

 

$

5,201

 

 

 

0.46

%

 

 

 

 

 

$

6,351

 

 

 

0.56

%

Net interest margin excluding loan

   accretion(6)

 

 

 

 

 

 

 

 

 

 

3.97

%

 

 

 

 

 

 

 

 

 

 

4.13

%

 

(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.

Page 4 of 20

Net interest income for the first quarter of 2019 was $50.1 million, a decrease of $3.2 million, or 6.0%, from $53.3 million for the fourth quarter of 2018.

The decrease in net interest income was primarily due to:

 

A decrease of $2.3 million in interest and fees on loans and leases, primarily due to a $1.2 million decrease in accretion income and lower day count, partially offset by growth in loan originations;

 

An increase of $961,000 in interest expense on deposits, primarily due to certificate of deposits promotions during the quarter to expand our Retail customer base; and

 

An increase of $380,000 in interest expense on Federal Home Loan Bank advances, primarily due to an increase in average advances outstanding during the quarter.

Partially offset by:

 

An increase of $413,000 in interest income on securities, primarily due to additional purchases during the first quarter of 2019.

 

 

Net interest margin for the first quarter of 2019 was 4.43%, a decrease of 26 basis points compared to 4.69% for the fourth quarter of 2018. Total net accretion income on acquired loans contributed 46 basis points to the net interest margin for the first quarter of 2019 compared to 56 basis points for the fourth quarter of 2018, a decrease of 10 basis points. Net interest margin excluding loan accretion decreased 16 basis points to 3.97% during the first quarter of 2019, compared to 4.13% for the fourth quarter of 2018.

 

The average cost of total deposits was 0.87% for the first quarter of 2019, an increase of 12 basis points compared to the fourth quarter of 2018, primarily due to increased rates on interest-bearing deposits. Additionally, there was growth in average time deposits of $65.1 million, partially offset by decreases in average money market accounts of $40.1 million, average interest checking of $15.8 million, and average savings of $18.3 million.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $4.0 million for the first quarter of 2019, an increase of $117,000 compared to $3.9 million for the fourth quarter of 2018. The first quarter provision included allocations of $2.0 million for originated loans and leases, $1.6 million for acquired non-impaired loans, and $354,000 for acquired impaired loans. The increased provision during the first quarter of 2019 was primarily due to increases in the general reserves driven by newly originated loans and renewals of acquired non-impaired loans that are now reflected with originated loans, and specific impairments in the unguaranteed balance of the U.S. government guaranteed portfolio.


Byline Bancorp, Inc.

Page 5 of 20

Non-interest Income

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

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

(dollars in thousands)

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2018

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposits

 

$

1,770

 

 

$

1,852

 

 

$

1,825

 

 

$

1,456

 

 

$

1,312

 

Loan servicing revenue

 

 

2,539

 

 

 

2,667

 

 

 

2,622

 

 

 

2,533

 

 

 

2,450

 

Loan servicing asset revaluation

 

 

(1,261

)

 

 

(2,862

)

 

 

(2,446

)

 

 

(2,074

)

 

 

(1,887

)

ATM and interchange fees

 

 

717

 

 

 

1,010

 

 

 

1,540

 

 

 

850

 

 

 

913

 

Net gains on sales of securities

   available-for-sale

 

 

 

 

 

160

 

 

 

 

 

 

4

 

 

 

 

Change in fair value of equity securities, net

 

 

499

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains on sales of loans

 

 

6,233

 

 

 

9,337

 

 

 

5,015

 

 

 

9,723

 

 

 

7,476

 

Wealth management and trust income

 

 

595

 

 

 

679

 

 

 

674

 

 

 

192

 

 

 

 

Other non-interest income

 

 

896

 

 

 

1,447

 

 

 

1,672

 

 

 

1,527

 

 

 

859

 

Total non-interest income

 

$

11,988

 

 

$

14,290

 

 

$

10,902

 

 

$

14,211

 

 

$

11,123

 

 

Non-interest income for the first quarter of 2019 was $12.0 million, a decrease of $2.3 million compared to $14.3 million for the fourth quarter of 2018.

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

 

A decrease of $3.1 million in net gains on sales of loans, primarily due to a decrease in government guaranteed loan sales;

 

A decrease of $551,000 in other non-interest income, primarily due to property tax adjustments in our leasing portfolio and a decrease in swap fee income; and

 

 

 

A decrease of $293,000 in ATM and interchange fees, primarily due to reduced transactional account volume during the quarter.

 

Partially offset by:

 

A reduction of $1.6 million in loan servicing asset revaluation, primarily due to the change in fair value of the servicing asset as a result of decreased prepayment rates; and

 

An increase in the fair value of equity securities, net of $499,000 due to the adoption of new accounting guidance in the first quarter of 2019. Following the adoption, beginning in the current quarter we reflect changes in the fair value of certain equity investments in the Consolidated Statements of Operations.

 

 

 

During the first quarter of 2019, the Company sold $66.2 million of U.S. government guaranteed loans compared to $87.4 million during the fourth quarter of 2018, contributing to the decrease in net gains on sale of loans for the quarter. The decrease in sales is primarily due to the timing of loans closed becoming fully funded and the mix of loans sold. The fourth quarter of 2018 includes sales of $30.1 million of USDA loans while the first quarter of 2019 included $479,000.


Byline Bancorp, Inc.

Page 6 of 20

Non-interest Expense

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

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

(dollars in thousands)

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2018

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

22,892

 

 

$

21,548

 

 

$

21,312

 

 

$

19,244

 

 

$

18,278

 

Occupancy expense, net

 

 

4,280

 

 

 

4,027

 

 

 

3,548

 

 

 

4,499

 

 

 

3,755

 

Equipment expense

 

 

669

 

 

 

641

 

 

 

617

 

 

 

558

 

 

 

603

 

Loan and lease related expenses

 

 

1,577

 

 

 

2,223

 

 

 

1,015

 

 

 

1,471

 

 

 

1,400

 

Legal, audit and other professional fees

 

 

2,066

 

 

 

2,746

 

 

 

2,358

 

 

 

4,418

 

 

 

1,851

 

Data processing

 

 

3,273

 

 

 

2,846

 

 

 

2,724

 

 

 

10,371

 

 

 

2,301

 

Net loss (gain) recognized on other

   real estate owned and other related

   expenses

 

 

196

 

 

 

48

 

 

 

(284

)

 

 

472

 

 

 

(1

)

Regulatory assessments

 

 

(59

)

 

 

462

 

 

 

675

 

 

 

366

 

 

 

241

 

Other intangible assets amortization

   expense

 

 

1,773

 

 

 

1,834

 

 

 

1,898

 

 

 

1,130

 

 

 

767

 

Advertising and promotions

 

 

709

 

 

 

590

 

 

 

537

 

 

 

347

 

 

 

249

 

Telecommunications

 

 

464

 

 

 

391

 

 

 

435

 

 

 

466

 

 

 

418

 

Other non-interest expense

 

 

2,839

 

 

 

2,732

 

 

 

2,880

 

 

 

2,137

 

 

 

1,752

 

Total non-interest expense

 

$

40,679

 

 

$

40,088

 

 

$

37,715

 

 

$

45,479

 

 

$

31,614

 

 

Non-interest expense for the first quarter of 2019 was $40.7 million, an increase of $591,000, or 1.5%, from $40.1 million for the fourth quarter of 2018.

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

 

An increase of $1.3 million in salaries and employee benefits, primarily due to higher payroll taxes and costs associated with our core system conversion, primarily training;

 

An increase of $427,000 in data processing expense, primarily due to a final contract termination expense incurred during the first quarter related to the Bank’s successful core system conversion; and

 

An increase of $253,000 in occupancy expense, net, primarily due to costs associated with seasonal weather fluctuations in the Chicagoland area.

 

 

 

Partially offset by:

 

A decrease of $680,000 in legal, audit and other professional fees, primarily due to professional services incurred in the fourth quarter of 2018 related to the acquisition of Oak Park River Forest Bankshares, Inc. and our successful core system conversion;

 

A decrease of $646,000 in loan and lease related expenses, primarily due to decreased broker fee expenses associated with U.S. government guaranteed loan sales due to decreased loan sales; and

 

A decrease of $521,000 in regulatory assessments, primarily due to an FDIC credit.

 

 

The Company’s efficiency ratio was 62.68% for the first quarter of 2019, compared with 56.63% for the fourth quarter of 2018. Excluding merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, the Company’s adjusted efficiency ratio1 was 59.55% for the first quarter of 2019, compared with 54.76% for the fourth quarter of 2018.

 

(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.



Byline Bancorp, Inc.

Page 7 of 20

INCOME TAXES

The Company recorded income tax expense of $4.8 million during the first quarter of 2019, an effective tax rate of 27.6%, compared to $6.5 million during the fourth quarter of 2018, an effective tax rate of 27.4%, a decrease of $1.7 million. The decrease was primarily due to the decrease in net income recorded during the quarter.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $5.0 billion at March 31, 2019, an increase of $67.4 million compared to $4.9 billion at December 31, 2018, and an increase of $1.5 billion compared to $3.5 billion at March 31, 2018.

The current quarter increase was primarily due to:

 

An increase in loans and leases of $65.9 million, primarily due to an increase of $249.7 million in our originated loan portfolio, partially offset by a decrease of $183.8 million in our acquired loan portfolio;

 

An increase in securities of $59.3 million, primarily due to additional purchases of treasury, agency, mortgage-backed, and corporate securities during the quarter. Additionally, upon adoption of new accounting guidance in the first quarter of 2019, we elected to reclassify $94.8 million of securities held-to-maturity to securities available-for-sale, which did not impact the Consolidated Statements of Operations or regulatory capital ratios; and

 

An increase in due from counterparty of $15.4 million due to the timing of the settlement of loans sold at March 31, 2019.

Partially offset by:

 

A decrease in interest bearing deposits with other banks of $59.7 million, primarily due to a lower reserve requirement;

 

A decrease in loans held for sale of $19.3 million, primarily due to the government shutdown and the timing of loan closings at March 31, 2019; and

 

A decrease in deferred tax assets, net of $5.1 million, primarily due to a decrease in deferred tax assets associated with unrealized losses on available-for-sale securities and utilization of operating loss carryforwards during the first quarter of 2019.

 

 

 


Byline Bancorp, Inc.

Page 8 of 20

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

 

March 31, 2019

 

 

December 31, 2018

 

 

March 31, 2018

 

(dollars in thousands)

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

Originated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

738,832

 

 

 

20.7

%

 

$

652,234

 

 

 

18.6

%

 

$

485,324

 

 

 

21.3

%

Residential real estate

 

 

494,877

 

 

 

13.9

%

 

 

466,309

 

 

 

13.3

%

 

 

397,516

 

 

 

17.4

%

Construction, land development, and

   other land

 

 

181,427

 

 

 

5.1

%

 

 

144,128

 

 

 

4.1

%

 

 

110,092

 

 

 

4.8

%

Commercial and industrial

 

 

900,709

 

 

 

25.2

%

 

 

803,508

 

 

 

22.9

%

 

 

470,689

 

 

 

20.6

%

Installment and other

 

 

11,082

 

 

 

0.3

%

 

 

11,718

 

 

 

0.3

%

 

 

3,645

 

 

 

0.2

%

Leasing financing receivables

 

 

160,607

 

 

 

4.5

%

 

 

159,901

 

 

 

4.6

%

 

 

151,468

 

 

 

6.7

%

Total originated loans and leases

 

$

2,487,534

 

 

 

69.7

%

 

$

2,237,798

 

 

 

63.8

%

 

$

1,618,734

 

 

 

71.0

%

Acquired impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

141,199

 

 

 

4.0

%

 

$

146,808

 

 

 

4.2

%

 

$

157,956

 

 

 

7.0

%

Residential real estate

 

 

106,764

 

 

 

3.0

%

 

 

113,934

 

 

 

3.3

%

 

 

139,858

 

 

 

6.1

%

Construction, land development, and

   other land

 

 

3,111

 

 

 

0.1

%

 

 

3,779

 

 

 

0.1

%

 

 

5,156

 

 

 

0.2

%

Commercial and industrial

 

 

11,963

 

 

 

0.3

%

 

 

12,617

 

 

 

0.4

%

 

 

8,055

 

 

 

0.4

%

Installment and other

 

 

374

 

 

 

0.0

%

 

 

404

 

 

 

0.0

%

 

 

449

 

 

 

0.0

%

Total acquired impaired loans

 

$

263,411

 

 

 

7.4

%

 

$

277,542

 

 

 

8.0

%

 

$

311,474

 

 

 

13.7

%

Acquired non-impaired loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

382,252

 

 

 

10.7

%

 

$

462,565

 

 

 

13.2

%

 

$

197,589

 

 

 

8.7

%

Residential real estate

 

 

97,395

 

 

 

2.8

%

 

 

124,659

 

 

 

3.6

%

 

 

30,785

 

 

 

1.3

%

Construction, land development, and

   other land

 

 

29,121

 

 

 

0.8

%

 

 

37,442

 

 

 

1.1

%

 

 

1,822

 

 

 

0.1

%

Commercial and industrial

 

 

277,146

 

 

 

7.8

%

 

 

328,672

 

 

 

9.4

%

 

 

89,985

 

 

 

3.9

%

Installment and other

 

 

1,346

 

 

 

0.0

%

 

 

1,596

 

 

 

0.0

%

 

 

36

 

 

 

0.0

%

Leasing financing receivables

 

 

29,361

 

 

 

0.8

%

 

 

31,352

 

 

 

0.9

%

 

 

29,993

 

 

 

1.3

%

Total acquired non-impaired loans

   and leases

 

$

816,621

 

 

 

22.9

%

 

$

986,286

 

 

 

28.2

%

 

$

350,210

 

 

 

15.3

%

Total loans and leases

 

$

3,567,566

 

 

 

100.0

%

 

$

3,501,626

 

 

 

100.0

%

 

$

2,280,418

 

 

 

100.0

%

Allowance for loan and lease losses

 

 

(27,106

)

 

 

 

 

 

 

(25,201

)

 

 

 

 

 

 

(17,640

)

 

 

 

 

Total loans and leases, net of allowance for

   loan and lease losses

 

$

3,540,460

 

&nbs