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Section 1: 8-K (8-K)

by-8k_20191024.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): October 24, 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 (see General Instruction A.2. below):

 

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

BY

New York Stock Exchange

 


 

 

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.  

 

2


 

 

Item 2.02.

Results of Operations and Financial Condition.

On October 24, 2019, Byline Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 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

  

Third Quarter 2019 Financial Results Press Release, dated October 24, 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.

 

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.

 

 

3


 

 

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: October 24, 2019

 

 

 

By:

/s/ Alberto J. Paracchini

 

 

 

 

Name:

Alberto J. Paracchini

 

 

 

 

Title:

President and Chief Executive Officer

 

 

 

4

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

by-ex991_6.htm

EX-99.1

 

                                      

 

Byline Bancorp, Inc. Reports Third Quarter 2019 Financial Results

 

Third Quarter 2019 Highlights

 

Net income of $15.3 million, or $0.39 per diluted share

 

o

Adjusted net income1 of $16.2 million, or $0.41 per adjusted diluted share1

 

Net interest margin of 4.62% for the third quarter of 2019, compared to 4.51% for the second quarter of 2019, and 4.73% for the third quarter of 2018

 

 

 

Originated loans and leases of $2.8 billion at September 30, 2019, an increase of $183.9 million, or 7.1%, from June 30, 2019

 

 

Efficiency ratio of 59.81% for the third quarter of 2019, compared to 61.19% for the second quarter of 2019, and 56.41% for the third quarter of 2018

 

o

Adjusted efficiency ratio1 of 58.17% for the third quarter of 2019, compared to 56.02% for the second quarter of 2019, and 55.62% for the third quarter of 2018

 

Return on average assets of 1.12% for the third quarter of 2019, compared to 1.00% for the second quarter of 2019, and 1.20% for the third quarter of 2018

 

Return on average stockholders’ equity of 8.34% for the third quarter of 2019, compared to 7.60% for the second quarter of 2019, and 9.22% for the third quarter of 2018

 

Successfully completed the core system conversion of Oak Park River Forest Bankshares, Inc. in September 2019

 

Chicago, IL, October 24, 2019 – Byline Bancorp, Inc. (the “Company” or “Byline”)(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $15.3 million, or $0.39 per diluted share, for the third quarter of 2019, compared with net income of $13.2 million, or $0.34 per diluted share, for the second quarter of 2019, and net income of $14.5 million, or $0.39 per diluted share, for the third quarter of 2018. The Company’s financial results include certain costs associated with its integration of First Evanston Bancorp, Inc. and its bank subsidiary First Bank & Trust, and its acquisition and integration of Oak Park River Forest Bankshares, Inc. (“Oak Park River Forest”) and its bank subsidiary Community Bank of Oak Park River Forest. Excluding these merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, adjusted net income1 was $16.2 million, or $0.41 per adjusted diluted share1, for the third quarter of 2019, compared with $15.9 million, or $0.41 per adjusted diluted share, for the second quarter of 2019, and $14.9 million, or $0.40 per adjusted diluted share, for the third 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 executed well and had a strong quarter of revenue generation while successfully completing the system conversion and integration of our recent acquisition of Oak Park River Forest. We are seeing the initial benefits from this acquisition in helping to more effectively manage our deposit costs and expect to see additional

 

 

 

(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 21

synergies over the remainder of 2019. We continue to be optimistic about our opportunities to execute on our strategy in the coming years and further enhance the value of our franchise, 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,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(dollars in thousands)

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans and

   leases

 

$

63,391

 

 

$

59,524

 

 

$

54,383

 

 

$

56,646

 

 

$

55,045

 

 

$

177,298

 

 

$

128,326

 

Interest on taxable securities

 

 

6,554

 

 

 

6,237

 

 

 

5,759

 

 

 

5,334

 

 

 

5,076

 

 

 

18,550

 

 

 

13,703

 

Interest on tax-exempt securities

 

 

486

 

 

 

428

 

 

 

343

 

 

 

355

 

 

 

337

 

 

 

1,257

 

 

 

740

 

Other interest and dividend

   income

 

 

598

 

 

 

571

 

 

 

625

 

 

 

560

 

 

 

615

 

 

 

1,794

 

 

 

1,287

 

Total interest and dividend

   income

 

 

71,029

 

 

 

66,760

 

 

 

61,110

 

 

 

62,895

 

 

 

61,073

 

 

 

198,899

 

 

 

144,056

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

9,618

 

 

 

9,306

 

 

 

8,076

 

 

 

7,115

 

 

 

5,971

 

 

 

27,000

 

 

 

12,214

 

Federal Home Loan Bank

   advances

 

 

2,771

 

 

 

2,174

 

 

 

2,099

 

 

 

1,719

 

 

 

1,723

 

 

 

7,044

 

 

 

4,441

 

Subordinated debentures and

   other borrowings

 

 

802

 

 

 

832

 

 

 

850

 

 

 

800

 

 

 

786

 

 

 

2,484

 

 

 

2,057

 

Total interest expense

 

 

13,191

 

 

 

12,312

 

 

 

11,025

 

 

 

9,634

 

 

 

8,480

 

 

 

36,528

 

 

 

18,712

 

Net interest income

 

$

57,838

 

 

$

54,448

 

 

$

50,085

 

 

$

53,261

 

 

$

52,593

 

 

$

162,371

 

 

$

125,344

 


Byline Bancorp, Inc.

Page 3 of 21

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, 2019

 

 

June 30, 2019

 

(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

 

$

34,225

 

 

$

253

 

 

 

2.93

%

 

$

35,346

 

 

$

245

 

 

 

2.78

%

Loans and leases(1)

 

 

3,860,770

 

 

 

63,391

 

 

 

6.51

%

 

 

3,759,634

 

 

 

59,524

 

 

 

6.35

%

Taxable securities

 

 

996,750

 

 

 

6,899

 

 

 

2.75

%

 

 

975,693

 

 

 

6,563

 

 

 

2.70

%

Tax-exempt securities(2)

 

 

76,161

 

 

 

486

 

 

 

2.53

%

 

 

68,314

 

 

 

428

 

 

 

2.52

%

Total interest-earning assets

 

$

4,967,906

 

 

$

71,029

 

 

 

5.67

%

 

$

4,838,987

 

 

$

66,760

 

 

 

5.53

%

Allowance for loan and lease losses

 

 

(32,246

)

 

 

 

 

 

 

 

 

 

 

(28,203

)

 

 

 

 

 

 

 

 

All other assets

 

 

500,102

 

 

 

 

 

 

 

 

 

 

 

464,036

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

5,435,762

 

 

 

 

 

 

 

 

 

 

$

5,274,820

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’

   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

358,185

 

 

$

524

 

 

 

0.58

%

 

$

333,725

 

 

$

452

 

 

 

0.54

%

Money market accounts

 

 

735,724

 

 

 

1,917

 

 

 

1.03

%

 

 

695,986

 

 

 

1,790

 

 

 

1.03

%

Savings

 

 

475,417

 

 

 

114

 

 

 

0.10

%

 

 

477,775

 

 

 

118

 

 

 

0.10

%

Time deposits

 

 

1,270,050

 

 

 

7,063

 

 

 

2.21

%

 

 

1,278,488

 

 

 

6,946

 

 

 

2.18

%

Total interest-bearing

   deposits

 

 

2,839,376

 

 

 

9,618

 

 

 

1.34

%

 

 

2,785,974

 

 

 

9,306

 

 

 

1.34

%

Federal Home Loan Bank advances

 

 

530,055

 

 

 

2,771

 

 

 

2.07

%

 

 

426,446

 

 

 

2,174

 

 

 

2.04

%

Other borrowed funds

 

 

70,080

 

 

 

802

 

 

 

4.54

%

 

 

73,358

 

 

 

832

 

 

 

4.55

%

Total borrowings

 

 

600,135

 

 

 

3,573

 

 

 

2.36

%

 

 

499,804

 

 

 

3,006

 

 

 

2.41

%

Total interest-bearing liabilities

 

$

3,439,511

 

 

$

13,191

 

 

 

1.52

%

 

$

3,285,778

 

 

$

12,312

 

 

 

1.50

%

Non-interest-bearing demand deposits

 

 

1,223,556

 

 

 

 

 

 

 

 

 

 

 

1,254,173

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

42,914

 

 

 

 

 

 

 

 

 

 

 

37,941

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

729,781

 

 

 

 

 

 

 

 

 

 

 

696,928

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND

   STOCKHOLDERS’ EQUITY

 

$

5,435,762

 

 

 

 

 

 

 

 

 

 

$

5,274,820

 

 

 

 

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

 

 

 

 

 

4.15

%

 

 

 

 

 

 

 

 

 

 

4.03

%

Net interest income

 

 

 

 

 

$

57,838

 

 

 

 

 

 

 

 

 

 

$

54,448

 

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

 

 

 

4.62

%

 

 

 

 

 

 

 

 

 

 

4.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loan accretion impact on margin

 

 

 

 

 

$

7,703

 

 

 

0.62

%

 

 

 

 

 

$

4,868

 

 

 

0.40

%

 

(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.

 



Byline Bancorp, Inc.

Page 4 of 21

The Company completed its acquisition of Oak Park River Forest in the second quarter of 2019. All references to this transaction in the following narrative are referred to as “the acquisition” or “our recent acquisition.”

Net interest income for the third quarter of 2019 was $57.8 million, an increase of $3.4 million, or 6.2%, from $54.4 million for the second quarter of 2019.

The increase in net interest income was primarily due to:

 

An increase of $3.9 million in interest and fees on loans and leases, primarily due to a $2.8 million increase in accretion income and loans added from the acquisition; and

 

An increase of $375,000 in interest income on securities, mainly due to additional purchases during the quarter.

Partially offset by:

 

An increase of $597,000 in interest expense on Federal Home Loan Bank advances, primarily due to an increase in average advances during the quarter; and

 

An increase of $312,000 in interest expense on deposits, primarily due to deposits assumed as a result of the acquisition and an increase in money market and interest checking accounts.

 

 

Net interest margin for the third quarter of 2019 was 4.62%, an increase of 11 basis points compared to 4.51% for the second quarter of 2019. Total net accretion income on acquired loans contributed 62 basis points to the net interest margin for the third quarter of 2019 compared to 40 basis points for the second quarter of 2019, an increase of 22 basis points. The net interest margin increase was primarily driven by increased loan and lease yields largely resulting from increased loan accretion income and higher U.S. government guaranteed loan originations during the quarter.

 

The average cost of total deposits was 0.94% for the third quarter of 2019, an increase of two basis points compared to the second quarter of 2019, primarily due to decreased average non-interest-bearing demand deposits and slightly increased costs on time deposits. Additionally, there was growth in average money market accounts of $39.7 million and average interest-bearing checking accounts of $24.5 million, partially offset by decreases in average non-interest-bearing demand deposits of $30.6 million, average time deposits of $8.4 million, and average savings accounts of $2.4 million.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $5.9 million for the third quarter of 2019, a decrease of $460,000 compared to $6.4 million for the second quarter of 2019. The third quarter included allocations of $10.0 million for originated loans and leases, and releases of $4.0 million for acquired non-impaired loans and $59,000 for acquired impaired loans. The provision during the third quarter of 2019 for originated loans reflects growth in the loan portfolio, particularly the unguaranteed portion of government guaranteed loans. The release to the provision for acquired non-impaired loans is the result of migration of acquired loans to originated loans as they come up for renewal.


Byline Bancorp, Inc.

Page 5 of 21

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,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(dollars in thousands)

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges on

   deposits

 

$

1,612

 

 

$

1,441

 

 

$

1,770

 

 

$

1,852

 

 

$

1,825

 

 

$

4,823

 

 

$

4,593

 

Loan servicing revenue

 

 

2,692

 

 

 

2,630

 

 

 

2,539

 

 

 

2,667

 

 

 

2,622

 

 

 

7,861

 

 

 

7,605

 

Loan servicing asset revaluation

 

 

(1,610

)

 

 

(1,223

)

 

 

(1,261

)

 

 

(2,862

)

 

 

(2,446

)

 

 

(4,094

)

 

 

(6,407

)

ATM and interchange fees

 

 

973

 

 

 

945

 

 

 

717

 

 

 

1,010

 

 

 

1,540

 

 

 

2,635

 

 

 

3,303

 

Net gains on sales of securities

   available-for-sale

 

 

178

 

 

 

973

 

 

 

 

 

 

160

 

 

 

 

 

 

1,151

 

 

 

4

 

Change in fair value of equity

   securities, net

 

 

(15

)

 

 

551

 

 

 

499

 

 

 

 

 

 

 

 

 

1,035

 

 

 

 

Net gains on sales of loans

 

 

9,405

 

 

 

7,472

 

 

 

6,233

 

 

 

9,337

 

 

 

5,015

 

 

 

23,110

 

 

 

22,214

 

Wealth management and trust

   income

 

 

653

 

 

 

626

 

 

 

595

 

 

 

679

 

 

 

674

 

 

 

1,874

 

 

 

866

 

Other non-interest income

 

 

918

 

 

 

768

 

 

 

896

 

 

 

1,447

 

 

 

1,672

 

 

 

2,582

 

 

 

4,058

 

Total non-interest income

 

$

14,806

 

 

$

14,183

 

 

$

11,988

 

 

$

14,290

 

 

$

10,902

 

 

$

40,977

 

 

$

36,236

 

 

Non-interest income for the third quarter of 2019 was $14.8 million, an increase of $623,000, or 4.4%, compared to $14.2 million for the second quarter of 2019.

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

 

An increase of $1.9 million in net gains on sales of loans, primarily due to an increase in government guaranteed loan sales and average premiums;

 

An increase of $171,000 in fees and service charges on deposits, primarily due to higher fee income from transactional business accounts; and

 

An increase of $150,000 in other non-interest income, primarily due to a gain on the sale of a former branch property from assets held for sale.

 

 

Partially offset by:

 

A decrease in net gains on sales of securities available-for-sale of $795,000, primarily due to reduced sales volume compared to the prior quarter in which $973,000 of net gains were recorded;

 

A decrease in the change in fair value of equity securities, net, of $566,000 due to a decrease in the fair value of the securities; and

 

An additional $387,000 in loan servicing asset revaluation, primarily due to the change in fair value of the servicing asset as a result of increased prepayment rates.

 

During the third quarter of 2019, the Company sold $93.3 million of U.S. government guaranteed loans compared to $75.2 million during the second quarter of 2019, contributing to the increase in net gains on sale of loans for the quarter. The increase in sales is primarily due to the timing of loans closed becoming fully funded and mix of loans sold. The third quarter of 2019 included sales of $14.4 million of USDA loans while the second quarter of 2019 included sales of $10.4 million.


Byline Bancorp, Inc.

Page 6 of 21

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,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(dollars in thousands)

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

24,537

 

 

$

23,652

 

 

$

22,892

 

 

$

21,548

 

 

$

21,312

 

 

$

71,081

 

 

$

58,834

 

Occupancy expense, net

 

 

3,745

 

 

 

4,337

 

 

 

4,280

 

 

 

4,027

 

 

 

3,548

 

 

 

12,362

 

 

 

11,802

 

Equipment expense

 

 

767

 

 

 

732

 

 

 

669

 

 

 

641

 

 

 

617

 

 

 

2,168

 

 

 

1,778

 

Loan and lease related expenses

 

 

1,949

 

 

 

1,841

 

 

 

1,577

 

 

 

2,223

 

 

 

1,015

 

 

 

5,367

 

 

 

3,886

 

Legal, audit and other professional

   fees

 

 

4,066

 

 

 

2,981

 

 

 

2,066

 

 

 

2,746

 

 

 

2,358

 

 

 

9,113

 

 

 

8,627

 

Data processing

 

 

4,062

 

 

 

3,849

 

 

 

3,144

 

 

 

2,846

 

 

 

2,724

 

 

 

11,055

 

 

 

15,396

 

Net loss (gain) recognized on other

   real estate owned and other

   related expenses

 

 

95

 

 

 

252

 

 

 

196

 

 

 

48

 

 

 

(284

)

 

 

543

 

 

 

187

 

Regulatory assessments

 

 

228

 

 

 

371

 

 

 

(59

)

 

 

462

 

 

 

675

 

 

 

540

 

 

 

1,282

 

Other intangible assets

   amortization expense

 

 

2,003

 

 

 

1,959

 

 

 

1,773

 

 

 

1,834

 

 

 

1,898

 

 

 

5,735

 

 

 

3,795

 

Advertising and promotions

 

 

843

 

 

 

732

 

 

 

709

 

 

 

590

 

 

 

537

 

 

 

2,284

 

 

 

1,133

 

Telecommunications

 

 

474

 

 

 

537

 

 

 

464

 

 

 

391

 

 

 

435

 

 

 

1,475

 

 

 

1,319

 

Other non-interest expense

 

 

2,679

 

 

 

2,711

 

 

 

2,968

 

 

 

2,732

 

 

 

2,880

 

 

 

8,358

 

 

 

6,769

 

Total non-interest expense

 

$

45,448

 

 

$

43,954

 

 

$

40,679

 

 

$

40,088

 

 

$

37,715

 

 

$

130,081

 

 

$

114,808

 

 

Non-interest expense for the third quarter of 2019 was $45.4 million, an increase of $1.5 million, or 3.4%, from $44.0 million for the second quarter of 2019.

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

 

An increase of $1.1 million in legal, audit and other professional fees, primarily due to $1.5 million of non-recurring professional services costs;

 

An increase of $885,000 in salaries and employee benefits, primarily due to acquisition related salary and employee benefit costs, including retention expenses, and an increase in stock-based compensation costs, partially offset by a decrease in payroll taxes; and

 

An increase of $213,000 in data processing expense, primarily due to expenses associated with our successful Oak Park River Forest core system conversion.

 

 

Partially offset by:

 

A decrease of $592,000 in occupancy expense, net, primarily due to property tax payments. Additionally, as part of our continual strategic review of our branch network, four of our existing branches will be consolidated or repurposed for our customers in the first quarter of 2020;

 

A decrease of $157,000 in net loss (gain) recognized on other real estate owned and other related expenses, primarily due to decreased property write-downs and real estate tax accrual adjustments; and

 

A decrease of $143,000 in regulatory assessments, primarily due to an accrual adjustment resulting from the quarterly FDIC assessment.

 

 

 

The Company’s efficiency ratio was 59.81% for the third quarter of 2019, compared with 61.19% for the second quarter of 2019. Excluding merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, the Company’s adjusted efficiency ratio1 was 58.17% for the third quarter of 2019, compared with 56.02% for the second quarter of 2019.

 

(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 21

INCOME TAXES

The Company recorded income tax expense of $5.9 million during the third quarter of 2019, an effective tax rate of 27.9%, compared to $5.1 million during the second quarter of 2019, an effective tax rate of 27.8%.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $5.4 billion at September 30, 2019, an increase of $47.0 million compared to $5.4 billion at June 30, 2019, and an increase of $520.9 million compared to $4.9 billion at September 30, 2018.

The current quarter increase was primarily due to:

 

An increase in securities of $62.9 million, primarily due to additional purchases of agency, mortgage-backed, municipal, and corporate securities during the quarter; and

 

An increase in due from counterparty of $12.8 million due to the timing of the settlement of loans sold at September 30, 2019.

 

 

 

Partially offset by:

 

A decrease in loans and leases of $32.1 million, primarily due to a decrease of $215.9 million in our acquired loan portfolio, partially offset by an increase of $183.9 million in our originated loan portfolio;

 

A decrease in loans held for sale of $11.3 million, primarily due to the timing of loan sales at September 30, 2019; and

 

A decrease in deferred tax assets, net of $2.3 million, primarily due to a decrease in deferred tax assets associated with unrealized losses on available-for-sale securities.


Byline Bancorp, Inc.

Page 8 of 21

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

 

September 30, 2019

 

 

June 30, 2019

 

 

September 30, 2018

 

(dollars in thousands)

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

 

Amount

 

 

% of Total

 

Originated loans and leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

772,559

 

 

 

20.2

%

 

$

721,230

 

 

 

18.7

%

 

$

619,767

 

 

 

17.9

%

Residential real estate

 

 

497,839

 

 

 

13.0

%

 

 

501,038

 

 

 

13.0

%

 

 

445,717

 

 

 

12.9

%

Construction, land development, and

   other land

 

 

236,780

 

 

 

6.2

%

 

 

196,656

 

 

 

5.1

%

 

 

140,391

 

 

 

4.1

%

Commercial and industrial

 

 

1,096,400

 

 

 

28.6

%

 

 

992,313

 

 

 

25.7

%

 

 

696,750

 

 

 

20.2

%

Installment and other

 

 

7,818

 

 

 

0.2

%

 

 

10,937

 

 

 

0.3

%

 

 

7,729

 

 

 

0.2

%

Leasing financing receivables

 

 

156,758

 

 

 

4.1

%

 

 

162,119

 

 

 

4.1

%

 

 

155,825

 

 

 

4.5

%

Total originated loans and leases

 

$

2,768,154

 

 

 

72.3

%

 

$

2,584,293

 

 

 

66.9

%

 

$

2,066,179

 

 

 

59.8

%

Acquired impaired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

142,435

 

 

 

3.7

%

 

$

151,127

 

 

 

3.9

%

 

$

154,108

 

 

 

4.5

%

Residential real estate

 

 

109,409

 

 

 

2.9

%

 

 

118,534

 

 

 

3.1

%

 

 

120,963

 

 

 

3.5

%

Construction, land development, and

   other land

 

 

4,562

 

 

 

0.1

%

 

 

4,220

 

 

 

0.1

%

 

 

4,203

 

 

 

0.1

%

Commercial and industrial

 

 

18,349

 

 

 

0.5

%

 

 

20,370

 

 

 

0.5

%

 

 

14,436

 

 

 

0.4

%

Installment and other

 

 

267

 

 

 

0.0

%

 

 

300

 

 

 

0.0

%

 

 

458

 

 

 

0.0

%

Total acquired impaired loans

 

$

275,022