Byline Bancorp, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

By: Byline Bancorp, Inc. via Business Wire

January 26, 2023 at 16:15 PM EST

Select Fourth Quarter 2022 Financial Highlights

Net income of $24.4 million, or $0.65 per diluted share
Net interest margin of 4.39%; up 36 bps from the previous quarter
Pre-tax pre-provision return on average assets of 2.05%
Return on average assets of 1.33%; Return on tangible common equity of 17.21%¹
Efficiency ratio of 55.53%
Total loans and leases increased $160.0 million
Total deposits increased $82.7 million to $5.7 billion
Common Equity Tier 1 to risk weighted assets of 10.20%

Select Full Year 2022 Financial Highlights

Net income of $88.0 million, or $2.34 per diluted share
Pre-tax pre-provision return on average assets of 1.97%
Return on average assets 1.25%; Return on tangible common equity 15.15%¹
Efficiency ratio of 54.99%
Adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) as of January 1, 2022²

(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) The previously reported 2022 quarterly financial statements have been recast to reflect the adoption of CECL.

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 $24.4 million, or $0.65 per diluted share, for the fourth quarter of 2022 compared with net income of $20.4 million, or $0.55 per diluted share, for the third quarter of 2022, and net income of $17.2 million, or $0.45 per diluted share, for the fourth quarter 2021.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “Byline executed its strategy well throughout the year and our focus on customers allowed us to experience solid loan and deposit growth despite a slowing economic environment. We remain committed to executing our strategy of disciplined organic growth in loans and deposits in order to drive higher profitability. We believe our pending acquisition of Inland Bancorp, Inc. will further enhance our position into other attractive Chicago metropolitan markets, provide an important source of stable, low-cost deposits, and further enhance the value of the Byline franchise. I want to thank the Byline employees, who enabled our strong performance for their dedication and hard work.”

Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “We reported strong results in the fourth quarter and ended 2022 on a good note as we delivered positive operating leverage as a result of increased revenues of 4% while continuing to invest in our businesses. Our results were driven by growth in net interest income supported by loan and deposit growth and the benefit of rising interest rates. Our business units performed well during the quarter, and we have good momentum in our areas of strategic focus. As we enter 2023, we remain committed to delivering on our purpose to support new and existing customers, executing our strategy, and growing the value of our franchise.”

Company Adopts ASU 2016-13 Financial Instruments - Credit Losses (Topic 326)

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) on the recognition of credit losses, otherwise known as the current expected credit loss standard, or "CECL", which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses. As an emerging growth company, we elected to delay the adoption of the standard in accordance with ASU No. 2019-10, Effective Dates, which delayed the effective date of the ASU for entities not classified as Public Business Entities. The Company’s EGC status expired during 2022, requiring CECL adoption be reflected in our December 31, 2022 financial statements and Form 10-K.

The Company adopted CECL on December 31, 2022, and has applied it retroactively to the period beginning January 1, 2022 using the modified retrospective method of accounting. Adoption of CECL includes both a $10.1 million retroactive equity adjustment to January 1, 2022 (Day 1) and a $1.7 million fourth quarter adjustment to earnings (net of tax) to account for the difference in provision for credit losses between CECL and the incurred loss methodology for the first three quarters of 2022. 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 Appendix A for recast prior quarter financial information as a result of the adoption of the new standard. Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.

Board Declares Cash Dividend of $0.09 per Share

On January 24, 2023, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on February 21, 2023, to stockholders of record of the Company's common stock as of February 7, 2023.

Board Authorizes New Stock Repurchase Program

On December 7, 2022, the Company's Board of Directors approved a new stock repurchase program that authorizes the Company to purchase up to 1.25 million shares of the Company's outstanding common stock. The new program is effective January 1, 2023 until December 31, 2023. Under the previous stock repurchase program that expired on December 31, 2022, Byline repurchased 2,139,262 shares of the 2.5 million total shares authorized for repurchase, including 689,068 shares during 2022. The Company did not repurchase any shares during the fourth quarter of 2022.

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
									Recast
	December 31, 2022								September 30, 2022								December 31, 2021
(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	$	89,368		$	234		1.04	%	$	77,522		$	210		1.08	%	$	106,170		$	42		0.16	%
Loans and leases⁽¹⁾		5,389,210			85,720		6.31	%		5,217,779		$	72,634		5.52	%		4,610,608			58,570		5.04	%
Taxable securities		1,288,750			7,043		2.17	%		1,306,024		$	5,963		1.81	%		1,288,969			5,111		1.57	%
Tax-exempt securities⁽²⁾		155,562			1,021		2.60	%		162,591		$	1,083		2.64	%		184,015			1,217		2.62	%
Total interest-earning assets	$	6,922,890		$	94,018		5.39	%	$	6,763,916		$	79,890		4.69	%	$	6,189,762		$	64,940		4.16	%
Allowance for credit losses - loans and leases		(81,815	)							(74,383	)							(59,144	)
All other assets		424,978								447,939								568,451
TOTAL ASSETS	$	7,266,053							$	7,137,472							$	6,699,069
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	596,627		$	1,902		1.27	%	$	583,777		$	1,077		0.73	%	$	659,841		$	236		0.14	%
Money market accounts		1,472,050			5,458		1.47	%		1,391,923			3,358		0.96	%		1,089,398			345		0.13	%
Savings		647,536			243		0.15	%		673,966			247		0.15	%		633,469			75		0.05	%
Time deposits		788,856			3,007		1.51	%		687,124			1,289		0.74	%		688,154			381		0.22	%
Total interest-bearing deposits		3,505,069			10,610		1.20	%		3,336,790			5,971		0.71	%		3,070,862			1,037		0.13	%
Other borrowings		514,517			4,598		3.55	%		607,471			3,232		2.11	%		385,787			330		0.34	%
Subordinated notes and debentures		110,947			1,992		7.12	%		110,799			1,825		6.54	%		110,341			1,589		5.71	%
Total borrowings		625,464			6,590		4.18	%		718,270			5,057		2.79	%		496,128			1,919		1.53	%
Total interest-bearing liabilities	$	4,130,533		$	17,200		1.65	%	$	4,055,060		$	11,028		1.08	%	$	3,566,990		$	2,956		0.33	%
Non-interest-bearing demand deposits		2,235,464								2,198,095								2,222,583
Other liabilities		151,764								118,496								70,521
Total stockholders’ equity		748,292								765,821								838,975
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,266,053							$	7,137,472							$	6,699,069
Net interest spread⁽³⁾							3.74	%							3.61	%							3.83	%
Net interest income, fully taxable equivalent				$	76,818							$	68,862							$	61,984
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾							4.40	%							4.04	%							3.97	%
Less: Tax-equivalent adjustment					214		0.01	%					227		0.01	%					256		0.01	%
Net interest income				$	76,604							$	68,635							$	61,728
Net interest margin⁽⁴⁾							4.39	%							4.03	%							3.96	%

Net loan accretion impact on margin				$	369		0.02	%				$	1,371		0.08	%				$	1,450		0.09	%

(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, 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.

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

							December 31, 2022
	Three Months Ended						Change from
			Recast
	December 31,		September 30,		December 31,		September 30,			December 31,
(dollars in thousands)	2022		2022		2021		2022			2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	85,720	$	72,635	$	58,570		18.0	%		46.4	%
Interest on securities		6,569		6,402		5,619		2.6	%		16.9	%
Other interest and dividend income		1,515		626		495		141.9	%		206.3	%
Total interest and dividend income		93,804		79,663		64,684		17.7	%		45.0	%
INTEREST EXPENSE
Deposits		10,610		5,971		1,037		77.7	%		922.7	%
Other borrowings		4,598		3,232		330		42.2	%		1296.1	%
Subordinated notes and debentures		1,992		1,825		1,589		9.1	%		25.4	%
Total interest expense		17,200		11,028		2,956		56.0	%		481.9	%
Net interest income	$	76,604	$	68,635	$	61,728		11.6	%		24.1	%

Net interest income for the fourth quarter of 2022 was $76.6 million, an increase of $8.0 million, or 11.6%, from the third quarter of 2022, driven mainly by the rising interest rate environment.

The increase in net interest income was primarily due to:

An increase of $13.1 million in interest income and fees on loans and leases due to higher yields and growth in the originated loan and lease portfolio.

Partially offset by:

An increase of $4.6 million in deposit interest expense mainly due to higher rates paid on deposits; and
An increase of $1.4 million in interest expense on other borrowings due to increases in rates paid on FHLB advances.

Tax-equivalent net interest margin for the fourth quarter of 2022 was 4.40%, an increase of 36 basis points compared to the third quarter of 2022. Total net accretion income on acquired loans contributed two basis points to the net interest margin for the fourth quarter of 2022 compared to eight basis points for the third quarter of 2022, an increase of six basis points.

The average cost of total deposits was 0.73% for the fourth quarter of 2022, an increase of 30 basis points compared to the third quarter of 2022. Average non-interest-bearing demand deposits were 38.9% of average total deposits for the fourth quarter of 2022 compared to 39.7% during the third quarter of 2022.

Provision for Credit Losses

The provision for credit losses was $5.8 million for the fourth quarter of 2022, a decrease of $1.4 million compared to $7.2 million for the third quarter of 2022. Provision for credit losses is comprised of provision for loan and lease losses of $5.4 million and provision for unfunded commitments of $426,000. The decrease in provision during the fourth quarter of 2022 was primarily driven by changes to expected losses in the conventional loan portfolio.

Non-interest Income

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

										December 31, 2022
	Three Months Ended									Change from
				Recast
	December 31,			September 30,			December 31,			September 30,			December 31,
(dollars in thousands)	2022			2022			2021			2022			2021
NON-INTEREST INCOME
Fees and service charges on deposits	$	2,081		$	2,128		$	1,955			(2.2	)%		6.4	%
Loan servicing revenue		3,293			3,422			3,392			(3.8	)%		(2.9	)%
Loan servicing asset revaluation		(3,534	)		(2,342	)		(2,510	)		50.8	%		40.8	%
ATM and interchange fees		1,250			1,007			1,219			24.1	%		2.5	%
Net realized gains (losses) on securities available-for-sale		—			(2	)		(21	)	NM			NM
Change in fair value of equity securities, net		710			(581	)		(98	)	NM			NM
Net gains on sales of loans		5,509			5,580			12,924			(1.3	)%		(57.4	)%
Wealth management and trust income		864			995			764			(13.3	)%		13.1	%
Other non-interest income		1,282			1,836			1,389			(30.1	)%		(7.6	)%
Total non-interest income	$	11,455		$	12,043		$	19,014			(4.9	)%		(39.8	)%

Non-interest income for the fourth quarter of 2022 was $11.5 million, a decrease of $588,000 or 4.9%, compared to $12.0 million for the third quarter of 2022.

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

An increase of $1.2 million in the downward valuation adjustment to the loan servicing asset, due to unfavorable fair value adjustments due to changes in the discount rates.

Partially offset by:

An increase of $1.3 million in the change in fair value of equity securities, due to changes in the market value of securities.

During the fourth quarter of 2022, we sold $86.0 million of U.S. government guaranteed loans compared to $75.4 million during the third quarter of 2022.

Non-interest Expense

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

							December 31, 2022
	Three Months Ended						Change from
			Recast
	December 31,		September 30,		December 31,		September 30,			December 31,
(dollars in thousands)	2022		2022		2021		2022			2021
NON-INTEREST EXPENSE
Salaries and employee benefits	$	31,808	$	29,587	$	28,850		7.5	%		10.3	%
Occupancy and equipment expense, net		3,532		3,919		4,995		(9.9	)%		(29.3	)%
Impairment charge on assets held for sale		372		—		8,351	NM			NM
Loan and lease related expenses		1,126		530		2,328		111.9	%		(51.7	)%
Legal, audit and other professional fees		3,204		2,733		2,376		17.3	%		34.9	%
Data processing		3,406		3,370		3,070		1.1	%		11.0	%
Net loss recognized on other real estate owned and other related expenses		221		275		26		(19.8	)%	NM
Other intangible assets amortization expense		1,596		1,611		1,738		(0.9	)%		(8.1	)%
Other non-interest expense		5,235		4,016		7,356		30.3	%		(28.9	)%
Total non-interest expense	$	50,500	$	46,041	$	59,090		9.7	%		(14.4	)%

Non-interest expense for the fourth quarter of 2022 was $50.5 million, an increase of $4.5 million, or 9.7%, from $46.0 million for the third quarter of 2022.

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

An increase of $2.2 million in salaries and employee benefits mainly is due to increased incentive compensation and lower loan deferral costs due to lower originations during the quarter; and
An increase of $1.2 million in other non-interest expense, which includes an increase in net losses of $480,000 in leasehold improvements, and increases in general expenses; and
An increase of $596,000 in loan and lease related expenses mainly due to higher expenses associated with government guaranteed loans; and
An increase of $471,000 in legal, audit and other professional fees primarily related to acquisition activities.

Partially offset by:

A decrease of $387,000 in occupancy and equipment expense, net, mainly due to lower real estate tax expenses.

Our efficiency ratio was 55.53% for the fourth quarter of 2022 compared to 55.07% for the third quarter of 2022.

INCOME TAXES

We recorded income tax expense of $7.4 million during the fourth quarter of 2022, compared to $7.0 million during the third quarter of 2022. The effective tax rate was 23.2% and 25.6% for the fourth quarter of 2022 and third quarter of 2022, respectively. The decrease in the effective tax rate is primarily due to a decrease in the state income tax rate.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $7.4 billion at December 31, 2022, an increase of $95.7 million compared to $7.3 billion at September 30, 2022.

The current quarter increase was primarily due to:

An increase in net loans and leases of $143.9 million primarily due to growth in the loan and lease portfolio.

Partially offset by:

A decrease in securities available-for-sale of $7.2 million primarily due to changes in market conditions.

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

							Recast
	December 31, 2022						September 30, 2022						December 31, 2021
(dollars in thousands)	Amount			% of Total			Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	1,712,152			31.6	%	$	1,659,218			31.5	%	$	1,379,000			30.4	%
Residential real estate		426,226			7.9	%		409,926			7.8	%		379,796			8.4	%
Construction, land development, and other land		438,617			8.1	%		456,276			8.6	%		323,886			7.1	%
Commercial and industrial		2,029,855			37.5	%		1,938,714			36.8	%		1,534,745			33.8	%
Paycheck Protection Program		761			0.0	%		1,522			0.0	%		123,712			2.7	%
Installment and other		1,410			0.0	%		999			0.0	%		940			0.0	%
Leasing financing receivables		521,689			9.6	%		492,744			9.3	%		352,247			7.8	%
Total originated loans and leases	$	5,130,710			94.7	%	$	4,959,399			94.0	%	$	4,094,326			90.2	%
Acquired impaired loans
Commercial real estate	$	45,143			0.8	%	$	49,649			0.9	%	$	72,160			1.6	%
Residential real estate		32,228			0.6	%		35,309			0.7	%		49,401			1.1	%
Construction, land development, and other land		372			0.0	%		1,131			0.0	%		1,312			0.0	%
Commercial and industrial		2,192			0.0	%		2,345			0.1	%		4,014			0.1	%
Installment and other		140			0.0	%		149			0.0	%		164			0.0	%
Total acquired impaired loans	$	80,075			1.4	%	$	88,583			1.7	%	$	127,051			2.8	%
Acquired non-impaired loans and leases
Commercial real estate	$	152,193			2.8	%	$	159,928			3.0	%	$	214,588			4.7	%
Residential real estate		31,508			0.6	%		36,480			0.7	%		51,317			1.1	%
Construction, land development, and other land		—			0.0	%		187			0.0	%		201			0.1	%
Commercial and industrial		24,266			0.5	%		27,249			0.5	%		43,202			1.0	%
Installment and other		209			0.0	%		216			0.0	%		264			0.0	%
Leasing financing receivables		2,297			0.0	%		3,084			0.1	%		6,179			0.1	%
Total acquired non-impaired loans and leases	$	210,473			3.9	%	$	227,144			4.3	%	$	315,751			7.0	%
Total loans and leases	$	5,421,258			100.0	%	$	5,275,126			100.0	%	$	4,537,128			100.0	%
Allowance for credit losses - loans and leases		(81,924	)					(79,704	)					(55,012	)
Total loans and leases, net of allowance for credit losses - loans and leases	$	5,339,334					$	5,195,422					$	4,482,116

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and leases (excluding acquired impaired), other real estate owned, and accruing troubled debt restructured loans at the dates indicated:

										December 31, 2022
				Recast						Change from
(dollars in thousands)	December 31, 2022			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Non-performing assets:
Non-accrual loans and leases	$	36,027		$	41,942		$	23,130			(14.1	)%		55.8	%
Past due loans and leases 90 days or more and still accruing interest		—			—			—		—%			—%
Total non-performing loans and leases	$	36,027		$	41,942		$	23,130			(14.1	)%		55.8	%
Other real estate owned		4,717			4,402			2,112			7.2	%		123.3	%
Total non-performing assets	$	40,744		$	46,344		$	25,242			(12.1	)%		61.4	%
Accruing troubled debt restructured loans ⁽¹⁾	$	719		$	1,113		$	1,927			(35.4	)%		(62.7	)%
Total non-performing loans and leases as a percentage of total loans and leases		0.66	%		0.80	%		0.51	%
Total non-performing assets as a percentage of total assets		0.55	%		0.64	%		0.38	%
Allowance for credit losses - loans and lease as a percentage of non-performing loans and leases		227.40	%		190.03	%		237.84	%

Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	2,225		$	1,676		$	3,270			32.8	%		(32.0	)%
Past due loans 90 days or more and still accruing interest guaranteed		—			—			—		—%			—%
Total non-performing loans guaranteed	$	2,225		$	1,676		$	3,270			32.8	%		(32.0	)%
Accruing troubled debt restructured loans guaranteed ⁽¹⁾	$	—		$	—		$	—		—%			—%
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.62	%		0.76	%		0.44	%
Total non-performing assets not guaranteed as a percentage of total assets		0.52	%		0.61	%		0.33	%

(1)	Accruing troubled debt restructured loans are not included in total non-performing loans and leases or in non-performing assets.

Variances in non-performing assets were:

Non-performing loans and leases were $36.0 million at December 31, 2022, a decrease of $5.9 million from $41.9 million at September 30, 2022, primarily due to charge-offs of loans previously reserved for.
Other real estate owned was $4.7 million at December 31, 2022, an increase of $315,000 from $4.4 million at September 30, 2022, primarily due to the transfer of one property.

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
	December 31,			September 30,			December 31,
(dollars in thousands)	2022			2022			2021
ACL - loans and leases, beginning of period	$	79,704		$	74,048		$	60,598
Provision/(recapture) for credit losses - loans and leases		5,399			7,447			(1,415	)
Net charge-offs		(3,179	)		(1,791	)		(4,171	)
ACL - loans and leases, end of period	$	81,924		$	79,704		$	55,012

Net charge-offs to average total loans and leases held for investment, net before ACL		0.23	%		0.14	%		0.36	%
Provision/(recapture) for credit losses to net charge-offs during the period		1.70	x		4.16	x	(0.34)x

Net charge-offs of loans and leases during the fourth quarter of 2022 were $3.2 million, or 0.23% of average loans and leases, on an annualized basis, an increase of $1.4 million compared to $1.8 million, or 0.14% of average loans and leases, during the third quarter of 2022, and a decrease of $1.1 million from $4.3 million or 0.36% of average loans and leases from the comparable period a year ago.

Net charge-offs for the fourth quarter of 2022 included $1.3 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the third quarter of 2022 and fourth quarter of 2021 included $1.9 million and $1.5 million, respectively, in the unguaranteed portion of U.S. government guaranteed loans.

Deposits and Other Liabilities

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

							December 31, 2022
							Change from
(dollars in thousands)	December 31, 2022		September 30, 2022		December 31, 2021		September 30, 2022			December 31, 2021
Non-interest-bearing demand deposits	$	2,138,645	$	2,142,183	$	2,158,420		(0.2	)%		(0.9	)%
Interest-bearing checking accounts		592,098		616,139		572,426		(3.9	)%		3.4	%
Money market demand accounts		1,415,653		1,485,815		1,106,272		(4.7	)%		28.0	%
Other savings		625,798		669,734		638,218		(6.6	)%		(1.9	)%
Time deposits (below $250,000)		762,250		586,198		532,589		30.0	%		43.1	%
Time deposits ($250,000 and above)		160,677		112,387		147,122		43.0	%		9.2	%
Total deposits	$	5,695,121	$	5,612,456	$	5,155,047		1.5	%		10.5	%

Total deposits increased to $5.7 billion at December 31, 2022 compared to $5.6 billion at September 30, 2022. Non-interest-bearing deposits were 37.6% and 38.2% of total deposits at December 31, 2022 and September 30, 2022, respectively.

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

An increase in time deposits of $224.3 million, primarily due to promotional certificates of deposit.

Partially offset by:

A decrease in money market demand accounts of $70.2 million, due to seasonal commercial outflows.

Total borrowings and other liabilities were $902.0 million at December 31, 2022, a decrease of $17.0 million from $919.0 million at September 30, 2022, primarily driven by decreases in Federal Home Loan Bank advances.

Stockholders’ Equity

Total stockholders’ equity was $765.8 million at December 31, 2022, an increase of $30.0 million from $735.8 million at September 30, 2022. The increase was primarily due to net income and a decrease in accumulated other comprehensive loss.

The following table presents actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of December 31, 2022:

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
December 31, 2022	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	900,806		13.00	%	$	554,436		8.00	%	N/A		N/A
Bank		852,047		12.34	%		552,507		8.00	%	$	690,633		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	751,887		10.85	%	$	415,827		6.00	%	N/A		N/A
Bank		778,128		11.27	%		414,380		6.00	%	$	552,507		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	706,887		10.20	%	$	311,870		4.50	%	N/A		N/A
Bank		778,128		11.27	%		310,785		4.50	%	$	448,912		6.50	%
Tier 1 capital to average assets:
Company	$	751,887		10.29	%	$	292,258		4.00	%	N/A		N/A
Bank		778,128		10.67	%	$	291,741		4.00	%	$	364,676		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 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 December 31, 2022 reflect 25% of the CECL impact.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, January 27, 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 (844) 200-6205; passcode 608025. A recorded replay can be accessed through February 10, 2023 by dialing (866) 813-9403; passcode: 817934.

A slide presentation relating to our fourth quarter 2022 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 Bank has approximately $7.3 billion in assets and operates more than 30 full service branch locations throughout the Chicago and Milwaukee metropolitan areas. Byline Bank offers a broad range of commercial and retail banking products and services including small ticket equipment leasing solutions and is one of the top 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, 2021. 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			Recast
	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)	2022			2022			2022			2022			2021
ASSETS
Cash and due from banks	$	62,274		$	56,546		$	58,844		$	48,015		$	35,247
Interest bearing deposits with other banks		117,079			159,744			83,057			105,564			122,684
Cash and cash equivalents		179,353			216,290			141,901			153,579			157,931
Equity and other securities, at fair value		7,989			7,279			7,860			10,677			10,578
Securities available-for-sale, at fair value		1,174,431			1,181,654			1,273,138			1,369,368			1,454,542
Securities held-to-maturity, at amortized cost		2,705			3,877			3,880			3,882			3,885
Restricted stock, at cost		28,202			27,077			30,002			13,977			22,002
Loans held for sale		47,823			33,975			17,284			39,520			64,460
Loans and leases:
Loans and leases		5,421,258			5,275,126			5,167,716			4,787,607			4,537,128
Allowance for credit losses - loans and leases		(81,924	)		(79,704	)		(74,048	)		(72,107	)		(55,012	)
Net loans and leases		5,339,334			5,195,422			5,093,668			4,715,500			4,482,116
Servicing assets, at fair value		19,172			21,127			22,155			24,497			23,744
Premises and equipment, net		56,798			59,049			60,773			62,281			62,548
Other real estate owned, net		4,717			4,402			4,749			2,221			2,112
Goodwill and other intangible assets, net		158,887			160,484			162,094			163,962			165,558
Bank-owned life insurance		82,093			81,592			81,100			80,604			80,039
Deferred tax assets, net		68,213			95,831			82,412			71,355			50,329
Accrued interest receivable and other assets		193,224			179,218			143,014			114,035			116,328
Total assets	$	7,362,941		$	7,267,277		$	7,124,030		$	6,825,458		$	6,696,172
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	2,138,645		$	2,142,183		$	2,180,927		$	2,281,612		$	2,158,420
Interest-bearing deposits		3,556,476			3,470,273			3,207,450			3,248,490			2,996,627
Total deposits		5,695,121			5,612,456			5,388,377			5,530,102			5,155,047
Other borrowings		640,399			653,954			748,092			311,450			519,723
Subordinated notes, net		73,691			73,648			73,604			73,560			73,517
Junior subordinated debentures issued to capital trusts, net		37,338			37,232			37,123			37,011			36,906
Accrued expenses and other liabilities		150,576			154,182			121,185			95,675			74,597
Total liabilities		6,597,125			6,531,472			6,368,381			6,047,798			5,859,790
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—			—			10,438
Common stock		389			389			388			388			387
Additional paid-in capital		598,297			597,049			595,938			595,006			593,753
Retained earnings		335,794			314,800			297,766			279,386			271,676
Treasury stock		(51,114	)		(51,535	)		(47,181	)		(40,732	)		(31,570	)
Accumulated other comprehensive loss, net of tax		(117,550	)		(124,898	)		(91,262	)		(56,388	)		(8,302	)
Total stockholders’ equity		765,816			735,805			755,649			777,660			836,382
Total liabilities and stockholders’ equity	$	7,362,941		$	7,267,277		$	7,124,030		$	6,825,458		$	6,696,172

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

	Three Months Ended															Year Ended
				Recast			Recast			Recast
(dollars in thousands,	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
except per share data)	2022			2022			2022			2022			2021			2022			2021
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	85,720		$	72,635		$	59,919		$	55,138		$	58,570		$	273,412		$	222,993
Interest on securities		6,569			6,402			6,264			6,155			5,619			25,390			23,601
Other interest and dividend income		1,515			626			496			120			495			2,757			2,332
Total interest and dividend income		93,804			79,663			66,679			61,413			64,684			301,559			248,926
INTEREST EXPENSE
Deposits		10,610			5,971			2,128			1,087			1,037			19,796			4,502
Other borrowings		4,598			3,232			1,097			395			330			9,322			1,663
Subordinated notes and debentures		1,992			1,825			1,694			1,600			1,589			7,111			6,374
Total interest expense		17,200			11,028			4,919			3,082			2,956			36,229			12,539
Net interest income		76,604			68,635			61,760			58,331			61,728			265,330			236,387
PROVISION/(RECAPTURE) FOR CREDIT LOSSES		5,826			7,208			4,286			6,559			(1,415	)		23,879			973
Net interest income after provision/(recapture) for credit losses		70,778			61,427			57,474			51,772			63,143			241,451			235,414
NON-INTEREST INCOME
Fees and service charges on deposits		2,081			2,128			2,059			1,884			1,955			8,152			7,254
Loan servicing revenue		3,293			3,422			3,384			3,380			3,392			13,479			12,693
Loan servicing asset revaluation		(3,534	)		(2,342	)		(4,636	)		(1,231	)		(2,510	)		(11,743	)		(6,658	)
ATM and interchange fees		1,250			1,007			1,131			1,049			1,219			4,437			4,476
Net realized gains (losses) on securities available-for-sale		—			(2	)		52			—			(21	)		50			1,435
Change in fair value of equity securities, net		710			(581	)		(697	)		(35	)		(98	)		(603	)		(62	)
Net gains on sales of loans		5,509			5,580			9,983			10,827			12,924			31,899			46,274
Wealth management and trust income		864			995			900			1,048			764			3,807			3,069
Other non-interest income		1,282			1,836			2,097			2,621			1,389			7,836			5,772
Total non-interest income		11,455			12,043			14,273			19,543			19,014			57,314			74,253
NON-INTEREST EXPENSE																��
Salaries and employee benefits		31,808			29,587			27,697			28,959			28,850			118,051			101,222
Occupancy and equipment expense, net		3,532			3,919			4,409			5,128			4,995			16,988			20,612
Impairment charge on assets held for sale		372			—			—			—			8,351			372			12,332
Loan and lease related expenses		1,126			530			942			(891	)		2,328			1,707			5,957
Legal, audit, and other professional fees		3,204			2,733			1,820			2,600			2,376			10,357			10,198
Data processing		3,406			3,370			3,396			3,186			3,070			13,358			11,780
Net loss recognized on other real estate owned and other related expenses		221			275			158			54			26			708			1,078
Other intangible assets amortization expense		1,596			1,611			1,868			1,596			1,738			6,671			7,073
Other non-interest expense		5,235			4,016			3,295			3,324			7,356			15,870			15,203
Total non-interest expense		50,500			46,041			43,585			43,956			59,090			184,082			185,455
INCOME BEFORE PROVISION FOR INCOME TAXES		31,733			27,429			28,162			27,359			23,067			114,683			124,212
PROVISION FOR INCOME TAXES		7,366			7,020			6,382			5,961			5,878			26,729			31,427
NET INCOME		24,367			20,409			21,780			21,398			17,189			87,954			92,785
Dividends on preferred shares		—			—			—			196			196			196			783
INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,367		$	20,409		$	21,780		$	21,202		$	16,993		$	87,758		$	92,002
EARNINGS PER COMMON SHARE
Basic	$	0.66		$	0.55		$	0.59		$	0.57		$	0.46		$	2.37		$	2.45
Diluted	$	0.65		$	0.55		$	0.58		$	0.56		$	0.45		$	2.34		$	2.40

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

	As of or For the Three Months Ended															As of or For the Twelve Months Ended
				Recast			Recast			Recast
(dollars in thousands, except share	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
and per share data)	2022			2022			2022			2022			2021			2022			2021

Earnings per Common Share
Basic earnings per common share	$	0.66		$	0.55		$	0.59		$	0.57		$	0.46		$	2.37		$	2.45
Diluted earnings per common share	$	0.65		$	0.55		$	0.58		$	0.56		$	0.45		$	2.34		$	2.40
Adjusted diluted earnings per common share^(1)(2)(3)(4)	$	0.67		$	0.55		$	0.58		$	0.56		$	0.69		$	2.36		$	2.71
Weighted average common shares outstanding (basic)		36,856,221			36,851,973			37,064,795			37,123,161			37,124,176			36,972,972			37,609,723
Weighted average common shares outstanding (diluted)		37,360,113			37,371,159			37,612,268			38,042,822			37,999,401			37,476,120			38,369,067
Common shares outstanding		37,492,775			37,465,902			37,669,102			37,811,582			37,713,903			37,492,775			37,713,903
Cash dividends per common share	$	0.09		$	0.09		$	0.09		$	0.09		$	0.09		$	0.36		$	0.30
Dividend payout ratio on common stock		13.85	%		16.36	%		15.52	%		16.07	%		20.00	%		15.38	%		12.50	%
Tangible book value per common share⁽¹⁾	$	16.19		$	15.36		$	15.76		$	16.23		$	17.51		$	16.19		$	17.51
Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin, fully taxable equivalent ⁽¹⁾⁽⁵⁾		4.40	%		4.04	%		3.78	%		3.80	%		3.97	%		4.01	%		3.86	%
Average cost of deposits		0.73	%		0.43	%		0.16	%		0.08	%		0.08	%		0.36	%		0.09	%
Efficiency ratio⁽²⁾		55.53	%		55.07	%		54.87	%		54.40	%		71.03	%		54.99	%		57.42	%
Adjusted efficiency ratio^(1)(2)(3)		54.50	%		55.07	%		54.87	%		54.40	%		55.61	%		54.70	%		52.14	%
Non-interest income to total revenues⁽¹⁾		13.01	%		14.93	%		18.77	%		25.09	%		23.55	%		17.76	%		23.90	%
Non-interest expense to average assets		2.76	%		2.56	%		2.51	%		2.66	%		3.50	%		2.62	%		2.79	%
Adjusted non-interest expense to average assets⁽¹⁾⁽³⁾		2.71	%		2.56	%		2.51	%		2.66	%		2.76	%		2.61	%		2.54	%
Return on average stockholders' equity		12.92	%		10.57	%		11.35	%		10.56	%		8.13	%		11.33	%		11.31	%
Adjusted return on average stockholders' equity^(1)(3)(4)		13.34	%		10.57	%		11.35	%		10.56	%		12.42	%		11.43	%		12.77	%
Return on average assets		1.33	%		1.13	%		1.25	%		1.30	%		1.02	%		1.25	%		1.40	%
Adjusted return on average assets^(1)(3)(4)		1.37	%		1.13	%		1.25	%		1.30	%		1.56	%		1.26	%		1.58	%
Pre-tax pre-provision return on average assets⁽¹⁾		2.05	%		1.93	%		1.87	%		2.05	%		1.28	%		1.97	%		1.88	%
Adjusted pre-tax pre-provision return on average assets⁽¹⁾⁽³⁾		2.10	%		1.93	%		1.87	%		2.05	%		2.02	%		1.99	%		2.13	%
Return on average tangible common stockholders' equity⁽¹⁾		17.21	%		14.17	%		15.31	%		14.02	%		10.94	%		15.15	%		15.17	%
Adjusted return on average tangible common stockholders' equity⁽¹⁾⁽³⁾		17.75	%		14.17	%		15.31	%		14.02	%		16.38	%		15.28	%		17.04	%
Non-interest-bearing deposits to total deposits		37.55	%		38.17	%		40.47	%		41.26	%		41.87	%		37.55	%		41.87	%
Loans and leases held for sale and loans and lease held for investment to total deposits		96.03	%		94.59	%		96.23	%		87.29	%		89.26	%		96.03	%		89.26	%
Deposits to total liabilities		86.33	%		85.93	%		84.61	%		91.44	%		87.97	%		86.33	%		87.97	%
Deposits per branch	$	149,872		$	147,696		$	141,799		$	125,684		$	117,160		$	149,872		$	117,160
Asset Quality Ratios
Non-performing loans and leases to total loans and leases held for investment, net before ACL		0.66	%		0.80	%		0.83	%		0.69	%		0.51	%		0.66	%		0.51	%
Net charge-offs to average total loans and leases held for investment, net before ACL - loans and leases		0.23	%		0.12	%		0.17	%		0.07	%		0.37	%		0.32	%		0.28	%
Capital Ratios
Common equity to total assets		10.40	%		10.12	%		10.61	%		11.39	%		12.33	%		10.40	%		12.33	%
Tangible common equity to tangible assets⁽¹⁾		8.42	%		8.10	%		8.53	%		9.21	%		10.11	%		8.42	%		10.11	%
Leverage ratio		10.29	%		10.30	%		10.34	%		10.70	%		10.89	%		10.29	%		10.89	%
Common equity tier 1 capital ratio		10.20	%		10.24	%		10.26	%		10.75	%		11.39	%		10.20	%		11.39	%
Tier 1 capital ratio		10.85	%		10.91	%		10.95	%		11.49	%		12.37	%		10.85	%		12.37	%
Total capital ratio		13.00	%		13.02	%		13.09	%		13.72	%		14.70	%		13.00	%		14.70	%

(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.
(4)	Represents the remaining net unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.
(5)	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 INTEREST-BEARING LIABILITIES (unaudited)

	For the Year Ended December 31,
	2022								2021
(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	$	76,978		$	547		0.71	%	$	69,338		$	117		0.17	%
Loans and leases⁽¹⁾		5,073,288			273,412		5.39	%		4,518,836			222,993		4.93	%
Taxable securities		1,316,147			24,156		1.84	%		1,376,045			21,909		1.59	%
Tax-exempt securities⁽²⁾		164,051			4,359		2.66	%		184,622			4,946		2.68	%
Total interest-earning assets	$	6,630,464		$	302,474		4.56	%	$	6,148,841		$	249,965		4.07	%
Allowance for credit losses - loans and leases		(74,233	)							(63,351	)
All other assets		462,548								556,641
TOTAL ASSETS	$	7,018,779							$	6,642,131
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	593,903		$	3,572		0.60	%	$	622,147		$	883		0.14	%
Money market accounts		1,357,371			10,484		0.77	%		1,073,970			1,285		0.12	%
Savings		658,968			649		0.10	%		610,953			289		0.05	%
Time deposits		691,650			5,091		0.74	%		722,974			2,045		0.28	%
Total interest-bearing deposits		3,301,892			19,796		0.60	%		3,030,044			4,502		0.15	%
Other borrowings		479,004			9,322		1.95	%		525,078			1,663		0.32	%
Subordinated notes and debentures		110,723			7,111		6.42	%		110,108			6,374		5.79	%
Total borrowings		589,727			16,433		2.79	%		635,186			8,037		1.27	%
Total interest-bearing liabilities	$	3,891,619		$	36,229		0.93	%	$	3,665,230		$	12,539		0.34	%
Non-interest-bearing demand deposits		2,236,615								2,085,454
Other liabilities		114,320								71,430
Total stockholders’ equity		776,225								820,017
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,018,779							$	6,642,131
Net interest spread⁽³⁾							3.63	%							3.73	%
Net interest income, fully taxable equivalent				$	266,245							$	237,426
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾							4.01	%							3.86	%
Less: Tax-equivalent adjustment					915		0.01	%					1,039		0.02	%
Net interest income				$	265,330							$	236,387
Net interest margin⁽⁴⁾							4.00	%							3.84	%

Net loan accretion impact on margin				$	4,555		0.07	%				$	6,451		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, 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

APPENDIX A - IMPACT OF THE ADOPTION OF CECL (unaudited)

The following tables have been included to provide additional information regarding the Company’s adoption of the new CECL accounting standard. The Company adopted CECL on December 31, 2022 and retroactively applied it to the period beginning January 1, 2022 using the modified retrospective method of accounting. The first table reflects the adoption adjustments for CECL that were made to the January 1, 2022 balances for key balance sheet accounts.

	January 1, 2022
(dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption			As Reported under CECL
Balance Sheet:
ASSETS
Allowance for credit losses - loans and leases	$	55,012	$	12,168		$	67,180
Deferred tax assets, net		50,329		3,679			54,008
LIABILITIES
Allowance for credit losses on unfunded commitments	$	1,403	$	1,595		$	2,998
EQUITY
Retained earnings	$	271,676	$	(10,097	)	$	261,579

The second table presents the impact of CECL on 2022 quarters previously reported using the incurred loss method of accounting. The table includes adjustments made to key balance sheet and income statement accounts to reflect how the balances would have been reflected had CECL been in effect for the full year.

	Three Months Ended
	March 31, 2022									June 30, 2022									September 30, 2022
(dollars in thousands)	As Reported			Adjustment			Recast			As Reported			Adjustment			Recast			As Reported			Adjustment			Recast
Balance Sheet:
ASSETS
Loans and leases	$	4,789,068		$	(1,461	)	$	4,787,607		$	5,168,071		$	(355	)	$	5,167,716		$	5,275,471		$	(345	)	$	5,275,126
Allowance for credit losses - loans and leases		(59,458	)		(12,649	)		(72,107	)		(62,436	)		(11,612	)		(74,048	)		(64,655	)		(15,049	)		(79,704	)
Deferred tax assets, net		67,335			4,020			71,355			78,950			3,462			82,412			91,532			4,299			95,831
Accrued interest receivable and other assets		113,123			912			114,035			142,196			818			143,014			178,433			785			179,218
LIABILITIES
Allowance for credit losses - unfunded commitments		2,003			1,832			3,835			2,191			1,825			4,016			2,327			1,450			3,777
EQUITY
Retained earnings		290,397			(11,011	)		279,386			307,278			(9,512	)		297,766			326,560			(11,760	)		314,800

Income Statement:
Provision for credit losses - loans and leases	$	4,995		$	728		$	5,723		$	5,908		$	(1,803	)	$	4,105		$	4,176		$	3,271		$	7,447
Provision for credit losses - unfunded commitments		599			237			836			188			(7	)		181			137			(376	)		(239	)
Net interest income after provision for credit losses		53,741			(1,969	)		51,772			55,719			1,755			57,474			64,699			(3,272	)		61,427
Income before provision for income taxes		28,612			(1,253	)		27,359			26,107			2,055			28,162			30,513			(3,084	)		27,429
Provision for income taxes		6,301			(340	)		5,961			5,824			558			6,382			7,857			(837	)		7,020
Net income	$	22,311		$	(913	)	$	21,398		$	20,283		$	1,497		$	21,780		$	22,656		$	(2,247	)	$	20,409
Net income available to common shareholders	$	22,115		$	(913	)	$	21,202		$	20,283		$	1,497		$	21,780		$	22,656		$	(2,247	)	$	20,409
EARNINGS PER COMMON SHARE
Basic		0.60			(0.03	)		0.57			0.55			0.04			0.59			0.61			(0.06	)		0.55
Diluted		0.58			(0.02	)		0.56			0.54			0.04			0.58			0.61			(0.06	)		0.55

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 Twelve Months Ended
				Recast		Recast		Recast
	December 31,			September 30,		June 30,		March 31,		December 31,			December 31,			December 31,
(dollars in thousands, except per share data)	2022			2022		2022		2022		2021			2022			2021
Net income and earnings per share excluding significant items
Reported Net Income	$	24,367		$	20,409	$	21,780	$	21,398	$	17,189		$	87,954		$	92,785
Significant items:
Impairment charges on assets held for sale and ROU asset		372			—		—		—		12,449			372			16,430
Merger-related expenses		538			—		—		—		—			538			—
Tax benefit		(118	)		—		—		—		(3,377	)		(118	)		(4,462	)
Adjusted Net Income	$	25,159		$	20,409	$	21,780	$	21,398	$	26,261		$	88,746		$	104,753
Reported Diluted Earnings per Share	$	0.65		$	0.55	$	0.58	$	0.56	$	0.45		$	2.34		$	2.40
Significant items:
Impairment charges on assets held for sale and ROU asset		0.01			—		—		—		0.33			0.01			0.43
Merger-related expenses		0.01			—		—		—		—			0.01			—
Tax benefit		—			—		—		—		(0.09	)		—			(0.12	)
Adjusted Diluted Earnings per Share	$	0.67		$	0.55	$	0.58	$	0.56	$	0.69		$	2.36		$	2.71

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 Twelve Months Ended
				Recast		Recast		Recast
(dollars in thousands, except per share data,	December 31,			September 30,		June 30,		March 31,		December 31,			December 31,			December 31,
ratios annualized, where applicable)	2022			2022		2022		2022		2021			2022			2021
Adjusted non-interest expense:
Non-interest expense	$	50,500		$	46,041	$	43,585	$	43,956	$	59,090		$	184,082		$	185,455
Less: Significant items
Impairment charges on assets held for sale and ROU asset		372			—		—		—		12,449			372			16,430
Merger-related expenses		538			—		—		—		—			538			—
Adjusted non-interest expense	$	49,590		$	46,041	$	43,585	$	43,956	$	46,641		$	183,172		$	169,025
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense	$	49,590		$	46,041	$	43,585	$	43,956	$	46,641		$	183,172		$	169,025
Less: Amortization of intangible assets		1,596			1,611		1,868		1,596		1,738			6,671			7,073
Adjusted non-interest expense excluding amortization of intangible assets	$	47,994		$	44,430	$	41,717	$	42,360	$	44,903		$	176,501		$	161,952
Pre-tax pre-provision net income:
Pre-tax income	$	31,733		$	27,429	$	28,162	$	27,359	$	23,067		$	114,683		$	124,212
Add: Provision/(recapture) for credit losses		5,826			7,208		4,286		6,559		(1,415	)		23,879			973
Pre-tax pre-provision net income	$	37,559		$	34,637	$	32,448	$	33,918	$	21,652		$	138,562		$	125,185
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income	$	37,559		$	34,637	$	32,448	$	33,918	$	21,652		$	138,562		$	125,185
Add: Impairment charges on assets held for sale and ROU asset		372			—		—		—		12,449			372			16,430
Add: Merger-related expenses		538			—		—		—		—			538			—
Adjusted pre-tax pre-provision net income	$	38,469		$	34,637	$	32,448	$	33,918	$	34,101		$	139,472		$	141,615
Tax equivalent net interest income
Net interest income	$	76,604		$	68,635	$	61,760	$	58,331	$	61,728		$	265,330		$	236,387
Add: Tax-equivalent adjustment		214			228		236		236		256			915			1,039
Net interest income, fully taxable equivalent	$	76,818		$	68,863	$	61,996	$	58,567	$	61,984		$	266,245		$	237,426
Total revenue:
Net interest income	$	76,604		$	68,635	$	61,760	$	58,331	$	61,728		$	265,330		$	236,387
Add: Non-interest income		11,455			12,043		14,273		19,543		19,014			57,314			74,253
Total revenue	$	88,059		$	80,678	$	76,033	$	77,874	$	80,742		$	322,644		$	310,640
Tangible common stockholders' equity:
Total stockholders' equity	$	765,816		$	735,805	$	755,649	$	777,660	$	836,382		$	765,816		$	836,382
Less: Preferred stock		—			—		—		—		10,438			—			10,438
Less: Goodwill and other intangibles		158,887			160,484		162,094		163,962		165,558			158,887			165,558
Tangible common stockholders' equity	$	606,929		$	575,321	$	593,555	$	613,698	$	660,386		$	606,929		$	660,386
Tangible assets:
Total assets	$	7,362,941		$	7,267,277	$	7,124,030	$	6,825,458	$	6,696,172		$	7,362,941		$	6,696,172
Less: Goodwill and other intangibles		158,887			160,484		162,094		163,962		165,558			158,887			165,558
Tangible assets	$	7,204,054		$	7,106,793	$	6,961,936	$	6,661,496	$	6,530,614		$	7,204,054		$	6,530,614
Average tangible common stockholders' equity:
Average total stockholders' equity	$	748,292		$	765,821	$	769,658	$	822,053	$	838,975		$	776,225		$	820,017
Less: Average preferred stock		—			—		—		9,974		10,438			2,459			10,438
Less: Average goodwill and other intangibles		159,680			161,292		163,068		164,837		166,396			162,203			169,042
Average tangible common stockholders' equity	$	588,612		$	604,529	$	606,590	$	647,242	$	662,141		$	611,563		$	640,537
Average tangible assets:
Average total assets	$	7,266,053		$	7,137,472	$	6,966,564	$	6,697,476	$	6,699,069		$	7,018,779		$	6,642,131
Less: Average goodwill and other intangibles		159,680			161,292		163,068		164,837		166,396			162,203			169,042
Average tangible assets	$	7,106,373		$	6,976,180	$	6,803,496	$	6,532,639	$	6,532,673		$	6,856,576		$	6,473,089
Tangible net income available to common stockholders:
Net income available to common stockholders	$	24,367		$	20,409	$	21,780	$	21,202	$	16,993		$	87,758		$	92,002
Add: After-tax intangible asset amortization		1,170			1,181		1,369		1,170		1,266			4,890			5,147
Tangible net income available to common stockholders	$	25,537		$	21,590	$	23,149	$	22,372	$	18,259		$	92,648		$	97,149
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders	$	25,537		$	21,590	$	23,149	$	22,372	$	18,259		$	92,648		$	97,149
Impairment charges on assets held for sale and ROU asset		372			—		—		—		12,449			372			16,430
Merger-related expenses		538			—		—		—		—			538			—
Tax benefit on significant items		(118	)		—		—		—		(3,377	)		(118	)		(4,462	)
Adjusted tangible net income available to common stockholders	$	26,329		$	21,590	$	23,149	$	22,372	$	27,331		$	93,440		$	109,117

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 Twelve Months Ended
				Recast			Recast			Recast
(dollars in thousands, except share and per share	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
data, ratios annualized, where applicable)	2022			2022			2022			2022			2021			2022			2021
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income	$	37,559		$	34,637		$	32,448		$	33,918		$	21,652		$	138,562		$	125,185
Average total assets		7,266,053			7,137,472			6,966,564			6,697,476			6,699,069			7,018,779			6,642,131
Pre-tax pre-provision return on average assets		2.05	%		1.93	%		1.87	%		2.05	%		1.28	%		1.97	%		1.88	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income	$	38,469		$	34,637		$	32,448		$	33,918		$	34,101		$	139,472		$	141,615
Average total assets		7,266,053			7,137,472			6,966,564			6,697,476			6,699,069			7,018,779			6,642,131
Adjusted pre-tax pre-provision return on average assets		2.10	%		1.93	%		1.87	%		2.05	%		2.02	%		1.99	%		2.13	%
Net interest margin, fully taxable equivalent
Net interest income, fully taxable equivalent	$	76,818		$	68,863		$	61,996		$	58,567		$	61,984		$	266,245		$	237,426
Total average interest-earning assets		6,922,890			6,763,916			6,572,416			6,252,866			6,189,762			6,630,464			6,148,841
Net interest margin, fully taxable equivalent		4.40	%		4.04	%		3.78	%		3.80	%		3.97	%		4.01	%		3.86	%
Non-interest income to total revenues:
Non-interest income	$	11,455		$	12,043		$	14,273		$	19,543		$	19,014		$	57,314		$	74,253
Total revenues		88,059			80,678			76,033			77,874			80,742			322,644			310,640
Non-interest income to total revenues		13.01	%		14.93	%		18.77	%		25.09	%		23.55	%		17.76	%		23.90	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense	$	49,590		$	46,041		$	43,585		$	43,956		$	46,641		$	183,172		$	169,025
Average total assets		7,266,053			7,137,472			6,966,564			6,697,476			6,699,069			7,018,779			6,642,131
Adjusted non-interest expense to average assets		2.71	%		2.56	%		2.51	%		2.66	%		2.76	%		2.61	%		2.54	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets	$	47,994		$	44,430		$	41,717		$	42,360		$	44,903		$	176,501		$	161,952
Total revenues		88,059			80,678			76,033			77,874			80,742			322,644			310,640
Adjusted efficiency ratio		54.50	%		55.07	%		54.87	%		54.40	%		55.61	%		54.70	%		52.14	%
Adjusted return on average assets:
Adjusted net income	$	25,159		$	20,409		$	21,780		$	21,398		$	26,261		$	88,746		$	104,753
Average total assets		7,266,053			7,137,472			6,966,564			6,697,476			6,699,069			7,018,779			6,642,131
Adjusted return on average assets		1.37	%		1.13	%		1.25	%		1.30	%		1.56	%		1.26	%		1.58	%
Adjusted return on average stockholders' equity:
Adjusted net income	$	25,159		$	20,409		$	21,780		$	21,398		$	26,261		$	88,746		$	104,753
Average stockholders' equity		748,292			765,821			769,658			822,053			838,975			776,225			820,017
Adjusted return on average stockholders' equity		13.34	%		10.57	%		11.35	%		10.56	%		12.42	%		11.43	%		12.77	%
Tangible common equity to tangible assets:
Tangible common equity	$	606,929		$	575,321		$	593,555		$	613,698		$	660,386		$	606,929		$	660,386
Tangible assets		7,204,054			7,106,793			6,961,936			6,661,496			6,530,614			7,204,054			6,530,614
Tangible common equity to tangible assets		8.42	%		8.10	%		8.53	%		9.21	%		10.11	%		8.42	%		10.11	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders	$	25,537		$	21,590		$	23,149		$	22,372		$	18,259		$	92,648		$	97,149
Average tangible common stockholders' equity		588,612			604,529			606,590			647,242			662,141			611,563			640,537
Return on average tangible common stockholders' equity		17.21	%		14.17	%		15.31	%		14.02	%		10.94	%		15.15	%		15.17	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders	$	26,329		$	21,590		$	23,149		$	22,372		$	27,331		$	93,440		$	109,117
Average tangible common stockholders' equity		588,612			604,529			606,590			647,242			662,141			611,563			640,537
Adjusted return on average tangible common stockholders' equity		17.75	%		14.17	%		15.31	%		14.02	%		16.38	%		15.28	%		17.04	%
Tangible book value per share:
Tangible common equity	$	606,929		$	575,321		$	593,555		$	613,698		$	660,386		$	606,929		$	660,386
Common shares outstanding		37,492,775			37,465,902			37,669,102			37,811,582			37,713,903			37,492,775			37,713,903
Tangible book value per share	$	16.19		$	15.36		$	15.76		$	16.23		$	17.51		$	16.19		$	17.51

View source version on businesswire.com: https://www.businesswire.com/news/home/20230126005915/en/

Contacts

Investors:

Brooks Rennie

Investor Relations Director

312-660-5805

brennie@bylinebank.com

Media:

Erin O’Neill

Marketing Director

773-475-2901

eoneill@bylinebank.com

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Byline Bancorp, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

Contacts