2019-10-24 | NYSE:BY | Press Release

CHICAGO

Third Quarter 2019 Highlights

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

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 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.

(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.

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

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.

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.

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.

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.

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.

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			7.2	%	$	294,551			7.6	%	$	294,168			8.5	%
Acquired non-impaired loans and leases
Commercial real estate	$	391,294			10.2	%	$	439,182			11.4	%	$	498,329			14.4	%
Residential real estate		141,855			3.7	%		158,190			4.1	%		138,516			4.0	%
Construction, land development, and other land		39,657			1.0	%		51,072			1.3	%		37,111			1.1	%
Commercial and industrial		187,413			4.9	%		307,887			8.0	%		384,260			11.1	%
Installment and other		1,269			0.0	%		1,672			0.0	%		4,007			0.1	%
Leasing financing receivables		26,426			0.7	%		26,301			0.7	%		33,232			1.0	%
Total acquired non-impaired loans and leases	$	787,914			20.5	%	$	984,304			25.5	%	$	1,095,455			31.7	%
Total loans and leases	$	3,831,090			100.0	%	$	3,863,148			100.0	%	$	3,455,802			100.0	%
Allowance for loan and lease losses		(31,585	)					(31,132	)					(23,424	)
Total loans and leases, net of allowance for loan and lease losses	$	3,799,505					$	3,832,016					$	3,432,378

ASSET QUALITY

Non-Performing Assets

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

	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2019			2019			2019			2018			2018
Non-performing assets:
Non-accrual loans and leases	$	39,529		$	34,027		$	28,539		$	25,834		$	28,643
Past due loans and leases 90 days or more and still accruing interest		—			996			—			—			291
Accruing troubled debt restructured loans		2,204			1,529			1,921			1,813			1,230
Total non-performing loans and leases		41,733			36,552			30,460			27,647			30,164
Other real estate owned		8,531			8,070			4,799			5,314			4,891
Total non-performing assets	$	50,264		$	44,622		$	35,259		$	32,961		$	35,055
Total non-performing loans and leases as a percentage of total loans and leases		1.09	%		0.95	%		0.85	%		0.79	%		0.87	%
Total non-performing assets as a percentage of total assets		0.92	%		0.83	%		0.70	%		0.67	%		0.71	%
Allowance for loan and lease losses as a percentage of non-performing loans and leases		75.68	%		85.17	%		88.99	%		91.15	%		77.65	%

Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	4,167		$	4,723		$	5,070		$	4,245		$	6,830
Past due loans 90 days or more and still accruing interest guaranteed		—			—			—			—			—
Accruing troubled debt restructured loans guaranteed		—			—			—			381			431
Total non-performing loans guaranteed		4,167			4,723			5,070			4,626			7,261
Other real estate owned guaranteed		2,029			1,539			—			—			—
Total non-performing assets guaranteed	$	6,196		$	6,262		$	5,070		$	4,626		$	7,261
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.98	%		0.82	%		0.71	%		0.66	%		0.66	%
Total non-performing assets not guaranteed as a percentage of total assets		0.81	%		0.71	%		0.60	%		0.57	%		0.57	%

Variances in non-performing assets:

Non-performing loans and leases were $41.7 million at September 30, 2019, an increase of $5.1 million from $36.6 million at June 30, 2019, primarily due to the downgrades of a commercial relationship and a U.S. government guaranteed relationship; and
Other real estate owned was $8.5 million at September 30, 2019, an increase of $461,000 from $8.1 million at June 30, 2019, due to properties added from the U.S. government guaranteed portfolio. The government guaranteed portion of other real estate owned was $2.0 million at September 30, 2019.

Non-performing assets included $6.2 million of U.S. government guaranteed balances at September 30, 2019 and $6.3 million at June 30, 2019, a decrease of $66,000, primarily due to resolutions in the U.S. government guaranteed portfolio, offset by the default of a relationship.

Allowance for Loan and Lease Losses

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

	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(dollars in thousands)	2019			2019			2019			2018			2018			2019			2018
Allowance for loan and lease losses, beginning of period	$	31,132		$	27,106		$	25,201		$	23,424		$	19,687		$	25,201		$	16,706
Provision for loan and lease losses		5,931			6,391			3,999			3,882			5,842			16,321			14,913
Net charge-offs of loans and leases		(5,478	)		(2,365	)		(2,094	)		(2,105	)		(2,105	)		(9,937	)		(8,195	)
Allowance for loan and lease losses, end of period	$	31,585		$	31,132		$	27,106		$	25,201		$	23,424		$	31,585		$	23,424

Allowance for loan and lease losses to period end total loans and leases held for investment		0.82	%		0.81	%		0.76	%		0.72	%		0.68	%		0.82	%		0.68	%
Net charge-offs (annualized) to average loans and leases outstanding during the period		0.56	%		0.25	%		0.24	%		0.24	%		0.25	%		0.36	%		0.40	%
Provision for loan and lease losses to net charge-offs during the period	1.08x			2.70x			1.91x			1.84x			2.78x			1.64x			1.82x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment increased to 0.82% at September 30, 2019, compared to 0.81% at June 30, 2019 and 0.68% at September 30, 2018.

Net Charge-Offs

Net charge-offs during the third quarter of 2019 were $5.5 million, or 0.56% of average loans and leases, on an annualized basis, an increase of $3.1 million compared to $2.4 million, or 0.25% of average loans and leases, during the second quarter of 2019, and an increase from $2.1 million, or 0.25%, for the comparable quarter one year ago.

The net charge-offs during the quarter were primarily attributed to the unguaranteed portion of U.S. government guaranteed loans. Net charge-offs for the third quarter of 2019 included $4.8 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the second quarter of 2019 included $2.3 million and third quarter of 2018 included $1.5 million 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:

	September 30,		June 30,		March 31,		December 31,		September 30,
(dollars in thousands)	2019		2019		2019		2018		2018
Non-interest-bearing demand deposits	$	1,221,431	$	1,240,375	$	1,163,255	$	1,192,873	$	1,175,222
Interest-bearing checking accounts		372,049		345,081		305,393		296,339		317,145
Money market demand accounts		745,154		728,954		611,634		640,401		661,271
Other savings		471,878		480,756		468,524		476,418		476,879
Time deposits (below $250,000)		966,866		980,162		967,999		911,603		916,014
Time deposits ($250,000 and above)		302,936		284,915		291,711		232,282		194,236
Total deposits	$	4,080,314	$	4,060,243	$	3,808,516	$	3,749,916	$	3,740,767

Total deposits were $4.1 billion at September 30, 2019, an increase of $20.1 million compared to June 30, 2019, primarily due to increases in interest-bearing deposits excluding time deposits. Non-interest-bearing deposits to total deposits slightly decreased from 30.5% at June 30, 2019 to 29.9% at September 30, 2019.

The increase in the current quarter was primarily due to:

An increase in interest-bearing checking deposits of $27.0 million, from $345.1 million at June 30, 2019 to $372.0 million at September 30, 2019, primarily driven by NOW business accounts; and
An increase in money market demand deposits of $16.2 million, from $729.0 million at June 30, 2019 to $745.2 million at September 30, 2019, primarily driven by business accounts.

Partially offset by:

A decrease in non-interest-bearing demand deposits of $18.9 million, to $1.2 billion at September 30, 2019, primarily driven by decreases in business accounts and escrow deposits due to real estate tax payments; and
A decrease in other savings of $8.9 million, from $480.8 million at June 30, 2019 to $471.9 million at September 30, 2019, primarily driven by personal savings accounts.

Total borrowings and other liabilities were $622.1 million at September 30, 2019, an increase of $8.8 million from $613.3 million at June 30, 2019, primarily due to an increase in FHLB advances and an increase in accrued expenses and other liabilities.

Stockholders’ Equity

Total stockholders’ equity was $735.9 million at September 30, 2019, an increase of $18.2 million from $717.7 million at June 30, 2019. The increase was primarily due to net income generated during the quarter. Stockholders’ equity increased $106.0 million from $629.9 million at September 30, 2018. The increase was primarily due to net income generated during the year and the stock consideration issued in connection with the acquisition.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of September 30, 2019:

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
September 30, 2019	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	615,656		14.19	%	$	347,079		8.00	%	N/A		N/A
Bank		594,885		13.72	%		346,762		8.00	%	$	433,453		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	582,754		13.43	%	$	260,309		6.00	%	N/A		N/A
Bank		561,953		12.96	%		260,072		6.00	%	$	346,762		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	525,816		12.12	%	$	195,232		4.50	%	N/A		N/A
Bank		561,953		12.96	%		195,054		4.50	%	$	281,744		6.50	%
Tier 1 capital to average assets:
Company	$	582,754		11.14	%	$	209,331		4.00	%	N/A		N/A
Bank		561,953		10.74	%		209,242		4.00	%	$	261,552		5.00	%

Capital ratios for the period presented are based on the Basel III regulatory capital framework as applied to the Company’s current business and operations, and are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review and implementation guidance.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) on Friday, October 25, 2019 to discuss its quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (877) 512-8755. A recorded replay can be accessed through November 9, 2019 by dialing (877) 344-7529; passcode: 10135549.

A slide presentation relating to the third quarter 2019 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the News and Events page of the Company’s investor relations website at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company for Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bank has approximately $5.4 billion in assets and operates more than 60 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 five Small Business Administration lenders in the United States.

Non-GAAP Financial Measures

This release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures include adjusted net income, adjusted diluted earnings per share, adjusted efficiency ratio, adjusted non-interest expense to average assets, 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 “Reconciliation of Non-GAAP Financial Measures” in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.

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.

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2019			2019			2019			2018			2018
ASSETS
Cash and due from banks	$	75,275		$	57,513		$	50,026		$	30,190		$	25,162
Interest bearing deposits with other banks		33,564			31,802			31,971			91,670			119,594
Cash and cash equivalents		108,839			89,315			81,997			121,860			144,756
Equity and other securities, at fair value		7,648			7,662			7,216			—			—
Securities available-for-sale, at fair value		1,031,933			969,029			964,553			817,656			795,408
Securities held-to-maturity, at amortized cost		4,417			4,421			4,425			99,266			102,683
Restricted stock, at cost		24,331			22,937			19,202			19,202			19,202
Loans held for sale		7,176			18,473			510			19,827			8,737
Loans and leases:
Loans and leases		3,831,090			3,863,148			3,567,566			3,501,626			3,455,802
Allowance for loan and lease losses		(31,585	)		(31,132	)		(27,106	)		(25,201	)		(23,424	)
Net loans and leases		3,799,505			3,832,016			3,540,460			3,476,425			3,432,378
Servicing assets, at fair value		19,939			19,760			19,534			19,693			20,674
Accrued interest receivable		13,013			12,913			11,974			10,863			11,331
Premises and equipment, net		96,006			96,588			97,069			97,680			106,948
Assets held for sale		15,472			16,329			13,596			14,489			8,343
Other real estate owned, net		8,531			8,070			4,799			5,314			4,891
Goodwill		145,638			145,638			128,177			128,177			127,536
Other intangible assets, net		33,905			35,908			31,646			33,419			35,248
Bank-owned life insurance		9,699			9,634			6,087			5,961			5,923
Deferred tax assets, net		33,388			35,737			30,534			35,643			42,287
Due from counterparty		47,045			34,226			20,691			5,338			14,484
Other assets		31,793			32,580			27,455			31,761			36,580
Total assets	$	5,438,278		$	5,391,236		$	5,009,925		$	4,942,574		$	4,917,409
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	1,221,431		$	1,240,375		$	1,163,255		$	1,192,873		$	1,175,222
Interest-bearing deposits:
NOW, savings accounts, and money market accounts		1,589,081			1,554,791			1,385,551			1,413,158			1,455,295
Time deposits		1,269,802			1,265,077			1,259,710			1,143,885			1,110,250
Total deposits		4,080,314			4,060,243			3,808,516			3,749,916			3,740,767
Accrued interest payable		4,778			4,522			4,390			3,484			2,971
Line of credit		—			—			—			—			—
Federal Home Loan Bank advances		506,000			500,000			425,000			425,000			425,000
Securities sold under agreements to repurchase		32,290			32,885			34,369			34,166			24,446
Junior subordinated debentures issued to capital trusts, net		37,207			37,059			36,912			36,768			36,615
Accrued expenses and other liabilities		41,823			38,852			31,989			42,568			57,749
Total liabilities		4,702,412			4,673,561			4,341,176			4,291,902			4,287,548
STOCKHOLDERS’ EQUITY
Preferred stock		10,438			10,438			10,438			10,438			10,438
Common stock		378			378			362			361			361
Additional paid-in capital		579,564			578,828			548,005			546,849			545,827
Retained earnings		144,525			129,379			116,363			102,522			85,597
Accumulated other comprehensive income (loss), net of tax		961			(1,348	)		(6,419	)		(9,498	)		(12,362	)
Total stockholders’ equity		735,866			717,675			668,749			650,672			629,861
Total liabilities and stockholders’ equity	$	5,438,278		$	5,391,236		$	5,009,925		$	4,942,574		$	4,917,409

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
	Three Months Ended															Nine Months Ended
(dollars in thousands, except share and	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
per share data)	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
PROVISION FOR LOAN AND LEASE LOSSES		5,931			6,391			3,999			3,882			5,842			16,321			14,913
Net interest income after provision for loan and lease losses		51,907			48,057			46,086			49,379			46,751			146,050			110,431
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 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
INCOME BEFORE PROVISION FOR INCOME TAXES		21,265			18,286			17,395			23,581			19,938			56,946			31,859
PROVISION FOR INCOME TAXES		5,923			5,075			4,798			6,460			5,402			15,796			7,787
NET INCOME		15,342			13,211			12,597			17,121			14,536			41,150			24,072
Dividends on preferred shares		196			195			196			196			196			587			587
INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	15,146		$	13,016		$	12,401		$	16,925		$	14,340		$	40,563		$	23,485
EARNINGS PER COMMON SHARE
Basic	$	0.40		$	0.35		$	0.34		$	0.47		$	0.40		$	1.09		$	0.73
Diluted	$	0.39		$	0.34		$	0.34		$	0.46		$	0.39		$	1.07		$	0.71

BYLINE BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (unaudited)
	As of or For the Three Months Ended															As of or For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(dollars in thousands, except share and per share data)	2019			2019			2019			2018			2018			2019			2018
Summary of Operations
Net interest income	$	57,838		$	54,448		$	50,085		$	53,261		$	52,593		$	162,371		$	125,344
Provision for loan and lease losses		5,931			6,391			3,999			3,882			5,842			16,321			14,913
Non-interest income		14,806			14,183			11,988			14,290			10,902			40,977			36,236
Non-interest expense		45,448			43,954			40,679			40,088			37,715			130,081			114,808
Income before provision for income taxes		21,265			18,286			17,395			23,581			19,938			56,946			31,859
Provision for income taxes		5,923			5,075			4,798			6,460			5,402			15,796			7,787
Net income		15,342			13,211			12,597			17,121			14,536			41,150			24,072
Dividends on preferred shares		196			195			196			196			196			587			587
Net income available to common stockholders	$	15,146		$	13,016		$	12,401		$	16,925		$	14,340		$	40,563		$	23,485

Earnings per Common Share
Basic earnings per common share	$	0.40		$	0.35		$	0.34		$	0.47		$	0.40		$	1.09		$	0.73
Diluted earnings per common share	$	0.39		$	0.34		$	0.34		$	0.46		$	0.39		$	1.07		$	0.71
Adjusted diluted earnings per common share^(2)(3)(4)	$	0.41		$	0.41		$	0.38		$	0.49		$	0.40		$	1.20		$	0.93
Weighted average common shares outstanding (basic)		37,831,356			37,263,352			36,169,477			36,116,189			36,042,914			37,094,083			32,341,087
Weighted average common shares outstanding (diluted)		38,487,180			37,948,006			36,876,574			36,900,589			36,958,209			37,818,868			33,288,657
Common shares outstanding		38,169,126			38,115,219			36,398,144			36,343,239			36,279,600			38,169,126			36,279,600

Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin		4.62	%		4.51	%		4.43	%		4.69	%		4.73	%		4.52	%		4.56	%
Cost of deposits		0.94	%		0.92	%		0.87	%		0.75	%		0.64	%		0.91	%		0.54	%
Efficiency ratio⁽¹⁾		59.81	%		61.19	%		62.68	%		56.63	%		56.41	%		61.15	%		68.70	%
Adjusted efficiency ratio^(1)(2)(3)		58.17	%		56.02	%		59.55	%		54.76	%		55.62	%		57.87	%		61.73	%
Non-interest expense to average assets		3.32	%		3.34	%		3.32	%		3.25	%		3.11	%		3.33	%		3.82	%
Adjusted non-interest expense to average assets⁽²⁾⁽³⁾		3.23	%		3.07	%		3.17	%		3.15	%		3.07	%		3.16	%		3.45	%
Return on average stockholders' equity		8.34	%		7.60	%		7.75	%		10.61	%		9.22	%		7.91	%		6.01	%
Adjusted return on average stockholders' equity^(2)(3)(4)		8.78	%		9.16	%		8.61	%		11.21	%		9.47	%		8.86	%		7.90	%
Return on average assets		1.12	%		1.00	%		1.03	%		1.39	%		1.20	%		1.05	%		0.80	%
Adjusted return on average assets^(2)(3)(4)		1.18	%		1.21	%		1.14	%		1.47	%		1.23	%		1.18	%		1.05	%
Non-interest income to total revenues⁽²⁾		20.38	%		20.67	%		19.31	%		21.16	%		17.17	%		20.15	%		22.43	%
Pre-tax pre-provision return on average assets⁽²⁾		1.98	%		1.88	%		1.75	%		2.23	%		2.13	%		1.87	%		1.56	%
Adjusted pre-tax pre-provision return on average assets⁽²⁾⁽³⁾		2.07	%		2.15	%		1.91	%		2.33	%		2.17	%		2.04	%		1.93	%
Return on average tangible common stockholders' equity⁽²⁾		12.22	%		11.32	%		11.37	%		15.49	%		13.81	%		11.66	%		8.51	%
Adjusted return on average tangible common stockholders' equity^(2)(3)(4)		12.82	%		13.44	%		12.54	%		16.31	%		14.16	%		12.94	%		10.96	%
Non-interest-bearing deposits to total deposits		29.93	%		30.55	%		30.54	%		31.81	%		31.42	%		29.93	%		31.42	%
Loans and leases held for sale and loans and lease held for investment to total deposits		94.07	%		95.60	%		93.69	%		93.91	%		92.62	%		94.07	%		92.62	%
Deposits to total liabilities		86.77	%		86.88	%		87.73	%		87.37	%		87.25	%		86.77	%		87.25	%
Deposits per branch	$	66,890		$	66,561		$	65,664		$	63,558		$	63,403		$	66,890		$	63,403
Tangible book value per common share⁽²⁾	$	14.30		$	13.79		$	13.70		$	13.17		$	12.59		$	14.30		$	12.59

Asset Quality Ratios
Non-performing loans and leases to total loans and leases held for investment, net before ALLL		1.09	%		0.95	%		0.85	%		0.79	%		0.87	%		1.09	%		0.87	%
ALLL to total loans and leases held for investment, net before ALLL		0.82	%		0.81	%		0.76	%		0.72	%		0.68	%		0.82	%		0.68	%
Net charge-offs to average total loans and leases held for investment, net before ALLL		0.56	%		0.25	%		0.24	%		0.24	%		0.25	%		0.36	%		0.40	%
Acquisition accounting adjustments⁽⁵⁾	$	31,053		$	37,109		$	29,341		$	34,029		$	42,375		$	31,053		$	42,375

Capital Ratios
Common equity to total assets		13.34	%		13.12	%		13.14	%		12.95	%		12.60	%		13.34	%		12.60	%
Tangible common equity to tangible assets⁽²⁾		10.38	%		10.09	%		10.28	%		10.01	%		9.60	%		10.38	%		9.60	%
Leverage ratio		11.14	%		11.09	%		11.27	%		11.05	%		10.78	%		11.14	%		10.78	%
Common equity tier 1 capital ratio		12.12	%		11.65	%		12.14	%		11.85	%		11.26	%		12.12	%		11.26	%
Tier 1 capital ratio		13.43	%		12.96	%		13.57	%		13.30	%		12.71	%		13.43	%		12.71	%
Total capital ratio		14.19	%		13.71	%		14.28	%		13.99	%		13.37	%		14.19	%		13.37	%

		(1)		Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
		(2)		Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
		(3)		Calculation excludes impairment charges, merger-related expenses, and core systems conversion expense.
		(4)		Calculation excludes incremental income tax expense or benefit related to changes in corporate income tax rates and reversal of valuation allowance on net deferred tax assets.
		(5)		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.

BYLINE BANCORP, INC. AND SUBSIDIARIES QUARTER-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)
	For the Three Months Ended September 30,
	2019								2018
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp		Average Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp		Average Yield / Rate
ASSETS
Cash and cash equivalents	$	34,225		$	253		2.93	%	$	107,555		$	368		1.36	%
Loans and leases⁽¹⁾		3,860,770			63,391		6.51	%		3,387,569			55,045		6.45	%
Taxable securities		996,750			6,899		2.75	%		860,081			5,323		2.46	%
Tax-exempt securities⁽²⁾		76,161			486		2.53	%		55,656			337		2.40	%
Total interest-earning assets	$	4,967,906		$	71,029		5.67	%	$	4,410,861		$	61,073		5.49	%
Allowance for loan and lease losses		(32,246	)							(21,557	)
All other assets		500,102								420,635
TOTAL ASSETS	$	5,435,762							$	4,809,939
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	358,185		$	524		0.58	%	$	316,394		$	384		0.48	%
Money market accounts		735,724			1,917		1.03	%		618,213			1,200		0.77	%
Savings		475,417			114		0.10	%		479,837			148		0.12	%
Time deposits		1,270,050			7,063		2.21	%		1,084,550			4,239		1.55	%
Total interest-bearing deposits		2,839,376			9,618		1.34	%		2,498,994			5,971		0.95	%
Federal Home Loan Bank advances		530,055			2,771		2.07	%		394,588			1,723		1.73	%
Other borrowed funds		70,080			802		4.54	%		61,582			786		5.06	%
Total borrowings		600,135			3,573		2.36	%		456,170			2,509		2.18	%
Total interest-bearing liabilities	$	3,439,511		$	13,191		1.52	%	$	2,955,164		$	8,480		1.14	%
Non-interest-bearing demand deposits		1,223,556								1,175,523
Other liabilities		42,914								53,631
Total stockholders’ equity		729,781								625,621
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,435,762							$	4,809,939
Net interest spread⁽³⁾							4.15	%							4.35	%
Net interest income				$	57,838							$	52,593
Net interest margin⁽⁴⁾							4.62	%							4.73	%

Net loan accretion impact on margin				$	7,703		0.62	%				$	8,259		0.74	%

		(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. AND SUBSIDIARIES YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)
	For the Nine Months Ended September 30,
	2019								2018
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp		Average Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp		Average Yield / Rate
ASSETS
Cash and cash equivalents	$	45,327		$	798		2.35	%	$	71,607		$	648		1.21	%
Loans and leases⁽¹⁾		3,719,323			177,298		6.37	%		2,771,274			128,326		6.19	%
Taxable securities		966,449			19,546		2.70	%		794,261			14,342		2.41	%
Tax-exempt securities⁽²⁾		66,635			1,257		2.52	%		40,065			740		2.47	%
Total interest-earning assets	$	4,797,734		$	198,899		5.54	%	$	3,677,207		$	144,056		5.24	%
Allowance for loan and lease losses		(28,626	)							(19,085	)
All other assets		457,383								358,793
TOTAL ASSETS	$	5,226,491							$	4,016,915
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	328,558		$	1,390		0.57	%	$	244,088		$	546		0.30	%
Money market accounts		682,020			5,166		1.01	%		478,607			2,352		0.66	%
Savings		474,815			371		0.10	%		457,179			308		0.09	%
Time deposits		1,248,258			20,073		2.15	%		895,502			9,008		1.34	%
Total interest-bearing deposits		2,733,651			27,000		1.32	%		2,075,376			12,214		0.79	%
Federal Home Loan Bank advances		463,645			7,044		2.03	%		367,098			4,441		1.62	%
Other borrowed funds		71,568			2,484		4.64	%		58,585			2,057		4.70	%
Total borrowings		535,213			9,528		2.38	%		425,683			6,498		2.04	%
Total interest-bearing liabilities	$	3,268,864		$	36,528		1.49	%	$	2,501,059		$	18,712		1.00	%
Non-interest-bearing demand deposits		1,221,375								938,423
Other liabilities		40,705								42,257
Total stockholders’ equity		695,547								535,176
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,226,491							$	4,016,915
Net interest spread⁽³⁾							4.05	%							4.24	%
Net interest income				$	162,371							$	125,344
Net interest margin⁽⁴⁾							4.52	%							4.56	%

Net loan accretion impact on margin				$	17,772		0.50	%				$	14,199		0.52	%

		(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 divided by total average earning assets.
		(5)		Average balances are average daily balances.

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
	As of or For the Three Months Ended															As of or For the Nine Months Ended
(dollars in thousands, except per share data)	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			September 30, 2019			September 30, 2018
Net income and earnings per share excluding significant items
Reported Net Income	$	15,342		$	13,211		$	12,597		$	17,121		$	14,536		$	41,150		$	24,072
Significant items:
Incremental income tax benefit attributed to federal income tax reform		—			—			—			—			—			—			(724	)
Impairment charges on assets held for sale		67			—			392			372			139			459			256
Merger-related expense		1,043			3,152			18			266			150			4,213			1,790
Core system conversion expense		77			394			1,530			625			213			2,001			9,222
Tax benefit on impairment charges and merger-related expenses		(369	)		(842	)		(540	)		(297	)		(112	)		(1,751	)		(2,978	)
Adjusted Net Income	$	16,160		$	15,915		$	13,997		$	18,087		$	14,926		$	46,072		$	31,638
Reported Diluted Earnings per Share	$	0.39		$	0.34		$	0.34		$	0.46		$	0.39		$	1.07		$	0.71
Significant items:
Incremental income tax benefit attributed to federal income tax reform		—			—			—			—			—			—			(0.02	)
Impairment charges on assets held for sale		—			—			0.01			0.01			—			0.01			—
Merger-related expense		0.03			0.08			—			0.01			—			0.11			0.05
Core system conversion expense		—			0.01			0.04			0.02			0.01			0.05			0.28
Tax benefit on impairment charges and merger-related expenses		(0.01	)		(0.02	)		(0.01	)		(0.01	)		—			(0.04	)		(0.09	)
Adjusted Diluted Earnings per Share	$	0.41		$	0.41		$	0.38		$	0.49		$	0.40		$	1.20		$	0.93

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 Nine Months Ended
(dollars in thousands, except per share data, ratios annualized, where applicable)	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			September 30, 2019			September 30, 2018
Adjusted non-interest expense:
Non-interest expense	$	45,448		$	43,954		$	40,679		$	40,088		$	37,715		$	130,081		$	114,808
Less: Significant items
Impairment charges on assets held for sale		67			—			392			372			139			459			256
Merger-related expense		1,043			3,152			18			266			150			4,213			1,790
Core system conversion expense		77			394			1,530			625			213			2,001			9,222
Adjusted non-interest expense	$	44,261		$	40,408		$	38,739		$	38,825		$	37,213		$	123,408		$	103,540
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense	$	44,261		$	40,408		$	38,739		$	38,825		$	37,213		$	123,408		$	103,540
Less: Amortization of intangible assets		2,003			1,959			1,773			1,834			1,898			5,735			3,795
Adjusted non-interest expense excluding amortization of intangible assets	$	42,258		$	38,449		$	36,966		$	36,991		$	35,315		$	117,673		$	99,745
Pre-tax pre-provision net income:
Pre-tax income	$	21,265		$	18,286		$	17,395		$	23,581		$	19,938		$	56,946		$	31,859
Add: Provision for loan and lease losses		5,931			6,391			3,999			3,882			5,842			16,321			14,913
Pre-tax pre-provision net income	$	27,196		$	24,677		$	21,394		$	27,463		$	25,780		$	73,267		$	46,772
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income	$	27,196		$	24,677		$	21,394		$	27,463		$	25,780		$	73,267		$	46,772
Impairment charges on assets held for sale		67			—			392			372			139			459			256
Merger-related expense		1,043			3,152			18			266			150			4,213			1,790
Core system conversion expense		77			394			1,530			625			213			2,001			9,222
Adjusted pre-tax pre-provision net income	$	28,383		$	28,223		$	23,334		$	28,726		$	26,282		$	79,940		$	58,040
Total revenues:
Net interest income	$	57,838		$	54,448		$	50,085		$	53,261		$	52,593		$	162,371		$	125,344
Add: Non-interest income		14,806			14,183			11,988			14,290			10,902			40,977			36,236
Total revenues	$	72,644		$	68,631		$	62,073		$	67,551		$	63,495		$	203,348		$	161,580
Tangible common stockholders' equity:
Total stockholders' equity	$	735,866		$	717,675		$	668,749		$	650,672		$	629,861		$	735,866		$	629,861
Less: Preferred stock		10,438			10,438			10,438			10,438			10,438			10,438			10,438
Less: Goodwill		145,638			145,638			128,177			128,177			127,536			145,638			127,536
Less: Core deposit intangibles and other intangibles		33,905			35,908			31,646			33,419			35,248			33,905			35,248
Tangible common stockholders' equity	$	545,885		$	525,691		$	498,488		$	478,638		$	456,639		$	545,885		$	456,639
Tangible assets:
Total assets	$	5,438,278		$	5,391,236		$	5,009,925		$	4,942,574		$	4,917,409		$	5,438,278		$	4,917,409
Less: Goodwill		145,638			145,638			128,177			128,177			127,536			145,638			127,536
Less: Core deposit intangibles and other intangibles		33,905			35,908			31,646			33,419			35,248			33,905			35,248
Tangible assets	$	5,258,735		$	5,209,690		$	4,850,102		$	4,780,978		$	4,754,625		$	5,258,735		$	4,754,625
Average tangible common stockholders' equity:
Average total stockholders' equity	$	729,781		$	696,928		$	659,156		$	639,885		$	625,621		$	695,547		$	535,176
Less: Average preferred stock		10,438			10,438			10,438			10,438			10,438			10,438			10,438
Less: Average goodwill		145,638			140,073			128,177			127,543			127,536			138,027			87,173
Less: Average core deposit intangibles and other intangibles		35,102			35,163			32,747			34,564			36,444			34,346			25,359
Average tangible common stockholders' equity	$	538,603		$	511,254		$	487,794		$	467,340		$	451,203		$	512,736		$	412,206
Average tangible assets:
Average total assets	$	5,435,762		$	5,274,820		$	4,963,706		$	4,896,434		$	4,809,939		$	5,226,491		$	4,016,915
Less: Average goodwill		145,638			140,073			128,177			127,543			127,536			138,027			87,173
Less: Average core deposit intangibles and other intangibles		35,102			35,163			32,747			34,564			36,444			34,346			25,359
Average tangible assets	$	5,255,022		$	5,099,584		$	4,802,782		$	4,734,327		$	4,645,959		$	5,054,118		$	3,904,383
Tangible net income available to common stockholders:
Net income available to common stockholders	$	15,146		$	13,016		$	12,401		$	16,925		$	14,340		$	40,563		$	23,485
Add: After-tax intangible asset amortization		1,445			1,413			1,279			1,323			1,369			4,138			2,738
Tangible net income available to common stockholders	$	16,591		$	14,429		$	13,680		$	18,248		$	15,709		$	44,701		$	26,223
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders	$	16,591		$	14,429		$	13,680		$	18,248		$	15,709		$	44,701		$	26,223
Incremental income tax benefit attributed to federal income tax reform		—			—			—			—			—			—			(724	)
Impairment charges on assets held for sale		67			—			392			372			139			459			256
Merger-related expense		1,043			3,152			18			266			150			4,213			1,790
Core system conversion expense		77			394			1,530			625			213			2,001			9,222
Tax benefit on significant items		(369	)		(842	)		(540	)		(297	)		(112	)		(1,751	)		(2,978	)
Adjusted tangible net income available to common stockholders	$	17,409		$	17,133		$	15,080		$	19,214		$	16,099		$	49,623		$	33,789

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 Nine Months Ended
(dollars in thousands, except share and per share data, ratios annualized, where applicable)	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			September 30, 2019			September 30, 2018
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income	$	27,196		$	24,677		$	21,394		$	27,463		$	25,780		$	73,267		$	46,772
Average total assets		5,435,762			5,274,820			4,963,706			4,896,434			4,809,939			5,226,491			4,016,915
Pre-tax pre-provision return on average assets		1.98	%		1.88	%		1.75	%		2.23	%		2.13	%		1.87	%		1.56	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income	$	28,383		$	28,223		$	23,334		$	28,726		$	26,282		$	79,940		$	58,040
Average total assets		5,435,762			5,274,820			4,963,706			4,896,434			4,809,939			5,226,491			4,016,915
Adjusted pre-tax pre-provision return on average assets		2.07	%		2.15	%		1.91	%		2.33	%		2.17	%		2.04	%		1.93	%
Non-interest income to total revenues:
Non-interest income	$	14,806		$	14,183		$	11,988		$	14,290		$	10,902		$	40,977		$	36,236
Total revenues		72,644			68,631			62,073			67,551			63,495			203,348			161,580
Non-interest income to total revenues		20.38	%		20.67	%		19.31	%		21.16	%		17.17	%		20.15	%		22.43	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense	$	44,261		$	40,408		$	38,739		$	38,825		$	37,213		$	123,408		$	103,540
Average total assets		5,435,762			5,274,820			4,963,706			4,896,434			4,809,939			5,226,491			4,016,915
Adjusted non-interest expense to average assets		3.23	%		3.07	%		3.17	%		3.15	%		3.07	%		3.16	%		3.45	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets	$	42,258		$	38,449		$	36,966		$	36,991		$	35,315		$	117,673		$	99,745
Total revenues		72,644			68,631			62,073			67,551			63,495			203,348			161,580
Adjusted efficiency ratio		58.17	%		56.02	%		59.55	%		54.76	%		55.62	%		57.87	%		61.73	%
Adjusted return on average assets:
Adjusted net income	$	16,160		$	15,915		$	13,997		$	18,087		$	14,926		$	46,072		$	31,638
Average total assets		5,435,762			5,274,820			4,963,706			4,896,434			4,809,939			5,226,491			4,016,915
Adjusted return on average assets		1.18	%		1.21	%		1.14	%		1.47	%		1.23	%		1.18	%		1.05	%
Adjusted return on average stockholders' equity:
Adjusted net income	$	16,160		$	15,915		$	13,997		$	18,087		$	14,926		$	46,072		$	31,638
Average stockholders' equity		729,781			696,928			659,156			639,885			625,621			695,547			535,176
Adjusted return on average stockholders' equity		8.78	%		9.16	%		8.61	%		11.21	%		9.47	%		8.86	%		7.90	%
Tangible common equity to tangible assets:
Tangible common equity	$	545,885		$	525,691		$	498,488		$	478,638		$	456,639		$	545,885		$	456,639
Tangible assets		5,258,735			5,209,690			4,850,102			4,780,978			4,754,625			5,258,735			4,754,625
Tangible common equity to tangible assets		10.38	%		10.09	%		10.28	%		10.01	%		9.60	%		10.38	%		9.60	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders	$	16,591		$	14,429		$	13,680		$	18,248		$	15,709		$	44,701		$	26,223
Average tangible common stockholders' equity		538,603			511,254			487,794			467,340			451,203			512,736			412,206
Return on average tangible common stockholders' equity:		12.22	%		11.32	%		11.37	%		15.49	%		13.81	%		11.66	%		8.51	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders	$	17,409		$	17,133		$	15,080		$	19,214		$	16,099		$	49,623		$	33,789
Average tangible common stockholders' equity		538,603			511,254			487,794			467,340			451,203			512,736			412,206
Adjusted return on average tangible common stockholders' equity		12.82	%		13.44	%		12.54	%		16.31	%		14.16	%		12.94	%		10.96	%
Tangible book value per share:
Tangible common equity	$	545,885		$	525,691		$	498,488		$	478,638		$	456,639		$	545,885		$	456,639
Common shares outstanding		38,169,126			38,115,219			36,398,144			36,343,239			36,279,600			38,169,126			36,279,600
Tangible book value per share	$	14.30		$	13.79		$	13.70		$	13.17		$	12.59		$	14.30		$	12.59

View source version on businesswire.com: https://www.businesswire.com/news/home/20191024006003/en/

Investors:
Tony Rossi
Financial Profiles, Inc.
310-622-8221
BYIR@bylinebank.com

Media:
Erin O’Neill
Director of Marketing
Byline Bank
773-475-2901
eoneill@bylinebank.com

Business Wire

October 24, 2019 - 1:23 PM PDT

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Byline Bancorp, Inc. Reports Third Quarter 2019 Financial Results

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Byline Bancorp, Inc. Reports Third Quarter 2019 Financial Results

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