BY - Earnings call transcript Q2 2020

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Operator

Good day and welcome to the Byline Bancorp Inc.

Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tony Rossi from Financial Profiles. sir. ahead go Please

Tony Rossi

part Good Byline's for and quarter the be to and presentation call. Cole. Please presentation. this joining the the Relations visit XXXX you website us We'll Events as slide a today Byline page using our morning you, discussion thank morning. of everyone Presentations for earnings of Investor Thank Bancorp access second for

to forward-looking factors the Alberto? future with the could company's which directly reconciliation today company like non-GAAP performance the comparable are by materially and implied that CEO. begin, be quantitative well financial to as the such the as from call cause this remind conference respect forward-looking I'd the The to Various company's forward-looking statements contains substitute contains most turn supplement, the obligation disclaims uncertainties, available the we statements. any Byline on intended to SEC the any financial Before to release available for of filings, the press are made be but pandemic. you website. statements the other different future are may And with These and The update risks and condition Bancorp results call. impact like Paracchini, in or call results actual Alberto expressed of involve and COVID-XX refer GAAP President to non-GAAP information that to of factors to GAAP discussed including I'd the discussed which measures. during website that any not over measures to on to Management measures.

Alberto Paracchini

We XXXX earnings we are effective Personally, been along Last on of executive morning retiring to would Corby, the valuable everyone the Officer; regular appreciate Owen addition organization today our of with joining and in privilege member night I've and me Owen also call has joined this on that with benefited time. release, First Owen's Tony, Evanston and us Lindsay Owen since before Chief Mark and our has many Credit and in be the from good the Thank to With morning. well all CFO; Beacom, contributions you, the you welcome announced over had call. Owen XXth. knowing a of that credit August since last Byline the management team several acquisition the of the years. Fucinato.

to take Fucinato his I seeing this our miss on in to next the opportunity will Mark we thank time certainly counsel Owen the Chief at and with and friendship, support, basis, want for day-to-day I can a will to during we count years come. his to over for While know Owen work Owen and taking company. on Officer. working continue formally be as Credit his contributions

know very very a is predecessors. like him company, the manager. welcome I served in are to had Prior We in organization. seasoned outside have coming ago credit the caliber, will Mark Mark knowledge similar credit and and familiar he working a the enjoy joined and Officer of quarters. would where and at culture, I someone much inside and getting to in had from excellent Mark one MB, at over its commercial experience, time Mark. is JPMorgan has and MB you fortunate Financial Mark's banking Chase Credit this of banking. know with Byline officer Senior FirstMerit year relationships our roles to been credit, to

the took and closing I navigate the go remarks actions back to through will through for will Next, the our questions. detail. support come with the through in up going current financials with opening you I'll provide at quarter to go who Lindsay our before more the some to efforts call to the then pass highlights the call for over and an on end we environment. I'm update clients

From follow our has way environment take website. a $XX.X the and proud income $XX.X standpoint, the Investor net deliver uncertainty, characterized support the very up the extremely net share, pre-provision degree the with the unprecedented financial the can while interest given for in and Clearly, further our million, COVID-XX the you per customers find of always or operating our created help of our Notwithstanding, As sheet comments $X.X traditional to at challenging balance a quarter-over-quarter. economic government for actions, of came deck of solidify was income team diluted quarter pandemic pretax section environment. actions can banks, to low a by performance Relations executed high million you $X.XX I'm solid performance in and rates. million

This of last impact to expense exclude quarter for our Total we increased million. revenue prior allowance build $XX.X if points XXX quarter $XX.X increased provision the with to reserve million the we by basis PPP XXX $X X.X% to continued from points from our which million, basis increasing to loans. losses period loan

the basis on was quarter at and first the Non-interest XX% rates earning resulted quarter our the and points nicely. XX basis strong brought flat in saw repricing saw XX revenue interest of net up points last sale income prior in asset margin the quarter. to down lower which had growth, from cost rebound impact points, June. compared end income We deposits we we of progress liabilities of decline basis significant XXX our made Although, from to gain to

after in we of in with almost evident quality the quarter, and the growth the balance the The those franchise sheet. helped stayed favorably excluding normal loans increased deposits mix. The during primarily dislocation returned million the XX%, growth of by course customers. and quarter quarter. other in side strong the deposit slightly in uncertainty on loans provided impacted for first as reflective categories, deposits by deposit XXXX impacted was total the PPP coming environment. over second the quarter, drive government-guaranteed $XXX given loans, again Loans in our deposit of Over was pricing the demand over dollars funding core were our all asset which declined PPP the and saw to non-interest-bearing levels for more to This the and majority of

expenses front, lower the the and On the COVID-XX. we quarter, loans, during reflecting expense impact both decline saw costs PPP costs to related increased despite of

efficiency XX.X%, Our lower both and revenue expenses ratio the quarter. improved to reflecting during higher

relief and continue the pushed nonperforming XX%. points digital changes ratio to nonperforming downturn quarter. cautious absolute percentage from we the commercial charge-offs continue quality Tier to in remained X%, X due capital expense the environment, the efforts. during efficiently. in resolution to more to relationship. of we loans pandemic stable opportunity Given which took million risk-based respect to XX virus adding the terms by and subordinated and of basis XX showed given need Net activity. total remain explore a the With and basis any the impacted as portfolio Provision elevated uncertainty and capital debt, last good just were capital a to both the resolution related and capabilities, in rate Past $XX our under Credit improvement additional liquidity, additional quarter by economic to our impact increase our and points levels investing both and the around infrastructure to operate opportunities costs the declined less of than to and solid increased remained reflecting we

us We balance is in a our to the the continue Our loan-to-deposit $X.X by funding securities continues and reflected decline combination support ratio believe remain to total XX.X%, and sheet of proportion throughout our to liquidity billion capital strong investment clients the communities and crisis. availability. well to strong positions of in position, approximately higher liquidity and

provides on on Slide COVID-XX PPP efforts our a Lastly, the dividend information and the paid share common for additional $X.XX program. we per detail of response quarter. X

The $XXX earlier, As than loans PPP were less and I in average than X,XXX were in $XXX,XXX the access at companies help XX% to loan $XXX,XXX. of mentioned came more made for million we loans. able

appendix, to to loans the later be most and August. continue forgiven in had beginning expect We the a year quarter. program requests completed PPP the had impact the be most and will a and begin you areas expect it the can on the and this the significant impact We provided XXXX. applications processing to where forgiveness new The in summary without originate better process various of that the of in so second with metrics line impact, of anticipate items have and of we balances both understand in Included PPP. performance PPP our

recover on included most this which leases the to business the the are loan credit Turning who case-by-case than taking on customer and business XX-day In receive require extensions and loans for utilize business. regular ask agreement the deferral some we type approved of X,XXX to cases, our from approximately contact on basis, condition principal million we of and totaling deferrals formal Commercial their a deferral. of the in were for disruption We on the customers the primarily enhancement steps deferrals we portfolio. The were to $XXX in consideration XX% remain deferrals. with to slide provide statement payments. information borrowers and deferral interest granted they're need. We modifications deferrals receiving of or updates the evaluating over request, of to a and X, more a

have of from and normal update deferrals the exposure initial July to no XX% have resumed had industries impact second provides XX, we on most than payment our six of XX% to Slide amount. deferrals second be on that borrowers the of activity. original deferral Majority coming granted As deferrals greater of less the amount than COVID-XX. deferral expect off seen an

basic million restaurants particular is small takeaway these makeup of limited to lease industry borrowers by In have this portfolios a PPP. and summary the these with our good XX.X% from PPP customers. as the and the industries, with loan eight that, as which exposure have Slide one segment the on in portfolio COVID-XX of impact subsidy industries. to up any or to borrowing $XXX is main appendix, industries, characterized be characteristics collectively The largest deferrals portfolio, government-guaranteed PPP. continue the SBA included well individual manageable. along provide our is to of seven the X.X% Details receiving percentage each early continues the excluding includes make we of have at The total exposure We total and aggregate representing and while case level of of portfolio the our industry also granularity payments, that funding, detail on exposure, detail non-borrowing include we borrowers. additional collateral select for portfolio or excluding industries exposure concentrations,

to more Lindsay, our results. I Now, call to the who on turn would detail will provide like over

Lindsay Corby

on with information Good nine. loan Alberto. portfolio some Thanks, on our morning, I'll slide additional everyone. start

the from Our quarter. June prior XX, million $X.X at net total billion loans of and increase leases were a $XXX

approximately due Our by originated to the PPP in for remained by our a loans. the of million loan This in outstanding the loan quarter. portfolio relatively utilization of quarter, just The quarter, balances increased of decreasing offset primarily million from $XXX our from portfolio. rate acquired $XX stable XX.X% decrease decreased XX.X% partially the on net was the $X to lines prior credit million, the although by prior end

recognize at for June for businesses. whole government-guaranteed XX, their to XX. Turning dedication we'll lending work lending team team as small at being to our Capital the and Small our number to SBA We of slide X(a) business. to look two ranked would hard Business Congratulations like

May. SBA of the and quarter significant end the traditional a business and into slowdown extending saw first at April Our

of production July, end well still of commitments USDA of and stronger which X(a) we loan of prior seeing was quarter, the loans. June but quarter, government-guaranteed at $XX.X activity. comparable the our the have below to During million SBA had started level We normalized and

deposits managed and had categories, strong deposit portfolio deposits with to very up the XX.X% had deposits, curve notably XX.X% and increased over reduce was During time growth our the on QX. our June increased entirely increasing demand the total to total deposits. yield driven billion growth deposits, lower-cost end the $XXX quarter to in flat XX. our The of loans. $X We checking are non-interest-bearing in Deposit from to interest-bearing our growth, most core by XX areas improving in us at these deposit almost billion XX. of prior XX allowed at non-interest-bearing quarter. deposits government-guaranteed slide significantly our to up lower-cost $XXX At cost of the and The declined They of prior mix half, in decline second interest-bearing quarter, in June $X trends deposit cost overall or million increases by from while basis quarter, million total points. than service our deposits more outlined by basis points were our a XX of resulted

Moving on income margin. and interest to net

interest million. for came quarter, Our flat $XX.X at income net in relatively the

income the last quarter, second X.XX% for in loans the interest quarter. to margin from million XX quarter. of the basis points basis contributed points margin basis acquired was from net $X.X points the Accretion last quarter, down XX XX Our in second down on

points our in borrowing of market to costs costs. money sheet. deposits basis our time by and by income, our earning short-term lower deposits of basis to in due the The lower-yielding loans, XX Primary offset an cost on the balance the of interest of yields compression a of decline XX decrease was decrease in liquidity decrease interest resulting accretion drivers PPP X.XX%, effective rates, time decreasing earning and asset Excluding were deposits was points. the net margin XX funding the points. was from addition by basis due yield asset a the The excess X.XX% and decline

of compression as the deposits in drivers and Our NIM lower in growth margin the change. cost offset the outlined of deposits non-interest-bearing

quarter, would PPP to our operating net ahead to compression expect as interest drag our well of to reported liquidity. additional loans some impact Looking of as with the full third we quarter the continued levels given see due the in margin

offset deposits additional points the with to reductions than basis in of quarter. for cost time June average XX our the to degree were some this deposits as lower expect We pressure in

we CDs prevent half maturing cost loan a accretion a of enough projected our in portfolio. slide deposits don't to the will rate the that with further Included lower is be in million of even the compression we year. second believe in But $XXX X.XX% of have our weighted our the provides it We margin. average at appendix in on expect, that acquired

gains as the non-interest In by the servicing Turning The XX. $X.X to net sales loans decrease quarter, income second increase value on in to non-interest a our higher assets. well due income slide from primarily adjustments of government-guaranteed on was million quarter. the our increased fair prior on as

$XX.X sold During loans the with compared prior quarter second the $XX loans quarter. government-guaranteed we of million million of in

was second quarter average premium the X.XX%. For sales, net the

While is the them. of level the economics this high beneficial loans we retaining to be is the than last below it selling enough more year for still saw

market closer July, more are as returned and have premiums improvements increasing. is pre-pandemic we During beginning to premiums. into a June normalized on secondary buyers level return Gain and seeing sales in the and to are demand to

XX. slide to Turning

million during PPP the deferral expense a the Our non-interest quarter, expense was associated $XX with prior benefit from the quarter. and down million for quarter. in did of quarter origination managed Expenses $X.X of decrease and other expenses were of from loans trending benefits the the salaries the and

We our second to to safely combination of ratio XX.X% and prior lower the the Due associates and improved in and quarter. the operate to our support XX.X% spend revenue serve our expenses, higher to prudently, customers. quarter in efficiently from continue efficiency our

million. should Looking stabilize in expense ahead million level $XX that $XX to we to the next of range the back QX, anticipate quarter

asset at look take a we'll quality. Next

in mentioned, quarter. we the Alberto As saw positive trends

from decreased basis the Our the non-performing end to of due prior at basis points assets of quarter points assets to the total XXX XX resolution primarily, loans. of non-performing

down As government-guaranteed our million June million of the the $X non-performing $X.X XX, quarter. of from end included assets of at prior loans

of government-guaranteed non-performing at XX end from loans non-performing our points XXX the down ratio total Excluding points quarter. loans, prior to was the loss basis basis

remaining the additional of million to stay-at-home charge-off the impacted, the to was charge-offs our their on quarter had pandemic. exposure. brand a were the more of industry net fitness been our a the $X.X to led severely quarter had for in million the prior $X.X that non-performing business year. pressure to to Our been one orders And related the loans than which The loan during struggling with net put due company in charge-offs fitness

to included provision million, leases. basis address to Our COVID. and provision total points increase expense XXX to The an for million was losses of largely in $XX.X allowance which increased quarter qualitative loans related was The the to loan factors. impact $X.X our

portfolio. In conjunction leases XX, points PPP adjustments the June when and lease accounting traditional basis loans XXX or loan At analyzed loans accounting our we of total and represented plus our the as loan losses XXX with are in percent adjustments points addition lease allowance for also metrics, a basis to acquisition impacting acquired acquisition the allowance allowance of excluded.

position. on last my to liquidity slide Turning our and capital

under Our very significantly percentage liquidity capital We during pandemic. securities strong. are assets our positions the XX XX%. and June cash at our just increased and was a of liquidity And as

time million and the regulatory issuing and dividend. During bank us flexibility subordinated the capital quarter our second $XX common debt June. environment. our increased an as this We did in the capital balance sheet during repurchase at our company opportunistic We quarter, an This maintained and we capital view during to modest holding level. additional not shares uncertain of solidify affords raise

quarter. XXX XX.XX% CETX ratios ratio XX.XX%. to Total to capital increased Our capital increased during basis by increased the basis points by and points X our

was capital Our call XX I to At strong and XX% well-capitalized X.X% excess book June our value of up and tangible pass to $XX.XX, are With like back up per ratios share in would levels. quarter-over-quarter the Alberto. that, year-over-year.

Alberto Paracchini

Thank of wrap priorities you, our going would comments Lindsay. forward. and about I like for with today few outlook the our a remainder XXXX up to

the from production loan largely in and terms demand our For of few clients months the centered most of focus was around past PPP.

the to appropriate just remainder PPP to efforts are loans the are largely seeing second demand area through outlook. loans off be that expect anticipate up. resuming contribution process, growth continuing we A From towards puts to generating accelerated more the build of the government-guaranteed during has banking the year. on to a income transactions XXXX. evaluate our our for we forgiveness focus customers the starting in Now the of pipeline and spending. to our the pandemic is loan as are expense flat year solid closing size network build are challenging loans total half uncertainty branch more that X(a) gain faster tightly we In longer-term we environment for improving digital perspective for a our management relatively us back loan will our of expect the enhance provide continue is adjustments and traditional granted, digitally. gradual, income additional sale one back excluding approach. comfortable building we of further clearly paying that becoming to be manage conducting loans which trends to net start the the the conservative given continue we pipelines of we a level of interest and are efficiency. should is business now This seeing for development while we're The opportunities will drive half We and make would of will our ongoing, and to on operate in where is Accordingly, with and pandemic

improvement economy shown impact impossible of economy of the effectiveness the and predict of any signs stimulus has While to additional the the any. if continued pandemic it's government in the

robust capital remain to operator team through talented positions us can manage period. employees this levels most flexibility. up and us of us With that of Furthermore we to a and well of call great degree open providing our liquidity with our questions. Our and importantly franchise -- the for quality the engaged manage

Operator

come of Please Ebrahim go question America. from Bank will And Instructions] our ahead. [Operator with Poonawala first today

Ebrahim Poonawala

morning. Good

Lindsay Corby

EB. morning Good

Alberto Paracchini

EB. Good morning

Ebrahim Poonawala

guess question. I first

of in the seeing rebound you So give little a that DLO in sustainability that? you're a and what what And the you strong sale Alberto, what pretty just activity even loans exceeding sort just line into saw are potentially of going you things back outlook? little back margin you're or of bouncing good us mentioned do a the of Can was see and of XXXX more seeing around kind a Just and bit that we it back? as color XQ. going the sense to item of bit looks to see in

Alberto Paracchini

Sure.

question me that two break in components. let So

for First, I'll loans government-guaranteed and demand of the in market. address the pricing kind the

saw of there saw I really through to the is the of think at quarter the all and it rebounded. from and it way continues quarter what -- we So end the the the start I that think June EB, during pricing we

prior of capital approach the we pre-COVID premium they to on the dislocations it the the saw very course the continue say, to worked what impact would we over the that saw back So nicely say levels And overall in have let's out itself just be of markets March system. to we really from quarter. seem would call And March. bounce levels

a positive. that's So certainly

As to seeing remarks loans to faster for far loan just seeing the there what in opportunities. financing would -- we're as loans I build. borrowers certainly building dissimilar that good has borrowers. of larger times during a they viable of our started means become government-guaranteed as not pipeline demand. mentioned stress, I overall as and for so just prepared demand our to We're government-guaranteed characterize a of number we It's other so saw look where

gradual So, of we back a year. overnight. second build. up, question, your see to But building levels point the half pre-COVID not of to of speak see do expect to course so with to certainly it's pipelines to It's the is what volumes continue to over the recover we come we back the

Ebrahim Poonawala

going if just point came around on a deposit forward which in color see of the this of Lindsay, this quarter? surprising. But PPP it. quarter? Any I expect more what How How any on pressure the the points bank that much third of question that deposit the you on are? from the compression of trends be is do compression leaving guess that growth margin much helpful. And level little in would And was expect expect you related? you do some you we Got give just mentioned maybe not separate a color could

Lindsay Corby

Sure.

impact loans entire do be on in that given numbers question the I in and full compression being will the think your there QX was I regards the in for QX PPP to on quarter. EB NIM, to the first our So referring I like just said

in some see drive will more that's it. loans. floating our pressure of to a going of terms little Also, So, rate bit I you think

to don't saw compression drastic definitely And see as little we'll I So still slight pressure muted, will the in going the -- funds. it I flattening forward, I continue second a down. answer real It be going was lot and then of And bit excluding the of PPP, but pressure there. see to accretion the you'll part your quarter. more second more think will was into see this think funds. I A do the XXXX. quick be regarding as deposits a PPP then PPP question we

I think some liquidity the of and cash it higher too is system currently. just more carrying in people

don't the the terms In funds PPP all over out, fourth will we'll traditional EB down Whether end think it I be I at to do we slowly but of think anticipate start gone to of the I levels not of in come quarter it and it time. QX. out trend coming or normalize will will that XXX% not more know to do see. going it's go

Ebrahim Poonawala

is Like I in hiring we're terms Alberto, at those question back growth, of in think get of as And to you so, talked to normal back soon talk the We but do terms to and new of go looking guess last to and bringing when if talent and like too or in talent. mode producers? get off, that sort market revenue disruption. you gradually of focus areas things just on hiring to this statement in us back one it. going terms in just Got about like on

Alberto Paracchini

Yes.

itself PPP quarter it quarter from a for in kind we think I certainly was was a where big effort. internally speaks of that, certainly So EB -- focused. were the

our think are segments on think That talent, front scheduled said, the and resuming both cautious. So, we government-guaranteed towards it think them got through can opportunities as PPP conventional the we we perfectly. we as lending to time with I if on business. started for All I talent, normal opportunities respect our call that I activities lending were after well they being be being said wouldn't more

a sense have the are think an think open and bring provided opportunities to that much front, So, I talent muted remain know good to. credit that's your a environment I But something certainly to consistent business think we of open on would every M&A certainly I looking more to -- we as they folks mind bit appetite. call have on that our the with little add for that's today. we To the most looking we a of the add to question

talk general down and with has I in think -- activity to respect considerably. slowed M&A just

So better the there I clarity fall, how have course need I little in what of economy of we the to think term better into of virus rebound bit some in here much heal to and terms certainty think short a – continues the and hopefully the the outlook XXXX.

So think until I longer environment. the we that probably of bit a certainty going terms little one operating be to more is have in

Ebrahim Poonawala

you. Thank questions. my taking for Thanks

Operator

And go our with from will next question come Race Nathan Piper Jaffray. Please ahead.

Nathan Race

Hi, guys. Good morning.

Lindsay Corby

Nate, good morning.

Alberto Paracchini

Good morning, Nate.

Nathan Race

half outlook going quarter so was forward. the in deterioration cost for forth. I the provision I to just tied the like appreciate the economic on start wanted to credit and just

about given doesn't to kind we the in just the stands get quarter in provision a the So and at unique it was nature charge-off more trying forward this the how how just XQ, think forward, least of assuming necessarily sense going they just had should today? repeat in going world and

Alberto Paracchini

It's what from Nate, today. would think are evolve we and cautious say we is I they outlook very remain where there. how much dependent things

time So the to remain continue expect being. elevated provision for expense I would we to say,

Nathan Race

get that Fair though criticized the it sense less to within guess trends And trying it just of at with to course second least enough. quarter? impairments? second that unfolded down fair comes over how Is classified I quarter relative the to a context probably the assume of

Alberto Paracchini

ahead. ahead, go Go balance Lindsay. On Yes. –

that. got You

Lindsay Corby

Yes. Sorry.

just should it of you're the non-performing terms loans with the do the that terms we of what seeing environment, In in be to in the elevated. But given uncertainty decrease help. again, expect

and it's is into don't I and the continues will However, to Nate fair. well businesses, elevated remain I credit think assuming small – our the still charge-offs as government to support it to the and Alberto's think as think I quarters. environment coming things that stays going again fair that's point, change But

Nathan Race

Okay.

Alberto Paracchini

add to just in criticized terms what due. to and – about asked just kind and past of classified you of Nate said Lindsay

So general I credit in stable. on was think

the as past for percentage a the dues came quarter. think I during a increased classified dollar on bit Obviously, of and absolute down quarter. they terms improved. portfolio Criticized slightly our

on So we performed outlook-dependent I particular way were during but me say some add I credit with pleased for just the let the quarter, were commercial think the quarter. trends relationship. clarity And stable would obviously the

the Chicago. that the were XXXX. fact, This mentioned And So back we is relationship quarter's we we the the closely. think I facilities the went company. call a a they of the certainly of changed business to last that for and during minds respect of to With through different They looking the the this same operator obviously terms this gym the in highlighted is in by in of same at situation with want ownership. do their were the as impacted in owners outlook what matter change business decision, pandemic

to the it do recovery. a not on balance to charge-off opportunity. that sheet credit balance no upside that have final proceeded on So our a if – credit we a really, longer comes, potentially the the anymore. come some we're it form as we'll of comes is in recognize resolution, We took and carrying that There's

Nathan Race

Got helpful. I appreciate Alberto. that it. color That's very

from deposit clarify that some wanted in just back here. going staying outlook third kind you at elevated the think and margin core quarter. to excess particular. of extent in to I least to to Just the Lindsay, I liquidity alluded levels

Lindsay Corby

Yes.

XX%. so And is liquidity my they've can up. gone remarks, our as securities the I percentage been in just as In elevated, has terms see assets under a noted of and you cash our PPP of deposits obviously

here. is margin So given that on it liquidity, a drag of our all excess causing

you're And seeing. time that growth and improve think excess as redeploy liquidity I going will forward. over we're that loan our that's able margin into down the to what help comes So

Nathan Race

guess, was that here? I in or how guys of least just of I do plan mean sit maybe just you in early securities interim, in least idle, let it on or thoughts any kind XQ to the liquidity reinvested the get at around reinvest Understood. sitting plan excess just is here, to little I with mean at trying liquidity I for at that bit to kind a

Lindsay Corby

yes, QX continue the are saw investing QX, that to going demand to In in that are there. in and not it doing loan and we is have if securities you

Nathan Race

Okay. Great.

slide and Sounds color as good. all the deck you. disclosures the added in well. Appreciate Thank the all

Operator

Stephens. [Operator Instructions] with go ahead. comes next Terry McEvoy from our question And Please

Terry McEvoy

good Hi, morning.

Lindsay Corby

Terry. morning, Good

Alberto Paracchini

Terry. morning, Good

Terry McEvoy

I smile. cover in always to made investor quarter deck Hi. your me particular this and like

So thanks for whoever puts that together.

given areas? Let if uniqueness portfolio do with, rate. think so little hotels the some mind What similar or stress both more in higher loss content of and start reserves, portfolio both has a me pretty look deferral have PPP. you I versus a what in a retail at the has has those your greater Restaurant

Alberto Paracchini

I'll a comment. after Terry, stab take Owen Mark and

Owen Beacom

I think the greater that restaurants risk. a offer probably

I on think, pretty shape the good hotels. we're in

feel are well about and exposures hotel we capitalized larger very the of Some pretty those. decent

granular. On the more it's side, restaurant

restaurant portfolio. have of operators in higher of a in that them But of We have well. lot would continue risk the just be are and done do two, restaurants think the comparison we expect the long-time -- well very to I to

Alberto Paracchini

nice industry continue restaurants it's owners an come how government the look those a And those Terry to COVID-XX. is guarantee and about segment going comments. to see after SBA when be that's hopefully continue very in the think loan to restaurant impacted to payments that talking But of to piece. -- is generally banking add to just I are I payments is credit businesses resume But their we add traditional is side than you're commercial that from would to business able see good the forward. said, would -- also their function much today smaller. like are going looks house. color, side risk would clearly that subsidy think on government-guaranteed grow that operations, have about we off kind resume what I Obviously, time to subsidy those have terms a that the SBA the SBA and the more of making. -- importantly what borrowers benefiting That on are performance profile we granularity Traditionally, pretty because side on size the of conventional I borrowers by weaker at very the the Owen's

Terry McEvoy

using of guess last it is conduct are the rethink the their four phone another looking doing? there opportunities open. to network their But to seems that Thanks. shut are And what down, three, And to locations results just a the like are months? transaction? of it me, question to XX% customers size be you your branch I on are an looks at From they branch then my experienced Is outsider, going it based then real there tell working. the over Alberto, is branch what not what you've

Alberto Paracchini

of think really to questions the is of above. all I the answer all Terry, those

looking I So that. closely very are at think, we

and are are I obviously impact we we have there's to questions, really distinguish short-term we to that adapt. customers changes what think to what to But permanent. more want to analyze your understand, -- try seen short go changes and from wanted short-term

Some call it the to very customers well. have the model taken by-appointment

certainly steady calls mobile more certainly customers to Calling would they call increased have Some before. and throughout very, have much were actively expect. are the as capabilities center using banking period -- very you than online banking, this been

-- answer is has this short call the be it decisions, out look sensible as as customers we do have That will something we we whole come that reduces convenience we some to and what see we being there. making opportunities do Behavior make is there a the want don't we're the we adapted. of want there sure when network how attractiveness And because has said, the to offers. that that evaluate that that period really behavior So and changed.

Terry McEvoy

And that. last then Thanks just one for question.

application it's to forgiveness maybe or you'll speak? August that happen, Do or open in You for as will that open you begin request. feel we be that said August, confident platform portal

Alberto Paracchini

think, saying So the yesterday I be I the got we word on that them available communications think we portal last that, XX. saw the from August SBA from will that

think personally. I

terrific. That a really kind be this would evolution week-by-week that think the it's I case here. of with being it's as said, program, been

So remain optimistic Terry. we

we'll and when we'll information submit that I at so. we we and do point opens be But guess this think the best view to the that's our have. point can is, of -- to from be to prepared portal prepared that SBA, we'll prepared be

we'll leave that. at So it

Terry McEvoy

for Thanks everything. Perfect.

Lindsay Corby

Terry. Thanks,

Operator

Brian ahead. question Martin And Montgomery. Janney Please go our next comes from with

Brian Martin

morning guys. good Hey,

Lindsay Corby

Good Brian. morning,

Brian Martin

a for just me. couple Hey,

a on follow-up Just PPP. that

guys given forgiveness thinking the for guess, I here, any better much of the percentage about just level the uncertainty Just terms big next maybe are in a picture. sense are when come much of to there's still on I general so you just given of that out then do details kind guys fall you And in it low this more may lot of versus timing how loans? thinking year forgiveness total the have about just know you -- as year how of your it. today

Lindsay Corby

me to do one? want that you take Sure. Alberto,

Alberto Paracchini

please. Yes,

Lindsay Corby

Okay.

the of PPP, right guess terms In now. anybody's it's

the evolve. So think And to the be finalized. I continue continues rules to program

remarks As our less. in over high a materials, loans prepared have we very our are or $XXX,XXX we noted in our percentage XX% and of

entire in the it We're different So we it's a those exactly more process to expedited going think at in I conservative Brian. a take will that think don't our the portfolio a that really And how I all should to that think be is will be than still be terms then portfolio story. to be looking more -- the of have faster but going the place, nature remaining determined those rest. forgiveness. percentage of

are a beginning rolling there. quarter on and balance going into sheet. the of remains do will lot to the think We in that fourth of the assume that is we So then there it some from XXXX get forgiven

Alberto Paracchini

Yes.

Lindsay Corby

at our how greater of we're that's more than in $XXX,XXX. for a We're conservative of those kind forgiveness of percentage terms looking it. So total little

Brian Martin

you. Got

I on maybe reserve Owen where guess can I question. then that it, sit book follow-up any of answered you to government-guaranteed that. don't just sense one Lindsay. those But Okay. those – just appreciate Just maybe were? what the know, give the for And on last and today? I kind the if back just the levels, restaurant

Owen Beacom

– Well, basically the it's reserves did in the part build all the we in of over general our there reserve quarters. last that two

not industry. or general to the for they're the specifically just change So restaurant in the It's economy. hotel the identified reserves

Brian Martin

Got you.

guess, through Okay. back third was down and deferrals, digits to low-single they in I maybe guys quarter answer. would number XX% And though then as your as fourth them given right? just sounds use the be the when that gotten the all where figured it you've that case I to expect look of at to today. the deferrals Is from – maybe are you you

Owen Beacom

Yeah. That's right.

Alberto Paracchini

correct. That's

Brian Martin

more I you you which consolidation, some you branch expenses. for done how on if the And on could given environment. about on to right. the have mentioned one efficiently outside guys last other then thinking your that All of maybe bit guys thinking that just, there continue just Alberto, you kind about, operate little was comment that to mean, a look items just are the you slate are there prospectively? elaborate of on guys or more you're ways

Alberto Paracchini

cost I I operate. think But think, is I branches are in just generally look continuing to for certainly think ways the more one Brian, to reductions area. find to

look to operate in revenue to that, invest ways have of infrastructure, invest we pressures level absolute pressures the elevated, efficiently. certainly, putting today fact to we curve remain franchise, and the when the more continue in the rates to continue revenues the fact are to and in capabilities, you that costs at on our are invest given credit find is, need margins think aside today, where in industry I and where the our yield

nature So of I comment. think that general my was the more

Brian Martin

Got you.

appreciate All I Okay. guys. right. Thanks it.

Operator

And the for like conference to further over turn at time, this remarks. there questions I'd are back no management closing any to

Alberto Paracchini

our about Thank strength navigate think I during remain safe call of from and healthy period. ability all our first joining hope I of our this the the franchise, I you, you and our thank very operator. morning. for through And the and I strength this perspective, all you team, feel hope foremost, to confident you environment. this

that to call. again the to next concludes pass to thank over So we joining operator the I'll you and you. you forward call, talking And look back for With that, quarter. the call

Operator

disconnect to will you And this for at Thank your may And today's participation. you. like We'd conference. thank conclude today's lines now this time. you

Byline Bancorp (BY) 24 Jul 202020 Q2 Earnings call transcript