BY - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Third Quarter 2020 Byline Bancorp 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 of Financial Profiles. Please go ahead.

Tony Rossi

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

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

Alberto Paracchini

and families the I Thank staying and and earnings call are you on doing welcome participating Thank to your you, well you our call. everyone and Tony. this hope morning quarter Good for morning healthy. third

a After Chief important our questions. more back CFO a that, of Lindsay before you and and the summary the highlights for with Lindsay to who the are Credit our developments with provide closing will call comments on Corby, quarter before detail our for today me with I and results I you will Joining some pass financials. provide start with Officer. Fucinato, opening I'll Mark up the over call come our

always, Web section can we materials in our Obviously, responded as presentation with operate continue find our environment of Relations of a the proud challenge. an to As follow way result our you has site. the Investor you a Notwithstanding, uncertain pandemic. a reminder, discussion of to this team I'm can in

would for basis productive continue unprecedented We strong efforts daily results maintain our all and to our team of like members highly I thank operations on to support and relative during produce customers a personally environment. time. this the efficient extraordinary to their

performance, came Moving on net for quarter. million diluted diluted in or up share from per at at $X.XX income last X.X the million quarter per $X.XX or to XX.X share

end. carrying, level largely XX NIM declining lower decline of the basis higher this and That impacted said at points loans in point. interest deposit loans, income million costs at the XX strong expense XX a just driven deposits by $X and maintaining basis in of up Pretax was was income basis we quarter-over-quarter turn in franchise of offsetting cost Net up basis by operating drove leverage from preparation from management, points PPP operating decline that liquidity quarter pretax income XX.X at XXX higher ROA the NIM a drove basis. to preparation Our which the was the on points increased while points million quarter. was SBA basis our quality yielding million primarily reflective XX.X of sale improvement The disciplined higher. from last came currently despite by of the are XXX fee by just under deposit in our

in are of an increase a strong mentioned as drove for I our gain loans sale earlier, high guaranteed received demand in which on business premiums market the resulted guaranteed record government in levels level secondary quarter, the government As for production income, loans. this sold

through good in the as team to a expiration loans the can and cycles very as before demand SBA Our space gone driven were of on where of partly take tighter borrowers. borrowers quarter. attractive looking the end loans SBA of through to principal origination six-month the operated prior by has benefit standards, this has through of quarter. end and we periods closed interest well that Notwithstanding loans lot become subsidy experience Higher of for advantage the continue this the potential see quarter for to levels

both once Indiana were number in as number SBA as top and well, the Illinois of the to we the again Wisconsin, Lastly, up position moved three nationally. and lender in recognized states actually XA lender two we

Turning management their driven million decline over a expenses XX.X%. items after about impacting with by adjusting led from by revenue primarily quarter the the billion, driven year. sheet, the for franchise. combination time quarter by from prior our of XX declined prior balance costs, by which grew basis non-interest points in earlier core year. declined to during one-time in of XX assets the from the remain quarter total production primarily to the to prior related balances going million seasonal to The which to securities bearing to discipline our higher higher quality lead continue over remain in runoff a levels increase Deposits decline underscoring payments contributed with again, efficiency Loans portfolio. total forward. deposits, stable X.X% deposits. X.X stable aforementioned pipelines mix and of the and tax The fluctuations the our of representing to by borrowers and XXX Operating relatively prior to increase curtailing Commercial reduction XX% for were an higher plan with in strong line should expense usage cost quarter except deposit

franchise. further efficiency should and improvement for digital in to announced we continued quarter, contribute capabilities XX also locations of the branch investments During a consolidation allow and which our

points and off generally decline. at at points NPLs we portfolio, Notwithstanding the while quality. quality [ph] the Moving held trends monitor to two uncertain basis capital. loss the the points subordinated and second saw and liquidity increase of and against incremental during an steady the the [defined] quarter. loan end on allowance positive We we backdrop to quarter. basis the the asset further and quarter of Criticized to to year million remained third continue for on XX from Loans and NPAs of at and and deferral, September. the throughout credit communicate actively our we strong Capital perform pandemic XXX classified stimulus, opted levels loans borrowers with add XX continue and end targeted of to reserve XXX for were net reviews. additional to levels, build and stable very debt increased and charges basis stood potential

X to is other fourth make now the evidenced from at X acquired program. years total and information IPO which the detail XX our expenses the to branch XX.X% also aggregate increase efforts this quarter. XX XX% process. All our year, we've We recapitalization [indiscernible] inclusive approximately quarter. the as the allowed branches on the in helping and after mark CET-X at helped increasing of optimize branches. complete focus iteration, dollars a during operating of our the amount third of the additional branch This locations We've by through XX of what consolidated in digital into our provides million at the branch Slide It's productivity, on taken branch identified seven our combined, reductions PPP information response quarter. to and to of on time business, since the the per and COVID-XX third us of resulted capabilities end we Our these million over material representing upgrades increased reinvest the some back continuation network. in clients And originated time of million retail manageable small our time to has navigate will efficiencies size on additional $XX the over which network capital the forgiveness we've us the consolidations the this our done ago. provide additional XX.XX% for improve primary loans recap actions we've to of Slide to consolidation XXX PPP

of SBA for this understand our the line quarter summary $XXX you metrics included We a in approximately both various provide of about and million to PPP. already had impact items significant without The program with loans of stages with better XX of forgiveness, we can appendix PPP million various the have areas and the the a approval. performance and submitted that been on impact has so in

regular have portfolios Slide that, largest exposures representing making PPP. you active to of over common with million be the collectively had last of our excluding of the at the of Lindsay, points that provide Slide our Turning more most payments with X an exposure deferrals X X our those X.X% received total XXX the XX, provide than COVID-XX. X, exposure from who manageable deferral, the XX less like September commercial individual manufacturing, up excluding more to have modification been is provided update deferrals of PPP, there on of impact portfolio provides with At active XX% to deferral, that to continues basis now select Slide XX on COVID-XX pass representing have The on update seen returned detail on two-thirds granted loan the I'd and results. a and the and the we loans entertainment that detail just to status. the collecting exposures these most second loans on portfolio services in to sectors. we industries are the call loans industries an XX% leases, food roughly industries about and restaurants remain loans or with

Lindsay Corby

on Thanks, Alberto. on with Slide information I'll additional portfolio XX. loan start our some

the and loans quarter. total XX, billion end prior unchanged at of Our essentially September the from X.X leases were

million acquired by portfolio, or million our originated million, our XX from during amount PPP including The we a Our the quarter XX.X and loan the of balances primarily growth acquired residential million XX real end in and offset the loan loans XX construction quarter. increased leasing, the our are in off originated in of prior in was portfolio. estate due impaired a X% run seeing offset originated commercial which the portfolio. by to by gross loans, portfolio decrease and grew portfolio small of We

third in excess Our payouts in had. XXX million total well of were million XXX we in loan originations the of quarter

loans level. below utilization total dropped increase The a utilization. XX.X% quarter, the rate by overall were negatively and line However, now it's from in in pre-COVID last net impacted quarter $XXX from XX.X% million

XX, Slide look business. to lending government guaranteed we'll Turning at our

this than more delivered our XXX discussed, the half saw quarter focused quarter, by pivoting was of the contractors. first that quickly be we production. lending record loan The services by industries impacted from levels of the we less three specialty support Alberto and loan We a on the had in million our of did team numerous double during and and As administrative COVID. included commitments insurance, year. finance which top They likely efforts, and PPP to trade were relationships

guaranteed exposure balance was sheet SBA During loans. was billion the managed on by our XX million USDA which is service quarter under including XX, SBA. which increased of balance government At XA the is just exposure sheet X.X million, in on portfolios September XXX guaranteed. million third XX.X of guaranteed to XX% the

loan the actions. make actively borrowers as monitor COVID-XX the and continue of payments. scheduled stimulus as We on with to any communicating they as to this have further remains monitoring portfolio their impact The the well these and duration as loans federal of severity uncertain, we pandemic transition back been

deposits. Moving over to

diligently deposits. our As we in managing and are higher reduce cost have of funds continued have discussed quarters, cost to we prior

We quarter. time last continue end total shift to the mix, to see deposit in XX.X% deposits our from a deposits declining XX.X% positive at of with of

point likely basis addition, non-interest positive by versus cost of XX bearing basis last our deposits quarter. decline of average to million mix drive interest in decline bearing XX increased driven a shift deposits helped The deposits. cost points In XX our in

which margin, and the than quarter. higher decline XX.X our offset the to $X Moving repricing average the interest million million income loans of on was quarter higher balances approximately to of was primarily net assets. income interest leases net for and due This prior

XX basis last points basis Our the income net third last quarter. quarter XX was the down from XXX interest the third the XX Accretion quarter contributed margin loans acquired from margin basis to for in on quarter. points in points up

securities see our continue Excluding lower as interest loan impact portfolios to The basis excess earning net accretion and well decline repricing of decline XXX of liquidity. we as PPP was as margin income, due was asset the yields to the our points. a and in lower yielding loans XX quarter

also costs the from debt. our cost as of the of our change. NIM an These offset resulting decline in We of deposits increase in issuance drivers our the in borrowing by subordinated continued had were outlined

the Excluding yield the PPP in average was in quarter on XXX QX. XXX third loans, loans versus

repricing an impact basis will of of bit now at offset. a going While ability cost in as our was our points, the of deposits portfolio just the same limited. not forward, deposit reduce further moderate, deposits have cost is our XX high levels With to costs we

reported As see the interest to fourth margin a quarter. compression result, in expect net we and our slight

quarter. the However, the degree in not same third as to experienced we

government asset, positive due primarily and increased fair and impact $XXX,XXX net Slide X.X customer in the quarter. contributed Turning million non-interest higher that by in general prior from also on XX. income on gains to activity this The non-interest our adjustment sales guaranteed a a quarter, was servicing income the from quarter. In to net increase our to increase the increase loans, fees on resulted securities value third

the of sold loans XXX.X in sold government the of quarter, During million guaranteed loans quarter. XX.X we from up million prior third

We XX.X%, searching premiums sales, this For the the for have for at for by liquidity of level net historically business. a driven extended in average remaining yield an which third been premium high period time, was the investors anticipate demand was level premiums the and from market. this quarter don't

in prior of expense which up XX of result was benefited Turning the million the quarter, Slide from the as from XX, salary to costs as origination. benefit our amount differed and from a quarter, we million higher third non-interest XX.X loan

did government production. related expenses, expenses was higher variance we well from loan see the Excluding of PPP, guaranteed were our quarter this controlled which by loan the although driven quarter, strong

operating non-recurring during our the declined adjusted We are expense X%, in of recognized to branch by nearly quarter. the the expense reflects charges consolidations. the our in year in our related which other third our revenue expenses improving success leverage. quarter to planned efficiency in expense have also quarter to when improved excluded, prior we had the XX.X% With merger our last related approximately quarter ratio Compared from managing XX.X% our third exceeding our $XXX,XXX had and growth, levels and growth non-interest

associated just a over to QX, X branch elevated anticipate be expense ahead million Looking of we expenses consolidation. levels to including with

quality. portfolio in at loan asset during we'll the We Next, stability take a quarter. look saw good the

was RPO were at total basis assets in to by had XX in consistent lower off a non-performing assets. our the We quarter. non-performing increase Our points net an loans, offset and than charge but decline this prior

the As quarter. included XX, end of which million was the X.X to non-performing of our guaranteed government comparable assets of prior September loans,

included Our in million provision expense was X.X specific XX.X which impairments. million,

caused X.X qualitative the factors. the to With increase pandemic. related remainder in included address largely quarter economic The million continued uncertainties an the to COVID-XX by

portfolio, the loans including unguaranteed portion factors qualitative our off payments on year. the of uncertainty XA to pandemic in in subsidy to uncertainty coming our a the SBA with leverage the later continue of allowance loss We the methodology the related incurred around

to Turning capital our solid liquidity slide and on positions. my last

the us holding as flexibility capital this and raise X.X of time balance to As total June uncertain liquidity during capital XX% securities of XX of level. strong increased opportunistic our company We bank subordinated represent view XX and of an our XX our have September XX, of balance regulatory a million. additional billion, solidify sheet. sheet affords additional capital in in cash debt while for to This August, continue the million issuance million We an we environment. at an and

CET-X I pass and during basis points ratios total call points our the basis increased to XX continue quarter, capital to With XX by increased like to by XX.XX. Alberto. to increase would XX.XX% to that, ratio Our capital back the

Alberto Paracchini

a Thank outlook few I'd like about of and going to Lindsay. you, wrap forward. focus with today up our comments areas

impact The on gives the impact hopefully as While the fiscal pandemic of us the recover consumers and economy as any its additional has remains of uncertain. recovery that caution. for to reason continues businesses well stimulus and path

period That's We namely for credit controlling we've existing can and capitalizing current time. environment remained the managing we and those rate adapted areas supporting extended control said, also quality, on continue focused an pockets of expenses. on that of to expect demand well clients

of strength, for as we levels our the positions period, high our can team talented call the balance the up and operator, well hard enhancing liquidity, capital, and manage Our that of sheet franchise. this through strategy our With questions. open of work to execute continue value

Operator

We now comes begin of go Please Perito question-and-answer ahead. The first will from [Operator the KBW. session. Instructions] Michael question

Michael Perito

the on wanted I -- I I question a comment, to on to had Lindsay. a hit. start things few margin wanted your clarification

said curious margin you heard but I in will be was quarter, think the forgiveness? quarter. so reported is third if any the I the PPP that correctly, what than again to excluding fourth I that less down potential

Lindsay Corby

Yes.

So you the reported margin as prepared on to the predict, my given environment, Mike. about remarks, I'm the just margin margin. call, is in it's a difficult talking yes, all thing when know, But the the around

So again, and processing getting and slow you've in through. as from that uncertain. getting PPP others, us But it's been fees a timing approvals hearing from go the terms remains the of here

I don't into you'll it be sure. So XXXX as will for some going in be material think QX, to as it's see but

more guidance that's So the around reported, there, it’s though.

Michael Perito

All right.

of that year? get say anyone's is basically So end smidgen is how through at relative we'll the could quote, by much to the upside of which rate, it point just the to be there to fair actually, guess, a forgiveness that this of

Lindsay Corby

That's fair.

Michael Perito

to two in bit this I obviously, expense items then actions you on the And kind Okay. us. earnings before fairly layer know of savings where might there's would if you run I expense cost was rate, And that, I as think looked quarterly feel for longer you a guys quarter it taken question, the into you some take lot bit the rate kind it any is have to starting third guess, great there's here for here. here just of that a I of kind have helpful clean some boil to bleed expense onto? us was a side, of little point down -- settle? wondering, rate the protect of at I -- but savings just that early will part be XXXX run And could wondering kind in environment. do for the

Lindsay Corby

Sure.

of had given previous that $XX in was quarter to Mike, I last the $XX guidance So range. expenses, I that million think terms the million

obviously, And controlling so quarter, the great really this we did a job expenses.

there some in noise I you. was So there outlined that for

Looking a lot at there's there. QX, uncertainty of again, out

to have think, XX I of the just back a in obviously And that terms I still better will we've of Mike, in going job I will the so investments. $X color market. looking XXXX think for of give into be XXXX, consolidations branch I've good continued the hate all perfect days, into have about controlling expenses around you, reinvested And And I'll you so through And given in about we adjustments some here, given but dynamics here obviously, and million guidance, changing process, XX% the then, guidance we're done the in then franchise. far.

uncertain we'll again, I've have it's given there. more you So I think But XX guidance days. and just color in still decent too

Michael Perito

even early the it's or? up before quarterly a in of just the with a lot hit fair quarter, could part that in that year, see fourth modest would next you It's savings of if step to expenses the think disagree the

Lindsay Corby

with agree would that. I would I with agree that.

as hitting from have branch You $X million QX the consolidations, will well. in the

Michael Perito

Right.

just time for a but I of And quick, the and that points parts you color than range next looking points basis flowing ROA of the the your XXX basis question great. kind Alberto, critical into was we something remember how more here my things. of are Obviously, is Okay. last I where you can get I back moving north there's can't to been over outlook strong pretax that with print to be through going and support, protrusion But was you, was I'm it year? it's less then and know, last yield XX So relative confident any really last there margin. that, as in year, this be curious, that confident are how would the some

Alberto Paracchini

comments something good And we Yes. been I Mike, of obviously do that control to pretax back we we're can kind of priority has remarks, said, on during think obviously, area that as we've focusing And that margin that a of the can prepared as well trying respect that focused things environment, -- revenue the things in In managing you because are to what very the margin, is make sure on in things XXXX. creating control. and with that a for to I where expenses, at can been we're I and has that a focus question. to that's looking the the as obviously can the preparation environment room Lindsay going rates in some an we're tough alluded know, the we to is the us.

levels to they think I standpoint of we from we've comments at quarter were sale and about think the very, fed as my have both providing think had that's to very I in high largely and going driven production the premium career back mentioned, in were on quarter talked I helped. attractive, facilities this by items that premiums obviously as we fact as and support looking seen margin high earlier, that as I gain has we think that have historically a my terms the have and and seen, the well that market these as I Lindsay the think as I

economy recover, recovered, going the out, over, pandemic a we bit happens I'm what So, are on but be to -- on is has it's fluctuate by going it's driven an continues or focus, not here of and not. what's if stimulus really the on the constructive front from to get however, to Mike, what the revenue happens that, more going around to area that's

specific of get we a in of the perform by to terms continue on I can continue can’t if going momentum will we for control But we are a think things then of continue can to to be that steadily. by revenues that And loan if things can growth. things up depending can and kind range there. now, inch good revenues, we're that So that And kind can control on right me asking in just that we number fluctuate we you're we focused also control. to

Michael Perito

Yes, fair. to specific seemed not things that? reasonable think for little But are sit for do look a and sure no, done Would that's I'm a guys where looking today maybe like point a number. a and to bit it's here agree of us here you some it inflection in the higher or you you guys there's at turning and you some of with drive framework place returns. an steadier

Alberto Paracchini

on focused We're Mike. that,

fair. I that's think

Operator

The Piper Sandler. next of go question Race ahead. comes Please from Nathan

Nathan Race

commitments. of in that's just team nuanced those there's I to been the just I'm late? the parse increased guys products. function the how, just that Question through the demand in guess back, versus And eight XQ on SBA we've that as for I binds I closed demand fact unit, seen curious, into seven of due saw SBA strong just is we and of terms looking the some think, think a much sales much in quarter we that to how organically of kind this strong the XXXX, trying of maybe of existing I'm probably strongest has this disruption market? of how just pipeline look the quarter the the you

Alberto Paracchini

I'll Yes. comment generally.

product the some be origination close by driven impact there six this of quarter, the XX, on from obviously, quarter principal borrowers very So the benefit attractive any the before to months -- definitely fact that of new that for interest. exact, September by end borrowers became that obviously the and fact is because of was worth

going to drove was to demand, I that's to see some extraordinary after pretty we if here certainly attractive say, And capitalize be even And we feature. or That look that to demand telling at that. demand there. not continue that to thinking demand. borrowers continue we good going of And said, be the you September that. So we've period. we're that try you're was able loan your strip seen continued out very able build certainly before saw end there's do decent started would at a And on we that me through. continue We're effect August if to coming of good that September that, good. shows see to to XX. to borrowers to beginning close that And pipeline us the to still demand throughout just out of the

that pretty It think, I question. underlying Nate, quarter? the So no put Of being But that course expect was to yes, I impact, it an demand, as think there impact not. good right we be would every single I now.

Nathan Race

came quarter, down kind industry that helpful working of loan more the of portfolio. a ex-PPPP are in exposures the That's you are a through COVID great. Okay, the here's get loan unit, some bit your thoughts, color, and then balances, perhaps way sensitive from also SDA guys within the

a well. of to if see and you guys out into coming growth balances XQ just loan curious quarter expect in XXXX, as kind seeing So trough of are of third graphics kind some and

Alberto Paracchini

Yes.

saw we I think back to business, think one as usage levels aside from guaranteed that pandemic. her we saw we normalized think we kind decent saw kind I comments, levels free I more was in pretty, from Lindsay to originations, line I the had the of the of said offset mean, SBA government revert

were saw to the manner. revert the drawn on that and year. that at degree We just some that their back sense pay balances people had that of down levels negative So to they in a a sat that much was that lines their precautionary the very earlier obviously in liquidity in

on So, balances, Mike. and impact that had some

recovery pretty and a flow. we're was, been nice think quarter. certainly happy at comfortable transactions, was it Not It's overall the pipelines both, built C&I, levels? pipelines pre-COVID So, side, -- yet, throughout we're quarter, we the pretty I are estate, seeing we're built it the they -- what but this way a but yet has commercial real so commercial with in seeing deal not

see So comes feel about growth, with pay being obviously, to pretty that able down. optimistic we some

see that pretty So, activity, to down have some we're been we year higher bought fact for for probably this anticipate pay pay the downs that nothing muted, going if reasons. obvious

And So we shot mean, for overall, fourth think demand, pay here to may I grow our open certainly selectively think see some prudently loan trying looking our business we're we're first I But, quarter. the getting at business. clients in that. at and downs I

Nathan Race

stocks tangible on trading below with just Okay, If helpful. you book are very value. more assisting capital, I that's guys could high still currently, one levels, and ask capital

to So you perspective buybacks or an the quarter? a the internally just earlier this first to perhaps or no resume credit perspective in know saw would otherwise we to from need what see from that year environmental curious

Alberto Paracchini

the slow in seeing and that pandemic rising think, cases I monitoring pandemic. is I foremost, well again, of So impact so Illinois, again, and it's has think we're to Nate, and importantly, that first foremost I more know, we're down you're shut again. hopefully potentially you some getting the and having or under that terms think, And down just first control in as businesses

impact of run, short So businesses any disruption type activity. the impact will there, and obviously, will in

try lot before, uncertainty also and we we more is, second to have soundness, remains control, far, the environment. growth organic really then as, first under for And certainty case is stimulus from opportunities want pandemic been of that the to little to but, credit at market. have still and additional safety take the point. advantage stable the of a important. coming in longer and in any we a I as stated Having support And, see to flexibility said of government this in foremost there's so That term, that, bit the third fiscal getting terms federal think So is important. trends reasonably

Operator

from Stevens, question comes The next Terry go ahead. of McEvoy please

Terry McEvoy

I question you of guarantee? XA relates the and my principal within to guess what one SBA type coming is that quarterly assumptions analysis as the it reserve off SBA those did are interest make loans

Alberto Paracchini

are looking of as month payments these may, were borrowers borrowers current factor obviously most eligible the the we from receive we the come monitoring that, – the were are their these, seeing, think a we payments, of these getting. obviously borrowers connection can factoring are government where October pre-pandemic we who period We that we federal remember in this lot to here the our seeing And borrowers action a a definitely Yes, I think making quarter, their of any I [indiscernible], payments. are we these okay, are result? were as was off to now reserving here. resuming are these we additional they as went we through look and and absent a in But that suspect

And of I our uncertainty proceed require going work it to mean, an doesn't, think first borrowers then of are off sense. we makes degree will your at, see any that of those look it element that as If payments. yeah, we're they where answer, or to is borrowers I to the these business to to see we're will that course going part furrow loans in normal portfolio like work But going those if they some coming there, will certainly of borrowers. the subsidy to back the was – out these their with business. course, point,

Terry McEvoy

and office of way anything the there is comes onto it first that then follow And slide consistent or CRE been COVID-XX maybe slides or few about more off maybe else potential my to the importantly, is, just Industries, that its X, then that has next my was you quarters, that kind quarter the earnings. first find question as And as published since think something after up, Slide what slide?

Alberto Paracchini

more I Knock our -- a we office view lot don't on right like mentioned wood, to we -- on think office. know exposure that's Terry of don't that. we kind of have passes, now, time will you as

point, feel, to have, now is impactful most at be this are okay, our we with So, what but we probably still remain sense the ones. industries that right those the

Operator

Janney [Operator comes Brian from ahead. question go Instructions] Next Please of Montgomery. Martin

Brian Martin

in just you this of had the elaborate bit the there's a it on or that that the correct sound all? wondering migration just seeing in at migration anything kind a just look you're at Just trends quarter, relative to guys now just kind of on the migration wondering, either the the chance kind could comment trends in just reviews a take of little occurred -- you've loan portfolio and the classifieds criticize or quarter. the to about significant Is didn't like of

Alberto Paracchini

that? Mark, to you want take

Mark Fucinato

are We've portfolio into believe. all still I had to prime It’s of had assets loans loans go say capital migration wouldn't much a because the people resolution the for some desire much C&C advantage is We've out so I classification. of taking environment types. word. acquire there's exit. good And there's so there,

we go in, we have some some had out. go So

big in going to loan think continued a continue at with don't surprise? us forward look list think Sure. So on going frequent basis that's a I theme a but our going we'll we as handle here all uncertainty, with have I forward. portfolio, right But a anticipate But changes inventories we a now what's loan can to and going forward. our our for good on we the C&C be and have

Brian Martin

I the Okay, perfect. you why heard thought wrong stable, I guess That's was I word. migration there.

the guess, month that that And of I would is come how I helpful? process expectation or So occur kind issues to going loans is to so off would it sounds more it just I when what have I process, guess is expected just timing loans, SBA, the or it relief those the do next much just come or how on timing be does okay. SBA understand you'd the or when though qualify your deferrals of Alberto the they is And work? off occurring? debt I Or in relief, your clarity, guess already the I as then from mean, debt so about question, loans they qualified these the for just do back of guess

Alberto Paracchini

at Yes, think where CARES maybe were I is back that, Congress kind look the Brian the to those the of loans think to about at passed framework time that Act.

that, a So you borrower. qualify essentially performing had you're to be to for

bills open act yet Senate, as that been is course, performing says, through to And we resume with work Act. in portfolio, or distinction most an to that So comes you White house. come of, worth you know, as their these will, type the time to if where the you makes will whatever okay, like terms just order with were if determine a the monthly returning resume SBA so loans if struggling, off, sense, to and I'm the months they of up following we we of circumstances follow flowers making basically their And a -- was borrower, borrower makes you this, loan, any And between a criteria, and any in the kind for essentially, we'll through Obviously, would six you were, they're payments, not payments loans, which a, with monitor consider what you as normal going the the principal were these to you going, their that and A we program, proceed our there or interest. if you that had know, we this characteristics, or, broad get then these this performing and to there's following or loan us if my the wasn't payments. loans in the borrower borrower’s a that. late, that were borrower listen, loan, based will business these of the the are, Cares state, forth, pre-CARES because to sense, House had is Act remember, of those in portfolio before more at agree Congress qualify and back to need or of basically this industry, deferral

and if of So is. not, then a what of were ourselves will is make working terms interest proceeding see as relationship. that if impact out and to and we that in we'll granting a not exceeding then the asset or best to the monitor termination if in the of But to what deferral, happen, the the borrowers

forgiven. would we of simply as CARES is mean, I payments borrowers, particular our it here this this no a if you injection and this was think subsidy, normally no it about in as months of of equity their received have subsidy deferral When or and that six think portfolio, context principal deferral that Act the maybe traditional portfolio, it's about to part would our the essentially say, an interest. payments form principal of the think these there will was that. normally thing of about in forgiveness, handle on like debt there simply I now to nice So is we would it, being not call you they that, accumulate, they're It's interest the pay just any about -- and borrower the they now, just payments more making obligations. going that has would caveat resume was

month So as next, passes that in November, so of the time something we'll we'll and we're know the month come see, obviously monitoring we of more it's here here, couple through closely, in the October of as months.

Brian Martin

you. Got

the was this reserve for Okay, all bill last two thanks just color just for me quarter. or the one and maybe

there, talked of that of underlying with in the are criticizing then COVID, see don't from point much classifies significant any at guess reserve the change I it, kind done? trends, this this bill the if about stability You but point they your at I where guess expectation is is

Alberto Paracchini

Yes.

that's Brian. comment, think fair a I

we today, and amount but still to a that, there's we here I develops this perform. want know fair I few environment. I in uncertainty And continues the from but think given said of I comment think think I caution question outlook the obviously, would how cautious And to be to and times I it's a fair. how your your see think But is the here. portfolio prudent

Brian Martin

talk pipeline one I at can they're a the pipelines, bit side, the what's you talked seeing activity about are some about picking loan on of said, up in and -- mean, driving know Alberto, I Okay. I little back you growth coming business And guess, you last, the what the there you but is then just today? of any areas the kind discussions? activity the

Alberto Paracchini

Yes.

there. to seeing, I see, good we pretty continue activity C&I, we're think, So

customer last I period calling actively bases. is, think a had year, start number on [indiscernible] remember have as of they had placed typically time one we their know, made individuals you hires that thing are for those of before can a to customers,

expired. largely have periods time those So

seeing activity translate customer the continue on the potential those request wanting earlier in a got capital borrowers of do projects also starting in on side. coming things, borrowers, of us we're back to that maybe on wanting essentially for and there existing efforts additional We're individuals, that into C&I things, activity seeing suffered. the to some pandemic, because put for so to So to things year the they pause, that of to equipment those had resumption they're

share On flow on of the a good we good, but good up seeing consider is transaction back obviously pretty nicely. We're what building is side, deals. we're real estate and you're think focused pipeline fair that I seeing and we're there, targeted activity seeing transaction very very being,

at On that And side, you again, do sponsors and lot advantage had position sponsors, of the the they're some of a degree to to the powder, environment. to look sponsor that acquisitions we've had try essentially that. in dry seen a take

So we're well. seeing again, good there, transaction as flow

continue we accordingly. share -- swing sit -- of it box looks. getting think put continue we're our to that we I we'll as getting to be the build pipelines selective be in at, let's at And fair be we're a the long way, So batter's things this as and to

Operator

further show for turn questions, call any to remarks. management the would like closing no back to I I

Alberto Paracchini

Great. Thank you, operator.

again stay safe our interest you you. and hope concludes today forward that quarter. in Thank you morning. call look next for healthy speaking So to this We participating you to and Thank and your Byline.

Operator

has for attending today's you Thank Conference presentation. concluded. now

now disconnect. You may

Byline Bancorp (BY) 23 Oct 202020 Q3 Earnings call transcript