BY - Earnings call 2 2023 | Byline Bancorp, Inc.

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Operator

Good morning, and welcome to the Byline Bancorp Second Quarter 2023 Earnings Call. My name is Glenn and I'll be your commerce operator today. [Operator Instructions] Please note the conference call is being recorded. At this time, I would like to introduce Brooks Rennie, Head of Investor Relations for Byline Bancorp to begin the conference call.

Brooks Rennie

Thank you, Glenn. Good morning, everyone. joining Earnings for Call. for Second Byline you XXXX Quarter thank us the today Bancorp And performance our the along In projections call is the everyone is regarding on that being statements with corresponding or recorded Relations future accordance regulation like events of made future and other available FD, presentation slides. Management certain the via forward-looking to release statements our company. involve earnings with this financial would call Investor or and website remind webcast today's on such caution risks, from We to cause subject uncertainties and statements materially that are actual to other those differ could certain discussed. factors that results The discussed in company's and are risk disclosed its SEC factors filings.

but we refer within most contain addition, the release. measures, Reconciliation not directly slides comparable In GAAP supplement, of these appendix to found substitute may be certain numbers can measures. for which and earnings non-GAAP the for the to are intended

information financial of the forward-looking over uncertainties, about to turn Alberto please conference For in and would like Bancorp. the release. I President Paracchini, disclosures earnings measures to see risks now additional non-GAAP Byline call and statement the

Alberto Paracchini

to be Brooks, our The on everyone. and good morning you quarter refer at appreciate the second our to referencing to will can you, Please join be call deck front. website. this We we time results. the disclaimer the Thank taking morning, review found the

Tom our call our and and our Chairman Treasurer, the and CEO, Fucinato. morning, on this Herencia; me Credit Bell; Officer, Joining CFO Chief Mark Roberto

for for few pass call Roberto the into a Before to results on Roberto? the the quarter, we want I get items. to

Roberto Herencia

good and morning, Alberto, Thank you, everyone.

and the questions, milestone wanted quarter of the story. the Bank June, team the in and end marked anniversary to strong Metropolitan highlight Before answer results for go important of the XX-year the the over Alberto in we of recapitalization Byline. million-plus recap At over recapitalization a Group, bank shortly time, was our an second know, I your Chicago and as transformation. At renamed our in of of has accomplished XX true What thereafter, which, been MBG, largest is story the you in the a remarkable XX we years. the $XXX years

the of of Looking closed Byline, branches assets closed billion. has at MBG XX quarter million of had has branches, of before MBG at branch back non-interest-bearing assets $XXX $X.X And fewer plus. as per XX total had of June, X deposits, which, and course, March more total X XX% and know, per total bank than end $XX and XX million recap, branch July $X.X you to Byline of total XX%. deposits Today, of charters, the total including not charter. deposits and to the XXXX, effective non-interest-bearing billion, of the Xx. Inland, we XX% deposits only deposits

mergers in acquisitions median better Board management have profitability margin top than later, We the quartile team and excluding peer their a bank been who larger shown growth X Inland, again, recap, but in and adding our well-executed expertise have our including Byline group. Growth our talented MBG integrating bankers acquisitions. organic between value and acquisitions area. joined disruption in amid has evenly driven have and distributed post by by

discuss is We the continue success. which years. There not driver, our And few this to supported next one a critical forum that the factors believe firmly the expect I X this are have to is but over main those, people. the

X shows nuanced and a topic enough To few collaborators to retain I we been replicate bank surveys This is especially through how and continue the and our key. and dedication course, Byline's be largest our as people. I commercial the Employers. were to our is hard up to Illinois members colleagues lives of ago ability Chicago's positioning improve as Best of to am organization. and companies within that our thanks Small as one one bank, Byline engagement our only continually operate deliver communities Being offerings line bank ever to today to that to only is has and do days will products customers, was and at emphasize for for who our larger as ways the our in town and people, to in stakeholders. commitment in and outperform well-being It yesterday, inspire be look cannot of others, of in Forbes Chicago recognized this in to America's We best in attract, recognized. This continue the ability team by and Illinois at the our palpable Byline. the of serve support cycle community home better is service and this talent. our investment confident to our business to players. and which, Our work than all

the the tell, into bank the As will can be I'll team you of Byline. frankly, the we I'm about future. With to to steward are part And just call pass back that thankful Alberto. optimistic that,

Alberto Paracchini

providing by system. walk start of you, questions. At a results we quarter, was industry Roberto. through Thank X our of for off highlights period agenda, failure quarter, were you of terms in in Great. degree followed and our And uncertainty the open ultimately the the challenging saw we the call the in detail. closing that coming our more by institutions confidence before that provide the a shook by characterized time that, for Tom, of the up I'll comments for After now I'll last some who call will

grow on executing our the priorities capitalize opportunities focused talent. at Our time remain were hire to to relationships and on strategy,

liquidity to remain capital conservatively. and manage and credit our on vigilant wanted also We

wanted the to we Inland complete Lastly, transaction.

quarter this meaningful progress against past priorities. and those performance show Our results

let highlights, first Inland me the the an you to jump we on Before update give transaction.

closed bank employees completed announced, in milestones and have The into the As planned. onboarded integration our have systems. the were previously merged been July former key transaction and as Xst subs effective Inland successfully

Due get the market. Up integrating the them and the closing, quarter rebranding track respective merger-related so remain some transaction comes for and into on the minor, the product under this company, the back of our which now they into the their was say, and is Our second later centered to Byline brand the timing out quarter. impact completion the culture on next expenses. of conversion, focus the can systems teams on for

quarter, Next noise aside charges, quarter you will from the usual consolidated full from a see results. onetime of

loans approximately our deposits billion billion now As earnings in we with $X.X billion $X.X in disclosed XX and Byline branch pro the assets, acquisition, for release, forma in in $X.X locations. has

to X of Page on Moving deck. the

came basis charges, points the X% quarter $XX.X and $XX.X per net in million and prior adjust ROA return XX% $XX.X adjusted impact points, year, at came quarters. million positive and XX.X%. of points stemming of at for levels but public was non-interest For Adjusting up was the the the the expected, of for Netting down but both diluted while our a X those, over at points, ROTCE income charges. by in fair was the XXX ROA translated year. figures for line reported million, at or If lower leverage than pre-tax pre-provision but basis, income came million $XX.X million with higher metrics EPS our basis interest representing was basis, managed revenue Expenses we exclude Total quarter on the basis XXX at these prior share. Profitability from million. rates. in figures pre-tax pre-provision put last asset, servicing strong in quarter, marks continue board. Non-interest consistent basis on company XXX for per ROTCE million, well $X.XX up and net XX share, driven flat On XX% second linked was loan basis income $XX $X.XX ROA and remained merger-related quarter, respectively. year-over-year remain the $XX at were and or in income higher strong at on basis. X between came income diluted XX.X%. Adjusted $XX.X inclusive a year-over-year. across to an adjusted quarter-on-quarter and $XX quarter-over-quarter as net into of points operating growth value million, which going expenses merger-related year-over-year If up we record since we income

to points higher funding from at notwithstanding prior profitability. solid margin Moving quarter, remained costs. X the on basis only X.XX%, declining The

efficiency down the adjusted XX%, basis. against a on points previous basis ratio XXX over came both in year-over-year at by quarter Our and lower

quarter Moving on leasing $X.X and we driven saw with Results at banking to we moderated consistent an loans, sponsor of growth Originations levels largely as billion to Notwithstanding consecutive quarter. businesses. in during continue of were activity. activity were commercial solid, and business the uptick balance the sheet. and payoff the end. portfolio our the see was Loan by in solid growth ninth guidance the stood quarter environment, this of and

loans, and month recognized give a up acknowledge by government-guaranteed million shout quarter Our quarter with for this the XXXX. to for recognized Illinois $XXX had XXX from closed prior top and the XX% X(a) the We and the consecutive lending team solid State XXth the lender SBA fiscal top business export our year-over-year. I'd as the in was of like lender as who were also to earlier year. year in out a

liabilities, quarter-on-quarter, of related Average million new quarter. $XXX customers. deposits driven the were X.X% up flows total the $X.X also by billion, terms from of up In end first at deposits to quarter

shortly, mix, will rate quarter, products higher higher-yielding a cover this consistent a environment. that towards in more anticipated, we As see we in detail to continue shift Tom with

which XX basis the costs net net million, Asset charge-offs, the and quality XX basis improved million million. points points, or of were inclusive we quarter. $X.X points XX with end at were had bill basis $X.X a $X.X of NPLs reserve decreasing Credit of to

losses some allowance at CETX this drove of total ended quarter past we quarter, quarter that, the and more X.XX% points charge-offs. liquidity opportunities advantage our capital and under basis for further credit bolstered which ratio respectively. With I'd quarter of just detail with the call took XX.X% on XX Tom, strong loans. with ratio accelerate were will results. the by Capital at over resolutions, uptick increasing and in and TCE to provide NPL X%, to the a to you to The ending our turn XX.X%, who like total This

Thomas J. Bell

across you, $XX the the XX%. flat to quarter, with $X.X lending areas the $XXX coming increased XX, growth Total quarter, in quarter-over-quarter. We good Alberto, million loans Slide billion major additional information $XXX in at to were of increase million prior during and $XXX groups. Payoffs leasing an some loans Thank June commercial our compared leases of remained start utilization strongest portfolio loan of from Net I on end quarter and and originated sold, the X. we increase XX% will at everyone. saw our from million quarter. first line of an and million the increases second with morning, and all the lease on

loan and this in the expect to the year. for continue digits lease growth remainder Looking of to we ahead, be mid-single

to Turning X. Slide

Our loan business government-guaranteed quarter unchanged expectations. than sheet better the X(a) the first closed the lending than SBA was quarter-over-quarter. exposure balance XX, commitments, USDA finished which and At exposure higher on June $XXX in million and with relatively quarter was

loan losses unguaranteed quarter as credit the a as balances of for was allowance X.X% Our percentage of end.

Slide -- quarter-over-quarter, accounted represents excuse higher and me, a deposits. deposits at non-interest-bearing DDAs increasing Commercial quarter. from business of and represent X. end total all billion, prior to deposits $X.X customers down healthy XX% Non-interest-bearing stood DDA $XXX continue the options, rate of million of for total seeking activity. seasonality to other X% deposits. by Total million Turning of driven was deposits the $XXX XX% XX%

mix rates, the for the deposit basis during As basis, of in both deposits higher-yielding cycle-to-date in from anticipated, market at and prior XX% points, Deposit XXX at interest-bearing a On costs alternatives. betas due basis and came we XX points continued saw increase and for XX%, quarter respectively. quarter to deposits quarter. the total stood competition an changes prevailing

remain to growth with core continue our on deposits. focused We loan funding

in transaction our brings million core deposits to In addition, balance sheet. Inland Bank the $XXX approximately

to Slide Turning X.

quarter. deposits. interest due offsetting quarter, $XX from expense prior increase our down million of net a was net GAAP points basis and prior by yields Our to basis QX, higher the an in was income on a On to growth the up XX interest higher healthy X% basis, X.XX%, margin increased points, X.XX%. driven points loan asset yields basis interest primarily loan Earning in lease yields X from and XX

in income And Inland we to on flat net basis, estimate net be a Going million by basis, QX. on interest forward, will grow $XX our income we a interest quarter-over-quarter. standalone with preliminary million $XX expect to

higher was Turning partially an by due in at value in income quarter, which to guaranteed to higher to net premium prepayments, quarter. and quarter premiums. for second gain picked negative second of down X.X% quarter. linked $XXX,XXX stood assets the servicing was the on offset Non-interest sale Slide of $XX in to by than in of loans increase compared X.X% Sales quarter, the a primarily average The on the X. volumes loan increase million million first up loans government $XX.X net net fair $XXX,XXX due by driven market first higher QX, an

funded fully and forecasted loan with be QX pipeline government Our consistent is results. to guaranteed

on gain with what in remain consistent income experienced QX expect QX. to We sale in we

Slide X. to Turning

to expense marketing Our guidance deposit million in and well costs below our quarter. and in was adjusted The And million. merger-related of managed due was came $XX to increase on basis, at $XX initiatives. $XX million the an higher non-interest million second QX attributed gathering $X expenses to

management are on disciplined We guidance continue to and acquisition. to our updating expense related Inland the remain

$XX and expense rate quarterly million. believe we $XX will between million trend Inland, with forward, non-interest Going run

in losses Turning the million the in in a to increase the the loan end $XX.X Net in the the million up first X% QX second portfolio. individually losses largely and of we by charge-offs quarter. driven the In The was credit allowance at credit $X.X was prior to Slide for provision reserve of second a quarter recorded were compared lease and million end compared $X for from bill million XX. $XX previous million, million to quarter, the growth $X.X $X.X quarter. The assessed quarter.

total basis QX and XX to Our in points basis loans decreased NPLs to leases in XX QX. points from

basis total assets were points XX a QX $X.X quarter. points $X million on Our decreased delinquencies from basis million And NPAs to QX. XX, XX in linked decrease June total to in

Slide to XX. Turning

at Our robust. cash million and billion. approximately $XXX with liquidity $X.X ended and our remains We stood quarter borrowing the of cash equivalents, capacity available

to ratio fell bank Our and peer remains uninsured below averages. deposit XX.X% all

In at ratio addition, coverage XXX%. the uninsured stood deposit

Turning XX. to Slide

position Our remains capital strong.

and capital quarter, For the improved as quarter-over-quarter. our ratios grew capital we result, a second

our ratio XX points up range. well and Our and CETX XX.X%, our targeted grew points to is basis up within to basis X.X%, TCE increased XX TCE

back are we our strong maintaining forward, on capital, executing focused you. our to on Alberto, position that, growing Going and liquidity strategy. With

Alberto Paracchini

Tom. Thank remain Slide on we strategy, you, XX and its summarizes focused execution. our

potential remain past of the delivered deliver and results. closing, proud the company In I about performance operating strong our the headwinds uncertainties Notwithstanding ability present we may are solid the quarter. We to optimistic that hard this emerge, open from Inland colleagues thank the for for a all that recently that, the joined let's like work on of basis. With our to new call welcome employees our daily and company questions. up their and dedication operator, would

Operator

first [Operator Nathan Instructions] from Your call of comes Race Piper from the line Sandler.

Nathan Race

expectations, of about the Just And also quarter. declined in nice to deposit pace the of the first outflows versus growth deposit core we XQ. see deposit thinking in future increase also low versus it's pace saw costs

these what an in growth days? curious the of of we seeing you're and area of pricing into thinking kind perspective how a year Chicago So should just balances kind overall be core from back deposit about half the on basis the deposit and organic

Alberto Paracchini

Sure.

break in kind core the in seeing of of forward, seeing. parts of of we're just kind outlook that of growth lastly, we're terms terms let's So and kind mix of what dynamics terms competitive going question like the deposit the X that in into

cycle. continue the the So look, we to will that's I part, with strategy continue over to do is years, And our the us on to served to intention has fund core through think well that deposits. and loan that been first our growth try

growth have of ebbs to you fund what So portfolio, and deposits. you deposits. In slightly in goes degree with that on long generally growth, growth, trying any growth and is we But that X what fund flows that given in we'll to quarter terms is do quarter, do guidance term, the going to we growth that give loan want core our the see as loan another, is I know think core there's be as the that. just speaking, faster some vis-a-vis growth to with we're that

going to look, mix, think I rate question regarding dependent. the second it's The be

mix bit, pace seems we're Tom But continue the not we're I change terms mix we to can forward, see It's and will stabilization the to of slowed high. be But of down and feel not jump think mix we change of second. say particularly rates to the a in seeing some stabilizing. in it's certainly, that I here as change. to continue have a think kind going in

question the Lastly, it's the third in terms dynamics, of look, a environment. competitive

liquidity also I raise grow think a an to the business. their to lot or the mass think were sitting they and, aggressively where a stabilizing some where the that? of to I That re-price have in competitive need Tom, were banks fund to period call think that they're seemed I like continue as they're excess of in where more to right had that to and we environment felt in seeing to we of want kind position liquidity, to it, pretty are impetus short what after, said, of rates, importantly opposed have being time. they're in getting March the a they to bank, a you events to saw had leave probably order retain seeing being point it forced they to add a institutions like

Thomas J. Bell

Yes.

Alberto. said, think that's I well

each That's that the could I we kind further and areas about XX%, growth. continue a just core transaction wait behind relationships other, the deposit side, to as And other adjusting on that the curve, to day. Fed But focus we're out, right and But the But see market the seems seeing those that what which flat events and be the but to week. we're rates speak, And have with on CDs And they're and of so to liquidity shape obviously, again, in savings rates the Alberto and curve think done money think are additional inverted Fed think where we'll on the competitive of way is raised money on have of shape our now. transaction pricing. commercial prudently and I go market of and and deposits DDA top that recently. have given us will what I clients it accounts foremost, and we're given are you and and growing first to our account first expect next accounts from stabilized. market the adjusting perspective. can going I you that see the has foremost. And core is rates are we'll guess the the said, now.

Nathan Race

that guys And de-lever the to it I specific level increases you on the their ex-accretion? to assume to an kind also in it you the the maybe pace appreciate some on the thinking is going I guess don't balance relative guidance, Inland there's margins just about Obviously, compression of kind sheet opportunity margin give of guidance of forward. of coming half your back potential I fair out the below second year, imagine degree. to but got directionally quarter

Thomas J. Bell

good That's a question. Yes.

NII analysis think margin I to flat. probably gave a on you type of would of guidance the same expect Nate. I margin think the expect that we Inland, But with would And standalone basis, you expand.

Nathan Race

excluding Tom? that's accretion, And

Thomas J. Bell

would accretion. include That

Alberto Paracchini

That includes accretion.

Thomas J. Bell

Yes.

Alberto Paracchini

September, just this on this a in basis. But we had a quarter obviously, we'll of to hypothetical want a consolidated think, call because rate all have you hypothetical if basis, October, increase in be on So now, Wednesday. month is and the when on reporting we this

bit coming if fourth the we say on a of to fair of terms the that going where are, about aside, by will add probably the to I just putting I it's see the think help. portfolio, with to certainly of that we quarter. know noise margin in would stabilization margin thought we're -- it pressure some going that So you because little But that's and re-price

context back So to the would forma the think coming context in of up today, X.XX% accretion right of around of think margin, you see including of to and X.XX%-ish. it X.XX% acquisition, the X.XX% pro it kind kind of that of in then X.XX% for

and margin guidance. as enough able clarity and more coming give Obviously, the be well. that's lot hopefully, to to So component components we'll that the between break gross a down accretion the this quarter, you

Nathan Race

if outside And little SBA more Charge-offs ask I around like portfolio. driven up bit couple more just It a seems it the a was credit. this could were quarter.

have charge-offs So with I in the in on, the the a some be to get impacts drove would quarter second provisioning CECL obviously, color what perspective. the on third just Inland And quarter? from curious coming you'll

in So are about current quarter just thinking trajectory light the year curious guys you maybe into the how reserve fourth the into of next environment?

Alberto Paracchini

charge-offs. comment to just on So

in range. say, let's charge-offs a were basis basis of and we've to that. that past quickly essentially more it, So XX assets we our we that. the you, target to accelerate the of felt if and work XX on this of the -- uptick drove X had asset, been But cleaning of as advantageous runway, XX that of been resolving as resolution above through in or you speak, planes charge-offs. Mind recently, XX point target, kind to having of these took the meaning taxing an said, point the we basis a advantage up loans have have up took kind we as we're lot opposed kind I And so quarter. the runway a just to period of opportunity than few historically some for usually competitors XX know that to that was you the point lower time

point So an we in basis had really just kind of the much. NPL opportunity you levels. think reduction lower nicely, too to XX We saw didn't which NPLs

We was NPAs. just just also to company decided do kind have reductions interest the of over that to of And reduction come best as saw those in through time. that, opposed the a that we in

then on you reserve trajectory. the And the So Nate. I'm that's asked story the there, really sorry. question

are we to impairment. quarter-over-quarter in the some growth the end Inland, well of quarter. largely evaluated from that reserve reserves additional adequate the we that are obviously, as our that aside think, stem individually putting for and changes assigned individual the as loans The I of strong in feel really So portfolio reserves as

said, if the supported that, fair from say see inch as continue to to think given to you think reserve I could we continue Tom growth, that. I it's the loan by expect to guidance, aside So along

Nathan Race

one maybe just for And last then Mark. one,

on portfolio within you credit negative migration the real Slide on seen XX. commercial portfolio guys that Just office detailed as estate Have any recently?

Mark Fucinato

don't negative migration. a any have seen have that very we at to test very that we haven't lot, again, We're have is We few we're a carefully situations. for but going going looking We especially cash carefully. certain these flow in office, be is locations, certain And watching the customers, to be there.

resize appraisals We will come deal, the say when have to what new in. have they to

staying that of of our, So list I expect focused an month are what's be them. a deals next ones those about top pretty and on. them, focused customers. things the we're lot year, to next XX happen that going don't year of We've on next at but terms maturing regularly have examining just that watching on X are we we to of the are much kind that with with of keep office, the in over year X every our We got in eye to this

Nathan Race

last on Congrats successes great XX XX-year the as years anniversary the the quarter, well. the and over all

Roberto Herencia

Nate. Excellent. Thank you,

Operator

second Your from Ben comes the Group. from of Hovde Gerlinger question line

Benjamin Gerlinger

bigger symbiotic. a the there's little opportunity, Byline Usually, that deal clients. years, bank, you see, holistic then the like fee to generation now seems and capped deposits legacy when i.e., footprint. revenue anything the branch this is it's decade M&A, on sell balance more and I was gets lending can sheet well bigger bit so bank the closed. also quarter. a it Congrats off And curious smaller Obviously, XX Inland

synergistic anything So Now relationships come the legacy with can nature from healthy closed, that is when that, ingredients really show and outside of the was you Is Byline special this? could I about sauce? you else great to that if just get footprint deposits. think some the and deal there extension curious this the that

Alberto Paracchini

have opportunity highlight years more organization said become you think I those originally for where ago our there, deliver efficient an think shown of acquisition. forma gain to I profitably that I XX to it growth if course as years, thing the trajectory about over are scale like think is into over that and been the we've we've taking time, able of Certainly, Ben. scale, we and certainly, deals Well, Roberto to we gain to obviously, done. mean, well, today think the account organic pro that kind I one

would we different. think this So don't transaction any be

what things, they I capabilities of other mean, have we not. certain that did In terms

So management sophisticated product for more a example, is had treasury than standalone a what our they suite suite entity. as

did So there'll to improve have management with and also be I'd that that some capability is clients. those a business we opportunities more with certainly, wealth say, customers do not. they

be there'll hopefully, So some there. opportunities

broad -- they they real Lastly, is terms primary area as of you very know, in scope in a significant their shareholder has successful Chicago that that here the had their a business estate of activities.

We're But we're certainly, not business the with really not in. in what reputable I assuming modeling transaction. factoring think larger business. it's bank, over a do a that them. time, there'll estate to real very that some We're be opportunities well-known, for

from to business you look do some with being we aside to items well. forward the other covered that, able So I But think pretty them.

Benjamin Gerlinger

of off you Can the expense. And say that. for dovetailing fees? I guidance then just the understand of just kind

those -- all can't handwriting, just I So notes. I own read took my

Thomas J. Bell

probably and I think income, But be Alberto consistent, their fee be that as fees wealth you line. bit. little would management income up at fee income to would Ben, add treasury it services, some on at fee would But look maybe rate mentioned, is, you the running there's a consistent. if fee what if look their

Benjamin Gerlinger

XX, it's getting sheet not you potential now wealth first entity. fees, some the think first just fee kind those growth curious, normal of cross-selling, we it of about that combined clearly going about to was think I here. about for well? at management. gains the 'XX? balance think picture year kind was and that's have point even areas, when the kind needed but just potential, hiring like, on you outside this fees to the XX, just in when the here what Do [indiscernible] improvement yes, of as that is So the like in see But just bigger happen the inflection in But service an of the cross-selling makes income I revenue, should in those sometime it Inland, trying staffing of is just includes there Or sense.

Alberto Paracchini

I commented like over a be we historically that we opted not is opportunities mean, That there'll remember, there. mortgage had think -- They continue. something was some I But banking traditional we a I very to had, Ben, on, this think, business. institution. time,

business them. from going to going be forward. that institution. we're income source of not that's It for taking fee pretty But you're that, for of was that the longer a consolidating there. be traditional also expenses them -- part of So no aside will source a a Obviously, was

are on So more your management some really be not. sources We be charges too nothing think But have going certain did probably of interchange that business revenue, side because do fee could there's we we income exotic. et deposits, treasury But that capabilities they service will cetera. on course. normal to the

extraordinary Ben. that So don't I there's anything beyond that, know

Benjamin Gerlinger

of need hire place XX? already from perspective any it like could And way, because do a approaching have month Or staffing today? is get or ink the to just And still Either sheet deal, dried the on XX, organic picture. Is X. to in but this do balance big cross office It there obviously engine I then you're last the else one growth staff. finally, you that's needed some going to is a that deal. seems back potential the anything earlier good you is a your to or

Alberto Paracchini

on to at that, We've we to operated be. to will We to company need don't strengthen then point certain there and that do we kind with always hire things okay, areas. that function a hire of get point. certain notion the the step a we need Yes,

the always consistently. idea are built time we've of regulatory think of the ahead the want will the management the side, I company we the company. to company on grow on stay what risk particularly we that expectations over won, And

prepare I earlier built we to risk approach to to order hire that functions have -- I company pretty have my have I that over built with go built So back our $XX through degree. I to We'll I is, and billion we're question we've where cross? mind. Do steadily in is control to staffing, we to going a always comment, have But do in asking think think, we're the going the think gradually and to you're go period think a to as time. think we hire I

So certainly we'll some to hiring have expectations. do as certain

meet order functions, for have and when those we to prepared we We accelerate run higher have to we built comes. but it's from something are and now that haven't where scratch, to in starting expectations, time the to be not

on that. perspective that gives hopefully, you So some

Roberto Herencia

for If just I add can quickly.

the threshold governed look you the that experience and it not in $XX we institutions. the and years the directors. billion billion, been exposed certainly other If to the directors, worked new have management that $XX and larger is So to is over right? the in had team at and team has And are than team entities this neither the

sophistication, good strengthening acquisition and $XX of that go right? constant exam level So we've think you well as about we're talent as we're over and place. risk it the them process communication in that in expect bringing regulators been us the different us help is And do the And well. in to get really know, billion. different you prepared. area Alberto a that a management the for and area prepare you it. well a with of As once with for jump, regulators a said I Inland new set different a We're

Operator

of Stephens. the question Your from third comes line McEvoy from Terry

Terence McEvoy

XX the over accomplished for commentary have the thanks safe given appreciate all in forward-looking by to And you Tom, It's now. that. the the I what name of some knows town everyone all moving on parts. years. say Byline Congrats last

that out. a of asset maybe the Byline, bigger than number optimization banks of picture rules share A on larger kind in market they're are in and Chicago question. balance more capital really just yesterday's their risk-weighted focusing after So shrinking sheets came

doing So in my the markets? some seeing can question of are your you benefit I is, you may be And how guess larger from it? banks what

Alberto Paracchini

capital question, the very right as as focused categorize and time of Terry. And I requirements. equivalent I that higher of market good anticipating think said, because type we've now institutions disruption larger Really always you the on are that in I risk-weighted what think just would there's of the very, some any reducing assets, here, any described

some business we because answer that seeing to do sheet It larger, town, on disruption just of we that careful question we will But institutions, think over have business. they in that business we some hearing are from mean from that being and the that think priced. the some institutions So they are focus being I you of management balance think institutions given necessarily benefit today. customers are want feel without to that company taking shut want on directly, full to other yes, do that. of a out-of-state particularly business relationship. And disciplined I said, outside market. That doesn't where that that what we passing I We is are look certainly that trying should the or it's to in like

on ability we'll think I think to we're benefit, I Terry. And that. optimistic So capitalize our about

Terence McEvoy

Inland. selected? mentioned the date year. still about then when you you you I And accretion a on cost couple XXXX you comfortable think later the XX% the earnings transaction? and of are announced talked you in have Do savings with that And questions conversion in X% this

Alberto Paracchini

Yes.

there. X So questions

we we yes, have the So fully this quarter, be call conversion, on will by time the converted. next

a that quarter. are But our But it schedule And add we cover along marks, rate prepared mark probably, rate and nicely. obviously we'll at you look of I say, we'll obviously, announced. better the be -- are we're terms marks and to next accretion. driver the when bit at in was more Terry, So that's on point, this interest the the significant going call, could accretion, think in would detail probably movements. at next biggest progressing to add the of like finalizing And I

Terence McEvoy

just then market there Are if of risk I in there particular? estate and any as there? But days in transfer proposal about anything And don't the to one Chicago. real residential a multifamily. last to triple know read ago Chicago well question. couple I is in as estate tax that's of Byline this the real

Alberto Paracchini

that it's what that we've going so proposed or and type times, impact Y to are there's And often be time there's probably think judge like Terry, have there's market. going going I And or been is ultimate mean, a any when -- impact. try positive change, -- been think change. X the many over wrong, that to been what going I have it's any like very wrong learned a impacted. think I we're we prices negative to to we the of transactions early new are think maybe outcome on think We years, to more to we've we I is the guess slow too down, be.

I So market differently, it guess, is the pretty resilient. put

of accordingly. Our reset is kind the proceed sense and our like There's guess usually you then best period, along there. is, adjust a will market from

on So Terry. too early at to point, that this judge

Operator

comes question the Martin of from Montgomery Janney fourth Your from line Scott. Brian

Brian Martin

Just the fee piece income remind that big up component me just of one kind Tom, forward? from things how size follow-up. Inland, as looking just on was we

Thomas J. Bell

are for Inland Specifically fee asking? what you Is that income?

Brian Martin

on yes, just I we adding with kind away. annual in the the acquisition? of noise know going adding with -- an are What there was unit Yes. mortgage some there basis

understand kind standalone that, to think to your trying with just about of along how operation. So

Thomas J. Bell

sorry. to going to have I'm back to get that, you on Terry,

Alberto Paracchini

that have don't us. in of front Just

Thomas J. Bell

I don't now. of right have it out me

Brian Martin

guess last just, here far Any guess driving income I of for been areas couple we that's I there commentary are fair Byline, growth in value the think pretty I the as you guys the that should stable on as fee about? then standalone outside thinking prospectively be focused the quarters. of And on mark

Thomas J. Bell

Related income? to fee

Brian Martin

Yes.

unit. the or have of a quarters I been consistent standalone looks X strip like mark. that pretty kind when Byline X mean last Just it you out

Thomas J. Bell

Yes.

our to back-to-back our continuing too. little to pick We helping, are starting Those fee And opportunities. up business management side, income a on the wealth think do as that's swaps. management growing, I treasury customer is well. I think improve then bit so we're

Brian Martin

And and next expectations this consistent of government the quarter guaranteed terms production? and kind in of like the with quarter pipeline premiums pretty seem

Thomas J. Bell

Correct.

Brian Martin

numbers come Mark, and Maybe for Maybe out? on just the criticized when see in classifieds. quarterly update we'll you X Can give the any ones. just the trends last XX-Q on

Mark Fucinato

resolve to We're Yes. some classified areas. loans good opportunities made still seeing We Brian, criticized, we have. in any progress, that those

out you lot there. As know, there's of a capital

people are quarter to on our taking the we're so customers. were looking conventional at these those very second for both portfolios. solutions advantage our well able we're looking And with opportunities, and in deals we those. And of business on execute the the in and But SBC

we a customers out is lot we have capital hunger those don't The make these judgments REO. on But REO, in effort good to continue? there's numbers. have with to for a there, an manage which of, that will even So strategies

And to real that's If that to able we you second want buy we oriented. have estate advantage some anything the in in quarter that of also. were

Alberto Paracchini

what Yes. If I could to to said. Brian, just add Mark

we for approach go think our asset. we asset, I each -- asset is have by

advantage value can assets disposing the on that We to what every of accelerate alternatives have is against you to look opportunities the on and the asset situation that then But then here, what particular what's single maximizes a comparing function strategy and we was, by a really that. present relative quicker you. each then of to that of value recovery And and yield you kind the strategy can brings strategy degree likely vis-a-vis asset. you. of ultimate, the this to perhaps asset, it's by And take your market where be the to at opt just that strategy, you

and So that's color on bit of just philosophy the a strategy.

Thomas J. Bell

follow-up Brian, for It's on QX. just to quarter, income. fee the roughly net the $XXX,XXX

Brian Martin

then last Alberto. And the just one maybe for maybe

today. the can kind of longer transaction if model support. kind X% Is over get as far back margin As to a business should just talk I or be there's and prior able a But for level couple the the quarters. guys and margin of we on where margin, about to about have? you range next time, of think is of drift term bit over know sustainability the I as you're the based then the of -- in the over Inland you mix mean, you little moving kind margin, you adding your are lot time operation the down of the legacy you to what

Thomas J. Bell

sensitive. at least start. one, Again, that to we're take I'll Brian, Yes, asset

Fed have to make of little given guess, here kind the money data So through market see. of increase. But the on anticipating year, end Fed the hold more we now so expect is to the a we'll dependent, I the

so as up to balance on you know, we sheet primarily and if But hedges down sheet scenario. organic would we rates continue stand to as the short give rates of income because to the expecting the prepare here year rates our sensitivity. decline next some to And do for on asset work strategies on working market down the end, protect is on balance

Brian Martin

I last me, more big for guess one just picture. maybe

over from perspective a to it certainly are it, to M&A over just level. you just as But you I You to how You more as that something get you something as all about with trying if growing something are talked billion guys $XX it? in outlined. approach trying it's keep significant it? you're way? familiar go an mean viewing thinking having there you've organically understand understand Or just the see to do about is guys how

Alberto Paracchini

not That crossing I $XX level. view as absolutely mark the be we parked necessarily, Yes. we'll don't certainly we at be Brian, $XX.X are you do say so it. -- think have want that something in to this. billion We that to also meaning order there said, to and billion don't cross

I think we've had growth. organic good

great. organically, happens if it think I

do able I if been well. back look over to and we've our track both both to record time, think do you able at be

think has served that well. strategy overall us I So

something not So it's we I think that think about.

as that do the past, If I there, cross business to doing way. grow like approach it we when then not $XX well. business a think we to try it's something continue as we our will we on it M&A organically, alter get well it then have have to our have and but that that to milestone we said it what to will we we certainly If we'll don't want Roberto in we're or said, be he opportunity -- the billion. cross when execute we

So -- with consistent will past. it done in mix a I it a we've mix of both will be be what of the think

Operator

[Operator Damon KBW. comes question next from Your DelMonte from Instructions]

Damon Del Monte

more pullback loan or good I'm of, lot on answered. But A Congrats and nice just given kind of with guys and a area? like on if becoming pipeline. a concerns? quarter. XX-year of given wondering in any a customer real a you're I higher would just just that especially asked some the demand, lending estate commercial bit questions commentary you more are Or your maybe more you're color seeing milestone kind macro little the just of the bit have little from been credits selective, rates, adding,

Alberto Paracchini

Good question, Damon.

say would this. think I we So

the think and on we've I the consistent estate real in said last that's several where area activity. material quarters, a side, been slowdown the you've what it's with seen over more of

seeing deals. We are still

still are that not what let's opportunities. is We or opportunities it so. we're It's seeing volume the of X.X ago seeing just there was, say, years

of certainly it. has of the brunt that seen So kind area

higher higher real that interest cost, you're of As estate adjusting projects. rates looking cap is much if at market terms in to I higher construction rates, the think

think situations that as take of strong I But I just We're we're So sponsors said, mentioned, that. that that, a part. still still advantage seeing of seeing are being I activity there. can plays all doing think

So estate real on side. we're seeing that the

pretty activity of rates, businesses so of inflation, as have far Higher level overall I is capital. pretty It's the By think and As good. able cost let's good. businesses, higher not other been absorb large, that. higher the far to forget

that helps. I also think

our them revenue the been has increases financing from start But pass to helped quarter. good. along activity costs. the the healthy absorb degree increases, certainly overall, price coming here they're of are So able to pretty pipelines that, pretty And that level and higher has as that third we see

that far so Damon, in So good, regard.

Damon Del Monte

areas or areas areas? your any any footprint of of stretch there that other industries Are versus experiencing early are

Alberto Paracchini

that Mark, want you to do take one?

Mark Fucinato

said, in I rates. mean, market. I to again, stress, going just people someone's coping Early of mean, portfolio type I haven't in that are industry if the seen yet. with office our any haven't the country, word Alberto trends or across increased the as building, knows But you everyone an I say that or situation win. seen

there. to and the I have continue. even they SBA very that far feel customers most so year, the to that this obviously brunt Our given managed But well the anticipate changes

theme yet. seeing deals we're have the the in not going seeing I'm what's or just as to So seeing, a on it not we portfolio

Damon Del Monte

like Well, answer. lot a a said, good asked, you I have guys provided and questions of good been

set. all I'm So

Operator

Thank turn now you all the I call Paracchini remarks. Alberto questions Mr. any will for to over back closing the for today.

Alberto Paracchini

Okay. Thank operator. you,

So thank that for on? in you Byline. comment all your for joining the call to something have you do Brooks, interest and wanted you today

Brooks Rennie

Yes.

the our as see you plan quarter. Raymond on attending we'll the Just conference concludes as conference. for investors and That James you. next Stephens this quarter, Bank Thank we call, well

Alberto Paracchini

you. Thank

Operator

for gentlemen and Thank call. this today's Ladies you. Thank concludes joining. you

now may lines. your disconnect You

Byline Bancorp (BY) 28 Jul 232023 Q2 Earnings call transcript