BY - Earnings call 3 2023 | Byline Bancorp, Inc.

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Operator

Good morning, and welcome to the Byline Bancorp Third Quarter 2023 Earnings Call. My name is Adam, and I will be your conference operator today. [Operator Instructions] Please note the conference 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, Adam. thank Third joining Quarter and the today everyone, Bancorp Byline XXXX morning, you us for for Good Earnings Call. or the the available make that other our course of with of recorded certain and the with statements accordance Regulation call future performance slides.During call release statements the this the forward-looking In the presentation is our and future earnings is or Relations today, via constitute Investor on the events projections corresponding webcast financial regarding website, along FD, being company. management may statements We caution actual subject that from uncertainties risks, and differ to factors such those cause are could to certain that discussed. materially other results and for The comparable intended which SEC in are its our the GAAP supplement, measures. non-GAAP company's are filings.In not but most measures, risk to disclosed directly substitute discussed remarks factors addition, may reference found can appendix these be the for within Reconciliation release. earnings the numbers of

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

Alberto Paracchini

Thank to you, third CFO; over everyone, Brooks. Herencia, Roberto results. for thank and call Mark Tom our and quarter our the me are go With on our Officer. Fucinato, this call Chairman Good joining the our Credit you CEO; morning, morning and Bell, Chief

on -- comment quarter, the pass Before to on few for Roberto into I'd like to we for results the get the call items. to a

Roberto Herencia

integration quarter. successful core delighted Thank shareholders a colleagues have conversion Inland We another and welcomed and you, had strong quarter Alberto, and to in and are morning good all. third to after the system our

individuals Board. to the of Speaking addition about two very out to accomplished call it important welcoming, our is

did we -- at selection buyers, than have We with tell the with those just won't in great at know a October. Board as But evaluation so close delighted of part months been details. process know can Pam level. that Pamela and You early contributions, through Sacristan into the there.Carlos selection July. you of our Stewart not we've merger the other joined a us in Inland joined her their we few go seen I the Board just working in early we've and we're Ruiz that her, made

and execution the numbers We posting ] our from mixed [ excellent. disconnected and than will been sector, has Alberto metrics. been our in Mr. Market top saw being important fundamentals, as performance nothing strong higher have even several economy. value.We the other quartile this or cover.We the team quarter, especially positioned, uniquely what these to feel just strategy And In are into of numbers. people, of in our moved shareholder all matters We core ] line Market for in knows make very identical to these on years, our high-performing more of of values our importantly, keeps and late have with brother where environment X levels known individuals inclusion, Jaime well. punish the we and shareholders elected us and has at commitment Ruiz our In of building to diversity was us Mr. that reflect and [ Carlos who of is addition these long-term some quartile. quarter, us, metrics uncertainty teams many and he because top the diverse, this Sacristan, twin the significantly an the stronger. banking believe founding those Carlos one But Board.The really served

in lenders us and where to want market We grow a opportunities. disruption work a have the best created place handling

for us you top have the value for In addition, just which the Market ] value enough this merger and for easy shareholders, ] and the we for come.I have long-only to long-term [ creation It special years we that grasp. us this that, think to strategic I unfold Inland want a [ to to inorganic Mr. to connects for very of such crisped story years future. is saw.On group come, creation provide pathways analysts to runway highlight as of and

turn use that.Alberto, but to can to than quarters you. back You as signposts, it understand much is this like I'd that more

Alberto Paracchini

Great. Roberto. Thank you,

and with before for some start wrap on at -- and moving cover and Tom back for the the to come agenda, follow financial quarter. open call the terms results the questions. the In I'll I'll highlights then in will detail, and up up comments end and we

refer we're at of the reminder, front.Starting disclaimer using on is the the Slide website, our for please deck deck. today's a As call to on so X the

productive but third The company, only not a financially very one. the for also quarter was quarter a strong

our and quarter, July I'd like share and mid-August a to $X the the like integration completed merger-related integration the roughly end.The in taken welcome Inland west of project in of conversion making of as million. added billion merger colleagues revenue employees million who connection loans to in the to on systems per I'd northwest critical net $XXX played we of former million suburbs $X.XX results charges projects Inland success.We Inland These impact of $XXX branches or reported merger customers, primarily the quarter wrapped up on the in stockholders role thank with transaction. all successfully and in the income Chicago. Byline.Lastly, deposits, XX X, located $XX include and attractive and in During closed conversion all by

XXX and charges, also ROA XX%. basis year-on-year under basis strong ROA These was company and XX.XX%. were and and X% of just basis, income quarter-on-quarter points XXX or Excluding per and return XX% of on represent $XX IPO, for figures increases $X.XX for our an net ROTCE since ROTCE diluted share. respectively.Profitability with of these, metrics benchmarks points a the of was new with an impact Adjusting the merger-related million

fair to a points by for charges.Total Growth in stemming points, our million, was the on and despite pre-tax pre-provision higher quarter, a up up $XX.X which inclusive $XX of revenue ROA XXX servicing charges a merger-related were income, revenue.Expenses from record to largely interest $XXX basis net quarter loan value income balances. in hit million pre-tax a million, mark declined translates income quarter asset was on increase XX% Our XX%. sale XXX increased basis XX% $XX one excluding the for or million preparation merger-related million of Non-interest the $XX gain all negative or due driven year-on-year.

charges, margin improvement which X.X% loan from from and marking basis prior charges, excluding Excluding The approximately points, accretion point the a point year-on-year. basis of increase from $XX prior coming expenses million, to strong at points, XXX XXX basis remain at XX a a expenses basis the basis came XX quarter operating XX at points includes well relative quarter.Operating managed assets income in improvement representing transaction. the remained

as accretion Inland. an aside, over XXX office exposure just slides came point updated disclosures points.As on like inclusive XX and you appendix to XX in our XX the additional basis accounting, margin added expected related acquisition on in Pages Slide loan income we at to of on the I'd Excluding to and

or notwithstanding. balance our a as the at on at by XX.X% XX.X% which increase stood The Loans sheet. prior approximately and improvement ratio due was and adjusted, point year, end. $X X to Lastly, X respectively.Moving percentage to of billion transaction, $X.X primarily efficiency billion the stood Inland increased quarter the represents quarter over and

activity basis. and approximately leasing $XXX linked impact, our consecutive of saw XXth we healthy, growth quarter driven commercial This quarter for portfolio million or marked remained by the still the on businesses. loan X% company.Business the in Excluding of growth development a the

million the a billion X.X% closed that, with good stable at or total $XXX reserve quarter ratio business of The inclusive Inland of at $X strong government-guaranteed allowance a X% $X transaction. at by for million. billion, targeted also portfolio, losses range of million, to quarter, and Our lending X.XX%, ended quarter and of loans.Liquidity now end million capital ended $X.X commitments for quarter. quarter million. $X X.X% in quality, costs remained on to and increased due as $XX.X for stood Credit net credit of came the is with of deposits had the charge-offs the totaling which within remained operating XX.X%. at Deposits up largely CETX the linked total basis.Asset of TCE a Adjusting of X%. capital of inclusive quarter XX.X% our ample build and the $X.X

call unchanged.And provide pass will with results. Moving detail our on capital that, the who Tom, I'd more to priorities forward, with remain over our you like to

Thomas J. Bell

growth areas to increases the the we of coming from teams. major loans our $XXX payoffs across leasing million on we an strongest we second $XXX increase XX, million you, expected in during and Thank Starting commercial our at Net and quarter. portfolio sold, than billion with lease were lower September loans loan $X everyone. million Total X. Notwithstanding, and at the good Slide morning, contributed and of total prior Alberto, approximately loans. $XXX $XXX saw quarter the billion $X.X Inland originated with from and were of compared leases million quarter. all in lending

the be loan ahead, and the to mid-single for in low remainder to Looking to expect of Slide digits year.Turning we X. growth lease the

business uptick lending business. the At was relatively the government-guaranteed million than which and closed in September with the loan Our finished was X(a) in On $XXX exposure saw XX, quarter. sheet second lower unchanged, the commitments, SBA balance we quarter an USDA

annualized XX% to end a result the total quarter credit Our deposit DDA at deposits lower as quarter. losses on a unguaranteed deposits million from XX. of to in of was assumed X. Slide of the the billion as The September loan the loan percentage deposits from XX% and for balances allowance grew prior X.X% deposits. accounts percentage as was mix prior Deposits by Total X.X% upgrades DDAs deposits of represent XX% for to a primarily payoffs.Turning increased total XX% compared and noninterest-bearing $XX.X quarter. change end, of or was as the percentage $X of a lower driven of portfolio.Commercial

interest an interest-bearing by interest by deposits. at to market a primarily lease merger, increased quarter, at to both basis and and betas, Our Net primarily and accounts which and QX, XX% rates for XX total XX%, came was deposits quarter, On respectively.Turning the prior cycle-to-date quarter X. yields the higher income basis, from prior organic for stood up Slide increase $XX.X time deposit the basis deposit XXX was driven points, expense. higher and in of points million on from cost loan due XX% the growth for deposits offset money

the points XX third stemming primarily from the acquired margin Earning quarter. the interest up X.XX%, quarter, increased last points prior X higher up asset to basis healthy quarter, yields. the by basis basis the points in basis driven yields income XX merger.Accretion points net XX contributed loan from loans in a Our from was on margin

to which QX. due for Going down driven the QX, $XX $X.X by forward, sale third Slide the and given higher million and quarter changes of on market servicing X% partially $XXX,XXX a million offset loans $XX.X million the conditions. $XX prior of the estimate discount quarter, X. in at increase we accretion by was due lower mark gain million in to prepayments, volumes.Sales third of to $X.X $XX The in primarily stood our primarily value due fair QX, compared of loan in QX.Turning million to Noninterest higher rates net asset quarter, to an income income increased the quarter, million loans higher-than-expected increased in linked net loans on interest average for to than tight mix net premium was of sold negative government-guaranteed

range Assuming forecasting gain X. we $X.X income a Slide million are QX.Turning November, shutdown in to for government on we in avoid the sale

Inland of of credit $X $X.X for in million quarter. previous and entirely in quarter, in non-PCD XX compared $XX.X charge-offs one-time QX.Net in basis NPLs came points basis, the increase XX the $XX.X increased us, third prior acquisition. due quarter, of the interest $X.X million total $X.X stood leases quarter, projected compared are adjusted disciplined part impact $XX loans. $XX.X expense the at were we a QX track our behind in QX. XX million from up noninterest for NPAs in due million basis net to QX. securities, to on in the The to million total cost XX% loans from $X.X expense the our to on cost QX to approximately of $XX to points expense total, the XX. million.We an On loans Our primarily points a remain million $X on from million of of third basis merger and million million the total at increase basis goals.Turning assets the for merger, for includes meet from XX, were continue and With management, $XXX merger. million million, guidance savings. expense below our $XX a allowance QX was NPLs are delinquencies $XX quarter. losses increase.Turning provision which deteriorated XX% cash in unchanged in In contributed our recorded investing We right acquired September per million the purchase $XXX.X million $X.X an a increase is the linked have And the to our credit achieve million strategic primarily approximately million credit $XX to The versus for for Expenses to billion ended QX half managed, to adjustment quarter Slide to increase quarter end was we PCD and which to to assets. believe the points million, quarter. Slide of to noninterest of as the spending $XX balance delinquency loans, prior quarter. $X we total to million we in and of up roughly guidance at provision well increased was XX assumed the represents end in The losses with The at attributed XX.

$X.X ratio Slide from QX.Turning uninsured borrowing capacity to averages. to a peer and available Our stood Total yields XX. at X.XX% which increased stood well healthy billion, XX below XX.X%, points bank basis remains at security our deposit all

our in remains and stood CETX X.X% TCE at XX.X% within our range. TCE came at Our targeted and ratio

our Going back that, forward, on strategy, our given we Alberto, we to to executing are grow you. our outlook. earnings expect capital With levels focused and

Alberto Paracchini

you, Thank Tom.

call pleased up, notwithstanding of work XX, another uncertainty results, questions. which our and of in operator, that, significant results We have remained the and to ability the both strong So on the environment, continues wrap to of ourselves to in well quarter remain a and about optimistic differentiate the for customers consistent marketplace to our for Slide and up us. present sources deliver continue has our were strategy, let's very summary for stockholders.With open you with

Operator

question first from today Damon Our KBW. Instructions] from [Operator DelMonte comes

Damon Del Monte

the to off start Just on question with margin. a

benefit like with expected margin, accounting XX basis yield you merger around did it reported there. table And think points forward. the you from had guys deck I the in So and of was was there slide X.XX%, noted a provide accretable the going

basically expected of So a kind out and can then we this yield, just of layer the $XXX into back to margin we get quarter do million, the like the $XX.X kind we core to take if accretable million number core of on is, kind like is to trying of NII. -- for Is that next lower trending Tom? third quarter it what the to I fourth sounds fair, margin the quarter from to guess guided get basically I'm So quarter. core get at to

Thomas J. Bell

I think that's generally accurate.

going to have in Gap] things sheet just priced that And have of maybe to have there's up XX slightly you -- think remember we think I the a number that we And hedges. I see another stable QX. given on. basis would higher balance you margin repricing points [Audio SBC the

flat to would up. say I So slightly

Alberto Paracchini

I saying, to is think think was -- the to correct. what the construct construct add Tom Damon, I

thinking it you're think I way. same about the

to faster. -- may we Just that par to In guess. one be accretion That's as fluctuate. best accretion. going see it's word of with our Obviously, caution cases, some

of you in best that our this point saw time. this quarter. But some I estimate that's think at

Just in, vary can out minus some know it percentage on quarter quarter plus basis. or that a

reached core point I margin, it rates to think second seeing, what what said the is, just to The absent speak, a the call think short-term of increase significant it the in in I a speak. market kind to so -- Tom rates to change add margin, or is is, another call you're so trough,

or So things just X, just impossible a predict point within minus. mean minus.I but we it's plus or to basis -- or plus these

flat top. speaking, that bounce Hope probably know accretion seeing generally around we're helps. relatively with little what core on the bit. of kind Just number number is could a it that But

Damon Del Monte

said next It that the And to regards then Is expenses, guide the $XX think million with to is $XX Tom, you I does. that the Yes. correct? for quarter in range. million

Thomas J. Bell

Yes.

Damon Del Monte

So of if the the kind we quarter I back charges and -- to in think were merger out

Thomas J. Bell

It beyondâ€¦ I goes Sorry, ahead, Damon. Go to didn't interrupt you. mean

Damon Del Monte

ofâ€¦â€” We were kind

Thomas J. Bell

quarter. [indiscernible]

Damon Del Monte

fourth the beyond goes It quarter.

Okay. here non-operating kind range. nonrecurring, quarter, back kind stuff fair? $XX kind out But in of we're this of if the that Is the in the of we million

Thomas J. Bell

Yes. -- That's

Damon Del Monte

the to from are go quarter's kind up Or quarter coming one-time don't that are higher? be the just guess, I quarters? So what's in transition there this kind $XX expenses savings million? some may of inflationary level there to to that of that Are $XX recur them million -- this causing

Thomas J. Bell

I that the conversion, mean work And there's are speak, don't a some that obviously expect costs, think employees little in to of so costs -- merger-related QX. the we there's We many done. acquisition no then longer here. through we're

things And the continue range. in trying So trying [ with the the there. But find ], to some of we're dealing to the want other to think and offices manage we there'll to projects we be end lower are business, pressures. to we're we some the given inflationary invest saves but

Alberto Paracchini

said he think, like to to quarter. guide think I in think like And, goes the said that And I what of I beyond -- the add that Tom point between -- kind is

also into Just that of kind going of XXXX. think

that of for take on an just the that if with kind adjusted rate range, and there So guide run it, the run what -- that I probably think take call rate of you But some uptake inflation you're I'm the is seeing that you charges that's I just year and of also next can probably sure year. envelope there. back just next into you we're kind do mean, the seeing of the the -- into growth incorporate

Damon Del Monte

portfolio lastly, a seeing you more keeping on areas of broader or the updated And where be kind you're eye? Any credit. speaking watchful particular on I -- footprint your just guess might or of thoughts softening some

Thomas J. Bell

of have portfolio. the Other seen than solutions in in we been in problems. focused asset doing any and any units We're other lot do we And haven't staying currently space, being vigilant the our We're that looking the spending with their for touch good trends in obviously, time of on about our office we very when any a have signs reviews. customers business problems. have portfolio classes

Operator

comes from Terry Stephens McEvoy question next from Inc. The

Terence McEvoy

for Thanks question. don't very have I the helpful. appendix the it's slide, accretion to ask very, Tom

a So of thanks the just model out that. stepping bit. Maybe for little

larger You've Chicago are areas. we're deemphasizing got in players hearing -- shrinking or certain

So are some offense, the hearing about how landscape about? thinking kind of I'm lenders? that more you changes the And of are given getting competitive more incoming in from calls playing you

Alberto Paracchini

the ] seeing we're [ to transactional-driven what of is, think of it's -- what very so-called we're risk-weighted I lot some through. that Terry, of seeing probably, general going lot diet those on of players a in A the initially, are terms, is asset much kind be larger business. seem

So not we're not well necessarily of a mortgage lot not -- know, significant necessarily the -- a we're you not have businesses. we in We don't We're -- consumer business. those space. in As

some not to -- are that necessarily is really not relationship, necessarily and And on capital of on. answer relationship and them seen just focused kind necessarily participate the had directly, what not driven. looking maybe looking I result where to or not be more more kind something yes, we're others mergers on capitalize of really, that to offer something dislocation seeing that's relationships opportunities in market up willing your are players, really say in past.So we we're would the order particularly have though seeing of it, more, are to to entice more to it's the are where would it's really entire seeing a as we larger happened of lighten to risk-weighted areas in opportunities customer the the What syndicate be a up again, pick focusing assets.We're actually in constrained participate. others that on change to transactions focused we of So basis. in building do here day-to-day more where relationship and on of we transactions from on some looking a question to it's we that we and the past.But mark are

Terence McEvoy

office surprised quarter. question. on as metrics should the think a then Page don't higher with in XX, And portfolio the follow-up anybody NPLs, criticized be delinquencies I

an retail my relatively are degree guess Slide areas other those credit portfolios office? stable? is, XX, just housing back those migration performing if in any to I Or So we're within guess, of where still upward go CRE, you but in or trends are some the I stats, there have seeing not senior I maybe question -- the to are that

Mark Fucinato

we're -- housing classes. don't The of We do the -- upsize. health terms it's we of Inland have one, seen come trends we care. senior a asset across, from We that at we in Inland. looking that any haven't lot book been or trend in than the in did other legacy our kind has The obviously just focus any asset from and classes. that increases other our some of seen But office for time in over the quite other of that, came haven't any real the in transition book

on been for real the have classes We've So we're not those. we that to a seen working ratings going we're that Inland since spent time any asset focused And it But for continue the commercial of our lot portfolio estate. on those. solutions got risk way. approach other confirming breaks in we I and to

Operator

The comes Nathan Sandler. next Race from Piper from question

Nathan Race

in to looks the borrowings earning like cash what end down terms Securities Curious a the also of the base sell a on discussion of balances of you in size were period Inland portion quarter? the higher, were the up asset the back basis. quarter. were contemplates Going fourth Obviously, of to portfolio. It core that able kind of in margin

just So some sheet funds? just quarter, overnight and of of thinking curious about the the those the terms dynamics are given the in you how between those fourth in guys balance maybe dynamics deleveraging securities

Thomas J. Bell

mean, the Thanks our at was maintain. I for quarter. that's I of mean, the position cash end we something not question. would slightly the normally elevated Yes,

flows. As prior we investing securities, weren't we in mentioned cash meetings,

with that board our on asset where now sensitivity. back rates just and doing given we're are so And

we mindful perspective. from an the rates us decline, of NII if were still think to I impact

end, we part plan next see some And into just then the securities move cash cash of elevated. position to continuing was at move flows being for quarter the the here. most as we'll cash you'll forward. So throughout that timing quarter on reinvest But

Alberto Paracchini

to what necessarily I reinvest caveat runoff we that going -- anticipating of add gave time. to see, transaction. have One guidance would that, kind a with We'll as mean, we're are we probably concerned. portfolio loan as Tom growth that, be going of And as the just stemming that far anticipate Nate. far is as cost to not Yes, the from over but to run deleveraging, it's to off that remixing as look primarily we

you over So times at up we'll payoffs, cash payoffs, we've we're the our redeployed and of time get see may just course those position because go anticipating got those in portfolios. our different

a that quarter, always certainly of anticipate little place, there's of some and starting So bit probably see remixing we'll will more we take XXXX. that but next into

Nathan Race

balances But come on in quarter, it contingent -- the is of that [indiscernible]? terms the kind just of of next in at you those loan overnight and growth, borrowings couple over the do success expect quarters? down the were to Or

Thomas J. Bell

money, No, bank at would ] hold the the high [ to of we again, it home that I mean, borrow the normally to sat not loan Fed. And we a went balance. if

for So it was kind P&L trade a of neutral us.

the borrowings the increase, see you would as cash other decline assume declined. that position if you the So other borrowings really could

Alberto Paracchini

be pretty negligible. look the where It's X Fed, like you Yes. think and to at out that said, financial a want a paid those net -- the given mean, we're to number, net impact I on because what just you the I -- reserves get numbers might just is of going of kind rates that at given Tom rates

to So just mind. keep in that -- but

Nathan Race

trajectory year. And sheet just the about the balance growth next kind in thinking of

of low around quarter. kind how to core guys in Tom Terry's dynamics to terms mid-single-digit growth loans question alluded in overall about of and into Curious prospects I next XXXX? kind the the thinking fourth to of curious for Relative how the year? in competitive are and Chicago, of loan in you some looks pipeline growth think deposits the going

Alberto Paracchini

given gave of to I guidance probably I would rate some there what mean, notably I this generally mean, you no of healthy. mean, are are slower our speaking, that real point. expect, I estate the surprise, sector I would it's is, Tom think -- pipelines I at interest as estate. of areas, this the mean solid. kind most is refer portfolio. sense real Activity

origination lower So on payoff side the the both activity on you side. have and

change of portfolio. that anticipating of that are. also kind just we We're won't get XXXX. origination anticipating the the point remixing we'll that there. some some right the get then We're I what no pay anticipating cases, renew core just before mean we're payoffs, in continue like So terms in made will within to cash into our within attention portfolio. we loans, redeploy we know will rates But we'll we'll that and the

We of number the I more -- the kind points had pretty you -- just GDP and we see it's originations obviously, but to the to be yesterday speak, don't number -- answer healthy. will your replaced businesses.But think, so net cautious. loan explains question, growth, tend being the So necessarily core to fact being that it's economy to our just mean, assets by into I remained has

remain that. bit slower business lot is years to but a of healthy, view so uncertainty a more the to There's cautious commercial tending have out seeing view Our passed, fair government-guaranteed want there, But of is to cautious. and of a side.Our a pipelines we're lending on they're opportunities. particularly compared more number far,

I remains, okay, that think, given rate the So environment.

really, good leasing Our over business year. shown has past really growth the

Some catch-up therefore, couldn't for just happening that of orders of supply equipment the equipment, chain had but that as people get were issues from kind is that delayed. a put earlier and

Nate, give think we're I of provided, in of a the all in So picture terms point terms is up in what guidance which should all, that, you we're kind this time. growth.But of good catching helping in with at seeing

Nathan Race

driven much lastly quarter. credit days? increasingly kind topic these a just ask that's Curious this quality how just rate generally could what I if credit on think across impacted. investors SBC shocks And Obviously, Yes. some quality. normalization just in seeing SBC, the just charge-offs I concern have you're by that given and continued of of of was that

Alberto Paracchini

think Yes. periods. saw that I mean -- taking about -- in generally the established jump mean I'll that we I let basically but -- X just all comments prior comments, and in, this we of against Mark charge-offs just charges so, speaking. it's reserves X quarter

realization as behaved we and that there business. for So as it's portfolio don't probably just worked course the and asset -- environment. of out, a those, back I quarter I above took fairly portfolio I increases Borrowers charge anticipated. far just calls, we expectations of the than think, absorbed charge-offs. just prior have, stated looking the Mark? as has think past rate normal accordingly. got any And prepared and better we in That have this different given think, well was anticipated that's essentially, SBC

Mark Fucinato

Yes, and it But Our stepped Alberto. steady. of actually quarters. last I it -- management monitoring couple steady. their looking agree, They've portfolio. SBA the been are would has portfolio really focused their call at very I teams up in The really

any with haven't are because me increases area jump far, seen all book reality. their small for are we been The either concern that where in any those as of one We big so consistent. pretty dealing today. business owners rate it's But

Nathan Race

things. kind the are It the slowing how you one squeeze I like growth thinking on lending side here? guys just in just of reserve last trajectory sounds If of understandably could about on one from is

the of significant relative where are going to a absent of But your framework, terms reserve [ kind within CECL thinking stacked I you are about reserve up. ] guys of obviously still deterioration trajectory just the of guys forward? operating peers strength You guess position in from macro the how

Alberto Paracchini

mean, macro But really any the fair that it's is trajectory attention kind to can as But knows in are -- give not you in see -- To other seeing, and environment things. factors obviously but reflected something -- is in in that. for the that's an there's We areas certainly a I important. example, in maybe that that environment it's and to paying office. I everybody said necessarily we or earlier, couple forecast. were something are of mean I not the we everybody amount factors your of happening other A adjust yet certainly, your we use of environment. uncertainty historical the --

the of reserve. think how -- I about you think mind.Second, terms just keep nailed and in I of that So we just provisioning think in kind

X reserve the any things in mind. in to overall with One are keep a you -- Just portfolio. see going higher growth is obviously

the other marks one on the that's of as that result loans So a -- have Inland thing.And took thing, obviously, transaction. we we then where

We in move loans those are active out. wanting to

that related to see come may you through. So charge-offs

those sure the of you aware that separate year, of we're situations make doing to in what so basically to are out there.But identified. been the will workout guys that show of will look We have we course

guidance that in you outside provided on quarter the it's But to may charge-offs that, past. in uptick it's what see think -- So given I we related -- with consistent any the of an that.

Operator

The Instructions] from from comes question Brian Martin Brian. [Operator next Janney

Brian Martin

question quick maybe one -- the Tom about on it just maybe Alberto. So talked I think SBA, or was that

in down outlook more a sale for holding Or that how up. revenues the I -- of Just of it mean, less ] maybe What's is a next like Is [ that little bit lower -- function like that little a you're little sounds broadly a just it sounded bit quarter. are -- about margins maybe driving were next kind quarter the quarter? decline? activity? are the thinking

Alberto Paracchini

loan is little were that as risk government getting the are to us we I we given rates quarter, is mean, And bit will the just appetite a -- a just a and and to they're that as high, obviously, a qualify, just right, the giving little think now, borrowers the kind yields then one guidance have. we've just thing bit the there given market before. same a the right here. so given lower -- And not mix caveat. out going result, that I of for premiums we're are next rate borrowers interest they the have be shutdown environment For mean -- stronger there's

Brian Martin

of volume a and combination kind the pricing in conservativeâ€¦? is both of So

Thomas J. Bell

always there's I a pretty again, mean I up. we speak. looks it's but Yes. little -- things decent as right now, slower pick can just bit pipeline mean

Alberto Paracchini

Yes.

quarter-by-quarter manage it's hard basis. Just we do on a keep in don't to mind, business -- to and hard way. on It's do Brian, the actually this that

quarter, the to XX-month just had it more mix because we we So compared sold example, the assets at that like a -- third different kind second in quarter, to look just like, quarter. of just over for period the a this try

the you higher had a certain to in Those any on We certain XX-year And characteristics gives given to So quarter, on an implications. XX-year. you changes. have USDA impact assets significantly prior mix -- that command assets. give example, that also we of that SBA relative sell them, than given or any able be don't That to have mix for have less investors that incentive to we have premium XX-year, if we relative protections -- The more more them may the because can those if more loans that impact. has -- to pay quarter. they for quarter USDA,

impact mind. So quarter on that dollars any going potentially to The -- just can in as is margins and keep given well. mix

Mark Fucinato

last too matters, are fully the I funded it is, haven't the think loans, say in right? pipeline would but some So funded. loans I thing fully

can't them go sell the So out that we really and in means marketplace.

a quarter. and delay, number. will hit doesn't fund mentioned. next it Alberto sell a specifically X If We this can't just quarter, timing So it's quarter fund sell it as for and

Brian Martin

Yes. I it And suggesting. another? understand if more -- to lower. I was was if -- radar guys just guys thinking the just going I was as something there were about understand so it. if and I than But was leading trying annual volume, I are understand didn't you look you apologize I

I So that. appreciate

and with up, the As -- in they missed far or Mark, this, quarter the quarter the close? they you with criticized were thought -- and transaction? -- it, were as delinquencies where you levels but I classifieds, are maybe for I maybe up were maybe missed if the said mean, I -- just the criticized one the on mentioned just that I the classified

Mark Fucinato

say, in would up, slightly I the They quarter. were

large bit classified, were had quarter. came an resolution again, resulted the credits a to asset which, increase. Yes. which because actually or knew a criticized of going Our during of coming credits, some the we in, down criticized were little criticized a in Inland they the be of we But transition yes,

Brian Martin

in is to or just increase criticized an So it both?

Thomas J. Bell

It of a our from other increase a different increases was criticized resolutions classified quarter. the say in -- criticized book. the assets of was where we wasn't Byline slight was slightly down because would legacy NPL asset. classified well much that of overall resolution increase, I just pretty but a Byline come back were obviously, criticized the had we from the and Inland words, and NPLs some previous have did we book. in from In But

Brian Martin

far on and the ]? then kind And yields the look to missed next the repricing loans I maybe I XX do are? on origination basis there what what just you fixed if what a color XX in maybe And just as of loans some give you business rate up, as Can over level of months? are can guys that? repricing, new [ deck and that's have Maybe [indiscernible] it one, at

Thomas J. Bell

to So, come maybe back let's -- youâ€¦

Alberto Paracchini

We can itâ€¦ you have if up follow

Thomas J. Bell

No. up with rate. you, X/X primarily of repriced I then loan asset XX-ish still Alberto right, if and some it's so refinances. Maybe we're the with life on -- that's Inland guess, sensitive. fixed pays would the And mix we're but fixed. or Inland then if The XX% asset now it follow ] that to I say as mentioned, get can years, we floating. I percent just depends But is kind really X average [ portfolio mean floating off, it's X/X. going But -- is X/X, of it

Alberto Paracchini

of said, XX-year a essentially think what XX% of of if this, mean But is can not if I are mortgages. like you kind -- XX-year these rule that are a or Tom just to Brian, X.X-year These -- residential just take so as assets. through thumb, kind fixed. you -- you you as

we're X.X-year a to to So just that is basis. on gives kind you of effectively get fixed mean it sense XX% a just going repriced And from I kind that doesn't the being yearly that. see far much how over too assume that, of repricing course a of life. that of deviate of portfolio rate

Brian Martin

last today? or And just the difficult mass you to one know like to opportunities done you're are even -- if maybe M&A what as given far on I side talked that how does there, far obviously with you was as, things merger one is guys quick some this M&A, turn I more on seems look -- out done just opportunities bit inorganic as today the being a just the but the are the having butâ€¦? seeing get as outlook the about activity calls page. it's But And today, guess, little

Alberto Paracchini

Yes.

think we remain I open to that.

nail. hit I think the you

the hit the nail I think on though. head you

portfolio folks for on capital of I rate in remains the The I that's the is -- interest investment transparent, loan amount be both some just is would the to math factor today. think the mean, potential and the the -- that channel, transactions be for challenging biggest the given marks, completely you on That's after sellers. the impediment issue that portfolio.

Operator

for I now any Alberto turn back will the Mr. remarks. call closing to Paracchini

Alberto Paracchini

Thank in Happy interest to call Byline. thank you. XXXX, and forward Halloween operator, and all again in you. you and And Yes. Thank your of all the you, early look to you for speaking joining to for today we

Operator

concludes Thank much you This attendance. for today's call. your very

disconnect now lines. your may You

Byline Bancorp (BY) 27 Oct 232023 Q3 Earnings call transcript