BY - Earnings call 4 2023 | Byline Bancorp, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Byline Bancorp's Fourth Quarter 2023 Earnings Call. My name is Carla, and I will be your conference 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, Carla. Good morning, everyone, and thank you for joining us today for the Byline Bancorp Fourth Quarter and Full Year 2023 Earnings Call. the FD, webcast is website, on our release Regulation is recorded along with earnings via slides. available our and accordance this being call and with In presentation corresponding Investor Relations

the company. that projections events and We such statements or caution of make regarding financial future forward-looking constitute call management that or those today, other During to statements may The factors course could are risks, performance subject are results from certain to the statements cause other future in filings. factors the differ risk of uncertainties the materially discussed its discussed. certain company's actual and that disclosed SEC

GAAP remarks but these numbers measures. intended may our the measures, non-GAAP can to be addition, found not which of the supplement, for release. within the earnings are comparable Reconciliation In substitute appendix for reference directly most

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

Alberto Paracchini

Happy you, XXXX you us joining results. for full review and quarter morning Year, to Thank all this our year thank fourth New Brooks. and

me CFO Chief Roberto and are morning Tom Bell, Fucinato, Herencia; our As Chairman Credit joining and always, Mark this and Treasurer; CEO, our Officer.

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

Roberto Herencia

acquisition. met story XX new and prior who as acknowledging and Dan's Thank recently almost was with and happy him to best Byline you, and healthy after Goodwin, Chicago shareholder merger, friend, an for I happy simply negotiated and and leader Dan to interacted have is coming how being value a in human system. He ago the passed much a key and last together important year Alberto. Byline start Good he and in as between the remarkable. I business Bank. we pleased remarks points shareholder morning Byline. Dan all. a a merger, to become most years Inland not away was alone with my weekend. about the him by wishes That tells his of to was referred that of our you It merger we and

happiest is he think Pam, we representative the as learned the our was if met would Pam when Board. had case. he know I his selected And that why you on you've Stewart

and Group Inland sympathy prayers extended Estate fill to and as Real Bank heart wife family Our family. go well as and his its

Chicago no the lost have titan, doubt. We

have appropriate. XXXX of and we his for with silence would I seconds for memory for and the was am results Byline. Importantly, breakout as a full have pleased year. honor gained legacy. actions much so as year A his the to quarter few are more Thank the you. Dan been

justify it's from Boards metrics weaker to cover group. Results were for and for excellent, Tom deviating XXXX and results earnings April shortly, which rank materially by with of the a grasping ways the Our quartile top will relative now budgets several basis. derailed teams most March, in events and profitability on plans, important performance, in Alberto and management our and peer banks

to outside having by turnover. don changes said with however, of banks part than banks hard took continue of strategy done. plan. and banking market well, our home work. We simply to each disruption disrupted to is from management believe other replicate. growth processes, fuels the people not and Chicago that is talent hard banking practices, key commercial right and within nurturing the organic can delivered under and proud will and The as between right put those smaller the using that headquarters be be ranging conditions. This team the have larger are estimates credit as events and being We focus to mergers best weaker, able finish That well getting continues and from shine It When to and the strategy risk be our to state group to technology, moving decision-making sentences. easier

are our shareholders. to optimistic the franchise the future value and can about our We deliver

With that said, Alberto, back to you.

Alberto Paracchini

Per I and through detail walking I with Roberto. over you, to will pass Tom, Thank our who provide then will will more Excellent. by the for results. our practice, on full highlights start call the year you you quarter. the

up to I'll wrap closing come opening before up call back with that, Following some for remarks the questions.

Slide deck the and X start. of to to on Moving

the failure executing of model to in Against to earlier well. year highlights, on several for a was challenging would surprise to stemming XXXX contributions the first We like backdrop, growth. an the and rate strategy their us this solid continues our work that I our terms Before past the our company. turn year market environment, the to another institutions hard the of year. business and and I thank focus employees through upside economy for that in continued navigated served diversified from disruptions

In merger the we addition, with integrated XXXX the year. in converted into within systems All fully the and was closed billion Inland, calendar all, a certainly successfully Byline year. $X.X operation busy

our just funded with year, strong under or share XX%. $X.XX yet, per return loan inclusive million was strong points, better was was net on Inland income diluted ROA of growth of of Adjusted ROTCE of $XXX the and were and by the basis XX%. Year-on-year of pretax profitability and under which revenue effects deposits, the preparation very XXX For the points for XX% million. ROA XXX metrics just $XXX growth at grew basis all of merger,

X basis. points Our to under and efficiency points on XX% percentage to adjusted an ratio over improved by percentage X XX.X%

at XX.X%. and strong TCE CETX year at ending the total X%, capital XX.XX% capital remained with at Lastly,

the third of ratios increases a basis, Inland in impact on these reflect of year-over-year notwithstanding All the the transaction quarter.

due with the also $X.XX of XX% preparation for XXX X, points, by decline share. Profitability we stood at primarily pretax but and per revenue from loan pretax stemming down X% $XX.X previous during the Turning with and $XXX around Revenue loans quarter net X of utilization Results to The income of for Loans line and a deposits quarter adjusted balance and activity in leasing net or was servicing million, was increased lower income return coming basis revenue million of linked also margin our previous both or standpoint, year-on-year. offset ROTCE from billion continued moderated as as expected, sales, quarter lower million $XX.X share remained higher ROA activity higher income. From merger-related sheet as million, basis interest annualized growth quarter. were quarters XX%. and to was at or from the increase record increased ROA $XX.X noninterest $X.X Slide net diluted per diluted by by and income up businesses. Payoff from million. income at a Net solid of quarter million XXX the driven C&I XX%. were of the $XX.X $X.XX origination strong of points on preparation Adjusted remained charges slightly end. at with income metrics healthy but anticipated stable $XXX saw

Our higher government-guaranteed as healthy lending expected, a in business loans, previous continued the million to originate was closed quarter. $XXX level than at which, with

our billion for basis. with this side, or additional provide and as XX.X% ratio represents to This we XX% moderate. given XX ratio margin focus, deposit basis and for liability the starting able year-on-year to we're rates million coming $XX.X base managed deposits $X.X were on and X importantly, and $XXX overall quarter XXX million. points. by efficiency on at of a our decline lower broadly, for in down market drive stood annualized points remain year. Expenses cost to well Tom account Noninterest-bearing our will you the at cost-to-asset bring of grew points color adjusted increases and basis our linked a certainly deposits quarter deposit of expectations basis the on and quarter outlook end. are a Moving More the to

purchase subject in to against than loan, as at asset expense came with a on were credit-deteriorated elevated established compared loans and previously million a resolution million quality. lower charge-offs to Turning reflecting quarter, quarter, Charge-offs charge taken to to credit of they can $X.X NPL at chart deck, between mark. prior the for and XX last detail distinguish trends $XX.X stood reserves the to points, near additional allowance PCD XX The added increased a XXX basis you We basis the losses Page NPL. in on the non-PCD XX Provision at basis so points credit NPLs points.

front-end Lastly, of a end notwithstanding the flat, impact year. the mortgage of delinquencies at completed remained servicing the transfer

portfolio. of for We and also on added office our risk ratings additional balanced disclosure a numbers loans stratification

deck that find of Page did not on can the the any quarter. shares the in during repurchase XX You appendix. We

that, capital overall approved an strategy, The Board to X.XX company's which outstanding that our the regular provide important in as on up to more the Tom? includes I'd turn repurchase like you repurchase as our stock. will call authorizes program stock detail the shares over to is who program of of business, the repurchases million dividend. With results. component company investments our well common our to new However, with share M&A, a Tom, management quarterly

Thomas J. Bell

coming and Starting loans Thank was leases lease Average by higher portfolio year-over-year X. growth loan basis, on the from strongest increased by Slide lending increase our all good everyone. across and XX. on morning, billion with and and you, categories $X.X Alberto, Total on were December merger. XX% organic loan linked commercial Inland and teams. leasing growth our were quarter the driven and with a balances The

of XXXX in the to growth mid-single loan course We expect low digits. over be the

X(a) business lending government-guaranteed the a million. with loan the in linked commitments, finished on up and December At quarter $XXX our closed sheet at a XX, SBA XX% X, quarter Slide relatively to basis. $XXX XX% which and unchanged Turning million is on-balance was exposure year-over-year

reserved related for lower Alberto and loan as result credit was quarter allowance losses the balances fully percentage charge-offs of loan end, a as payoffs of to upgrades, X.X% of Our as mentioned. a as loans, unguaranteed

annualized end organic fourth the brokered We reduction to quarter. X, gathering. million $X.X billion, deposits $XXX of of the growth Turning quarter, million Slide net In was the prior the focus we increased up a deposit in CDs. saw total robust continue from quarter, in deposit $XX which XX% on to to of

inclusive quarter-over-quarter transaction. were XX% slightly by deposit a basis, higher and balances of on Inland Average increased year-over-year

was Excluding for the transaction, healthy X.X% a the year. full deposit growth

XX% quarter moderate mix continue shift percentage as with compared in cycle-to-date and in moderate XX%, total deposits as was the of average mix the of and total rate was interest-bearing by was expected expect XX% deposits to prior for driven decelerating quarter. DDAs deposit maturity XXXX, deposit On part the pace the XXXX. portfolio. In XX% continues we and deposits our to a a the CD stabilize X.XX%. Our to repricing CD to from during linked was betas basis,

will average we CD rate of less of XXXX, impact X.XX%. that maturing of repricing CD the an have expect book given For the

lower QX in to loans accretion income interest quarter. primarily prior the was X. from X.X% decrease by higher Net Turning growth. and to due on Slide interest offset The expense loan million, income was down acquired million $X.X on $XX.X deposits of for NII

fourth Our which margin net at loans acquired margin on NII the strong guidance. basis, points interest our in the basis was remained in income contributed with to XX on by lower reported quarter a X.XX% driven for Accretion to line asset basis the points basis during accretion yields rate in and decreased XX points quarter, fixed compared loans prior XX quarter. quarter. increase linked the Earning an

was $XX interest net increasing basis NIM the X.XX%. income at a and XXXX, year-over-year For to by or million the points translates up full XX year ending XX%, strong which

range QX given in previously $XX for section. to reduce asset to discussed, as forecast, we is $XX steps for forward, in forward factors Looking the our highlighted Based the on sensitivity estimate million. make curve interest the million rate continue to IRR net income of the our

discount fair Turning higher the slightly value $X.X $XX.X in for asset due The improvement government-guaranteed quarter, sold. million million of our income X.X% quarter, favorable a XX% than primarily the change valuation, by and million stood loan compared fourth equity $XX in quarter, loans to linked net million Slide in rates decreased X, and servicing up $X.X gain lower of average the primarily securities. Sales in prior mix a fourth to quarter at reflecting to noninterest premium more of was QX. loans in driven conditions market QX,

the in of for lower million on in line historical is be trends the sale loan range, income gain $X with our forecasted million to production Our first $X.X quarter. QX to in

Slide to Turning XX.

our million million from $X expense noninterest $X.X QX guidance came quarter, an adjusted $XX down prior million, basis, in $XX.X $XX.X noninterest to stood million. Our million merger-related expense primarily driven QX. our $XX the On at by at for taken million below of the in expenses fourth quarter,

our achieving manage are investments to continue our to that We and objectives. prioritize expenses critical strategic tightly more

Looking forward, to full quarter. our guidance $XX at unchanged million expense noninterest year is million per $XX

from $X to $XX.X loans XX, the a points basis quarter. NPLs provision of in end $XX.X basis allowance $XXX.X a $X basis credit at December QX in compared in previous charge-offs Net down to the million, the losses $X.X linked Turning XX compared XX quarter. to end recorded basis to leases Slide QX, delinquencies quarter and prior The QX. million in in on were credit fourth the XX. essentially we QX total in losses for points quarter. for QX. million X% was total million QX in and to million NPA total QX to flat, million points XX increased from XX from to assets were points increased In

and XX, which securities Slide to liquidity portfolio. Turning our recaps strong

Our linked points quarter decreased basis loan-to-deposit XXX XX.X%. ratio to

ratio bringing with work pleased to progress are We time. down this towards this and continue over

among averages. deposits Notably, uninsured the at Our peer deposit granular have available ratio of which stood our group below highest bank a all as remains proxy the base. and borrowing very billion, capacity insured deposit peer we result XX.X%, grew to our $X.X

on Moving capital Slide on XX. to

Our our at year-over-year at Both share in over $XX.XX, quarter. improved end nicely by improved and with value our positive ratios earnings. our ratio XX% basis book We X.X% ratio increased TCE the tangible by nicely driven XX% CET quarter by to XXXX at our capital on levels a per grew XX.XX%. capital and

capital Given throughout market liquidity strong position, business the believe opportunities our XXXX. to and balance grow are capitalize and we well on positioned sheet, we

With Alberto, back you. that, to

Alberto Paracchini

Tom. Thank you,

solid a up strategic Moving outlook momentum. on XXXX great XX. to the like Slide comments footing today our and for to about XXXX. We I'd entered wrap with with on priorities and few

priorities, customer much disciplined to add value credit positioned the and We on We to this by improving change value to they we well growth, year. market the we the both create franchise consistent our loan reinvestment, and In grow pursue relationships, M&A. Again, don't shareholders. capitalizing of expanding believe remain talent franchise. continue can our year strategy of from our and are terms on business pursuing to efficiencies allow of and believe to continued and continue grow growing do and opportunities for to we maintain to capitalize opportunities for

that, And questions. operator, for call with let's up open the

Operator

[Operator Instructions] Sandler. comes from first of Race question Nathan Piper Your

Nathan Race

deck, commercial I just slide charge-offs property looking through start quarter. the was off it the And of office charge-offs. like estate this to contributed hoping real looked those on some an

for asset in maturities kind of curious of kind the up So forth? you're be color And And terms get from seeing I what would maturities? outlook just the portfolio to maybe that within remaining of Mark terms potential some additional rates those portfolio. with stack and outlook the going of so quality how overall in cap up and

Mark Fucinato

office overall seeing of bit refinance good now a a overall good some we're We coming on first the it percentage of X buildings, opportunities these But the for the shape. have surprise a to lot the and me. years, to our in right year. little some in shape office We're handle We're portfolio. going been which in book actually next is out good customers discussing quarters of for of maturities on what's in their X office a we've very of terms a up the

of of any are are there be as know, So customer them be see they're to outcomes to you the unique, be going we with credit what are to with situations and kind some to a strategy that we're assets. tailored the criticized of going to see. them issues going where going But approach

to charge-off of asset. we're had results here that's achieve But we the during and resolve we're of our the On particular strategy course office asset, part XXXX. charge-offs, again, that those to a using yes, on that an hoping

Nathan Race

this remarks, and the Tom, touch on didn't it apologize gears, in year. you NII report. prepared I if changing I about your touched Maybe for thinking

of core NII how the course pause. do kind we for [ in back the in of the on kind rate of terms Fed Just of the kind over NII you assuming couple ex of XXXX? accretion over see the year, quarters, outlook And of next a the couple get of of remains hikes half trending then ]

Thomas J. Bell

XXX prepared curves has estimate interest fund points In and we're the -- year. for the as in market anticipated basically the I remarks, forward basis rates reduction the using our for Fed

given million reference, first the given we million we've for the out. in stuff, happening So to think forecast the have ease in just I for kind $XX supplemental the your which that, $XX And NII. March, accretion back of in of that split guidance

Nathan Race

Okay.

So if in half couple get maybe we cuts rate it of fair do But we year, it's if back would the to growth little the of get of maybe year, that year-over-year? contract. just degree this a to bit it's assume a fair expect

Thomas J. Bell

and happens Yes, market possible, expectations. what with Fed subject that to the could be again,

On the but information we risk Page And provided the sensitivity net year-over-year rate our asset our by X, able on been are sensitivity we've to some X.X% year. sensitive. interest page still on one we of interest reduce income deck, over

see scenario scenario, can the what ramp give up NII is income and number. you So net bank's in both interest the in to a a static

a provided down in it's X.X% provided And point about -- were is we on X.X% ramp X.X% that costs well ramp, and in annualized an it's sorry, basis static a we as on I'm decline. the -- you X.X% and basis. XXX quarterly So

Alberto Paracchini

more Tom to to Nate, there is think, I saying just broadly. what add

So market has of at cuts in terms for what XXXX. I if of think kind look priced rate the you

Certainly, moderation mix as in well changes. pricing asset-sensitive. in remain can as As we're certainly help the terms Tom of see you we decline regard. will remarks, from Rate we the said, in that as That deposit materials, of prepared covered moderation asset-sensitive. remain in kind being seeing

to have interest to impact assumes rates are said, asset negatively that market assets, view the to to declines going going sense the and rate you're liabilities. That move margin net faster the of terms of than degree in being come assets the to grow reprice repricing positively. the an going and still continue that and kind interest that impact, side faster earlier going in margin in But be So expand the faster the that's that's the feel about they're that it slower, our obviously negatively impacts to all, income. to rates lower, to ability impacts year or we in degree the pretty be that good all

Nathan Race

saw remains new if this for have about kind half that in you kind the yield quarter. in just saw the yields portfolio we outlook, do next fourth I and year in would above of to could loans think kind or that guys the you within on higher? Fed that cadence over months here. XX the fixed, that put hear have be also the XX% loan the of just the of in are rate first of we of the of And And imagine of that maturities from loans what on amount curious just those reprice terms pause

Thomas J. Bell

of I priced you Well, already market's rate doing the mean, remember, if in loans, have kind to Fed you're fixed the easing.

for price market we speak. So so takers, to

cases, interest cost is spread because loan to on a right fixed curves. punitive basis, bank. lose price a rate to we now going tend income So marginal to you thing the so the like to -- And loans you to spread right, home net in were some the if

SOFR on would other some that basis earnings, of have fixed that be higher loans think protect the range rate that, in that do they're [ on sheet just ]. hedges or a whether you you mindful things given on I So the balance layering spread X.X% maybe floating the technically you're rate be to to

Nathan Race

quarter. kind deposit this deposit just largely one the nice last on could core that low of the deposit loans for fourth some year? in kind growth. looked If outlook for expectation to It ask of had core just Is outlook growth that you in the follow one generation will like mid-single-digit I

Alberto Paracchini

right do are to continue client given Obviously, and we've preferences, in continue that I the covering know time, to that's deposits, for think but as don't been us deposits, think how the you've customers. Nate, thing we of ever subject terms feel the for us a important know that. to to ability to and and grow deposits to I long that's doing I guidance for you subject are plans

do And strategies want competitors the continue look, thing. continue our same obviously, we grow deposits. in broadly, think would to I to But I are who trying have place say, to to to

you Tom XX%. decline we -- that. saw loan-to-deposit as were we we quarter, want on this We operating think nice Over continue to ratio. recall, a mentioned, closer drive operating time, -- to were I to we're our if

We that that. down said to ratio to are wanted much and gave we do guidance that over very that we bring wanting time, to continue

So I below closer continuing the in ratio context over see even to think you XX% that time. down to come think XX%, of should

Nathan Race

there was share Or the growth deposit tackling in of and the and more was And core fourth it market in ongoing seasonality just any gains? kind quarter? blocking

Thomas J. Bell

Blocking and tackling.

Alberto Paracchini

Yes.

we think latter, you as know, see the I tend seasonality. to

the in liability have We focus inclusive side. obviously commercial a business, our in

things you So right you happen first quarter. all payments, tax have around tend the have that to those

the some that the So But we'll year. of end see was not the seasonality there. at case

Operator

next Your question Stephens Inc. comes from McEvoy from Terry

Terence McEvoy

start on maybe expenses. a Just with question

organically, going XX% less in a If years. say, year, let's $XX you you're than to X grow cross billion

how much expenses rate current $XX my So are guess I that worried is a in in should million? And question step-up crossing $XX million about from billion XXXX? $XX what, to of the run be I of, incremental

Alberto Paracchini

I maybe ways. me the think -- question answer let two

that to to from time, the requisite to the management, we've make growth business. control be run growth able kind from of the controls, Terry, to is, level have always company behind the sure business. I in of we expectation what of business is, conjunction requisite on reporting, to the the the And not a level off of investment a the perspective, want that that invested always keep over the we've mean to consistently we risk by of of a First get kind from

in just that That mean to said, answer very that increase will you assets, growth growth to going I revenues meet that to correspond billion continue significant. expenses for to a of increase us, the some that, expectations step with to being expenses it, $XX and anticipate we're come with at point, investments in that to an along that fact we you're make expenses the mark, necessarily that mere your cross that to that with can the crossing function think continue in higher along So billion be, making by question, $XX mark. sure with growth would right see in doesn't would call the

we to to the what continue we've lines during calls. of want operate think I along mentioned our proportionately, So

We been an eye have discipline expenses. always around keeping maintaining expenses, on

this As quarter, saw nice cost-to-asset we on ratio. you a took basis decline a to on last that saw an XXX basis points. we That's the adjusted where were to We operating material year. decrease from

to So mark continue to that billion proportionately we sure we if cross gain $XX of not. scale we want make the irrespective or

hopefully, you terms about we So of in that. that gives think some how color

Terence McEvoy

for? of levels, And Helpful. got it to to case what pre-COVID kind there, out noninterest-bearing which And And back where going you balances? it to back to to the model, that getting get XX%? kind what then watch deposit if is utilization Yes. what's earnings we take get just you of that does wish of rates XX%, mean what

Alberto Paracchini

good So that's know. answer a The short really don't we really question. is, Terry,

would expected you now would revert utilization seen post by back that COVID. have You have

that could I coming a is little things a bank which be call different, were we COVID utilization utilization or mix a impacting now. today kind play. line there's than we that of have are overall right we of report. so different couple think probably percentage slightly maybe the We're into larger the that line it, before We're

from little borrowers fact levels rates call piece discrepancy to, XXXX that, a the of higher today. interest back second I'm it, reversion kind going skeptical from mean is, given much of with The the

had a If or would you frankly cash line were the probably sitting and money you the higher-yielding move you flexibility, just the you on pay to would down alternative.

but in we that our in some seen mass seen of book. it, We've haven't

I of what rate, skeptical in guess fully back it a was mean probably little to what So hearing we're is, XXXX. reverting you're that utilization

Operator

from from James. is question David next Our Long Raymond

David Long

to deposit the out you the follow rate out downside deposit want you the we beta discussion. of do point? some if year, expect what this do cuts, look for the up I on rest at the of get on as And

Thomas J. Bell

a That's good question.

actually again, subject higher short-term were think, year, flat rates to overnight certainly inverted before. I We're on are the Fed, one to right we which today.

I'll CD of we're book on have are that So repricing end months. benefits we book our shorter curve. But some to already it, the call is of our, the seeing about of X.X -- some CDs

book XX try XX% it's short, then to the that, we've those a rates products, betas to been haven't And have model high-yield will on reprice certainly, lower some in so really -- positioning we pretty -- in more accounts to CD can't Obviously, and on operate relatively betas be the will core XX% at to and reduction. adjust as down. the market So the bank expect down. moved, our rates substantial you call of really it, money your rack our the again accounts, we way the but continue

Alberto Paracchini

And then David, just said. to add two things Tom to what

rate X.XX%, seeing I average remarks was maturities about CD the we're for on like the that Tom's think think. that book, in think you earlier, I when XXXX

at relative rates where you in keep is So kind if just and Tom rate X.X have the months, that to said, of see portfolio are. X.XX%, as duration kind can of mind market you that of, a

in a being sense what kind you terms reprice gives be, would equal. the that all else of So of

think into have come to to comments the If is the in think earlier going obviously, that's I in you competitive Tom's the play, declines subject obviously, in so dynamics to moderate. pricing market the call, and deposit forth. But rates, comments to and I starting

our interest for at end, little keep this be the that bit, quicker that's point, it our slower. repricing, going to lag declining to that that's in to rates degree a impact given But benefit that's as going a will that opposed rate our more we it's what If on If than positioning obviously, probably market I so the mind. get that fashion. be just slower to faster, in think to rates detriment rate-dependent.

Thomas J. Bell

add David, significant a in reduction brokered would The we this and FHLB our other is to, had borrowings, we right, thing a only I mature. quarter, had CD

So to wholesale at cash Fed, us ultimately pricing. million less of -- which And that $XXX speak. the that that's so type gave

really still is liquidity strong, So even improving.

just help to the -- numbers that's NII it's going as well. So

David Long

it. Got

Cool. for well. deal wanted gone M&A with to Integration, The seems then that. here. Okay. And Inland pretty second to mostly have done just a talk

First then appetite do secondly, or a discussions question is is, to pickup are you what Byline's something serious seeing discussions? at in this And point? else

Alberto Paracchini

I think first. let question the take me latter

appetite our think I is high.

I of the we've gotten to but it's reverted It's on and it's M&A not better, portfolios gotten I to rate which the very seen, announcements think lot M&A. To XX impact marks clearly, where open for part a of easier to recent impact are in friction M&A, of the we of a think what's the first rates look, the think question, think of certainly think the towards for -- of that institutions, kind that bit was to ago, a AOCI, the entertaining getting prior it's back in little the certainly I maybe meaning better. -- given I year, terms -- I that M&A with it that math, of on the for the speak, interest of end that's so lot difficult question you've to fact is the think indicative I people. was environment M&A be rally months say the causing the to

our concerned, look, we're framework M&A. kind So we for we our have far of as evaluating remain as --

partner some in think to a hopeful terrific there's long-term We think there activity we're that for are a for consolidation. to that that we will XXXX. We are and be institutions going continue partner, be looking

Operator

KBW. Damon comes Your from next question from DelMonte

Damon Del Monte

and but asked couple answered, little just a ones questions Most of have of my here. been

expenses the quarter. first outlook here in the for Regarding

or it sub-XX% kind was level? like $XX data $XX and looking salaries help in million. that Does the I kind the come there. up you just million benefits, walk through think Tom, of guidance kind to us some number of from processing? operating is Just of for it guide of to can

Thomas J. Bell

and delays of lower that to what XXXX. We've so benefits. salaries a Some looking from in into originally definitely some some estate and The teams to we're out actually bring that the is as than it numbers hires in materialize organization business a bit well came for, were real new accrued that some had we won't still perspective. and as seek little

there. guidance we're trying to give So full year

the teams, we on to be invest absent the expect side the to do the that. that, lower and we increase side, of to XX%, on bring cost think that given I to But bit business think to on to maybe would QX. for spend going just we're make want little in we guidance have a

Damon Del Monte

it. Got

And Okay. of the provision then forward net expense normalized and kind level. going we think about All That's helpful. right. as a like charge-off

and think on XX I last is quarter, high understandably. the going think you reasonable X But level from do that like the XXs, basis basis last that's years, you points XX forward? point had rise

Alberto Paracchini

the today added basis that. XX loans. a of said, in little additional in I PCD think for think different still We that historically. range maybe things than comfortable to XX a And kind with we're point historically. the we've always couple Keep I disclosure are Damon, somewhere mind of some

that, us over are move the those those. can add that to related time, the mean we to loans I expect of quickly. degree We'll you those out take bank try to to relatively charges

a subject to obviously As mark. those you credit know, are

the points to in back terms But basis that. kind question, is around color of XX XX I think of of you that underlying give your reasonable. and the first part disclose still rate, to like we'll So

Damon Del Monte

and looking lastly, the that are some at tied of just an deposits the the index if deposit any base, portfolio? then rates, Fed so when relief does you'll cut do And have that you rate in get portion specifically to that

Thomas J. Bell

we to hedge accounts, for market money some the have deposits funds, Fed tied brokered Yes. are of that they're our balance like on I they're sheet purposes. and mean

there. that public an in few immediate we that. So were from entity then where more a more tied are clients the to we'll And index see an benefit there's space

So we'll definite immediately get relief XXX%.

Operator

Brian Scott. is question next from Martin Montgomery Janney Your from

Brian Martin

lag you rate what much or And the follow-up, a a side, asset going give ask cut, an what some color it on immediately reprices quantify side, question. being versus can on through -- then deposit Tom. immediate a to on walk if what the I you Can some you just moves how Can on and of that? it? Just just Damon's to of a you was lag?

Thomas J. Bell

I both that of static of in our of point risk X the XXX. a And what would decline sensitivity to reduced in happens repricing how and around our Slide we then profile. a you scenarios on our assets XXX year-over-year ramp asset would a point We have basis liabilities. you again, and rate assumptions decline include give interest basis we've Well, where

$X XX XXX So we are million a basis points. it's asset in sensitive, per basis points, and we have, static,

that would that would give-up. So be earnings be -- NII the

Mark Fucinato

basis. annual an On

Thomas J. Bell

annualized basis. On an

as So May, April. Fed July. in takes if challenging actually that if again, -- gets eases book ease in because subject they in to then the And repriced the in place timing, it's you the if Fed the know, March, well immediately SBA

both timing an the our curves, the the on side expectation forecast, numbers on basis. I you So asset side. using is the on -- And our forward the quoted we're book... which But the rate and based liability matters, NII for

Brian Martin

is I'm And -- much sorry. ahead, loan variable of book the go how

Thomas J. Bell

No, it's under XX%.

in the or of fixed have Prime SOFR combination XX% and then the and parts. other rate We

So it's again, it's you But XX-XX-ish. of straight investment have portfolio, well. kind as

bit So XX-XX. skewed, it's a little

Alberto Paracchini

and when I I an And even think think if Yes. about Brian, is this -- you think important you -- point.

really rate roughly you which, when lot fixed about of loan. to tenure those example, fixed in XX%, think mortgage shorter which even remember, than, a are be are component, around So it's the commercial rate let's for going loans, a say,

So X-year, going on like it's those assume it's a those to are -- assets. duration let's typically, X.X-year be

component, about roughly to of year, speaking, be going every that have you X/X as that So well. repricing is

that keep So mind. just in

Thomas J. Bell

Yes, XX%. about our is we'd say base loan

Alberto Paracchini

Yes.

Brian Martin

Okay.

Just, I one -- there couple are guess, a of others. two or

Just on the capital.

M&A. about talked You

follow-up in It as having buyback your as the about that of the you the M&A? to buyback, what your more was something about just the buyback target there just doesn't term be talk pan appetite can you that you far sounds one. that, as -- are if versus value and short a And the M&A if of us place secondly, characteristics what a than through Just remind M&A so today. on are on -- then interest as but though might the in talk outlook,

Alberto Paracchini

I terms terms first allocation, in of we part first foremost. think, the it's -- very capital and the just When your of it's how growth think consistent to the in support about of question, of Brian, very, to in priorities, business. we're So you think

want sure talent, to cetera. business, enough invest the we more continue to we than capital continue to in So our infrastructure, have that business, et grow make to

we categories, pertains to that want M&A the several continue obviously buybacks, As you to obviously, M&A And that or has to we endeavoring -- the dividend, are need, like-minded. ultimately is next make we're of dividend. to sure be the our paying a really it to the -- a counterparty function

need for from strategic transaction, return also business to and from has an You from that perspective, a sense. perspective, culturally and strike to make the earn-back transaction a a

-- it, back we all if than we M&A buyback in better therefore, box So that's shareholders. to you telling capital, of superior to the to basically check use is check those the look have excess no for -- have we categories return we and categories to feel can those like we can that that capital

would think that then that you a asked I So about in about targets. question priority. And

to that be I a about between to the million, targets And of think as in slightly kind grown greater We've somewhere -- targets the would billion $X of about target our That around about to that think target market. today. company. say, $XXX up company we when $XXX to But today, think is million XX still kind obviously, category I we in that, would over we're larger a continues be market market. time. comes metropolitan Chicago

Brian Martin

you. Got

one Okay. the maybe for That's helpful. And then on credit side. Mark just

they some third this there how credits if during I you're I the give XX days Just and apologize, or then paying the fourth to us that areas missed trended last you mention with I the kind the in special -- of just the so today the guess in closer from -- dynamics attention the quarter of to market. can you was any, comment, and if Mark, just deck it, put and change, on

Mark Fucinato

special increase area also. resolutions said? good we had also in credits, but there Well, Special was mention that mention you Okay. credits, an

We continue with to of same lot I of be we're in the rating we're resolutions. dealing activity moved have lot credits year. same of see to our see a that to and this at PCD a But good time, expect the going terms that

there's answered we increase. Brian, But we the to the there'll key. asset We're execute Can a not. is ins, where strategies? It's question, we the be look to making exit classes, credits either in what been but up of the criticized big think to particular different book, trend there's things moves the seeing things we're that be not no deal? on I want trends. be -- been just There'll that things asset is commercial seeing terms are in strategically can, some been not no class Which particular have book, in that we're there's these been each upgrade unique in area one or of those if sure in to I'm outs. going SBA your book. popped there's or

Brian Martin

to Yes, broadly, around. what I'm get just the trend arms my trying is

watching give that? in in closely ins commentary this terms areas they you least can on have the helps. maybe So near any and just more you're outs, And term, at of year,

Mark Fucinato

then rates quickly. book are too not spent that their obviously, everybody watching, our is the it, portfolio. even assets. SBA of with part still And carefully like big to customers. ease We the those higher going sponsors this a maturities, appraisal impacts upcoming a country looking in is and not values else that our though I'm up office what saying about dealing lot And at that's of time

we have last can months. to on an companies for that eye So their keep to had payments portfolio those with continue see they've the rates sustain also to deal to at if these XX that

Brian Martin

Okay. maybe question big Got Alberto. picture helpful. And just you. That's for last

Just Alberto, year year at if look a Byline. for talking you being last about breakout

you If guys today? broadly that be more given model conditions market can opportunity opportunistic this like feel Byline of speak certain you you can look greatest business today, the really for that kind is to the in Is at you there like your where you year where can areas this you excel feel just year? any

Alberto Paracchini

to I of have want are word yes. lend for think here To that give or remain And we certainly an regional we we position people over optimistic we hearing and in there where Chicago. I game of saw the lot be touched particularly, III And we -- would regionals close have think Brian, at call coming call, of a primarily -- might the asset answer, on the you banks in that larger or of clients quarter to point example, say their the the about current the lot third kind I XXXX. potentially to bank. market maybe through the is super able this diets, so there the were market of the short a to very course, we the be risk-weighted -- latter you relationship-oriented quarter towards We cycle. were to in from do part some opportunities. And and seemed be latter a second anticipation opportunities larger doors simply Basel saw end the new

the expect to it when do opportunities importantly talent. XXXX. into think I well know, for some up to pick when will that, to that to banking customers of and comes that We see we also high-quality ability and continue type we XXXX. also will us I that disruption of in comes we from our you market benefit it anticipate think, as any do in to

the optimistic our add about our to and ability to customers going grow continue market. talent and we're in forward ability So to

Operator

today. will now any turn over you remarks. questions Paracchini the for Thank your back to Mr. for closing call Instructions] Alberto I [Operator

Alberto Paracchini

forward I you to just on thank first Great. the want Thank speaking and of all joining to for next a interest give the schedule in heads for Carla, call look again you, before our to up and we half -- your want to We Brooks leave, you quarter. And today you Byline. for conference year. the

Brooks Rennie

Yes, investors Coast KBW Goodbye. that, the attending our plan nice conference concludes weekend. everyone Hope Piper has Alberto. that we this call West for a the Thanks, And this on Sandler along with Conference. quarter, with morning.

Operator

today's all for you Thank your This participation. call. concludes

your lines. now You disconnect may

Byline Bancorp (BY) 26 Jan 242023 Q4 Earnings call transcript