BY - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to Byline Bancorp Third Quarter 2024 Earnings Call. My name is Kate, 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, Kate. Good morning, everyone, and welcome to Byline Bancorp's Third Quarter 2024 earnings conference 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

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

our Reconciliation comparable GAAP financial the earnings the financial substitute addition, contain for, appendix the and are for or measure directly the to but reference certain measures, GAAP comparable found each not In most non-GAAP be within of non-GAAP measures. slides intended remarks financial may which to can measure release. supplement,

please statement about earnings risks For disclosures financial release. the the and see and additional in measures non-GAAP information uncertainties, forward-looking

a like call Paracchini, quarter, of Conference. With on I Hovde Byline now the [ East the turn Conference we Financial Alberto Piper that, for this Services As attending ] Coast in would plan over the investors, to conference to reminder Sandler Bancorp. President

Alberto Paracchini

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

comments. on to would of Roberto? Before his we call to for like into pass our the results for the I review a get Roberto quarter,

Roberto Herencia

all. Thank you, to good Alberto, and morning

reward Alberto deliver top franchise a model. strong of will to board solid in which consistency the across the on had franchise this with to peer another We proud XXXX. strong the premium performance once within back have we rank time of quarter and our metrics, metrics results. They a place several touch our will minute. merger the valuation. We're Our these in prospects a and merger of disciplined Security, This started believe among We're group yet with showcase marketplace quality excited with a also merger continue in with the attributes and resiliency group. and profitability shareholders we to continue since about which Byline with the was announced quartile First is again business in

preeminent market, to We spaces Chicago. to a continues and optimistic above our gain weight. build opportunities continue well The banking about to and excited rich share commercial with ability market in in our of punch kind feel our to Chicago know market the bank out be we

XXXX, we top XX Management. from the to Illinois the in by by Chicago Resources Best awards addition in Human for on and and U.S. the recently said Workplaces We Group home Workplaces we're commercial workplace were banking to awards. as ranking in one of new Chicago's before, the Byline being focused Society Workplaces for City the Best Best talent in recognized keenly Illinois town. award Sun Companies X best with the As are These Times

and same employee News one I'm last we're our to Midwest indeed. With The compensation shared For thrilled Companies the World investments making and that, that Byline. awards, at feedback, we driven the making recognition humbled & that back call. We're are inclusion, built impact have we culture in by Work benefits an in of delighted competitive Best and employee development, demonstrate the which call to pass earlier celebration we on our year Report are these significantly the Alberto. and of at to as and to this in received the receive awards the time people

Alberto Paracchini

Thank you, Roberto. Excellent.

results Tom will questions. the in I call and more to highlights the terms and financial for come opening for detail morning, some with and start In this quarter, will up I'll before of agenda the wrap comments cover back the up follow

we're call can today's the the to As you front. find reminder, refer deck disclaimer on using as our a the at for always, website. please And

Let proud performance overall are of by our quarter. for results the saying that start me we and

transaction EPS we in loans, reflected minimal excess attractive, as the and to of financial million opportunity Chicago. XX% in record the from which this value the $XXX on Aside first line capital. Furthermore, XXXX. return we this of opportunities The our with We will with importantly, I'd will believe preeminent of call performance million employees earn-back of the $XXX executing be announced a in dilution, here we commercial like shortly, the welcome assets, are transaction becoming in consider company, add look consistent is are First M&A Security transaction the in continued that in First franchise-enhancing deposits, of in book by and also track strong $XXX tangible take Security of the Bancorp accretion of forward to bank in get I which a to that with to core. transaction approximately is half completing cost to Chicago. strategy short million the our period, And and shareholders financially transaction morning. our

Moving to our starting Page on results, on X.

$X.XX income on we or share quarter, of reported $XX.X For million. diluted revenue the net per of $XXX third million

diluted share. charges, income was net million $X.XX transaction-related per Excluding or $XX.X

base, strong to our AOCI an quarter XX.X%. also this recapture. came Turning last retained of The by lower and of equity driven a quarter tangible stemming with metrics. on points return common in compared to rather from growth not and but They ROTCE XXX declining and profitability, profitability was earnings in return capital ROA basis by

operating preparation million interest assets, basis metric driven was net higher stemming company decline to for points. Total higher a million, in $X.X income the which driven Xth from The revenue for as new average Our the the charges and by came quarter. up increased X margin of managed XXX $XX.X asset by points, mark on $XX.X to the income prior $XXX points lower to value fair income basis that increase quarter. earning the offset expenses charges, a servicing quarter. to marking XXX continued and basis excluding declined Expenses, million, of pre-tax at transaction ROA from record quarter fees. ratio in set our other for resulting consecutive the The well of to expected. preparation assets a Non-interest increases average in in X.XX% pre-tax million, for increased transaction-related million remain adjusted $XX.X exceeding at

That cover Notwithstanding, asset income As earning in net which quarter. for margin saw detail to basis a far basis shortly, as compressed for expected. Tom higher by excluding margin drove accretion, X.XX% points. point is interest will the the as growth XX X more the said, only quarter the we decline concerned,

Lastly, basis. remaining our stable on efficiency ratio a quarter-on-quarter stood at XX%,

billion. Moving good reducing remained part loans Higher of on in towards We progress to the from flat latter the non-core at of pay-offs prior relatively Loans the the $X.X acquired loans portfolio acquisitions. on balances. quarter coming made impacted of balance sheet. period end

bodes forward XXX deposits $XXX also that leasing loan grew Total or on quarter. $XXX healthy, from at to prior Business liability and in In we X.X% into million bring stood quarter. notice with discussed the the that the we front the You'll our points carried XX%. year-on-year year basis average side. driven lending cash loans. That that $X.X a had by ratio level for calls, our grew deploy end, We progress balances to modestly said, down quarter rest totaling the higher plus made well business ratio cash and a commercial quarter of billion million. Shifting closed development or anticipate XX% we've remained to activity range. loan-to-deposit We commitments annualized quarter teams on good target second be good desire the it's with going second to minus to the at growth of a down from basis. on the and by declining as government-guaranteed and mid-single-digit which balances for the

NPLs balances points million Asset million quality at Charge-offs the million increasing last excluding basis with stable remained include by last basis or declined to of X related the from to $X points quarter loans. quarter. points government-guaranteed $X.X $X.X basis quarter and XX PCD XX approximately end to from

Excluding maintaining levels total X.XX% opportunities. million invest organically, charge-offs take for XX the advantage allowance basis and and capital remained quarter. ability into strong or gives impact, and of grow us the that of back points ended provides flexibility us The at business quarter to were to loans. Having strong $X the the with

our Our strengthened respectively. capital XX.X% quarter and ratio total With a range CETX X%. above X.XX% X% operating as capital this of of targeted XX.XX% further at end, with remain coming we and ratio of quarter to TCE in

going value I'd continued remain we well strong forward. steadily in to quarter Lastly, grow grow will time of call us a share. our recall middle been front can't more in over to strategic like has the set the to continue positioned results. summary, per turn with to provide the tangible business attractive. With you I and more our the delivered the also and book process who results We're Tom, in planning we on In that, detail when of opportunity to

Thomas J. Bell

interest Alberto, quarter, well-controlled by we had everyone. changing Despite and Thank for morning, expenses. rate revenue income, driven the interest results environment, you, net the good strong and higher fee growth

$X.X increased tangible quarter, book Byline. With this the we this the portfolios, portfolio. higher offset other million, grew Pay-off start with non-core Xth loans was in prior X% million in from in activity in new Slide billion September to we We the quarter. for Line and flat All stood up were regulatory and business capital by TCE, loan linked lease by X XX%. for capital another at ratios. a that, higher at was grew quarter, As value, pay-offs at resulted growth originated quarter, great for consecutive utilizations up which Total CETX $XX in can quarter coming million new run-off relationships. loans $XXX result, on nicely all, the and XX, quarter. which in all $XXX largely

the year, for of expect the ahead are continue the remainder look to in we for mid-single-digits loan we As and growth stronger XXXX. pipelines

deposits in slightly time accounted total to commercial by increase down commercial deposits, for driven needs. for money after Total client market Turning Non-interest-bearing X. deposits. customer demand to Slide seasonal for accounting was mix quarter. $X.X deposits primarily The and of by stable from growth X.X% QX, deposits the the from was billion, annualized consumer quarter. activities XX% driven The increased in accounts second up

ago. from year decreased are pleased results, basis with We loan-to-deposit points our which ratio a XXX

higher million continue for Fed million range up income, $XX QX we interest Net higher to driven X. stable rate in expense balances QX, cash interest focus interest The was to and was path, and offset due Depending interest to $XX down lower XX forward, quarter, net going growing the we on net quarter, accretion. points $XX.X NIM income. basis increases by expect on linked in income the for by the to than quarter Slide guidance, million income primarily from on to deposits. the X% Turning prior for higher X.XX%, interest

to Turning primarily million totaled both to value which fair Slide XX% X. third our a change increase expense up in driven by the quarter, income in $XX.X in equity Non-interest an of wealth securities, was linked quarter, The compared guaranteed X.X% premium management second and loans sold than of QX. sold. primarily businesses. QX, higher customer mix The was lower loans the average swap of quarter, due government volume to for was

income the on QX. $X We million million sale in expect range for to $X gain

Turning X. Slide to

assets improving efficiency for remains our mainly the as non-interest Our up our on acquisition as employee salaries, expenses in of at million quarter. ratio was and in a higher record Discipline record X% well The in consistently the and to evident prior low uptick to from maintaining as remained expense costs. the average an noted management expenses came X.XX% third expense low-XXs. benefits quarter, to managed due by well $XX.X track

to platform investments in As we look ahead, mainly related digital due costs and to expense seasonality our quarter, our advertising to fourth non-interest banking increase in the one-time we expect spend. in

million. expect we And the to million we expenses range in our $XX expenses expect $XX QX, to between $XX area. million and $XX million XXXX, For for

quarter. ACL of came down from to to attributed in at total the X. million, NPLs Slide points X the related prior individually Net the to quarter. the Provision X.XX% end to million to loans $X.X the by $X portfolio. million loan to down was of primarily $XX.X for expenses to government end XX% QX basis assessed QX. previous this QX, $X.X guaranteed increased compared trended at by $X.X from quarter the in loans million X% Turning The in increases in million, quarter charge-offs up in

are points, well basis pre-tax, basis while of quarter loans, the guaranteed points we track delivering X%, at government to basis and credit Excluding NPLs record XX NPAs from results. positioned strong stood higher pre-provision above Due total points stood QX. to up costs, assets at X financial to in consistent our maintaining previous XX absorb

Slide Turning XX. to

at stood $XXX cash of the our the trade. quarter, During term quarter, second the million approximately due from which to repayment primarily million, decreased facility the $XXX position

business remains liquidity positions strong, to well us which development. Our fund future

Moving on to Slide on capital XX.

the Our grow to continued quarter. capital levels during

We are that very XX.XX% quarter of see end, now at CETX after schedule of our the exceeds as which pleased XX% Inland to transaction. and is stood ahead

Our points increased basis total to XX.XX%. capital by linked XX quarter

TA remain opportunities quarter. points that, ahead We franchise stood ratio XX you. and about our strategy basis linked TCE to our Additionally, execute the X.XX%, at as to value. With positive we on enhance Alberto, back up

Alberto Paracchini

Tom. you, Thank

listed So we we not of think the past here. excellent when and across about gives does categories change you quarter, made XX to summary of what up, wrap This much Slide progress very the running all business. a

our we the with our acquisition strong we financial commercial our strategy delivered grow performance. announced balance of and and to consistent continue business sheet, an we strength further attractive bolstered in the invested transaction We franchise,

pleased we and their hard the our for ability a work and employees like basis results they continue to our contributions execute organization. With with we for I remain open let's the for about were would questions. call that, quarter, While daily to thank for the for on make deliver up our results all our to operator, stockholders. to optimistic customers

Operator

Race question first of with from line Nate The Sandler. Instructions] will [Operator the come Piper

Nathan Race

next you Alberto, of just Curious the of of that organic on some on if heading business into if tie I enthusiasm out the just of front an And just those as some in was coming most the on some comments you touch wondering strategic if excitement you're your and curious of planning could comments about process your into the terms could aspects excited expand also well. acquisition on basis. optimism year.

Alberto Paracchini

opportunities to transaction think we -- are the to point continued announced that the still for think similar I yes, the a to transactions latter that see is announced. do the just we quarter. Nate. I And answer this of opportunities one Obviously, we types

to answer the So the point yes. is latter

$XX ahead under at the look, ultimately On market traded in $XX and the look we commercial the point, first have the I obviously we're the we today, we we will that $XX billion. today cross the be largest market the for traded bank just presents as market same we've -- position publicly billion, in in we look XX size, at When excellent $XX years. capabilities the billion And execute largest to commercial and publicly our with same strategy continue billion. so to characteristics, that on been between that runway executing us bank, last excellent focused over the

to on Roberto our talent. So touched ability attract

than continue good was of time probably to the to our We optimistic customers banking serve today company in see back to And to continue opportunities I'm recapitalization platform attract talent I the the more well. XXXX. of at to

sorry. gives that -- answer you your question, to hopefully, So color your I'm to

Nathan Race

an perspective, -- to Just guys if frame et cetera, Is you very Yes, of up that helpful. guys terms are XX%, of preparing are billion, up you speaking just kind cross that from where if And $XX of threshold? curious of for in frame compliance, can it infrastructure, terms us. you kind XX%? curious in could you just of maybe headcount

Alberto Paracchini

also much people for will And said, ultimately company. as to as on smaller time, is to kind the a there were we and to this new like since close preparing the -- investments we this $XX crossing primarily be that prepare Yes. pipeline. We've in just frankly, billion us. also just for timeline, That get is cross being we of been thing something over Nate, not touch a so

to say of that. terms percentages, hard it's of me kind In for

areas importantly, the to control be regulatory we management, control have the in our we place meet risk with and think in staff when it that manage more want functions that and comfortably to particularly heightened comes different have in capabilities, -- make expectations. to able to sure I the expertise we

transaction. question -- that? somebody How asked In terms the into in And M&A think think just is about potential? And we factoring of you we the how an do is announced timeline, prior expect when to I M&A the quarter, I cross? the

this XXXX. is the between, still our I organically could second that, say, look, to view first XXXX half something So that happen half think let's of potentially of ultimately, the is

I without business. any of a manage still we that a on negative think have lot to to degree flexibility impact the having

an you mean do that So approval more -- take could of go have the X X to XXXX, diligence, probably between were this fair what I that transactions Obviously, of range or to fair or kind assessment you it's or full that timeline. still at of think point. is say, to that if half a to could process. But point, time, plus at think there take be M&A, minus through quarters extending it's second kind I XXXX to have year to this

Nathan Race

one a the Okay. include XQ. helpful. the more cuts gradual any basis maybe for thinking year, for And That's legacy the about Byline Maybe on growth very additional Tom. appreciate just one of rate NII Fed cutting I last NII through next for cadence? guidance generally Fed has the end year? Does rate assuming that

Thomas J. Bell

Sure. point, cut, of able is that also growth saw to that Obviously, because the little XX that period. But our we be we stable is to of pressure stable the again, the speak. think think Fed subject NII have through here. catch-up and growing, I keep to here should basis organic given this least just think on the at we some point at and does we But what so was the book, CD NIM going the we'll a actually

Nathan Race

that Okay, acquisition, great. right? excludes the And

Thomas J. Bell

Yes.

Nathan Race

Okay. deal. Good

you that think mentioned sorry, expense excluding one deal? Was $XX question. Is year. for million just million Tom, $XX next the I And last to the guidance, clarifying

Thomas J. Bell

the excluding deal. is It

Operator

will with line question from Damon of KBW. come the next DelMonte The

Damon Del Monte

positive side growth regarding rates go you question the initial into that with we maybe additional loan real conversations a pretty as could estate things outlook. seen cuts in rate and change seems of had with lower? behavior from the It XXXX. much be the Have coming commercial expectation the Just

Alberto Paracchini

the guess, and I thanks foremost, first question. for

a coming we longer rates. more to in need also rates help We've see down bit think term some. short-term I back-up a will and had certainly

So as well. impact that's to going some

over in is any was of what -- can the our pipeline estate I as tell far our seeing we you -- pipeline the -- we're point it that course than real our today commercial so year As higher the far. pipeline, at

certainly strictly say rate I don't an is driven. I would that that's know uptick. that that So

think have at proxy, both margin you That's and would originations for rates that pay-offs. I a keep it, start usually good more a down I transactions. rate-induced to come eye so transaction more, the activity. seeing on would call close

the think with in opportunities I is to is they institutions to to what seeing the in consistent -- today. that where which Us think are and other lend market, seeing those advantage a need take dollars rates and we're sponsors points sponsors you're of Fed ability the this more driven capitalized certainly the strictly are of I have strategies. that position their have kind cut than we what to is And it's are execute XX they by and capital. rates well basis access by

Damon Del Monte

Got it.

credit kind helpful. net then level, to last expect basis regards with That's the mid-XX you I bit at bit XX do of you a of was the more think And little quarter if of normalized? XX longer like go points trend it little back a charge-offs, you for and couple continue that before. or think quarters, Okay. look kind of this quarter, Would we to the kind specifically to

Alberto Paracchini

Yes.

are because to to that flowing in that mark attention quarters, you because paying think the think would the I we accounting this we've about today. point through now talked PCD attention, just keep essentially acquired seeing charge-offs way prior of that component works you're loans those I paying keep I

you improving of So and track We're keep deck the that on additional paying disclosure attention. added that that. keep so for could

an was with what time. XX the roughly example, that consistent has If been rate charge-off you which is is in historically quarter, our exclude this as basis what range, point rate PCD over

Damon Del Monte

I lastly, on to think And have comfortably Great. of The guess X.X%, updates you above is capital thoughts, shouldn't impact X% to I your target. which on capital then any an too helpful. noted just meaningful management here? That's pending up X% levels. TCE, transaction is

deploying So any excess capital? near-term on thoughts the

Alberto Paracchini

Yes.

to is think level in we'll generating then excess We opportunity deploy of an -- ultimately don't can with use capital that look attractive the and do and a growth to is operating said, are dividend look, at we're that opportunity to really capital, was have for an consistent we operating of if we've it all that's organically. the there, capital to to return be the things, of it shareholders. to time, business in for excess have to if if we is, we in not a we we'll think like think on look, short ways the need to at Damon, I a But we'll that. And effectively, said we comes utilize to those this think market. then whether in ability at generating what capital -- for all we we over before and need look support back a had it's always that what we we're above guidance being ways, act time quarter, buybacks it's whether of what are that period of the flexibility continue our want level or itself presented our the medium-term, looking if

Operator

the Stephens. McEvoy from Terry line of The next come will question with

Terence McEvoy

more growth, because pay-offs to how up? higher loan that shaped the quarter play follow-up X/X the And how attractive expanding into I opportunity first of insightful set down you appreciate questions. for look the that Was very And QX selective When seem in Page come a originations really and about was on thanks just overall? bottom as they thought A Tom, competition off, be at for of industry quarter-over-quarter. do the there, or X, being couple pricing being the mid-single-digit I and Alberto, that. the today.

Alberto Paracchini

still XXXX, of mean, activity pipelines. the dipped good noticed third I Terry, at $XXX terms -- million, business that like at of chart, as quarters Yes. you there like seeing we're look to quarter back if not to just at some going you we million. down in we were there, are then -- $XXX development looking the we're

I there's just volatility. think quarterly

Some the quarter. next loans don't into in happen one they bleed quarter,

think -- seeing good there. we're activity So have I'm don't I not still in regard. any we I concerns think that

think time I for pass I our those to we would this announced allow in side, acquisition, when I we that pay-off some lending essentially the the us run-off redeploy we wanted mentioned the on it what into that at before Tom, over think that. we Inland to liabilities quarter, businesses. of and allow portfolio some saw do that And to own was

like we I think seeing that.

want we of do think I that. more to

actually some you this driven run-off Tom in Tom end the also would by it were remarks the we'll saw at quarter, forward, our what is So and elevated out, well, bit of which or quarter redeploy I in over ultimately, there on you little well really terms saw cash balances, pay-offs a cash that. And point balances businesses. of into -- lending cash will his of touched bodes because that time as going

So Tom?

Thomas J. Bell

Yes. Sure.

Alberto we pay-offs. had some some the I think pay-offs, loan as syndication of loans Inland to, alluded

non-core lending. that call So

fourth I are very what Alberto your the into think of we've But we the In seen We'll funds here from very at that But a see redeploy least question, happens the brakes for see to outcome also future generally, customer and the elevated tap So quarter, pull-through there's alluded Terry. demand. Hopefully, as that we slowdown with elections into to. But the the bit little loan strong, good answers because the relationship what rate is. I like or been that. can look pipelines. things think those to a pipelines stuff. just

Terence McEvoy

can bit and come Yes. well? deposit was a quarter of just interest-bearing you where And heading deposit betas strategy in as kind down, as your than about more costs talk you modeling see then pricing, the I little up market third rates

Thomas J. Bell

Sure.

in to perspective. mean, X put just book months, I roughly So that is CD our

for to cut, when on a painful. a they less going it's Fed lag that we depending have So while does. we're more be is to the basis point for us have us Obviously, little going basis But that call will do what gradual also and answer the to points the XX declines XX new take in a on of I'd pricing, repricing soften seen CD acquisition as just the accounts. seen pricing back and expectations your we've about book of on we've front. to But definitely the question to market well. And has catch-up up reacted what if significant

the range repricing we pretty of So move in to with Most relates the and pricing in the that and it pricing to things expect exception we're XX areas, product and with some other banks betas here suite as we're declines. have swiftly XX% other line XX on on normal exceptions where or consistent kind betas.

Alberto Paracchini

to the of I from Terry, if kind standpoint. approach on could business approach business add -- to the more a an that, just to

more willing calls, in to think saw costs that funding the opportunities wanted business prior mentioned we higher were we to margin, to we we add relationships, I incur add that very add if do the of of than marginally the think benefit a offset long-term higher business. growing the is short-term in the marketplace. of We funding time period in costs by for relationships cost having

were reason, run, within in we want to $XX.X And customer down We to run, I this the The we with -- as thing business that's deposits. quarter, think, deposits. much fund down I We deposits. philosophically, broker to but customer strategy, that think is, run million other want the can really as we want long loan with do to growth in brought we our that's long plan. achieve for example, our

come from to other could we rule-making, customer could that as come types funding. deposits Those to there look that which given, out for customer those proposed rule-making But example, the with in on stemming that of insurance actually We of that that as deposit continue balances favor notice more deposits, notice factor it's prudent attractive. proposed grow coming down. there's look of on of think changes you in can So deposits higher if through to well replaced effect keep opportunities broker a deposits. to

Terence McEvoy

release, in think then apologize rates this balance just I where of off January. will that the And $XXX be today sheet was are the take quick the one given in BTFP million the if Did you matured I one. or but actions in January? any

Thomas J. Bell

off basically It's Fed the on borrowing of earnings Terry. top cut now, rate When rates, the rate. the is

make investment. So And declined hold that quarter. cash to was the for it sense why the doesn't the

Operator

line The Nosal will next with Group. Hovde of question the from come Brendan

Brendan Nosal

quite we PPNR think mean, said, the as X% quarters as some ahead that X the next above you across move we of at fantastic line to X%. now. you Do ROA of on been has you hold year, bank number kind really Just look profitability for 'XX? I the can the time Like

Alberto Paracchini

easing institutions the I of so period here. is fair to we're to adjustment, seem certainly what to seeing are fact of let's some look, size a it's to in say, anticipation trying to in billion be Brendan. as $XXX reprice that to you're think think our in of that and rate cycle that be a alluded liabilities I headed between, there's billion, degree most going $XX And Tom think I -- institutions say range to

which and essentially, margin lag to try there. your trying they're to a essentially going depending you're from So then and reset base the going back to book, little is -- new But -- at you're on to that your margin book grow CD a bit. come of balance, going to the stabilize you're tenor -- should point

able bit, a by touched to I in is, on the kind focus income that, fact offset net earning And quarter, income. little we on think the terms with the where but driven saw this we've margin of really margin interest drives compressed then what growth, but the I were Thomas net degree interest higher. it think of that asset and look, guidance, like said to we a that's

answer level the certainly levels Can think point, could that I or your That some at we consistent could, see interest in that are what to should consistent kind X profitability or we the with a question. drive alluded income should of lag this question. Hopefully, a to happen. saw be question, at in of back quarter we're to But in answers net call quarter? could with adjusting, allowing we words, CDs can that your we dip the we see in higher. other you we margin, it, the those we where be reprice? Hopefully,

Brendan Nosal

helpful the super that driving on are that. cadence that's Yes, the factors and timing various

me. from one another Maybe good. Okay,

this at allowance portfolios, book fair curious, this you're reported like quarter-over-quarter. recently the what like saw of coverage bit Looking unguaranteed a kind quarter, seem much of that it books. that your piece of up SBA doesn't in looks in stress their have some stress But with seeing at saw bit too others portfolio on the just you It in a moment? own

Alberto Paracchini

portfolio. portfolio higher I pandemic, return higher cautious, we've out think portfolio. that we've a also coming on a mean, particularly -- been maybe view portfolio. a I always is Well, we Brendan, have that It's of certainly, the risk

I view in always in that think balanced attractive. our has are been risk-adjusted that business returns

So we in context. much like that that business very

of would we we I say would expect the been of we portfolio of really either the thing support still the or kind support we're after anticipate surprised. view we've the done. a would simply I the effects the stress these shortly prepared to we And we've is best basis borrowers that position lot business that's have advantage other going could. resumption in has to in are it have somewhat the normalization We just the seize. try portfolio. Are programs sense to surprised was The fact provided from pandemic, direct think the originated see we well would could our have take of, down two, think that is expected to seeing that. that then we but seeing We we -- -- We or that think we're that of didn't I of for what more that I Yes, on but that the some on what small been borrowers. the government main And that, that of stress? the are took

obviously, So you our -- reserves. and brought up

a also need operate that business. to have of that maintain We view the we within reserves and

Operator

the from Martin line come Brian Janney. will question of with next The Instructions] [Operator

Brian Martin

one question. Just one or thought, Alberto, just

as up mid-single-digit to of on the Just got focusing do the inorganic an you've see I Roberto opportunity loan kind mean, of beyond in organic, growth terms outlined, But the at play the accelerate just of marketplace today? organic the given the where look and mean, of from and your positioning, dynamics range? here, mean, the you you given As kind kind that market I it in here. you move to do and ability like, sounds both it's just I you see an

Alberto Paracchini

our are this think not Brian. it's We I I to in front very don't our something just to not would that we is much. way. of maybe credit going We're our going risk And -- changes terms the in approach on to answer also, set market of don't certainly of appetite depend philosophy. opportunity it think going us, to change change the I

game we if by being what We banking expand we've of platform. our the -- had we there's a involved, mean And time as cannot a of there's off. in to non-solicits know, all non-solicits an lot that, those up. And past, customers fair that at has like what I So we're growth now your a bankers catch-up. of team then the opportunities think future. now things could, And success bring in those period to that banking a and team. And are ability the time, then usually call you see certainly in things And doing. said, attracting that banking for team until are on loan to really that push I margin, period

bit activity. maybe thing a is to that other pay-off The we're calibrating

we're going in in at we we short that in provide portfolio, is guidance, run-off regard. what in doing when know, you our least from But perfect to terms the best of far think we're As the run.

to loan pay-off consistent, be on activity, lower just see remain basis. that's a going growth higher originations we push if net So to

a It's we good play you a of at to precisely. dynamics question some answer But are it's there that estimate. question. the hopefully, hard gave So driving that

Brian Martin

Yes, seems kind how positioning today. like about here it's of there you're given world super It helpful, your an thinking Alberto. opportunity the and just there's

-- So the given look future. as your excitement about you

couple -- a X or others. X just maybe So

or it in the opportunities like in where the the today you we at of deal are sounds the on looking maybe picture. deals landscape big market? expect should that Is Alberto, is front, guys the at Just smaller how or kind things deals versus larger

Alberto Paracchini

haven't we I our think, Brian, changed criteria. really

First the, $XXX it, call range. in So is about think if Security million, $XXX you million

the base -- level think all time couple that of our some that's say, up, and going been I for at the been then dollars we've that's been way of a kind billion cohort additional having like up let's in look participate there. the of as we pertains opportunity institutions. range. it opportunities Chicago there's still is banks that we those that in forward still That And to consolidation to to -- think to, in

Brian Martin

you. Got

Okay. on Tom. And maybe last maybe margin, X the just for just or X,

kind out at Just loan have where you the you seen expect with it competitive? Do far more rates pricing play down a to gotten today, as is has as of bit here? that

Thomas J. Bell

No that pricing been has front. I say. asset very on stable, The change would

Brian Martin

yields, but terms the Okay. And at new if of gave they today in it, in Tom, you missed deck, of maybe origination where pricing? are I kind

Thomas J. Bell

on it's it's asset class, maybe. the XXX, prime Depending SOFR XX plus minus

Brian Martin

Got you.

Okay, perfect. X then or last, just here. X And

the it on impact. like small in what's quarter, occurred term the sounds the that impact? bank pretty but the later the lending or percentage. It On Is program, just remind just impact us margin that Tom,

Thomas J. Bell

maybe points, basis basis X points X tops. about It's

expand would the points other words, that's basis a tight in in spread to X because the So quarter points by X coming transaction. basis margin

Brian Martin

Right.

impacted Okay. it really quarter, done current correct? And in was that That was because was the later? not

Thomas J. Bell

ago. didn't unwound week. it a we week. X X -- week it was Yes, was just week the X

Brian Martin

Yes.

And kind just just one thinking perfect. I overcoming on potential clarify how about NII Okay, was, commentary, the wanted that. of here. -- Tom, and then margin some just the margin you're headwinds your last to

rate your kind about not is thinking outlook, cuts. as rate As what's sequentially as far kind cuts? embedded you're rate guess, we and then maintaining just X you of I guide here growing I of next or X more thoughts expect, get I'm terms of kind sure kind far how X or increases quarters But quarter-to-quarter? in assuming kind there guess, that's go of as as the get if being that of the are flat, cuts steady the X to we do X in we or just it like of

Thomas J. Bell

the the you as Yes. stable to X margin, have growing I I But have mean, relates it deck. to mean, the to on we're I trying sensitivity mean, NII NII. Page of

So...

Brian Martin

I talking just your Yes. I was NII. on understand percentage. about comments

NII, Just in dollars sure terms your understood kind of of I want of terms overcoming... in make outlook to just I of

Thomas J. Bell

it's more gave just in guidance and $XX if range the I think Fed Yes, subject million to we million to the less. $XX does or

Alberto Paracchini

income. is based one just little a kind to think add Brian, relevant margin net the -- highlight just of I to discussion in between interest bit, trade-off and on which

X transaction potentially you let's result. that as lose so basis say, funding as that to So we net term the margin, of to X had, out, basis impact notwithstanding pointed adds points the bank we points a interest that, that income

actually So else equal, where, we the all that's less being margin something expands, money. but make

of ultimately we Tom here, So one But talks margin. what kind the income, course, competitors want has pay net the attention We interest to that's why margin. when the older pays of is emphasis, bills. said like to our manage of yes, the

So mind. just keep that in

Operator

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

Alberto Paracchini

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

day. great Thank a have So you.

Operator

That your you you your concludes for may And participation. today's Thank disconnect now all call. lines.

Byline Bancorp (BY) 25 Oct 242024 Q3 Earnings call transcript