Byline Bancorp, Inc. Reports Second Quarter 2021 Financial Results

By: Byline Bancorp, Inc. via Business Wire

July 29, 2021 at 16:15 PM EDT

Select Second Quarter 2021 Highlights

Net income of $28.5 million, or $0.73 per diluted share
Net interest margin of 3.74%
Return on average assets of 1.70%, as adjusted¹ 1.78%
Efficiency ratio of 51.95%
Non-interest bearing deposits 41.0% of total deposits
Originated loans and leases increased $63.8 million, total production of $365.4 million
Common Equity Tier 1 to risk weighted assets of 11.97%

Byline Bancorp, Inc. ("Byline", the “Company”, "we", "our", or "us")(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $28.5 million, or $0.73 per diluted share, for the second quarter of 2021, compared with net income of $21.8 million, or $0.56 per diluted share, for the first quarter of 2021 and net income of $9.1 million, or $0.24 per diluted share for the second quarter 2020. Adjusted net income¹ was $29.9 million, or $0.77 per adjusted diluted share, for the second quarter of 2021, compared with $22.2 million, or $0.57 per adjusted diluted share¹, for the first quarter of 2021 and $9.1 million, or $0.24 per adjusted diluted share for the second quarter of 2020.

Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, commented, “Our second quarter results were indicative of the improving economic environment and continued execution of our strategic plan to generate a higher level of profitability. With the strong returns we are generating, we have increased the amount of capital we are returning to shareholders by increasing our quarterly cash dividend and expanding our current stock repurchase program. We have now increased our quarterly cash dividend by 200% since it was first initiated at the end of 2019. As we head into the second half of 2021, we remain well positioned to support our continued organic and acquisitive growth in the future. I want to thank our employees for their continued dedication to help our clients, communities, and shareholders.”

Alberto J. Paracchini, President of Byline Bancorp, added, “We believe increasing economic activity is driving strong inflows of commercial deposits, a higher level of loan growth, and improved asset quality. Excluding PPP loans, our total loans increased at a 16.3% annualized growth rate in the second quarter with balanced contributions coming from nearly all areas of lending. We also continue to see strong demand for government-guaranteed loans, which resulted in another quarter of significant gain on loan sale income. We continue to have a healthy loan pipeline, which is benefiting from the contributions of new banking talent we have added over the past couple of years, which should lead to continued growth and a favorable shift in our mix of earning assets going forward.”

(1)

Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

Board Declares Cash Dividend of $0.09 per Share

On July 27, 2021, the Company's Board of Directors declared a cash dividend of $0.09 per share, payable on August 24, 2021, to stockholders of record of the Company's common stock as of August 10, 2021.

Board Authorizes Expansion of Share Repurchase Program

On July 27, 2021, the Company's Board of Directors authorized an expansion of its current stock repurchase program. Under the extended program, the Company is authorized to repurchase up to an additional 1,250,000 shares of the Company's outstanding common stock and will be in effect until December 31, 2022. The extended stock repurchase program does not require the Company to repurchase any specified number of shares of its common stock, and it may be discontinued, suspended, or restarted at any time at the Company’s discretion.

As of June 30, 2021, the Company has approximately 39.1 million shares of common stock issued and 38.1 million shares of common stock outstanding. The additional shares authorized for repurchase under the extended program represent approximately 3.2% of the Company’s issued shares and 3.3% of the Company’s outstanding shares of common stock. In connection with the previously announced stock repurchase program, the Company has repurchased 989,974 shares of common stock through June 30, 2021.

STATEMENTS OF OPERATIONS

Net Interest Income

The following table presents net interest income for the periods indicated:

							June 30, 2021
	Three Months Ended						Change from
	June 30,		March 31,		June 30,		March 31,			June 30,
(dollars in thousands)	2021		2021		2020		2021			2020
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	54,324	$	53,808	$	50,153		1.0	%		8.3	%
Interest on securities		6,359		6,089		7,530		4.4	%		(15.6	)%
Other interest and dividend income		628		262		222		140.3	%		183.0	%
Total interest and dividend income		61,311		60,159		57,905		1.9	%		5.9	%
INTEREST EXPENSE
Deposits		1,058		1,421		4,246		(25.6	)%		(75.1	)%
Other borrowings		482		502		476		(4.2	)%		1.2	%
Subordinated notes and debentures		1,597		1,596		574		0.1	%		178.1	%
Total interest expense		3,137		3,519		5,296		(10.9	)%		(40.8	)%
Net interest income	$	58,174	$	56,640	$	52,609		2.7	%		10.6	%

The following table presents the average interest-earning assets and average interest-bearing liabilities for the periods indicated. Net interest income and margin are adjusted to reflect tax-exempt interest income on a tax-equivalent basis using tax rates effective as of the end of the period:

	For the Three Months Ended
	June 30, 2021									March 31, 2021
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate
ASSETS
Cash and cash equivalents	$	75,382		$	28			0.15	%	$	55,477		$	28			0.21	%
Loans and leases⁽¹⁾		4,491,197			54,324			4.85	%		4,432,246			53,808			4.92	%
Taxable securities		1,477,070			5,947			1.62	%		1,430,625			5,379			1.52	%
Tax-exempt securities⁽²⁾		187,967			1,281			2.73	%		179,364			1,194			2.70	%
Total interest-earning assets	$	6,231,616		$	61,580			3.96	%	$	6,097,712		$	60,409			4.02	%
Allowance for loan and lease losses		(65,848	)								(66,989	)
All other assets		554,724									557,042
TOTAL ASSETS	$	6,720,492								$	6,587,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	626,886		$	220			0.14	%	$	546,730		$	199			0.15	%
Money market accounts		1,052,223			279			0.11	%		1,124,101			381			0.14	%
Savings		607,035			72			0.05	%		577,504			67			0.05	%
Time deposits		717,795			487			0.27	%		777,266			774			0.40	%
Total interest-bearing deposits		3,003,939			1,058			0.14	%		3,025,601			1,421			0.19	%
Other borrowings		642,586			482			0.30	%		649,639			502			0.31	%
Subordinated notes and debentures		110,030			1,597			5.82	%		109,859			1,596			5.89	%
Total borrowings		752,616			2,079			1.11	%		759,498			2,098			1.12	%
Total interest-bearing liabilities	$	3,756,555		$	3,137			0.33	%	$	3,785,099		$	3,519			0.38	%
Non-interest-bearing demand deposits		2,085,358									1,924,178
Other liabilities		68,089									72,036
Total stockholders’ equity		810,490									806,452
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,720,492								$	6,587,765
Net interest spread⁽³⁾								3.63	%								3.64	%
Net interest income, fully taxable equivalent				$	58,443								$	56,890
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾								3.76	%								3.78	%
Tax-equivalent adjustment					(269	)		0.02	%					(250	)		0.01	%
Net interest income				$	58,174								$	56,640
Net interest margin⁽⁴⁾								3.74	%								3.77	%

Net loan accretion impact on margin				$	1,395			0.09	%				$	1,968			0.13	%

(1)		Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)		Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.
(3)		Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
(4)		Represents net interest income (annualized) divided by total average earning assets.
(5)		Average balances are average daily balances.

Net interest income for the second quarter of 2021 was $58.2 million, an increase of $1.5 million, or 2.7%, from the first quarter of 2021.

The increase in net interest income was primarily due to:

An increase of $516,000 in interest income on loans and leases, due to higher lease income and loan fees;
An increase of $270,000 in interest income on securities, due to higher yields; and
A decrease of $363,000 in interest expense on deposits, due to favorable changes in deposit mix.

Tax-equivalent net interest margin for the second quarter of 2021 was 3.76%, down two basis points compared to the first quarter of 2021. Total net accretion income on acquired loans contributed nine basis points to the net interest margin for the second quarter of 2021 compared to 13 basis points for the first quarter of 2021, a decrease of four basis points. Paycheck Protection Program ("PPP") interest income and net fee income combined contributed $4.5 million to net interest income for the second quarter of 2021 compared to $7.0 million for the first quarter of 2021 due to the timing of forgiveness of loans and the passing of the application deadline for the second round of PPP on May 4, 2021.

The average cost of total deposits was 0.08% for the second quarter of 2021, a decrease of four basis points compared to the first quarter of 2021, mainly due to a lower average cost of time deposits and money market accounts. Average non-interest-bearing demand deposits increased $161.2 million, while average time deposits decreased by $59.5 million. Average non-interest-bearing demand deposits were 41.0% of average total deposits for the second quarter of 2021 compared to 38.9% the first quarter of 2021, mainly due to increases in commercial non-interest bearing deposits.

Provision for Loan and Lease Losses

The provision for loan and lease losses was a release of $2.0 million for the second quarter of 2021, a decrease of $6.3 million compared to a $4.4 million provision for the first quarter of 2021. The release of provision during the second quarter of 2021 was mainly impacted by an improvement in the outlook related to COVID-19.

Non-interest Income

The following table presents the components of non-interest income for the periods indicated:

	Three Months Ended									Change from
	June 30,			March 31,			June 30,			March 31,			June 30,
(dollars in thousands)	2021			2021			2020			2021			2020
NON-INTEREST INCOME
Fees and service charges on deposits	$	1,768		$	1,664		$	1,455			6.2	%		21.5	%
Loan servicing revenue		3,188			2,769			2,980			15.2	%		7.0	%
Loan servicing asset revaluation		7			(1,505	)		(711	)	NM			NM
ATM and interchange fees		1,044			1,012			845			3.1	%		23.6	%
Net gains (losses) on sales of securities available-for-sale		(136	)		1,462			—		NM			NM
Change in fair value of equity securities, net		517			(206	)		766		NM				(32.5	)%
Net gains on sales of loans		12,270			8,319			6,456			47.5	%		90.1	%
Wealth management and trust income		722			768			608			(5.9	)%		19.0	%
Other non-interest income		1,622			1,459			430			11.1	%		275.3	%
Total non-interest income	$	21,002		$	15,742		$	12,829			33.4	%		63.7	%

Non-interest income for the second quarter of 2021 was $21.0 million, an increase of $5.3 million, or 33.4%, compared to $15.7 million for the first quarter of 2021.

The increase in total non-interest income was primarily due to:

An increase of $4.0 million in net gains on sales of loans, mainly due to higher volume of loans sold and premiums received; and
A decrease of $1.5 million for loan servicing asset revaluation charges, which was a $7,000 upward valuation for the current quarter compared to a charge of $1.5 million in the prior quarter due to favorable fair value adjustments based on decreased discount rates and lower prepayment speeds.

During the second quarter of 2021, we sold $100.6 million of U.S. government guaranteed loans compared to $73.9 million during the first quarter of 2021.

Non-interest Expense

The following table presents the components of non-interest expense for the periods indicated:

	Three Months Ended						Change from
	June 30,		March 31,		June 30,		March 31,			June 30,
(dollars in thousands)	2021		2021		2020		2021			2020
NON-INTEREST EXPENSE
Salaries and employee benefits	$	24,588	$	21,806	$	19,405		12.8	%		26.7	%
Occupancy and equipment expense, net		4,856		5,779		5,359		(16.0	)%		(9.4	)%
Loan and lease related expenses		1,503		951		1,260		57.9	%		19.2	%
Legal, audit and other professional fees		2,898		2,214		2,078		30.9	%		39.4	%
Data processing		2,847		2,755		2,826		3.4	%		0.7	%
Net loss recognized on other real estate owned and other related expenses		389		621		456		(37.4	)%		(14.7	)%
Other intangible assets amortization expense		1,848		1,749		1,892		5.6	%		(2.4	)%
Other non-interest expense		4,052		2,967		3,777		36.6	%		7.4	%
Total non-interest expense	$	42,981	$	38,842	$	37,053		10.7	%		16.0	%

Non-interest expense for the second quarter of 2021 was $43.0 million, an increase of $4.1 million, or 10.7%, from $38.8 million for the first quarter of 2021.

The increase in total non-interest expense was primarily due to:

An increase of $2.8 million in salaries and employee benefits, primarily due to higher deferred costs related to the second round of PPP loans during the first quarter of 2021; and
An increase of $1.1 million in other non-interest expense, mainly due to impairment charges on assets held for sale.

Partially offset by:

A decrease of $923,000 in occupancy and equipment expense, net, mainly due to lower seasonal maintenance expense.

Our efficiency ratio was 51.95% for the second quarter of 2021 compared to 51.25% for the first quarter of 2021. Excluding impairment charges on assets held for sale, our adjusted efficiency ratio¹ was 49.50% for the second quarter of 2021, compared with 50.41% for the first quarter of 2021.

INCOME TAXES

We recorded income tax expense of $9.7 million during the second quarter of 2021, compared to $7.4 million during the first quarter of 2021. The effective tax rate for both periods was 25.3%.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $6.5 billion at June 30, 2021, a decrease of $209.5 million compared to $6.8 billion at March 31, 2021.

The current quarter decrease was primarily due to:

A decrease in securities of $178.1 million, as a result of sales of mortgage-backed securities and maturities and calls during the quarter; and
A decrease in other assets of $18.3 million mainly due to the timing of settlement of government guaranteed loans and securities sold during the prior quarter.

The following table shows our allocation of the originated, acquired impaired, and acquired non-impaired loans and leases at the dates indicated:

	June 30, 2021						March 31, 2021						June 30, 2020
(dollars in thousands)	Amount			% of Total			Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	1,156,824			25.9	%	$	1,064,151			23.9	%	$	919,510			20.9	%
Residential real estate		389,758			8.7	%		399,958			9.0	%		480,692			10.9	%
Construction, land development, and other land		271,710			6.1	%		238,122			5.3	%		219,261			5.0	%
Commercial and industrial		1,350,471			30.2	%		1,285,759			28.9	%		1,200,996			27.4	%
Paycheck protection program		476,282			10.7	%		617,006			13.8	%		611,664			13.9	%
Installment and other		982			0.0	%		1,094			0.0	%		2,714			0.1	%
Leasing financing receivables		267,300			6.0	%		243,399			5.5	%		160,741			3.7	%
Total originated loans and leases	$	3,913,327			87.6	%	$	3,849,489			86.4	%	$	3,595,578			81.9	%
Acquired impaired loans
Commercial real estate	$	91,313			2.0	%	$	96,059			2.2	%	$	126,405			2.9	%
Residential real estate		67,401			1.5	%		74,283			1.7	%		90,784			2.1	%
Construction, land development, and other land		2,008			0.0	%		1,992			0.0	%		4,784			0.1	%
Commercial and industrial		7,444			0.2	%		8,842			0.2	%		13,485			0.3	%
Installment and other		180			0.0	%		191			0.0	%		226			0.0	%
Total acquired impaired loans	$	168,346			3.7	%	$	181,367			4.1	%	$	235,684			5.4	%
Acquired non-impaired loans and leases
Commercial real estate	$	254,739			5.6	%	$	271,458			6.0	%	$	305,041			6.9	%
Residential real estate		65,119			1.5	%		71,038			1.6	%		99,288			2.2	%
Construction, land development, and other land		208			0.0	%		210			0.0	%		21,958			0.5	%
Commercial and industrial		58,320			1.3	%		69,795			1.6	%		116,668			2.7	%
Installment and other		311			0.0	%		331			0.0	%		818			0.0	%
Leasing financing receivables		9,087			0.3	%		10,932			0.3	%		16,087			0.4	%
Total acquired non-impaired loans and leases	$	387,784			8.7	%	$	423,764			9.5	%	$	559,860			12.7	%
Total loans and leases	$	4,469,457			100.0	%	$	4,454,620			100.0	%	$	4,391,122			100.0	%
Allowance for loan and lease losses		(61,719	)					(65,590	)					(51,300	)
Total loans and leases, net of allowance for loan and lease losses	$	4,407,738					$	4,389,030					$	4,339,822

Loan and Lease Deferrals

In support of customers impacted by COVID-19 and keeping with regulatory guidance, we began offering relief through payment deferrals during the first quarter of 2020. The following table shows active deferrals by category at the dates indicated:

	Active Deferrals
	As of June 30, 2021							As of December 31, 2020							Change from December 31, 2020
(dollars in thousands)	Count		Amount		Percentage of Total Loans and Leases⁽²⁾			Count		Amount		Percentage of Total Loans and Leases⁽²⁾			Count			Amount
Commercial Banking		2	$	2,167		0.05	%		21	$	22,905		0.60	%		(19	)	$	(20,738	)
Consumer Loans		—		—		—			2		703		0.02	%		(2	)		(703	)
Leasing		3		118		—			30		1,528		0.04	%		(27	)		(1,410	)
Government Guaranteed Lending		7		1,436		0.04	%		262		75,444		1.97	%		(255	)		(74,008	)
Total		12	$	3,721		0.09	%		315	$	100,580		2.63	%		(303	)	$	(96,859	)
(2) Excludes PPP loans

Paycheck Protection Program

The following table presents the net PPP loans outstanding as of June 30, 2021:

	PPP Loan Size

(dollars in thousands)	First Round			Second Round			Total
Principal outstanding	$	150,646		$	337,523		$	488,169
Unearned processing fee		(2,162	)		(13,785	)		(15,947	)
Deferred cost		552			3,508			4,060
PPP loans, net	$	149,036		$	327,246		$	476,282
Number of loans		914			2,552			3,466

PPP loans decreased by $140.7 million in the second quarter of 2021 primarily as a result of forgiveness of PPP loans originated during the first round of PPP funding. As of June 30, 2021, approximately 75.1% of first round PPP loans have been forgiven, 10.2% of first round PPP loans are in the forgiveness review or submission process, and approximately 14.7% first round PPP loans have not applied for forgiveness.

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and leases (excluding acquired impaired), other real estate owned, and accruing troubled debt restructured loans at the dates indicated:

										Change from
(dollars in thousands)	June 30, 2021			March 31, 2021			June 30, 2020			March 31, 2021			June 30, 2020
Non-performing assets:
Non-accrual loans and leases	$	35,514		$	37,084		$	40,505			(4.2	)%		(12.3	)%
Past due loans and leases 90 days or more and still accruing interest		—			—			—		—		%	—		%
Total non-performing loans and leases	$	35,514		$	37,084		$	40,505			(4.2	)%		(12.3	)%
Other real estate owned		4,417			5,952			8,652			(25.8	)%		(48.9	)%
Total non-performing assets	$	39,931		$	43,036		$	49,157			(7.2	)%		(18.8	)%
Accruing troubled debt restructured loans ⁽¹⁾	$	2,395		$	2,719		$	3,151			(11.9	)%		(24.0	)%
Total non-performing loans and leases as a percentage of total loans and leases		0.79	%		0.83	%		0.92	%
Total non-performing assets as a percentage of total assets		0.61	%		0.64	%		0.77	%
Allowance for loan and lease losses as a percentage of non-performing loans and leases		173.79	%		176.87	%		126.65	%

Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	5,847		$	3,388		$	3,755			72.6	%		55.7	%
Past due loans 90 days or more and still accruing interest guaranteed		—			—			—		—		%	—		%
Total non-performing loans guaranteed	$	5,847		$	3,388		$	3,755			72.6	%		55.7	%
Accruing troubled debt restructured loans guaranteed ⁽¹⁾	$	—		$	—		$	—		—		%	—		%
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.66	%		0.76	%		0.84	%
Total non-performing assets not guaranteed as a percentage of total assets		0.52	%		0.59	%		0.71	%

Variances in non-performing assets were:

Non-performing loans and leases were $35.5 million at June 30, 2021, a decrease of $1.6 million from $37.1 million at March 31, 2021; and
Other real estate owned was $4.4 million at June 30, 2021, a decrease of $1.5 million from $5.9 million at March 31, 2021 mainly due to sales.

Allowance for Loan and Lease Losses

The following table presents the balance and activity within the allowance for loan and lease losses for the periods indicated:

	Three Months Ended
	June 30,			March 31,			June 30,
(dollars in thousands)	2021			2021			2020
Allowance for loan and lease losses, beginning of period	$	65,590		$	66,347		$	41,840
Provision for (release of) loan and lease losses		(1,969	)		4,367			15,518
Net charge-offs of loans and leases		(1,902	)		(5,124	)		(6,058	)
Allowance for loan and lease losses, end of period	$	61,719		$	65,590		$	51,300

Allowance for loan and lease losses to period end total loans and leases held for investment		1.38	%		1.47	%		1.17	%
Net charge-offs (annualized) to average loans and leases outstanding during the period		0.17	%		0.47	%		0.57	%
Provision for (release of) loan and lease losses to net charge-offs during the period	(1.04)x				0.85	x		2.56	x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment decreased to 1.38% at June 30, 2021 compared to 1.47% at March 31, 2021. The allowance for loan and lease losses as a percentage of total loans and leases held for investment excluding PPP loans decreased to 1.55% at June 30, 2021 from 1.71% at March 31, 2021.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on the recognition of credit losses, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. In November 2019, the FASB delayed the effective date of the standard for smaller reporting companies, which includes emerging growth companies. Assuming we remain an emerging growth company, the standard is effective for fiscal years beginning after December 15, 2022. We are in the process of implementation and determining the impact that this new authoritative guidance will have on our consolidated financial statements.

Net Charge-Offs

Net charge-offs during the second quarter of 2021 were $1.9 million, or 0.17% of average loans and leases, on an annualized basis, a decrease of $3.2 million compared to $5.1 million or 0.47% of average loans and leases, during the first quarter of 2021, and a decrease of $4.2 million from $6.1 million or 0.57% of average loans and leases from the comparable period a year ago.

Net charge-offs for the second quarter of 2021 included $1.6 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the first quarter of 2021 and second quarter of 2020 included $3.3 million and $2.0 million in the unguaranteed portion of U.S. government guaranteed loans, respectively.

Deposits and Other Liabilities

The following table presents the composition of deposits at the dates indicated:

							Change from
(dollars in thousands)	June 30, 2021		March 31, 2021		June 30, 2020		March 31, 2021			June 30, 2020
Non-interest-bearing demand deposits	$	2,089,455	$	2,015,643	$	1,768,675		3.7	%		18.1	%
Interest-bearing checking accounts		653,558		567,660		503,909		15.1	%		29.7	%
Money market demand accounts		1,023,675		1,075,330		1,233,748		(4.8	)%		(17.0	)%
Other savings		613,136		600,725		525,043		2.1	%		16.8	%
Time deposits (below $250,000)		567,469		579,682		710,429		(2.1	)%		(20.1	)%
Time deposits ($250,000 and above)		144,902		185,500		216,541		(21.9	)%		(33.1	)%
Total deposits	$	5,092,195	$	5,024,540	$	4,958,345		1.3	%		2.7	%

Total deposits were $5.1 billion at June 30, 2021, an increase of $67.7 million, or 1.3%, compared to $5.0 billion at March 31, 2021. Non-interest-bearing deposits were 41.0% and 40.1% of total deposits at June 30, 2021 and March 31, 2021, respectively.

The increase in the current quarter was primarily due to:

An increase in non-interest-bearing deposits of $73.8 million, due to increases in commercial deposits; and
An increase in interest-bearing checking accounts of $85.9 million, mostly due to increases in personal accounts.

Partially offset by:

A decrease in money market demand accounts of $51.7 million, principally driven by decreases in public funds and in money market deposits; and
A decrease in time deposits ($250,000 and above) of $40.6 million, primarily consisting of brokered deposits.

Total borrowings and other liabilities were $631.3 million at June 30, 2021, a decrease of $300.5 million from $931.8 million at March 31, 2021, primarily driven by a decrease in Federal Home Loan Bank advances of $217.0 million. The Paycheck Protection Program Liquidity Facility decreased $82.9 million to $304.7 million at June 30, 2021 from $387.6 million at March 31, 2021.

Stockholders’ Equity

Total stockholders’ equity was $817.1 million at June 30, 2021, an increase of $23.3 million from $793.8 million at March 31, 2021. The increase was primarily due to an increase in retained earnings and an increase in the fair value of available-for-sale securities, offset by repurchases of common stock.

Under its stock repurchase program announced in the fourth quarter of 2020, the Company repurchased an aggregate of 538,744 shares at an average price per share of $22.45 during the second quarter, and 871,488 shares at an average price of $21.18 year-to-date.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of June 30, 2021:

	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
June 30, 2021	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	808,088		15.74	%	$	410,628		8.00	%	N/A		N/A
Bank		727,418		14.22	%		409,099		8.00	%	$	511,374		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	669,765		13.05	%	$	307,971		6.00	%	N/A		N/A
Bank	$	664,095		12.99	%		306,824		6.00	%	$	409,099		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	614,327		11.97	%	$	230,978		4.50	%	N/A		N/A
Bank		664,095		12.99	%		230,118		4.50	%	$	332,393		6.50	%
Tier 1 capital to average assets:
Company	$	669,765		10.82	%	$	247,646		4.00	%	N/A		N/A
Bank		664,095		10.73	%		247,596		4.00	%	$	309,495		5.00	%

Capital ratios for the period presented are based on the Basel III regulatory capital framework as applied to our current business and operations, and are subject to, among other things, completion and filing of our regulatory reports and ongoing regulatory review and implementation guidance.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 30, 2021 to discuss our quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (877) 512-8755. A recorded replay can be accessed through August 13, 2021 by dialing (877) 344-7529; passcode: 10158447.

A slide presentation relating to our second quarter 2021 results will be accessible prior to the conference call. The slide presentation and webcast of the conference call can be accessed on our investor relations website at www.bylinebancorp.com.

About Byline Bancorp, Inc.

Headquartered in Chicago, Byline Bancorp, Inc. is the parent company for Byline Bank, a full service commercial bank serving small- and medium-sized businesses, financial sponsors, and consumers. Byline Bank has approximately $6.5 billion in assets and operates more than 40 full service branch locations throughout the Chicago and Milwaukee metropolitan areas. Byline Bank offers a broad range of commercial and retail banking products and services including small ticket equipment leasing solutions and is one of the top five Small Business Administration lenders in the United States.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, made through the use of words or phrases such as ‘‘may’’, ‘‘might’’, ‘‘should’’, ‘‘could’’, ‘‘predict’’, ‘‘potential’’, ‘‘believe’’, ‘‘expect’’, ‘‘continue’’, ‘‘will’’, ‘‘anticipate’’, ‘‘seek’’, ‘‘estimate’’, ‘‘intend’’, ‘‘plan’’, ‘‘projection’’, ‘‘would’’, ‘‘annualized’’, “target” and ‘‘outlook’’, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements involve estimates and known and unknown risks, and reflect various assumptions and involve elements of subjective judgement and analysis, which may or may not prove to be correct, and which are subject to uncertainties and contingencies outside the control of Byline and its respective affiliates, directors, employees and other representatives, which could cause actual results to differ materially from those presented in this communication.

The COVID-19 pandemic is adversely affecting us, our employees, customers, counterparties and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Deterioration in general business and economic conditions, including increases in unemployment rates or turbulence in U.S. or global financial markets, could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, and lead to a tightening of credit and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways.

No representations, warranties or guarantees are or will be made by Byline as to the reliability, accuracy or completeness of any forward-looking statements contained in this communication or that such forward-looking statements are or will remain based on reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication.

Certain risks and important factors that could affect Byline’s future results are identified in our Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws.

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(dollars in thousands)	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2021			2021			2020			2020			2020
ASSETS
Cash and due from banks	$	50,558		$	47,101		$	41,432		$	47,433		$	51,818
Interest bearing deposits with other banks		52,138			66,038			41,988			53,645			88,113
Cash and cash equivalents		102,696			113,139			83,420			101,078			139,931
Equity and other securities, at fair value		10,575			8,557			8,764			8,335			8,181
Securities available-for-sale, at fair value		1,495,789			1,675,907			1,447,230			1,509,211			1,426,871
Securities held-to-maturity, at amortized cost		3,890			3,892			4,395			4,400			4,404
Restricted stock, at cost		11,927			19,057			10,507			9,652			6,232
Loans held for sale		25,046			28,584			7,924			49,049			3,031
Loans and leases:
Loans and leases		4,469,457			4,454,620			4,340,535			4,374,517			4,391,122
Allowance for loan and lease losses		(61,719	)		(65,590	)		(66,347	)		(61,258	)		(51,300	)
Net loans and leases		4,407,738			4,389,030			4,274,188			4,313,259			4,339,822
Servicing assets, at fair value		24,683			22,140			22,042			21,267			18,351
Premises and equipment, net		80,482			85,182			86,728			94,638			95,546
Other real estate owned, net		4,417			5,952			6,350			8,150			8,652
Goodwill and other intangible assets, net		169,034			170,882			172,631			174,523			176,470
Bank-owned life insurance		60,628			60,258			10,009			9,952			9,896
Deferred tax assets, net		43,127			48,662			40,181			35,945			37,082
Accrued interest receivable and other assets		100,570			118,883			216,283			157,054			119,049
Total assets	$	6,540,602		$	6,750,125		$	6,390,652		$	6,496,513		$	6,393,518
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	2,089,455		$	2,015,643		$	1,762,676		$	1,718,682		$	1,768,675
Interest-bearing deposits		3,002,740			3,008,897			2,989,355			3,091,563			3,189,670
Total deposits		5,092,195			5,024,540			4,752,031			4,810,245			4,958,345
Other borrowings		446,836			749,719			647,901			710,560			510,414
Subordinated notes, net		73,429			73,386			73,342			73,299			48,777
Junior subordinated debentures issued to capital trusts, net		36,682			36,565			36,451			36,331			36,206
Accrued expenses and other liabilities		74,387			72,120			75,463			71,382			58,841
Total liabilities		5,723,529			5,956,330			5,585,188			5,701,817			5,612,583
STOCKHOLDERS’ EQUITY
Preferred stock		10,438			10,438			10,438			10,438			10,438
Common stock		385			385			384			383			381
Additional paid-in capital		590,422			589,209			587,165			586,057			583,307
Retained earnings		236,363			210,385			191,098			180,162			168,444
Treasury stock		(20,712	)		(8,275	)		(1,668	)		(1,668	)		(1,668	)
Accumulated other comprehensive income (loss), net of tax		177			(8,347	)		18,047			19,324			20,033
Total stockholders’ equity		817,073			793,795			805,464			794,696			780,935
Total liabilities and stockholders’ equity	$	6,540,602		$	6,750,125		$	6,390,652		$	6,496,513		$	6,393,518

BYLINE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended														Six Months Ended
(dollars in thousands, except per share data)	June 30,			March 31,			December 31,			September 30,		June 30,			June 30,			June 30,
(dollars in thousands, except per share data)	2021			2021			2020			2020		2020			2021			2020
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	54,324		$	53,808		$	53,441		$	51,036	$	50,153		$	108,132		$	104,311
Interest on securities		6,359			6,089			6,252			7,070		7,530			12,448			15,546
Other interest and dividend income		628			262			232			128		222			890			1,214
Total interest and dividend income		61,311			60,159			59,925			58,234		57,905			121,470			121,071
INTEREST EXPENSE
Deposits		1,058			1,421			1,814			2,760		4,246			2,479			12,050
Other borrowings		482			502			480			465		476			984			2,373
Subordinated notes and debentures		1,597			1,596			1,611			1,485		574			3,193			1,214
Total interest expense		3,137			3,519			3,905			4,710		5,296			6,656			15,637
Net interest income		58,174			56,640			56,020			53,524		52,609			114,814			105,434
PROVISION FOR (RELEASE OF) LOAN AND LEASE LOSSES		(1,969	)		4,367			10,236			15,740		15,518			2,398			29,973
Net interest income after provision for (release of) loan and lease losses		60,143			52,273			45,784			37,784		37,091			112,416			75,461
NON-INTEREST INCOME
Fees and service charges on deposits		1,768			1,664			1,740			1,603		1,455			3,432			3,128
Loan servicing revenue		3,188			2,769			2,645			2,936		2,980			5,957			5,738
Loan servicing asset revaluation		7			(1,505	)		(2,298	)		1,122		(711	)		(1,498	)		(3,775	)
ATM and interchange fees		1,044			1,012			1,076			1,028		845			2,056			2,061
Net gains (losses) on sales of securities available-for-sale		(136	)		1,462			2,889			1,037		—			1,326			1,375
Change in fair value of equity securities, net		517			(206	)		428			154		766			311			147
Net gains on sales of loans		12,270			8,319			9,449			12,671		6,456			20,589			11,229
Wealth management and trust income		722			768			710			693		608			1,490			1,277
Other non-interest income		1,622			1,459			1,051			990		430			3,081			956
Total non-interest income		21,002			15,742			17,690			22,234		12,829			36,744			22,136
NON-INTEREST EXPENSE
Salaries and employee benefits		24,588			21,806			22,559			23,126		19,405			46,394			44,071
Occupancy and equipment expense, net		4,856			5,779			6,854			5,220		5,359			10,635			10,883
Loan and lease related expenses		1,503			951			1,324			2,053		1,260			2,454			2,578
Legal, audit, and other professional fees		2,898			2,214			1,336			2,390		2,078			5,112			4,412
Data processing		2,847			2,755			2,748			2,661		2,826			5,602			5,491
Net loss recognized on other real estate owned and other related expenses		389			621			495			349		456			1,010			975
Other intangible assets amortization expense		1,848			1,749			1,892			1,947		1,892			3,597			3,785
Other non-interest expense		4,052			2,967			9,813			3,941		3,777			7,019			8,519
Total non-interest expense		42,981			38,842			47,021			41,687		37,053			81,823			80,714
INCOME BEFORE PROVISION FOR INCOME TAXES		38,164			29,173			16,453			18,331		12,867			67,337			16,883
PROVISION FOR INCOME TAXES		9,672			7,375			4,162			5,260		3,728			17,047			4,778
NET INCOME		28,492			21,798			12,291			13,071		9,139			50,290			12,105
Dividends on preferred shares		195			196			196			196		195			391			391
INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	28,297		$	21,602		$	12,095		$	12,875	$	8,944		$	49,899		$	11,714
EARNINGS PER COMMON SHARE
Basic	$	0.75		$	0.57		$	0.32		$	0.34	$	0.24		$	1.31		$	0.31
Diluted	$	0.73		$	0.56		$	0.31		$	0.34	$	0.24		$	1.29		$	0.31

BYLINE BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (unaudited)

	As of or For the Three Months Ended															As of or For the Six Months Ended
(dollars in thousands, except share and per share data)	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands, except share and per share data)	2021			2021			2020			2020			2020			2021			2020
Common Share Data
Summary of Operations
Earnings per Common Share
Basic earnings per common share	$	0.75		$	0.57		$	0.32		$	0.34		$	0.24		$	1.31		$	0.31
Diluted earnings per common share	$	0.73		$	0.56		$	0.31		$	0.34		$	0.24		$	1.29		$	0.31
Adjusted diluted earnings per common share^(2)(3)(4)	$	0.77		$	0.57		$	0.38		$	0.34		$	0.24		$	1.34		$	0.32
Weighted average common shares outstanding (basic)		37,965,658			38,164,201			38,202,665			38,057,350			37,919,480			38,064,381			37,931,406
Weighted average common shares outstanding (diluted)		38,696,036			38,915,482			38,574,129			38,249,335			38,027,289			38,773,018			38,350,064
Common shares outstanding		38,094,972			38,641,851			38,618,054			38,568,916			38,383,217			38,094,972			38,388,217
Cash dividends per common share	$	0.06		$	0.06		$	0.03		$	0.03		$	0.03		$	0.12		$	0.06
Dividend payout ratio on common stock		8.22	%		10.71	%		9.68	%		8.82	%		12.50	%		9.30	%		19.35	%
Tangible book value per common share⁽¹⁾	$	16.74		$	15.85		$	16.12		$	15.81		$	15.47		$	16.74		$	15.47

Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin, fully taxable equivalent ⁽¹⁾⁽⁵⁾		3.76	%		3.78	%		3.78	%		3.61	%		3.72	%		3.77	%		3.94	%
Average cost of deposits		0.08	%		0.12	%		0.15	%		0.22	%		0.36	%		0.10	%		0.54	%
Efficiency ratio⁽²⁾		51.95	%		51.25	%		61.22	%		52.46	%		53.73	%		51.61	%		60.30	%
Adjusted efficiency ratio^(1)(2)(3)		49.50	%		50.41	%		55.77	%		52.42	%		53.73	%		49.93	%		59.74	%
Non-interest expense to average assets		2.57	%		2.39	%		2.92	%		2.59	%		2.41	%		2.48	%		2.76	%
Adjusted non-interest expense to average assets⁽¹⁾⁽³⁾		2.45	%		2.35	%		2.67	%		2.59	%		2.41	%		2.40	%		2.74	%
Return on average stockholders' equity		14.10	%		10.96	%		6.07	%		6.57	%		4.74	%		12.54	%		3.16	%
Adjusted return on average stockholders' equity^(1)(3)(4)		14.80	%		11.18	%		7.50	%		6.58	%		4.74	%		13.01	%		3.29	%
Return on average assets		1.70	%		1.34	%		0.76	%		0.81	%		0.59	%		1.52	%		0.41	%
Adjusted return on average assets^(1)(3)(4)		1.78	%		1.37	%		0.94	%		0.81	%		0.59	%		1.58	%		0.43	%
Non-interest income to total revenues⁽¹⁾		26.53	%		21.75	%		24.00	%		29.35	%		19.61	%		24.24	%		17.35	%
Pre-tax pre-provision return on average assets⁽¹⁾		2.16	%		2.06	%		1.66	%		2.12	%		1.85	%		2.11	%		1.60	%
Adjusted pre-tax pre-provision return on average assets⁽¹⁾⁽³⁾		2.28	%		2.10	%		1.91	%		2.12	%		1.85	%		2.19	%		1.63	%
Return on average tangible common stockholders' equity⁽¹⁾		18.87	%		14.86	%		8.61	%		9.39	%		7.05	%		16.88	%		4.99	%
Adjusted return on average tangible common stockholders' equity⁽¹⁾⁽³⁾		19.77	%		15.15	%		10.47	%		9.40	%		7.05	%		17.48	%		5.17	%
Non-interest-bearing deposits to total deposits		41.03	%		40.12	%		37.09	%		35.73	%		35.67	%		41.03	%		35.67	%
Loans and leases held for sale and loans and lease held for investment to total deposits		88.26	%		89.23	%		91.51	%		91.96	%		88.62	%		88.26	%		88.62	%
Deposits to total liabilities		88.97	%		84.36	%		85.08	%		84.36	%		88.34	%		88.97	%		88.34	%
Deposits per branch	$	115,732		$	109,229		$	103,305		$	84,390		$	86,989		$	115,732		$	86,989

Asset Quality Ratios
Non-performing loans and leases to total loans and leases held for investment, net before ALLL		0.79	%		0.83	%		0.95	%		0.99	%		0.92	%		0.79	%		0.92	%
ALLL to total loans and leases held for investment, net before ALLL		1.38	%		1.47	%		1.53	%		1.40	%		1.17	%		1.38	%		1.17	%
Net charge-offs to average total loans and leases held for investment, net before ALLL		0.17	%		0.47	%		0.47	%		0.53	%		0.57	%		0.32	%		0.53	%
Acquisition accounting adjustments⁽⁴⁾	$	9,393		$	10,424		$	13,389		$	17,133		$	19,324		$	9,393		$	19,324

Capital Ratios
Common equity to total assets		12.33	%		11.61	%		12.44	%		12.07	%		12.05	%		12.33	%		12.05	%
Tangible common equity to tangible assets⁽¹⁾		10.01	%		9.31	%		10.01	%		9.64	%		9.55	%		10.01	%		9.55	%
Leverage ratio		10.82	%		10.93	%		11.12	%		10.93	%		10.29	%		10.82	%		10.29	%
Common equity tier 1 capital ratio		11.97	%		12.09	%		12.20	%		12.55	%		12.33	%		11.97	%		12.33	%
Tier 1 capital ratio		13.05	%		13.20	%		13.36	%		13.77	%		13.56	%		13.05	%		13.56	%
Total capital ratio		15.74	%		15.96	%		16.18	%		16.67	%		15.86	%		15.74	%		15.86	%

(1)		Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
(2)		Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
(3)		Calculation excludes impairment charges, merger-related expenses, and core systems conversion expense.
(4)		Represents the remaining net unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.
(5)		Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

BYLINE BANCORP, INC. AND SUBSIDIARIES QUARTER-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)

	For the Three Months Ended June 30,
	2021									2020
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate
ASSETS
Cash and cash equivalents	$	75,382		$	28			0.15	%	$	58,971		$	25			0.17	%
Loans and leases⁽¹⁾		4,491,197			54,324			4.85	%		4,283,654			50,153			4.71	%
Taxable securities		1,477,070			5,947			1.62	%		1,243,604			7,021			2.27	%
Tax-exempt securities⁽²⁾		187,967			1,281			2.73	%		117,340			894			3.06	%
Total interest-earning assets	$	6,231,616		$	61,580			3.96	%	$	5,703,569		$	58,093			4.10	%
Allowance for loan and lease losses		(65,848	)								(43,009	)
All other assets		554,724									526,414
TOTAL ASSETS	$	6,720,492								$	6,186,974
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	626,886		$	220			0.14	%	$	392,070		$	165			0.17	%
Money market accounts		1,052,223			279			0.11	%		1,214,713			946			0.31	%
Savings		607,035			72			0.05	%		511,049			61			0.05	%
Time deposits		717,795			487			0.27	%		976,710			3,074			1.27	%
Total interest-bearing deposits		3,003,939			1,058			0.14	%		3,094,542			4,246			0.00	%
Other borrowings		642,586			482			0.30	%		534,766			476			0.36	%
Subordinated notes and debentures		110,030			1,597			5.82	%		40,180			574			5.75	%
Total borrowings		752,616			2,079			1.11	%		574,946			1,050			0.73	%
Total interest-bearing liabilities	$	3,756,555		$	3,137			0.33	%	$	3,669,488		$	5,296			0.58	%
Non-interest-bearing demand deposits		2,085,358									1,692,723
Other liabilities		68,089									48,884
Total stockholders’ equity		810,490									775,879
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,720,492								$	6,186,974
Net interest spread⁽³⁾								3.63	%								3.52	%
Net interest income, fully taxable equivalent				$	58,443								$	52,797
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾								3.76	%								3.72	%
Tax-equivalent adjustment					(269	)		0.02	%					(188	)		0.01	%
Net interest income				$	58,174								$	52,609
Net interest margin⁽⁴⁾								3.74	%								3.71	%

Net loan accretion impact on margin				$	1,395			0.09	%				$	3,172			0.22	%

(1)		Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)		Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.
(3)		Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
(4)		Represents net interest income (annualized) divided by total average earning assets.
(5)		Average balances are average daily balances.

BYLINE BANCORP, INC. AND SUBSIDIARIES YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)

	For the Six Months Ended June 30,
	2021									2020
(dollars in thousands)	Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate			Average Balance⁽⁵⁾			Interest Inc / Exp			Average Yield / Rate
ASSETS
Cash and cash equivalents	$	65,484		$	56			0.17	%	$	48,952		$	182			0.75	%
Loans and leases⁽¹⁾		4,461,884			108,132			4.89	%		4,041,433			104,311			5.19	%
Taxable securities		1,453,976			11,326			1.57	%		1,209,362			15,337			2.55	%
Tax-exempt securities⁽²⁾		183,689			2,475			2.72	%		101,010			1,571			3.13	%
Total interest-earning assets	$	6,165,033		$	121,989			3.99	%	$	5,400,757		$	121,401			4.52	%
Allowance for loan and lease losses		(66,415	)								(38,336	)
All other assets		555,877									514,042
TOTAL ASSETS	$	6,654,495								$	5,876,463
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	587,030		$	419			0.14	%	$	365,487		$	425			0.23	%
Money market accounts		1,087,964			660			0.12	%		1,088,459			3,160			0.58	%
Savings		592,350			139			0.05	%		495,660			122			0.05	%
Time deposits		747,366			1,261			0.34	%		1,045,153			8,343			1.61	%
Total interest-bearing deposits		3,014,710			2,479			0.17	%		2,994,759			12,050			0.81	%
Other borrowings		646,093			984			0.31	%		527,937			2,373			0.90	%
Subordinated notes and debentures		109,945			3,193			5.86	%		38,782			1,214			6.30	%
Total borrowings		756,038			4,177			1.11	%		566,719			3,587			1.27	%
Total interest-bearing liabilities	$	3,770,748		$	6,656			0.36	%	$	3,561,478		$	15,637			0.88	%
Non-interest-bearing demand deposits		2,005,213									1,495,761
Other liabilities		70,052									48,571
Total stockholders’ equity		808,482									770,653
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,654,495								$	5,876,463
Net interest spread⁽³⁾								3.63	%								3.64	%
Net interest income, fully taxable equivalent				$	115,333								$	105,764
Net interest margin, fully taxable equivalent⁽²⁾⁽⁴⁾								3.77	%								3.94	%
Tax-equivalent adjustment					(519	)		0.01	%					(330	)		0.01	%
Net interest income				$	114,814								$	105,434
Net interest margin⁽⁴⁾								3.76	%								3.93	%

Net loan accretion impact on margin				$	3,363			0.11	%				$	6,843			0.25	%

(1)		Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)		Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.
(3)		Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
(4)		Represents net interest income (annualized) divided by total average earning assets.
(5)		Average balances are average daily balances.

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Non-GAAP Financial Measures

This release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures include adjusted net income, adjusted diluted earnings per share, adjusted efficiency ratio, adjusted non-interest expense to average assets, tax-equivalent net interest margin, non-interest income to total revenues, adjusted return on average stockholders’ equity, adjusted return on average assets, pre-tax pre-provision return on average assets, adjusted pre-tax pre-provision return on average assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common stockholders' equity, and adjusted return on average tangible common stockholders' equity. Management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, management acknowledges that our non-GAAP financial measures have a number of limitations. As such, these disclosures should not be viewed as a substitute for results determined in accordance with GAAP financial measures that we and other companies use. Management also uses these measures for peer comparison. See below in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.

	As of or For the Three Months Ended														As of or For the Six Months Ended
(dollars in thousands, except per share data)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020		June 30, 2021			June 30, 2020
Net income and earnings per share excluding significant items
Reported Net Income	$	28,492		$	21,798		$	12,291		$	13,071		$	9,139	$	50,290		$	12,105
Significant items:
Impairment charges on assets held for sale		1,942			604			4,022			32			—		2,546			715
Tax benefit		(529	)		(165	)		(1,120	)		(9	)		—		(694	)		(199	)
Adjusted Net Income	$	29,905		$	22,237		$	15,193		$	13,094		$	9,139	$	52,142		$	12,621
Reported Diluted Earnings per Share	$	0.73		$	0.56		$	0.31		$	0.34		$	0.24	$	1.29		$	0.31
Significant items:
Impairment charges on assets held for sale		0.05			0.02			0.10			—			—		0.07			0.02
Tax benefit		(0.01	)		(0.01	)		(0.03	)		—			—		(0.02	)		(0.01	)
Adjusted Diluted Earnings per Share	$	0.77		$	0.57		$	0.38		$	0.34		$	0.24	$	1.34		$	0.32

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

	As of or For the Three Months Ended														As of or For the Six Months Ended
(dollars in thousands, except per share data, ratios annualized, where applicable)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020		June 30, 2021			June 30, 2020
Adjusted non-interest expense:
Non-interest expense	$	42,981		$	38,842		$	47,021		$	41,687		$	37,053	$	81,823		$	80,714
Less: Significant items
Impairment charges on assets held for sale		1,942			604			4,022			32			—		2,546			715
Adjusted non-interest expense	$	41,039		$	38,238		$	42,999		$	41,655		$	37,053	$	79,277		$	79,999
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense	$	41,039		$	38,238		$	42,999		$	41,655		$	37,053	$	79,277		$	79,999
Less: Amortization of intangible assets		1,848			1,749			1,892			1,947			1,892		3,597			3,785
Adjusted non-interest expense excluding amortization of intangible assets	$	39,191		$	36,489		$	41,107		$	39,708		$	35,161	$	75,680		$	76,214
Pre-tax pre-provision net income:
Pre-tax income	$	38,164		$	29,173		$	16,453		$	18,331		$	12,867	$	67,337		$	16,883
Add: Provision for loan and lease losses		(1,969	)		4,367			10,236			15,740			15,518		2,398			29,973
Pre-tax pre-provision net income	$	36,195		$	33,540		$	26,689		$	34,071		$	28,385	$	69,735		$	46,856
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income	$	36,195		$	33,540		$	26,689		$	34,071		$	28,385	$	69,735		$	46,856
Impairment charges on assets held for sale		1,942			604			4,022			32			—		2,546			715
Adjusted pre-tax pre-provision net income	$	38,137		$	34,144		$	30,711		$	34,103		$	28,385	$	72,281		$	47,571
Tax Equivalent Net Interest Income
Net interest income	$	58,174		$	56,640		$	56,020		$	53,524		$	52,609	$	114,814		$	105,434
Add: Tax-equivalent adjustment		269			250			240			222			188		519			330
Net interest income, fully taxable equivalent	$	58,443		$	56,890		$	56,260		$	53,746		$	52,797	$	115,333		$	105,764
Total revenues:
Net interest income	$	58,174		$	56,640		$	56,020		$	53,524		$	52,609	$	114,814		$	105,434
Add: Non-interest income		21,002			15,742			17,690			22,234			12,829		36,744			22,136
Total revenues	$	79,176		$	72,382		$	73,710		$	75,758		$	65,438	$	151,558		$	127,570
Tangible common stockholders' equity:
Total stockholders' equity	$	817,073		$	793,795		$	805,464		$	794,696		$	780,935	$	817,073		$	780,935
Less: Preferred stock		10,438			10,438			10,438			10,438			10,438		10,438			10,438
Less: Goodwill and other intangibles		169,034			170,882			172,631			174,523			176,470		169,034			176,470
Tangible common stockholders' equity	$	637,601		$	612,475		$	622,395		$	609,735		$	594,027	$	637,601		$	594,027
Tangible assets:
Total assets	$	6,540,602		$	6,750,125		$	6,390,652		$	6,496,513		$	6,393,518	$	6,540,602		$	6,393,518
Less: Goodwill and other intangibles		169,034			170,882			172,631			174,523			176,470		169,034			176,470
Tangible assets	$	6,371,568		$	6,579,243		$	6,218,021		$	6,321,990		$	6,217,048	$	6,371,568		$	6,217,048
Average tangible common stockholders' equity:
Average total stockholders' equity	$	810,490		$	806,452		$	805,593		$	791,111		$	775,879	$	808,482		$	770,653
Less: Average preferred stock		10,438			10,438			10,438			10,438			10,438		10,438			10,438
Less: Average goodwill and other intangibles		169,906			171,795			173,536			175,443			177,440		170,845			178,428
Average tangible common stockholders' equity	$	630,146		$	624,219		$	621,619		$	605,230		$	588,001	$	627,199		$	581,787
Average tangible assets:
Average total assets	$	6,720,492		$	6,587,765		$	6,400,621		$	6,401,290		$	6,186,974	$	6,654,495		$	5,876,463
Less: Average goodwill and other intangibles		169,906			171,795			173,536			175,443			177,440		170,845			178,428
Average tangible assets	$	6,550,586		$	6,415,970		$	6,227,085		$	6,225,847		$	6,009,534	$	6,483,650		$	5,698,035
Tangible net income available to common stockholders:
Net income available to common stockholders	$	28,297		$	21,602		$	12,095		$	12,875		$	8,944	$	49,899		$	11,714
Add: After-tax intangible asset amortization		1,344			1,272			1,365			1,405			1,365		2,616			2,731
Tangible net income available to common stockholders	$	29,641		$	22,874		$	13,460		$	14,280		$	10,309	$	52,515		$	14,445
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders	$	29,641		$	22,874		$	13,460		$	14,280		$	10,309	$	52,515		$	14,445
Impairment charges on assets held for sale		1,942			604			4,022			32			—		2,546			715
Tax benefit on significant items		(529	)		(165	)		(1,120	)		(9	)		—		(694	)		(199	)
Adjusted tangible net income available to common stockholders	$	31,054		$	23,313		$	16,362		$	14,303		$	10,309	$	54,367		$	14,961

BYLINE BANCORP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued) (unaudited)

	As of or For the Three Months Ended															As of or For the Six Months Ended
(dollars in thousands, except share and per share data, ratios annualized, where applicable)	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			June 30, 2021			June 30, 2020
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income	$	36,195		$	33,540		$	26,689		$	34,071		$	28,385		$	69,735		$	46,856
Average total assets		6,720,492			6,587,765			6,400,621			6,401,290			6,186,974			6,654,495			5,876,463
Pre-tax pre-provision return on average assets		2.16	%		2.06	%		1.66	%		2.12	%		1.85	%		2.11	%		1.60	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income	$	38,137		$	34,144		$	30,711		$	34,103		$	28,385		$	72,281		$	47,571
Average total assets		6,720,492			6,587,765			6,400,621			6,401,290			6,186,974			6,654,495			5,876,463
Adjusted pre-tax pre-provision return on average assets		2.28	%		2.10	%		1.91	%		2.12	%		1.85	%		2.19	%		1.63	%
Net interest margin, fully taxable equivalent
Net interest income, fully taxable equivalent	$	58,443		$	56,890		$	56,260		$	53,746		$	52,797		$	115,333		$	105,764
Total average interest-earning assets		6,231,616			6,097,712			5,913,746			5,916,554			5,703,569			6,165,033			5,400,757
Net interest margin, fully taxable equivalent		3.76	%		3.78	%		3.78	%		3.61	%		3.72	%		3.77	%		3.94	%
Non-interest income to total revenues:
Non-interest income	$	21,002		$	15,742		$	17,690		$	22,234		$	12,829		$	36,744		$	22,136
Total revenues		79,176			72,382			73,710			75,758			65,438			151,558			127,570
Non-interest income to total revenues		26.53	%		21.75	%		24.00	%		29.35	%		19.61	%		24.24	%		17.35	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense	$	41,039		$	38,238		$	42,999		$	41,655		$	37,053		$	79,277		$	79,999
Average total assets		6,720,492			6,587,765			6,400,621			6,401,290			6,186,974			6,654,495			5,876,463
Adjusted non-interest expense to average assets		2.45	%		2.35	%		2.67	%		2.59	%		2.41	%		2.40	%		2.74	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets	$	39,191		$	36,489		$	41,107		$	39,708		$	35,161		$	75,680		$	76,214
Total revenues		79,176			72,382			73,710			75,758			65,438			151,558			127,570
Adjusted efficiency ratio		49.50	%		50.41	%		55.77	%		52.42	%		53.73	%		49.93	%		59.74	%
Adjusted return on average assets:
Adjusted net income	$	29,905		$	22,237		$	15,193		$	13,094		$	9,139		$	52,142		$	12,621
Average total assets		6,720,492			6,587,765			6,400,621			6,401,290			6,186,974			6,654,495			5,876,463
Adjusted return on average assets		1.78	%		1.37	%		0.94	%		0.81	%		0.59	%		1.58	%		0.43	%
Adjusted return on average stockholders' equity:
Adjusted net income	$	29,905		$	22,237		$	15,193		$	13,094		$	9,139		$	52,142		$	12,621
Average stockholders' equity		810,490			806,452			805,593			791,111			775,879			808,482			770,653
Adjusted return on average stockholders' equity		14.80	%		11.18	%		7.50	%		6.58	%		4.74	%		13.01	%		3.29	%
Tangible common equity to tangible assets:
Tangible common equity	$	637,601		$	612,475		$	622,395		$	609,735		$	594,027		$	637,601		$	594,027
Tangible assets		6,371,568			6,579,243			6,218,021			6,321,990			6,217,048			6,371,568			6,217,048
Tangible common equity to tangible assets		10.01	%		9.31	%		10.01	%		9.64	%		9.55	%		10.01	%		9.55	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders	$	29,641		$	22,874		$	13,460		$	14,280		$	10,309		$	52,515		$	14,445
Average tangible common stockholders' equity		630,146			624,219			621,619			605,230			588,001			627,199			581,787
Return on average tangible common stockholders' equity		18.87	%		14.86	%		8.61	%		9.39	%		7.05	%		16.88	%		4.99	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders	$	31,054		$	23,313		$	16,362		$	14,303		$	10,309		$	54,367		$	14,961
Average tangible common stockholders' equity		630,146			624,219			621,619			605,230			588,001			627,199			581,787
Adjusted return on average tangible common stockholders' equity		19.77	%		15.15	%		10.47	%		9.40	%		7.05	%		17.48	%		5.17	%
Tangible book value per share:
Tangible common equity	$	637,601		$	612,475		$	622,395		$	609,735		$	594,027		$	637,601		$	594,027
Common shares outstanding		38,094,972			38,641,851			38,618,054			38,568,916			38,383,217			38,094,972			38,388,217
Tangible book value per share	$	16.74		$	15.85		$	16.12		$	15.81		$	15.47		$	16.74		$	15.47

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006134/en/

Contacts

Investors:

Brooks Rennie

Investor Relations Manager

Byline Bank

312-660-5805

brennie@bylinebank.com

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Erin O’Neill

Director of Marketing

Byline Bank

773-475-2901

eoneill@bylinebank.com

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Byline Bancorp, Inc. Reports Second Quarter 2021 Financial Results

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