BYLINE BANCORP INC

Previous wording

estimates of fair value estimates of certain of our assets and liabilities, which could change in value significantly from period to period;

Current wording

fair value estimates of certain of our assets and liabilities, which could change in value significantly from period to period;

Previous wording

We reported consolidated net income of $30.4 million, or $0.70 per basic and diluted common share, for the three months ended March 31, 2024, compared to net income of $23.9 million, or $0.65 per basic and $0.64 per diluted common share, for the three months ended March 31, 2023, an increase of $6.5 million. The increase in net income was attributable to a $9.8 million increase in net interest income. The increase in net interest income during the three months ended March 31, 2024 was primarily driven by higher yields on loans and leases, and organic growth in the loan and lease portfolio, as well as from the Inland acquisition.

Current wording

We reported consolidated net income of $29.7 million, or $0.68 per basic and diluted common share, and $60.1 million or $1.39 per basic and $1.37 per diluted share for the three and six months ended June 30, 2024, compared to net income of $26.1 million, or $0.70 per basic and diluted common share, and $50.1 million or $1.35 per basic and $1.34 per diluted share and for the three and six months ended June 30, 2023, an increase of $3.6 million and $10.1 million for the three and six month periods. The increase in net income was attributable to a $10.4 million and $20.2 million increase in net interest income for the three and six months ended June 30, 2024. The increase in net interest income during the three and six months ended June 30, 2024 was primarily driven by higher yields on loans and leases, and organic growth in the loan and lease portfolio, as well as growth in the portfolio as a result of the Inland acquisition.

Previous wording

Dividends declared on common shares were $3.9 million and $3.4 million for the three months ended March 31, 2024 and 2023, respectively. Dividends paid on common shares were $3.9 million and $3.3 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Dividends declared on common shares were $4.0 million and $3.4 million for the three months ended June 30, 2024 and 2023, respectively. Dividends paid on common shares were $4.0 million and $3.3 million for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

As of March 31, 2024, we had consolidated total assets of $9.4 billion, total gross loans and leases outstanding of $6.8 billion, total deposits of $7.4 billion, and total stockholders’ equity of $1.0 billion.

Current wording

As of June 30, 2024, we had consolidated total assets of $9.6 billion, total gross loans and leases outstanding of $6.9 billion, total deposits of $7.3 billion, and total stockholders’ equity of $1.0 billion.

Previous wording

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the Banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes, which are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

Current wording

Our accounting and reporting policies conform to GAAP and to general practices within the Banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes, which are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

Previous wording

The ACL is maintained at a level that management believes is appropriate to provide for current expected credit losses as of the dates of the Consolidated Statements of Financial Condition, and we have established methodologies for the determination of its adequacy. The methodologies are set forth in a formal policy and take into consideration relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. We increase our ACL by recording provisions for current expected credit losses against our income and decrease by charge‑offs, net of recoveries.

Current wording

The ACL is maintained at a level that management believes is appropriate to provide for current expected credit losses as of the dates of the Consolidated Statements of Financial Condition, and we have established methodologies for the determination of its adequacy. The methodologies are set forth in a formal policy and take into consideration relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. We increase our ACL by recording provisions for credit losses against our income and decrease by charge‑offs, net of recoveries.

Previous wording

Goodwill. Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in connection with our recapitalization and acquisitions using the acquisition method of accounting. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”).

Current wording

Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in connection with our recapitalization and acquisitions using the acquisition method of accounting. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC 350.

Previous wording

Impairment testing is performed using either a qualitative or quantitative approach at the reporting unit level. Our goodwill is allocated to Byline Bank, which is our only applicable reporting unit for the purposes of testing goodwill for impairment. We have selected

Current wording

Impairment testing is performed using either a qualitative or quantitative approach at the reporting unit level. Our goodwill is allocated to Byline Bank, which is our only applicable reporting unit for the purposes of testing goodwill for impairment. We have selected November 30 as the date to perform the annual goodwill impairment test. Additionally, we perform a goodwill impairment evaluation on an interim basis when events or circumstances indicate impairment potentially exists.

Previous wording

We reported consolidated net income of $30.4 million for the three months ended March 31, 2024 compared to net income of $23.9 million for the three months ended March 31, 2023, an increase of $6.5 million. The increase in net income was primarily attributable to a $9.8 million increase in net interest income and a decrease in the provision for credit losses of $3.2 million, offset by an increase in non-interest expense of $5.0 million. Net income available to common stockholders was $0.70 per basic and per diluted common share, for the three months ended March 31, 2024 compared to $0.65 per basic and $0.64 per diluted common share, for the three months ended March 31, 2023.

Current wording

We reported consolidated net income of $29.7 million for the three months ended June 30, 2024 compared to net income of $26.1 million for the three months ended June 30, 2023, an increase of $3.6 million. The increase in net income was primarily attributable to a $10.4 million increase in net interest income, offset by a decrease in non-interest income of $1.4 million and an increase in non-interest expense of $3.9 million and provision for income taxes of $1.2 million. Net income available to common stockholders was $0.68 per basic and per diluted common share, for the three months ended June 30, 2024 compared to $0.70 per basic and per diluted common share, for the three months ended June 30, 2023. The increase in provision for income taxes was due to higher income before taxes.

Previous wording

The increase in net interest income during the three months ended March 31, 2024 was mainly a result of higher yields on loans and leases, organic growth in the loan and lease portfolio, as well as from the Inland acquisition.. The decrease in provision for credit losses was due to a smaller allocation for individually assessed loans. The increase in non-interest expense was primarily due to increases in salaries and employee benefits mainly due to headcount.

Current wording

The increase in net interest income during the three months ended June 30, 2024 was mainly a result of higher yields on loans and leases, organic growth in the loan and lease portfolio, as well as growth in the portfolio as a result of the Inland acquisition. The decrease in non-interest income was mainly due to an increase in the downward revaluation of the loan servicing asset. The increase in non-interest expense was primarily due to increases in salaries and employee benefits mainly due to headcount.

Previous wording

Our annualized return on average assets was 1.36% for the three months ended March 31, 2024 compared to 1.32% for the three months ended March 31, 2023. Our annualized return on average stockholders’ equity was 12.26% for the three months ended March 31, 2024 compared to 12.38% for the three months ended March 31, 2023. Our efficiency ratio was 51.94% for the three months ended March 31, 2024 compared to 52.10% for the three months ended March 31, 2023.

Current wording

Our annualized return on average assets was 1.31% for the three months ended June 30, 2024 compared to 1.41% for the three months ended June 30, 2023. Our annualized return on average stockholders’ equity was 11.83% for the three months ended June 30, 2024 compared to 12.99% for the three months ended June 30, 2023. Our efficiency ratio was 52.19% for the three months ended June 30, 2024 compared to 52.92% for the three months ended June 30, 2023.

Previous wording

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Because of our recapitalization and acquisitions, we derive a portion of our interest income from the accretable discounts on purchase credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan and is impacted by changes in expected cash flows on the loan. This accretion will continue to have an impact on our net interest income as long as loans acquired with a discount at acquisition represent a meaningful portion of our interest-earning assets. As of March 31, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 3.0% of our total loan and lease portfolio compared to 3.4% at December 31, 2023.

Current wording

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Because of our recapitalization and acquisitions, we derive a portion of our interest income from the accretable discounts on purchase credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan and is impacted by changes in expected cash flows on the loan. This accretion will continue to have an impact on our net interest income as long as loans acquired with a discount at acquisition represent a meaningful portion of our interest-earning assets. As of June 30, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 2.5% of our total loan and lease portfolio compared to 3.4% at December 31, 2023.

Previous wording

Net interest income for the three months ended March 31, 2024 was $85.5 million compared to $75.7 million during the same period in 2023, an increase of $9.8 million, or 13.0%. Interest income increased $38.3 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily a result of growth in the loan and lease portfolio, including acquired loans, and higher yields on interest earning assets. Interest expense increased by $28.5 million for the three months ended March 31, 2024 compared to the same period in 2023 mostly due growth of the deposit portfolio, including assumed deposits, change in deposit mix, and higher rates paid on interest-bearing deposits.

Current wording

Net interest income for the three months ended June 30, 2024 was $86.5 million compared to $76.2 million during the same period in 2023, an increase of $10.4 million, or 13.6%. Interest income increased $34.3 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily a result of growth in the loan and lease portfolio, including acquired loans, and higher yields on interest earning assets. Interest expense increased by $23.9 million for the three months ended June 30, 2024 compared to the same period in 2023 mostly due growth of the deposit portfolio, including assumed deposits, change in deposit mix, and higher rates paid on interest-bearing deposits.

Previous wording

The net interest margin for the three months ended March 31, 2024 was 4.00%, a decrease of 38 basis points compared to 4.38% for the three months ended March 31, 2023. The decrease was primarily attributable to the rising rate environment.

Current wording

The net interest margin for the three months ended June 30, 2024 was 3.98%, a decrease of 34 basis points compared to 4.32% for the three months ended June 30, 2023. The decrease was primarily attributable to the rising rate environment. The net interest margin for the six months ended June 30, 2024 was 3.99%, a decrease of 36 basis points compared to 4.35% for the six months ended June 30, 2023. The decrease was primarily attributable to the rising rate environment.

Previous wording

Net loan accretion income was $4.3 million for the three months ended March 31, 2024 compared to $729,000 for the three months ended March 31, 2023, an increase of $3.6 million due to loans acquired in the Inland acquisition. Total net loan accretion on acquired loans contributed 20 basis points to the net interest margin for the three months ended March 31, 2024 compared to four basis points for the three months ended March 31, 2023. We expected loan accretion income to decline and projected accretion income as of March 31, 2024 is summarized as follows:

Current wording

Net loan accretion income was $3.7 million for the three months ended June 30, 2024 compared to $611,000 for the three months ended June 30, 2023, an increase of $3.0 million due to loans acquired in the Inland acquisition. Total net loan accretion on acquired loans contributed 17 basis points to the net interest margin for the three months ended June 30, 2024 compared to three basis points for the three months ended June 30, 2023.

Previous wording

The provision for credit losses was $6.6 million for the three months ended March 31, 2204, compared to $9.8 million for the three months ended March 31, 2023, a decrease of $3.2 million and is comprised of a provision for credit losses - loans and leases and a provision for credit losses - unfunded commitments. Provision for credit losses - loans and leases was $6.9 million for the three months ended March 31, 2024, compared to $9.7 million for the three months ended March 31, 2023, a decrease of $2.8 million. The decrease in provision for credit losses - loans and leases was driven by lower allocation to individually assessed loans. The provision for credit losses - unfunded commitments was a recapture of $248,000 and a provision of $113,000 for the three months ended March 31, 2024 and 2023, respectively

Current wording

The provision for credit losses was $6.0 million for the three months ended June 30, 2024, compared to $5.8 million for the three months ended June 30, 2023, an increase of $255,000 and is comprised of a provision for credit losses - loans and leases and a provision for credit losses - unfunded commitments. Provision for credit losses - loans and leases was $6.9 million for the three months ended June 30, 2024, and $6.5 million for the three months ended June 30, 2023, an increase of $411,000. The provision for credit losses - unfunded commitments was a recapture of $833,000 and a recapture of $677,000 for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

The following table presents the major components of non-interest income for the three months ended March 31, 2024 and 2023, respectively (dollars in thousands):

Current wording

The following table presents the major components of non-interest income for the three and six months ended June 30, 2024 and 2023, respectively (dollars in thousands):

Previous wording

Fees and service charges on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but are not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $2.4 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively. The increases is primarily due to increases in deposit balances.

Current wording

Fees and service charges on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but are not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $2.5 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively. Fees and service charges on deposits were $5.0 million and $4.4 million for the six months ended June 30, 2024 and 2023, respectively. The increases were primarily due to increases in deposit balances.

Previous wording

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of loans that we sell are retained by us. In exchange for continuing to service loans that have been sold, we receive servicing revenue from a portion of the interest cash flow of the loan. We generated $3.4 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the three months ended March 31, 2024 and 2023. At March 31, 2024 and 2023, the outstanding balance of guaranteed loans serviced was $1.7 billion.

Current wording

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of loans that we sell are retained by us. In exchange for continuing to service loans that have been sold, we receive servicing revenue from a portion of the interest cash flow of the loan. We generated $3.2 million and $3.4 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the three months ended June 30, 2024 and 2023, respectively. We generated $6.6 million and $6.8 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the six months ended June 30, 2024 and 2023, respectively. At June 30, 2024 and 2023, the outstanding balance of guaranteed loans serviced was $1.7 billion.

Previous wording

Loan servicing asset revaluation represents net changes in the fair value of our servicing assets. Loan servicing asset revaluation had a downward adjustment of $703,000 and an upward adjustment $656,000 for the three months ended March 31, 2024 and 2023, respectively, a change of $1.4 million. Changes in the revaluation were mainly due to higher prepayment speeds and a lower average life.

Current wording

Loan servicing asset revaluation represents net changes in the fair value of our servicing assets. Loan servicing asset revaluation had a downward adjustment of $2.5 million and $865,000 for the three months ended June 30, 2024 and 2023, respectively, a change of $1.6 million. Loan servicing asset revaluation had a downward adjustment of $3.2 million and $209,000 for the six months ended June 30, 2024 and 2023, respectively, a change of $3.0 million. Changes in the revaluation were mainly due to a decline in overall loans serviced balances and higher prepayment speeds.

Previous wording

Net gains on sales of loans were $5.5 million for the three months ended March 31, 2024 compared to $5.1 million for the three months ended March 31, 2023, an increase of $385,000, or 7.5%, driven mainly by higher premiums. We sold $72.5 million of U.S. government guaranteed loans during the three months ended March 31, 2024 compared to $72.2 million during the three months ended March 31, 2023.

Current wording

Net gains on sales of loans were $6.0 million for the three months ended June 30, 2024 compared to $5.7 million for the three months ended June 30, 2023, an increase of $332,000, or 5.8%, driven mainly by higher premiums. We sold $72.5 million of U.S. government guaranteed loans during the three months ended June 30, 2024 compared to $72.2 million during the three months ended June 30, 2023. Net gains on sales of loans were $11.6 million for the six months ended June 30, 2024 compared to $10.9 million for the six months ended June 30, 2023, an increase of $717,000 or 6.6%, driven by higher premiums. We sold $146.4 million of U.S. government guaranteed loans during the six months ended June 30, 2024 compared to $158.1 million during the six months ended June 30, 2023.

Previous wording

Wealth management and trust income represents fees charged to customers for investment, trust, or wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $1.2 million for the three months ended March 31, 2024 compared to $924,000 for the three months ended March 31, 2023, an increase of $233,000 or 25.2%. Assets under administration were $654.1 million and $573.7 million as of March 31, 2024 and 2023, respectively. Assets under administration decreased $116.4 million or 15.1% from $770.5 million as of December 31, 2023, due to the loss of accounts.

Current wording

Wealth management and trust income represents fees charged to customers for investment, trust, or wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $942,000 for the three months ended June 30, 2024 compared to $1.0 million for the three months ended June 30, 2023, a decrease of $97,000 or 9.3%. Wealth management and trust income was $2.1 million for the six months ended June 30, 2024 compared to $2.0 million for the six months ended June 30, 2023, an increase of $136,000 or 6.9%. Assets under administration were $665.7 million and $636.0 million as of June 30, 2024 and 2023, respectively. Assets under administration decreased $104.8 million or 13.6% from $770.5 million as of December 31, 2023, due to account attrition.

Previous wording

Other non-interest income was $2.2 million for the three months ended March 31, 2024 compared to $1.5 million for the three months ended March 31, 2023, an increase of $724,000 or 48.1%. The increase was primarily driven by net gains on sales of leased equipment and income associated with bank owned life insurance.

Current wording

Other non-interest income was $1.8 million for the three months ended June 30, 2024 compared to $1.5 million for the three months ended June 30, 2023, an increase of $299,000 or 20.0%. The increase was primarily driven by income associated with bank owned life insurance. Other non-interest income was $4.0 million for the six months ended June 30, 2024 compared to $3.0 million for the six months ended June 30, 2023, an increase of $1.0 million or 34.1%. The increase was primarily driven by net gains on sales of leased equipment and income associated with bank owned life insurance.

Previous wording

The following table presents the major components of non-interest expense for the three months ended March 31, 2024 and 2023, respectively (dollars in thousands):

Current wording

The following table presents the major components of non-interest expense for the three and six months ended June 30, 2024 and 2023, respectively (dollars in thousands):

Previous wording

Salaries and employee benefits, the single largest component of our non-interest expense, totaled $34.0 million for the three months ended March 31, 2024 compared to $30.4 million for the three months ended March 31, 2023, an increase of $3.6 million, or 11.7%. The increases were primarily a result of increased headcount as a result of our acquisition of Inland. Our staffing increased from 971 full-time equivalent employees as of March 31, 2023 to 1,064 as of March 31, 2024.

Current wording

Salaries and employee benefits, the single largest component of our non-interest expense, totaled $33.9 million for the three months ended June 30, 2024 compared to $29.6 million for the three months ended June 30, 2023, an increase of $4.3 million, or 14.4%. Salaries and employee benefits, totaled $67.9 million for the six months ended June 30, 2024 compared to $60.0 million for the six months ended June 30, 2023, an increase of $7.8 million, or 13.0%. The increases were primarily a result of increased headcount as a result of our acquisition of Inland. Our staffing increased from 987 full-time equivalent employees as of June 30, 2023 to 1,052 as of June 30, 2024.

Previous wording

Occupancy and equipment expense, net was $5.3 million for the three months ended March 31, 2024 compared to $4.4 million for the three months ended March 31, 2023, an increase of $840,000 or 18.9%. The increase is primarily due to branches acquired as a result of the Inland acquisition.

Current wording

Occupancy and equipment expense, net, was $4.6 million for the three months ended June 30, 2024 compared to $4.4 million for the three months ended June 30, 2023, an increase of $235,000 or 5.3%. Occupancy and equipment expense, net, was $9.9 million for the six months ended June 30, 2024 compared to $8.8 million for the six months ended June 30, 2023, an increase of $1.1 million, or 12.1%. The increases were primarily due to branches acquired as a result of the Inland acquisition.

Previous wording

Loan and lease related expenses were $685,000 for the three months ended March 31, 2024 compared to $963,000 for the three months ended March 31, 2023, a decrease of $278,000, or 28.8%. The decrease was primarily driven by lower government guaranteed expenses.

Current wording

Loan and lease related expenses were $741,000 for the three months ended June 30, 2024 compared to $488,000 for the three months ended June 30, 2023, an increase of $253,000, or 51.8%. Loan and lease related expenses were $1.4 million for the six months ended June 30, 2024, compared to $1.5 million for the six months ended June 30, 2023, a decrease of $25,000. The decrease was primarily driven by lower government guaranteed expenses.

Previous wording

Legal, audit, and other professional fees were $2.7 million for the three months ended March 31, 2024 compared to $3.1 million for the three months ended March 31, 2023, a decrease of $395,000, or 12.7%. The decrease was principally driven by merger-related expenses incurred during the first quarter of 2023.

Current wording

Legal, audit, and other professional fees were $3.7 million for the three months ended June 30, 2024 compared to $3.7 million for the three months ended June 30, 2023, an increase of $33,000, or 0.9%. Legal, audit, and other professional fees were $6.4 million for the six months ended June 30, 2024 compared to $6.8 million for the six months ended June 30, 2023, a decrease of $362,000 or 5.3%. The decrease was principally driven by merger-related expenses incurred during the first half of 2023.

Previous wording

Data processing was $4.1 million for the three months ended March 31, 2024, compared to $3.8 million for the three months ended March 31, 2023, an increase of $362,000 or 9.6%. The increases were driven by increased software licensing and IT infrastructure expenses.

Current wording

Data processing was $4.0 million for the three months ended June 30, 2024 compared to $4.3 million for the three months ended June 30, 2023, a decrease of $236,000 or 5.5%. The decrease was driven by lower IT infrastructure expenses. Data processing was $8.2 million for the six months ended June 30, 2024, compared to $8.1 million for the six months ended June 30, 2023, an increase of $126,000 or 1.6%. The increases were driven by increased software licensing expenses.

Previous wording

Our efficiency ratio was 51.94% for the three months ended March 31, 2024 compared to 52.10% for the three months ended March 31, 2023. The change in our efficiency ratio for the three months ended March 31, 2024 was driven by net interest income growth. Our adjusted efficiency ratio was 51.75% for the three months ended March 31, 2024 compared to 51.54% for the three months ended March 31, 2023.

Current wording

Our efficiency ratio was 52.19% for the three months ended June 30, 2024 compared to 52.92% for the three months ended June 30, 2023. The change in our efficiency ratio for the three months ended June 30, 2024 was driven by net interest income growth. Our adjusted efficiency ratio was 52.19% for the three months ended June 30, 2024 compared to 51.39% for the three months ended June 30, 2023. Our efficiency ratio was 52.06% for the six months ended June 30, 2024, compared to 52.51% for the six months ended June 30, 2023. The change in our efficiency ratio was due to higher net interest income. Our adjusted efficiency ratio was 51.97% for the six months ended June 30, 2024, compared to 51.47% for the six months ended June 30, 2023.

Previous wording

Our provision for income taxes for the three months ended March 31, 2024 totaled $10.1 million compared to $8.3 million for the three months ended March 31, 2023, an increase of $1.8 million, or 22.0%. The increase in income tax expense was principally due to an increase in net income before provision for income taxes. Our effective tax rate was 25.0% for the three months ended March 31, 2024 and 25.7% for the three months ended March 31, 2023.

Current wording

Our provision for income taxes for the three months ended June 30, 2024 totaled $10.4 million compared to $9.2 million for the three months ended June 30, 2023, an increase of $1.2 million, or 13.1%. The increase in income tax expense was principally due to an increase in net income before provision for income taxes. Our effective tax rate was 26.0% for the three months ended June 30, 2024 and 26.1% for the three months ended June 30, 2023.

Previous wording

Our total assets increased by $528.5 million, or 6.0%, to $9.4 billion at March 31, 2024 compared to $8.9 billion at December 31, 2023. The increase in total assets was primarily due to an increase in cash and cash equivalents of $410.7 million, inclusive of $200.0 million in short term investments, an increase of $93.9 million in loans and leases, or 1.4%, from $6.7 billion at December 31, 2023 to $6.8 billion at March 31, 2024. Our originated loan and lease portfolio increased by $133.4 million and our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio decreased by $39.5 million. The increase in our originated portfolio was primarily attributed to growth in the commercial and industrial portfolio. The decrease in our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio was attributed to decreases in commercial and residential real estate resulting from resolutions and charge-offs.

Current wording

Our total assets increased by $751.8 million, or 8.5%, to $9.6 billion at June 30, 2024 compared to $8.9 billion at December 31, 2023. The increase in total assets was primarily due to an increase in cash and cash equivalents of $504.3 million, inclusive of $200.0 million in short term investments, and an increase of $206.9 million in loans and leases, or 3.1%, from $6.7 billion at December 31, 2023 to $6.9 billion at June 30, 2024. Our originated loan and lease portfolio increased by $308.8 million and our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio decreased by $101.9 million. The increase in our originated portfolio was primarily attributed to growth in the commercial and industrial portfolio. The decrease in our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio was attributed to decreases in commercial and residential real estate resulting from resolutions and charge-offs.

Previous wording

Total liabilities increased by $509.6 million, or 6.5%, to $8.4 billion at March 31, 2024 compared to $7.9 billion at December 31, 2023. Total deposits increased by $173.2 million, or 2.4%, driven by growth in time deposits and money market accounts, offset by a decrease in non-interest bearing deposits. Other borrowings increased by $326.0 million, or 82.5%, mainly due to advances under the Bank Term Funding Program of $200.0 million and increased FHLB advances.

Current wording

Total liabilities increased by $709.0 million, or 9.0%, to $8.6 billion at June 30, 2024 compared to $7.9 billion at December 31, 2023. Total deposits increased by $170.2 million, or 2.4%, driven by growth in time deposits and interest bearing checking accounts. Other borrowings increased by $523.5 million, or 132.5%, mainly due to advances under the BTFP of $200.0 million and increased FHLB advances.

Previous wording

Securities available-for-sale increased by $36.7 million, or 2.7%, from $1.3 billion at December 31, 2023 to $1.4 billion at March 31, 2024. The increase was mainly attributed to purchases of securities, net of maturities, calls, and repayments.

Current wording

Securities available-for-sale increased by $44.3 million, or 3.3%, from $1.3 billion at December 31, 2023 to $1.4 billion at June 30, 2024. The increase was mainly attributed to purchases of securities, net of maturities, calls, and repayments.

Previous wording

At March 31, 2024, our held-to-maturity securities portfolio consists of obligations of states, municipalities and political subdivisions. We carry these securities at amortized cost. Securities held-to-maturity were $1.2 million at March 31, 2024, and at December 31, 2023, respectively.

Current wording

At June 30, 2024, our held-to-maturity securities portfolio consists of obligations of states, municipalities and political subdivisions. We carry these securities at amortized cost. Securities held-to-maturity were $606,000 at June 30, 2024, and $1.2 million at December 31, 2023, respectively.

Previous wording

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At March 31, 2024, we evaluated the securities that had an unrealized loss for credit losses and determined there were none. There were 320 investment securities with unrealized losses at March 31, 2024. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

Current wording

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At June 30, 2024, we evaluated the securities that had an unrealized loss for credit losses and determined there were none. There were 339 investment securities with unrealized losses at June 30, 2024. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

Previous wording

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $54.0 million at March 31, 2024, a decrease of $1.7 million from December 31, 2023.

Current wording

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $53.5 million at June 30, 2024, a decrease of $2.2 million from December 31, 2023.

Previous wording

As a member of the Federal Home Loan Bank system, Byline Bank is required to maintain an investment in the capital stock of the FHLB. No market exists for this stock, and it has no quoted market value. The stock is redeemable at par by the FHLB and is, therefore, carried at cost. In addition, Byline Bank owns stock of Bankers’ Bank that was acquired as part of a bank acquisition. The stock is redeemable at par and carried at cost. As of March 31, 2024 and December 31, 2023, we held $22.8 million and $16.3 million, respectively, in FHLB and Bankers’ Bank stock. We evaluate impairment of our investment in FHLB and Bankers’ Bank based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. We did not identify any indicators of impairment of FHLB and Bankers’ Bank stock as of March 31, 2024 and December 31, 2023.

Current wording

As a member of the Federal Home Loan Bank system, Byline Bank is required to maintain an investment in the capital stock of the FHLB. No market exists for this stock, and it has no quoted market value. The stock is redeemable at par by the FHLB and is, therefore, carried at cost. In addition, Byline Bank owns stock of Bankers’ Bank that was acquired as part of a bank acquisition. The stock is redeemable at par and carried at cost. As of June 30, 2024 and December 31, 2023, we held $31.8 million and $16.3 million, respectively, in FHLB and Bankers’ Bank stock. We evaluate impairment of our investment in FHLB and Bankers’ Bank based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. We did not identify any indicators of impairment of FHLB and Bankers’ Bank stock as of June 30, 2024 and December 31, 2023.

Previous wording

Lending-related income is the most important component of our net interest income and is the main driver of the results of our operations. Total loans and leases at March 31, 2024 and December 31, 2023 were $6.8 billion and $6.7 billion, respectively, an increase of $93.9 million, or 1.4%. Originated loans and leases were $5.9 billion at March 31, 2024, an increase of $133.4 million, or 2.3%, compared to $5.8 billion at December 31, 2023. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $877.8 million at March 31, 2024, a decrease of $39.5 million, or 4.3%, compared to $917.3 million at December 31, 2023. The increase in our originated portfolio was primarily attributed to organic loan and lease growth, and renewals of acquired loans and leases that are now reflected with originated loans. The decrease in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by renewals of acquired loans and leases as well as resolutions and charge-offs.

Current wording

Lending-related income is the most important component of our net interest income and is the main driver of the results of our operations. Total loans and leases at June 30, 2024 and December 31, 2023 were $6.9 billion and $6.7 billion, respectively, an increase of $206.9 million, or 3.1%. Originated loans and leases were $6.1 billion at June 30, 2024, an increase of $308.8 million, or 5.4%, compared to $5.8 billion at December 31, 2023. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $815.3 million at June 30, 2024, a decrease of $101.9 million, or 11.1%, compared to $917.3 million at December 31, 2023. The increase in our originated portfolio was primarily attributed to organic loan and lease growth, and renewals of acquired loans and leases that are now reflected with originated loans. The decrease in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by renewals of acquired loans and leases as well as resolutions and charge-offs.

Previous wording

We strive to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral. Loans, excluding leases, are typically made to real estate, manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and operations. As of March 31, 2024, the loan portfolio included $424.3 million of unguaranteed 7(a) SBA and USDA loans with exposure to the following top three industries: 17.3% retail trade, 13.2% accommodation and food services, and 11.4% manufacturing. The following table shows our allocation of originated, purchase credit deteriorated and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):

Current wording

We strive to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral. Loans, excluding leases, are typically made to real estate, manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and operations. As of June 30, 2024, the loan portfolio included $414.4 million of unguaranteed 7(a) SBA and USDA loans with exposure to the following top three industries: 17.6% retail trade, 13.9% accommodation and food services, and 10.8% manufacturing. The following table shows our allocation of originated, purchase credit deteriorated and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):