BYLINE BANCORP INC

Previous wording

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provisions for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses and other miscellaneous operating costs.

Current wording

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provisions for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, data processing expenses, and other miscellaneous operating costs.

Previous wording

We reported consolidated net income of $107.9 million for the year ended December 31, 2023, compared to net income of $88.0 million for the year ended December 31, 2022, an increase of $19.9 million. The increase in net income was attributable to a $65.3 million increase in net interest income, offset by a $25.5 million increase in non-interest expense, an $11.1 million increase in provision for income taxes, and a $7.8 million increase in provision for credit losses. The increase in net interest income was primarily a result of higher interest income and fees on loans and leases due to growth including acquired loans, and higher yields, partially offset by an increase in deposit interest expense due to higher rates paid and growth. The increase in non-interest expense was driven mainly by expenses related to the Inland acquisition. The increase in provision for credit losses was mainly driven by an increase in non-performing loans and acquired non-credit-deteriorated loans. The increase in provision for income taxes was mostly driven by an increase in net income before provision for income taxes during the period.

Current wording

We reported consolidated net income of $120.8 million for the year ended December 31, 2024, compared to net income of $107.9 million for the year ended December 31, 2023, an increase of $12.9 million, or 11.9%. The increase in net income was attributable to a $17.4 million increase in net interest income, a $4.6 million decrease in provision for credit losses, and a $2.5 million increase in non-interest income, offset by a $9.2 million increase in non-interest expense, and a $2.5 million increase in provision for income taxes. The increase in net interest income was primarily due to increases in interest and dividend income due to growth in the loan and lease portfolio, offset by increases in deposit interest expense due to growth in the deposit base. The decrease in provision for credit losses was mainly attributable to lower non-performing loans and leases, as well as the absence in 2024 of a day one provision expense such as was recognized in 2023 as a result of the Inland Bancorp acquisition in accordance with applicable acquisition accounting guidance. The increase in non-interest income was primarily due to increased swap fee activity and increases in net gains on sales of loans due to higher premiums received, offset by lower net loan servicing income. The increase in non-interest expense was mainly due to increased salaries and employee benefit expenses, due to higher salaries and incentives, partially offset by lower data processing expenses due to merger-related data processing expenses incurred during 2023. The increase in provision for income taxes was mostly driven by an increase in net income before provision for income taxes during the year.

Previous wording

Dividends declared and paid on preferred shares were $196,000 for the year ended December 31, 2022. There was no preferred stock issued or outstanding during 2023. Dividends declared on common shares were $14.6 million $13.5 million for the years ended December 31, 2023 and 2022, respectively. Dividends paid on common shares were $14.6 million and $13.4 million for the years ended December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, net income available to common stockholders was $107.9 million, or $2.69 per basic and $2.67 per diluted common share, and $87.8 million, or $2.37 per basic and $2.34 per diluted common share, respectively. Our results of operations for the years ended December 31, 2023 and 2022, produced an annual return on average assets of 1.34% and 1.25% and a return on average stockholders’ equity of 12.50% and 11.33%, respectively.

Current wording

Dividends declared on common shares were $15.9 million and $14.6 million for the years ended December 31, 2024 and 2023, respectively. Dividends paid on common shares were $15.8 million and $14.6 million for the years ended December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, net income available to common stockholders was $120.8 million, or $2.78 per basic and $2.75 per diluted common share, and $107.9 million, or $2.69 per basic and $2.67 per diluted common share, respectively. Our results of operations for the years ended December 31, 2024 and 2023, produced an annual return on average assets of 1.31% and 1.34% and a return on average stockholders’ equity of 11.61% and 12.50%, respectively.

Previous wording

Since our recapitalization in June 2013, our branch network has been reduced from 88 to 48, including 23 branches added through acquisition. During 2023 we added 10 branches within our network as a result of our acquisition of Inland.

Current wording

Since our recapitalization in June 2013, our branch network has been reduced from 88 to 46, including 23 branches added through acquisition. During 2024, we consolidated two branches, and during 2023 we added 10 branches as a result of our acquisition of Inland and closed two of those branches.

Previous wording

For acquisitions, we are required to record the assets acquired, including identified intangible assets such as goodwill, and the liabilities assumed at their fair value. These determinations often involve estimates based on third party valuations, such as appraisals or other valuations based on discounted cash flow analyses or other valuation techniques that may consider estimates such as attrition, growth rates, or other relevant assumptions. Goodwill is not amortized but is evaluated for impairment on an annual basis or more frequently should events warrant. We have selected November 30 as the date to perform the annual goodwill impairment test.

Current wording

For acquisitions, we are required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value. These determinations often involve estimates based on third party valuations, such as appraisals or other valuations based on discounted cash flow analyses or other valuation techniques that may consider estimates such as attrition, growth rates, or other relevant assumptions. Goodwill is not amortized but is evaluated for impairment on an annual basis or more frequently should events warrant. We have selected November 30 as the date to perform the annual goodwill impairment test.

Previous wording

Calculation excludes impairment charges and merger-related expenses.

Current wording

Calculation excludes impairment charges on assets held for sale and ROU assets and merger-related expenses.

Previous wording

"Pre‑tax pre‑provision net income" is pre‑tax income plus the provision for credit losses. The metric demonstrates income excluding the tax provision or benefit and the provision for credit losses and enables investors and others to assess our ability to generate capital to cover credit losses through a credit cycle.

Current wording

"Pre‑tax pre‑provision net income" is pre‑tax income plus the provision for credit losses. Management believes this metric demonstrates income excluding the tax provision or benefit and the provision for credit losses and enables investors and others to assess our ability to generate capital to cover credit losses through a credit cycle.

Previous wording

"Pre‑tax pre‑provision return on average assets" is pre-tax income plus the provision for credit losses, divided by average assets. The ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for credit losses.

Current wording

"Pre‑tax pre‑provision return on average assets" is pre-tax income plus the provision for credit losses, divided by average assets. Management believes this ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for credit losses.

Previous wording

"Tangible common equity" is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

Current wording

"Tangible common stockholders' equity" is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

Previous wording

"Tangible common equity to tangible assets" is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this metric is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.

Current wording

"Tangible common stockholders' equity to tangible assets" is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this metric is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.

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 purchased credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan. As of December 31, 2023, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 3.4% of our total loan portfolio, compared to 1.4% at December 31, 2022.

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 purchased credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan. As of December 31, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 1.8% of our total loan portfolio, compared to 3.4% at December 31, 2023.

Previous wording

Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Fees included in loan and lease interest income were $9.8 million, $12.1 million, and $27.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Non-accrual loans and leases are included in total loan and lease balances. Interest income on non-accruing loans is reflected in the period that it is collected, to the extent it is not applied to principal. Non-accrual loans are included in the average balances.

Current wording

Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Fees included in loan and lease interest income were $8.1 million, $9.8 million, and $12.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Non-accrual loans and leases are included in total loan and lease balances. Interest income on non-accruing loans is reflected in the period that it is collected, to the extent it is not applied to principal. Non-accrual loans are included in the average balances.

Previous wording

Net interest income for the year ended December 31, 2023 was $330.6 million, an increase of $65.3 million, or 24.6% compared to 2022. The increase in interest income of $177.9 million was principally a result of higher yields and increased average balances on loans and leases resulting from loan and lease growth, including acquired loans. The average balance of interest-earning assets was $7.7 billion for the year ended December 31, 2023, an increase of $1.0 billion, or 15.8%, compared to 2022, primarily due to growth in our loan and lease portfolios. Interest expense increased by $112.6 million for the year ended December 31, 2023 compared to 2022, mostly due to increased rates paid on deposits, change in deposit mix, and growth of deposits from assumed deposits. Average total interest-bearing deposits increased $1.1 billion, or 34.2% year over year.

Current wording

Net interest income for the year ended December 31, 2024 was $348.0 million, an increase of $17.4 million, or 5.3% compared to 2023. The increase in interest income of $86.5 million was principally a result of increased average balances due to portfolio growth and higher yields. The average balance of interest-earning assets was $8.8 billion for the year ended December 31, 2024, an increase of $1.1 billion, or 14.3%, compared to 2023, primarily due to growth in our loan and lease portfolios. Interest expense increased by $69.0 million for the year ended December 31, 2024 compared to 2023, mostly due to higher average deposit balances, a shift in deposit mix, and higher average rates paid on time deposits and money market accounts. Average total interest-bearing deposits increased $1.1 billion, or 25.7% year over year.

Previous wording

The net interest margin for the year ended December 31, 2023 was 4.31%, an increase of 31 basis points compared to 4.00% for the year ended December 31, 2022. The average yield on interest-earning assets increased 170 basis points to 6.26% for the year ended December 31, 2023 compared to 4.56% for the year ended December 31, 2022, while the average rate paid on interest-bearing liabilities increased by 202 basis points to 2.95%, resulting in a decrease in the interest rate spread of 32 basis points.

Current wording

The net interest margin for the year ended December 31, 2024 was 3.97%, a decrease of 34 basis points compared to 4.31% for the year ended December 31, 2023. The average yield on interest-earning assets increased 20 basis points to 6.46% for the year ended December 31, 2024 compared to 6.26% for the year ended December 31, 2023, while the average rate paid on interest-bearing liabilities increased by 59 basis points to 3.54% from 2.95%, resulting in a decrease in the interest rate spread of 39 basis points.

Previous wording

Net loan accretion income was $16.7 million for the year ended December 31, 2023 compared to $4.6 million for the year ended December 31, 2022, an increase of $12.2 million. Total net loan accretion on acquired loans contributed 22 basis points to the net interest margin for the year ended December 31, 2023 compared to seven basis points for the year ended December 31, 2022. We expected loan accretion income to decline as acquired loans mature. Projected accretion income as of December 31, 2023 is summarized as follows:

Current wording

Net loan accretion income was $13.5 million for the year ended December 31, 2024 compared to $16.7 million for the year ended December 31, 2023, a decrease of $3.2 million. Total net loan accretion on acquired loans contributed 15 basis points to the net interest margin for the year ended December 31, 2024 compared to 22 basis points for the year ended December 31, 2023. Assuming no additional acquisitions, we expect loan accretion income to decline as acquired loans mature. Projected accretion income as of December 31, 2024 is summarized as follows:

Previous wording

Provision for credit losses for the year ended December 31, 2023 was $31.7 million compared to $23.9 million for the year ended December 31, 2022, an increase of $7.8 million. The increase in provision was driven by an increase in non-performing loans and acquired non-credit-deteriorated loans. For the year ended December 31, 2023, the provision for credit losses is comprised of a provision for loan and lease losses of $32.2 million and a recapture for unfunded commitments of $567,000. For the year ended December 31, 2022, the provision for credit losses is comprised of a provision for loan and lease losses of $22.7 million and a provision for unfunded commitments of $1.2 million. The ACL as a percentage of loans and leases increased slightly from 1.51% at December 31, 2022 to 1.52% at December 31, 2023.

Current wording

Provision for credit losses for the year ended December 31, 2024 was $27.0 million compared to $31.7 million for the year ended December 31, 2023, a decrease of $4.6 million. The decrease in provision was driven by lower non-performing and substandard loans, particularly those originated in the commercial real estate loan portfolio, and improvement of purchased credit deteriorated and other acquired loans due to their continued resolution. For the year ended December 31, 2024, the provision for credit losses is comprised of a provision for loan and lease losses of $28.3 million and a recapture of provision for unfunded commitments of $1.2 million. For the year ended December 31, 2023, the provision for credit losses is comprised of a provision for loan and lease losses of $32.2 million and a recapture of provision for unfunded commitments of $567,000. The ACL as a percentage of loans and leases decreased from 1.52% at December 31, 2023 to 1.42% at December 31, 2024.

Previous wording

Fees and service charge on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $9.2 million for the year ended December 31, 2023, compared to $8.2 million for the year ended December 31, 2022, an increase of $1.1 million or 13.0%. The increase was a result of increases in deposit balances and changes in fee structure.

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, treasury management fees, and other charges. Fees and service charges on deposits were $10.2 million for the year ended December 31, 2024, compared to $9.2 million for the year ended December 31, 2023, an increase of $1.0 million or 10.9%. The increase was a result of growth in deposit balances and from new client acquisitions.

Previous wording

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of the 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 $13.5 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for each of the years ended December 31, 2023, and 2022. At December 31, 2023 and 2022, the outstanding balances of U.S. government guaranteed loans serviced, was $1.7 billion.

Current wording

While portions of the loans that we originate are sold and generate gain on sale revenue, servicing rights for the majority of the 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 $12.9 million and $13.5 million in loan servicing revenue on the sold portion of U.S. government guaranteed loans for the years ended December 31, 2024 and 2023, respectively, a decrease of $598,000 or 4.4%. At December 31, 2024 and 2023, the outstanding balance of U.S. government 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 $5.1 million for the year ended December 31, 2023, compared to a downward adjustment of $11.7 million for the year ended December 31, 2022. The variance was primarily driven by the change in fair value of the servicing asset as a result of changes to valuation assumptions, including prepayment speeds, discount rates, and expected average loan life on U.S. government guaranteed loans based on the current interest rate environment.

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 $6.7 million for the year ended December 31, 2024, compared to a downward adjustment of $5.1 million for the year ended December 31, 2023. The variance was primarily driven by the change in fair value of the servicing asset as a result of lower overall balance of loans serviced and higher prepayment speeds.

Previous wording

Net gains on sales of loans were $22.8 million for the year ended December 31, 2023 compared to $31.9 million for the year ended December 31, 2022, a decrease of $9.1 million, or 28.5%. The decrease in net gains on sales was primarily driven by lower volume of government guaranteed loans sold and lower market premiums for government guaranteed loans. We sold $348.4 million and $382.2 million of U.S. government guaranteed loans during the years ended December 31, 2023 and 2022, respectively.

Current wording

Net gains on sales of loans were $24.5 million for the year ended December 31, 2024 compared to $22.8 million for the year ended December 31, 2023, an increase of $1.7 million, or 7.6%. The increase in net gains on sales was primarily driven by higher market premiums for U.S. government guaranteed loans. We sold $314.8 million and $348.4 million of U.S. government guaranteed loans during the years ended December 31, 2024 and 2023, respectively.

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 $4.2 million for the year ended December 31, 2023 compared to $3.8 million for the year ended December 31, 2022, an increase of $351,000 or 9.2%, mainly due to increases in assets under administration. Assets under administration were $770.5 million and $548.7 million as of December 31, 2023 and 2022, respectively.

Current wording

Wealth management and trust income represents fees charged to customers for investment, trust, and wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $4.3 million for the year ended December 31, 2024 compared to $4.2 million for the year ended December 31, 2023, an increase of $152,000 or 3.7%, mainly due to increased fees. Assets under administration were $746.5 million and $770.5 million as of December 31, 2024 and 2023, respectively, and include $119.7 million and $165.8 million of money market demand accounts included in interest-bearing deposits on the Consolidated Statements of Financial Condition.

Previous wording

Occupancy expense for the year ended December 31, 2023 was $14.0 million compared to $13.2 million for the year ended December 31, 2022, an increase of $833,000, or 6.3%. The increase was primarily a result of increased building maintenance and depreciation due to acquired branches.

Current wording

Occupancy expense for the year ended December 31, 2024 was $14.7 million compared to $14.0 million for the year ended December 31, 2023, an increase of $656,000, or 4.7%. The increase was primarily a result of increased depreciation due to acquired branches and increased building maintenance.

Previous wording

Loan and lease related expenses for the year ended December 31, 2023 were $2.9 million compared to $1.7 million for the year ended December 21, 2022, an increase of $1.2 million, or 72.0%. The increase was due to increases in expenses related to government guaranteed loans.

Current wording

Loan and lease related expenses for the year ended December 31, 2024 were $2.8 million compared to $2.9 million for the year ended December 31, 2023, a decrease of $147,000, or 5.0%. The decrease was due to decreases in expenses related to government guaranteed loans.

Previous wording

Legal, audit and other professional fees for the year ended December 31, 2023 were $12.9 million compared to $10.4 million for the year ended December 31, 2022, an increase of $2.6 million or 25.0%. The increase was mainly driven by increased legal and professional services related to the Inland acquisition.

Current wording

Legal, audit and other professional fees for the year ended December 31, 2024 were $13.4 million compared to $12.9 million for the year ended December 31, 2023, an increase of $482,000 or 3.7%. The increase was mainly driven by increased legal fees related to U.S. government guaranteed loans.

Previous wording

Advertising and promotions for the year ended December 31, 2023 were $3.8 million compared to $2.8 million for the year ended December 31, 2022, an increase of $971,000 or 34.4%, primarily due to an increase in digital deposit advertising campaigns.

Current wording

Advertising and promotions for the year ended December 31, 2024 were $5.0 million compared to $3.8 million for the year ended December 31, 2023, an increase of $1.2 million, or 31.1%, primarily due to an increase in digital deposit advertising campaigns.

Previous wording

For the years ended December 31, 2023 and 2022, our efficiency ratio was 52.62% and 54.99%, respectively. The improvement in our efficiency ratio was primarily attributable to increased net interest income. For the years ended December 31, 2023 and 2022, our adjusted efficiency ratio was 49.61% and 54.70%, respectively. Please refer to the "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" included in Item 7 of this report, for more information on how our adjusted efficiency ratio is calculated.

Current wording

For the years ended December 31, 2024 and 2023, our efficiency ratio was 52.45% and 52.62%, respectively. The improvement in our efficiency ratio was primarily attributable to increased net interest income and non-interest income, offset by an increase in non-interest expense. For the years ended December 31, 2024 and 2023, our adjusted efficiency ratio was 52.24% and 49.61%, respectively. Please refer to the "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" included in Item 7 of this report, for more information on how our adjusted efficiency ratio is calculated.

Previous wording

Income tax expense was $37.8 million for the year ended December 31, 2023, compared to $26.7 million for the year ended December 31, 2022. The increase in income tax expense was primarily due to increased income before provision for income taxes during 2023.

Current wording

Income tax expense was $40.3 million for the year ended December 31, 2024, compared to $37.8 million for the year ended December 31, 2023. The increase in income tax expense was primarily due to increased income before provision for income taxes during 2024.

Previous wording

Our effective tax rate was 25.9% for the year ended December 31, 2023 and 23.3% for the year ended December 31, 2022. The increase in our effective tax rate was primarily driven by a decrease in tax benefit from share-based compensation and an increase in the state tax rate. We expect our effective tax rate for 2024 to be approximately 25% to 27%.

Current wording

Our effective tax rate was 25.0% for the year ended December 31, 2024 and 25.9% for the year ended December 31, 2023. The decrease in our effective tax rate was primarily driven by an increase in tax benefit from share-based compensation. We expect our effective tax rate for 2025 to be approximately 25% to 27%.

Previous wording

Our total assets increased by $1.5 billion, or 20.6%, to $8.9 billion at December 31, 2023, compared to $7.4 billion at December 31, 2022. The increase in total assets includes an increase of $1.3 billion, or 23.3%, in loans and leases from $5.4 billion at December 31, 2022 to $6.7 billion at December 31, 2023. Our originated loan and lease portfolio increased by $636.3 million, and our purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio increased by $626.7 million. The increases in our originated portfolio was mostly attributed to organic loan and lease growth and the increase in our acquired portfolio was due to the Inland acquisition.

Current wording

Our total assets increased by $614.6 million, or 6.9%, to $9.5 billion at December 31, 2024, compared to $8.9 billion at December 31, 2023. The increase in total assets includes an increase of $222.5 million, or 3.3%, in loans and leases from $6.7 billion at December 31, 2023 to $6.9 billion at December 31, 2024. Our originated loan and lease portfolio increased by $476.8 million, and our purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio decreased by $254.2 million. The increases in our originated portfolio was mostly attributed to organic loan and lease growth, and the decrease in our acquired portfolio was primarily due to renewals of loans as originated, resolutions of these loans, and charge-offs.

Previous wording

Total liabilities increased by $1.3 billion, or 19.6%, to $7.9 billion at December 31, 2023 compared to $6.6 billion at December 31, 2022. The increase is a result of an increase in total deposits of $1.5 billion, or 26.0%, primarily attributed to our acquisition and organic deposit growth, offset by lower FHLB advances.

Current wording

Total liabilities increased by $513.2 million, or 6.5%, to $8.4 billion at December 31, 2024 compared to $7.9 billion at December 31, 2023. The increase is primarily attributed to an increase in total deposits of $281.6 million, or 3.9%, driven by organic growth, as well as a $250.0 million increase in FHLB advances at December 31, 2024.

Previous wording

Our investment securities portfolio consists of securities classified as equity and other securities, at fair value, available-for-sale, and held-to-maturity. There were no securities classified as trading in our investment portfolio as of or for the years ended December 31, 2023 and 2022. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest. Securities available-for-sale consist primarily of residential mortgage-backed securities, commercial mortgage-backed securities and U.S. government agencies securities and has an average duration of 4.8 years.

Current wording

Our investment securities portfolio consists of securities classified as equity and other securities, at fair value, available-for-sale, and held-to-maturity. There were no securities classified as trading in our investment portfolio as of or for the years ended December 31, 2024 and 2023. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest. Securities available-for-sale consist primarily of residential mortgage-backed securities, commercial mortgage-backed securities and U.S. government agencies securities and has an average duration of 4.9 years.

Previous wording

Our held-to-maturity securities portfolio consists of municipal securities. We carry these securities at amortized cost. Securities held-to-maturity were $1.2 million and $2.7 million at December 31, 2023 and 2022, respectively.

Current wording

Our held-to-maturity securities portfolio consists of municipal securities. We carry these securities at amortized cost. Securities held-to-maturity were $605,000 and $1.2 million at December 31, 2024 and 2023, respectively. We evaluated the held to maturity securities in an unrealized loss position for credit losses as of December 31, 2024 and 2023 and determined there were none. In January 2025, we received $605,000 payment in full for the security held-to-maturity outstanding at December 31, 2024.

Previous wording

The fair value of our equity and other securities portfolio was $8.7 million at December 31, 2023, and $8.0 million at December 31, 2022.

Current wording

The fair value of our equity and other securities portfolio was $9.9 million at December 31, 2024, and $8.7 million at December 31, 2023.

Previous wording

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At December 31, 2023, we evaluated the securities in an unrealized loss position for credit losses and determined there were none. There were 285 investment securities with unrealized losses at December 31, 2023. 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. There were 335 investment securities with unrealized losses at December 31, 2024 totaling $181.7 million. 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 $55.7 million at December 31, 2023, an increase of $11.9 million from December 31, 2022.

Current wording

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $53.5 million at December 31, 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, which is redeemable at par and carried at cost. As of December 31, 2023 and 2022, we held $16.3 million and $28.2 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 December 31, 2023 and 2022.

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, which is redeemable at par and carried at cost. As of December 31, 2024 and 2023, we held $27.5 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 December 31, 2024 and 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 December 31, 2023 and 2022 were $6.7 billion and $5.4 billion, respectively, an increase of $1.3 billion or 23.3%. The growth in the originated loan and lease portfolio was primarily driven by increases in commercial and industrial loans and leases, commercial real estate, and leasing financing receivables, as well as renewals of acquired loans that are now reflected with originated loans. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $917.3 million at December 31, 2023, an increase of $626.7 million, compared to $290.5 million at December 31, 2022. The increase in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by loans acquired in the Inland acquisition.

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 December 31, 2024 and 2023 were $6.9 billion and $6.7 billion, respectively, an increase of $222.5 million or 3.3%. The growth in the originated loan and lease portfolio was primarily driven by increases in commercial and industrial loans and leases, leasing financing receivables, and commercial real estate, as well as renewals of acquired loans that are now reflected with originated loans. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $663.0 million at December 31, 2024, a decrease of $254.2 million, compared to $917.3 million at December 31, 2023. The decrease in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by renewals of loans as originated, resolutions of these loans, and charge-offs.

Previous wording

We strive to maintain a relatively diversified loan and lease portfolio to help reduce the risk inherent in concentration in certain types of collateral. Our exposure to certain industries as of December 31, 2023 represents the following percentages of the portfolio: 36.5% real estate, 12.5% manufacturing, 7.7% finance and insurance, 6.4% wholesale trade, 5.0% retail trade, and all other industries represent less than 5% of the portfolio or 31.9% of the total loan and lease portfolio. As of December 31, 2023, the loan portfolio included $422.8 million of unguaranteed SBA 7(a) and USDA loans with exposure to the following top three industries: 16.8% retail trade, 14.0% accommodation and food services and 11.6% manufacturing. The following table shows our allocation of originated, purchased 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 diversified loan and lease portfolio to help reduce the risk inherent in concentration in certain types of collateral. Our exposure to certain industries as of December 31, 2024 represents the following percentages of the portfolio: 36.1% real estate, 12.8% manufacturing, 8.7% finance and insurance, 5.9% wholesale trade, 5.0% other services, and all other industries represent less than 5% of the portfolio or 31.4% of the total loan and lease portfolio. As of December 31, 2024, the loan portfolio included $421.5 million of unguaranteed SBA 7(a) and USDA loans with exposure to the following top three industries: 19.0% retail trade, 13.8% accommodation and food services and 10.0% manufacturing. The following table shows our allocation of originated, purchased credit deteriorated, and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):

Previous wording

Loans collateralized by real estate comprised 53.4% and 52.4% of the loan and lease portfolio at December 31, 2023 and 2022, respectively. Commercial real estate loans comprised the largest portion of the real estate loan portfolio as of December 31, 2023 and 2022, and totaled $2.3 billion, or 65.0%, of real estate loans and 34.7% of the total loan and lease portfolio at December 31, 2023. At December 31, 2022, commercial real estate loans totaled $1.9 billion and comprised 67.3% of real estate loans and 35.2% of the total loan and lease portfolio. Purchased credit deteriorated commercial real estate loans increased from $45.1 million as of December 31, 2022 to $137.8 million as of December 31, 2023, as a result of the Inland acquisition. At December 31, 2023 and 2022, commercial real estate loans, including both owner-occupied and non-owner occupied, as a percentage of total capital were 299.6% and 313.4%, respectively. Non-owner occupied commercial real estate loans were $1.0 billion and $736.7 million, or 95.9% and 86.6% of total capital, at December 31, 2023 and 2022, respectively.

Current wording

Commercial Real Estate Loans. Commercial real estate loans, including owner occupied and non-owner occupied, comprised the largest portion of the real estate loan portfolio as of December 31, 2024 and totaled $2.4 billion, or 66.0%, of real estate loans and 34.1% of the total loan and lease portfolio. At December 31, 2023, commercial real estate loans totaled $2.3 billion and comprised 65.0% of real estate loans and 34.7% of the total loan and lease portfolio. Purchased credit deteriorated commercial real estate loans decreased from $137.8 million as of December 31, 2023 to $82.9 million as of December 31, 2024, as a result of the migration of renewed loans to originated, paydowns, resolutions, and charge-offs.

Previous wording

Residential real estate loans totaled $719.5 million at December 31, 2023 compared to $490.0 million at December 31, 2022, an increase of $229.6 million or 46.9%. The residential real estate loan portfolio comprised 20.2% and 17.3% of real estate loans as of December 31, 2023 and 2022, respectively, and 10.8% and 9.1% of total loans and leases at December 31, 2023 and 2022, respectively. Purchased credit deteriorated residential real estate loans increased from $32.2 million as of December 31, 2022 to $42.5 million as of December 31, 2023, or 31.9%. Multifamily real estate loans were $399.3 million and $303.0 million, or 36.8% and 35.7% of total capital, at December 31, 2023 and December 31, 2022, respectively.

Current wording

Residential real estate loans. Residential real estate loans totaled $726.1 million at December 31, 2024, compared to $719.5 million at December 31, 2023, an increase of $6.6 million or 0.9%. The residential real estate loan portfolio comprised 20.3% and 20.2% of real estate loans as of December 31, 2024 and 2023, respectively, and 10.4% and 10.8% of total loans and leases at December 31, 2024 and 2023, respectively. Purchased credit deteriorated residential real estate loans decreased from $42.5 million as of December 31, 2023 to $30.5 million as of December 31, 2024, or 28.2%. Multifamily real estate loans, included in residential real estate loans, were $429.9 million and $399.3 million, or 36.4% and 36.8% of Byline Bank total capital, at December 31, 2024 and December 31, 2023, respectively.