BYLINE BANCORP, INC. - FORM 8-K - EX-99 - EX-99.1

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8-K - 8-K - BYLINE BANCORP, INC.	by-8k_20180726.htm

EX-99.1

Byline Bancorp, Inc. Reports Second Quarter 2018 Financial Results

Second Quarter 2018 Highlights

•

Completed the First Evanston Bancorp, Inc. acquisition on May 31, 2018

•

Net income of $2.8 million, or $0.08 per diluted share

Adjusted net income¹ of $10.6 million, or $0.32 per diluted share

•

Loan originations of $169.6 million and lease originations of $25.6 million

•

Originated loans and leases grew to $1.8 billion as of June 30, 2018, an increase of $186.0 million or 11.5% from the first quarter of 2018, and $449.5 million or 33.2% from second quarter of 2017

•

Total deposit base of $3.6 billion as of June 30, 2018. Non-interest bearing deposits to total deposits increased from 29.7% at March 31, 2018 to 32.7% at June 30, 2018

Chicago, IL, July 26, 2018 – Byline Bancorp, Inc. (the “Company”)(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $2.8 million, or $0.08 per diluted share, for the second quarter of 2018, compared with net income of $6.8 million, or $0.22 per diluted share, for the first quarter of 2018, and net income of $6.1 million, or $(0.18) per diluted share, for the second quarter of 2017. The Company’s financial results for the second quarter of 2018 include certain costs associated with its acquisition and integration of First Evanston Bancorp, Inc. (“First Evanston”) and its bank subsidiary First Bank & Trust, including merger-related and core system conversion expenses. Excluding these costs and impairment charges on assets held for sale, adjusted net income was $10.6 million, or $0.32 per diluted share, for the second quarter of 2018. A reconciliation of adjusted net income and adjusted diluted earnings per share to net income and diluted earnings per share, respectively, according to accounting principles generally accepted in the United States of America (“GAAP”) is provided in the financial tables at the end of this release.

Alberto J. Paracchini, President and Chief Executive Officer of Byline, commented, “Byline Bank had a solid quarter highlighted by strong loan growth with contributions coming from our diversified commercial lending platform. Our government guaranteed lending business contributed nicely to both loan production and revenue for the quarter. Strong revenue growth along with continued gains in operating leverage resulted in a significant increase in our adjusted earnings.

During the quarter we completed the acquisition of First Evanston. This was an important milestone for our Company and we remain focused on ensuring a smooth transition for customers and colleagues. As part of our integration project we had the opportunity to evaluate our technology platform and made the decision to convert our core platform to FIS IBS which First Evanston utilized. We believe this platform will further enhance our product capabilities, provide for tighter integration and allow us to operate more efficiently going forward. We expect to see continued benefits on our financial performance as we execute on our integration plan and fully capture all of the synergies projected for this combination.

(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.

Byline Bancorp, Inc.

Page 2 of 22

We continually evaluate all areas of the organization for opportunities to increase efficiencies. During the second quarter, we consolidated six branches and two other facilities within our network that had a minimal impact on our customer service levels, convenience, and business development capabilities. These consolidations resulted in approximately $891,000, or $0.03 per diluted share, in one-time charges and will provide an estimated $2.0 million in annual cost savings that will be re-invested over time into our infrastructure,” said Mr. Paracchini.

STATEMENTS OF OPERATIONS

Net Interest Income

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

	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2018		2018		2017		2017		2017		2018		2017
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	39,627	$	33,654	$	31,896	$	30,933	$	29,181	$	73,281	$	57,577
Interest on taxable securities		4,572		4,055		3,679		3,720		3,703		8,627		7,493
Interest on tax-exempt securities		229		174		176		174		151		403		284
Other interest and dividend income		413		259		205		217		280		672		449
Total interest and dividend income		44,841		38,142		35,956		35,044		33,315		82,983		65,803
INTEREST EXPENSE
Deposits		3,745		2,498		2,218		2,112		1,923		6,243		3,406
Federal Home Loan Bank advances		1,360		1,358		1,009		850		772		2,718		1,432
Subordinated debentures and other borrowings		680		591		578		670		809		1,271		1,616
Total interest expense		5,785		4,447		3,805		3,632		3,504		10,232		6,454
Net interest income	$	39,056	$	33,695	$	32,151	$	31,412	$	29,811	$	72,751	$	59,349

Byline Bancorp, Inc.

Page 3 of 22

The following table presents the quarter-to-date schedule of average interest-earning assets and average interest-bearing liabilities for the periods indicated:

	For the Three Months Ended
				June 30,								March 31,
	2018								2018
(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	$	68,019		$	199		1.17	%	$	38,490		$	80		0.85	%
Loans and leases⁽¹⁾		2,638,757			39,627		6.02	%		2,275,274			33,654		6.00	%
Securities available-for-sale		694,154			4,203		2.43	%		628,879			3,623		2.34	%
Securities held-to-maturity		96,414			583		2.42	%		101,834			611		2.43	%
Tax-exempt securities⁽²⁾		36,749			229		2.50	%		27,480			174		2.57	%
Total interest-earning assets	$	3,534,093		$	44,841		5.09	%	$	3,071,957		$	38,142		5.04	%
Allowance for loan and lease losses		(18,292	)							(17,360	)
All other assets		347,383								307,474
TOTAL ASSETS	$	3,863,184							$	3,362,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	227,760		$	124		0.22	%	$	186,686		$	38		0.08	%
Money market accounts		469,066			781		0.67	%		345,545			370		0.43	%
Savings		454,295			83		0.07	%		436,935			76		0.07	%
Time deposits		864,348			2,757		1.28	%		733,753			2,014		1.11	%
Total interest-bearing deposits		2,015,469			3,745		0.75	%		1,702,919			2,498		0.59	%
Federal Home Loan Bank advances		342,825			1,360		1.59	%		363,540			1,358		1.52	%
Other borrowed funds		57,644			680		4.73	%		56,471			591		4.25	%
Total borrowings		400,469			2,040		2.04	%		420,011			1,949		1.88	%
Total interest-bearing liabilities	$	2,415,938		$	5,785		0.96	%	$	2,122,930		$	4,447		0.85	%
Non-interest bearing demand deposits		891,175								743,827
Other liabilities		37,524								35,779
Total stockholders’ equity		518,547								459,535
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,863,184							$	3,362,071
Net interest spread⁽³⁾							4.13	%							4.19	%
Net interest income				$	39,056							$	33,695
Net interest margin⁽⁴⁾							4.43	%							4.45	%

Net loan accretion impact on margin				$	3,604		0.41	%				$	2,336		0.31	%
Net interest margin excluding loan accretion⁽⁶⁾							4.02	%							4.14	%

(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.

(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.

(6)

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.

Byline Bancorp, Inc.

Page 4 of 22

The Company completed its acquisition of First Evanston on May 31, 2018. All references to this transaction in the following narrative are referred to as “the acquisition” or “our recent acquisition.”

Net interest income for the second quarter of 2018 was $39.1 million, an increase of $5.4 million, or 15.9%, from $33.7 million for the first quarter of 2018.

The increase in net interest income was primarily due to:

•

An increase of $6.0 million in interest and fees on loans and leases, primarily due to loans acquired from the acquisition, growth from loan and lease originations, and an increase in interest rates on variable rate loans during the quarter; and

•

An increase of $572,000 in interest income on securities, primarily due to additional purchases and securities acquired during the quarter.

Partially offset by:

•

An increase of $1.2 million in interest expense on deposits, primarily due to deposits assumed as a result of the acquisition, an increase in time deposits and money market demand deposits driven by promotional campaigns during the quarter, and an increase in average rates on deposits; and

•

An increase of $89,000 in interest expense on subordinated debentures and other borrowings, partially due to junior subordinated debentures relating to trust preferred securities assumed as a result of the acquisition.

Net interest margin for the second quarter of 2018 was 4.43%, a decrease of 2 basis points from the first quarter of 2018. Total net loan accretion on acquired loans contributed 41 basis points to the net interest margin for the second quarter of 2018 and 31 basis points for the first quarter of 2018. Net interest margin excluding loan accretion decreased 12 basis points to 4.02% during the second quarter of 2018, compared to 4.14% for the first quarter of 2018. The net interest margin decrease was primarily driven by increased interest-bearing deposit rates during the quarter.

The cost of average total deposits was 0.52% for the second quarter of 2018, an increase of 11 basis points from the first quarter of 2018, due to higher rates on interest bearing deposits and growth in average time deposits of $130.6 million, partially offset by growth in average non-interest bearing demand deposits of $147.3 million. While we believe the acquisition provides a solid additional deposit base to help support future growth, the acquired interest-bearing demand deposits have a slightly higher overall cost than the Company’s existing deposit base, which contributed to the overall increase in the cost of average total deposits during the second quarter.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $4.0 million for the second quarter of 2018, a decrease of $1.1 million compared to $5.1 million for the first quarter of 2018. The second quarter provision included allocations of $4.5 million for originated loans and leases, partially offset by a $528,000 credit to the provision for acquired impaired loans. The decreased provision during the second quarter of 2018 was mainly due to recording a specific reserve on a commercial loan relationship during the previous quarter, offset by increases to the general reserve driven by originated loan and lease portfolio growth.

Byline Bancorp, Inc.

Page 5 of 22

Non-interest Income

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

	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2018		2018		2017		2017		2017		2018		2017
NON-INTEREST INCOME
Fees and service charges on deposits	$	1,456	$	1,312	$	1,304	$	1,418	$	1,348	$	2,768	$	2,567
Net servicing fees		459		563		704		959		1,076		1,022		1,995
ATM and interchange fees		1,141		1,218		1,498		1,495		1,499		2,359		2,847
Net gains on sales of securities available-for-sale		4		—		—		—		—		4		8
Net gains on sales of loans		9,723		7,476		9,036		7,499		8,445		17,199		16,527
Wealth management and trust income		192		—		—		—		—		192		—
Other non-interest income		1,527		859		97		547		825		2,386		1,557
Total non-interest income	$	14,502	$	11,428	$	12,639	$	11,918	$	13,193	$	25,930	$	25,501

Non-interest income for the second quarter of 2018 was $14.5 million, an increase of $3.1 million compared to $11.4 million for the first quarter of 2018.

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

•

An increase of $2.2 million in net gains on sales of loans, primarily due to an increase in loans sold;

•

An increase of $668,000 in other non-interest income, primarily due to a $985,000 increase in customer derivative products fee income partially offset by a net loss on sale of an asset held for sale of $27,000 during the second quarter of 2018; and

•

An increase of $192,000 in wealth management and trust income, a new business line added as a result of the acquisition.

Partially offset by:

•

A decrease of $104,000 in net servicing fees, primarily due to the change in fair value of the servicing asset as a result of increases in prepayment speed assumptions on government guaranteed loans.

During the second quarter of 2018, the Company sold $95.0 million of government guaranteed loans compared to $78.6 million during the first quarter of 2018, contributing to the increase in net gains on sale of loans for the quarter.

Byline Bancorp, Inc.

Page 6 of 22

Non-interest Expense

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

	Three Months Ended												Six Months Ended
	June 30,		March 31,			December 31,			September 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2018		2018			2017			2017		2017		2018		2017
NON-INTEREST EXPENSE
Salaries and employee benefits	$	19,244	$	18,278		$	17,118		$	16,323	$	17,226	$	37,522	$	33,828
Occupancy expense, net		4,499		3,755			3,553			3,301		3,485		8,254		7,224
Equipment expense		558		603			663			630		616		1,161		1,179
Loan and lease related expenses		1,471		1,400			1,116			891		801		2,871		1,678
Legal, audit and other professional fees		4,418		1,851			2,658			1,608		1,090		6,269		2,761
Data processing		10,371		2,301			2,284			2,399		2,447		12,672		4,856
Net loss (gain) recognized on other real estate owned and other related expenses		472		(1	)		(430	)		565		141		471		(429	)
Regulatory assessments		366		241			299			326		384		607		568
Other intangible assets amortization expense		1,130		767			767			769		769		1,897		1,538
Advertising and promotions		347		249			232			196		318		596		607
Telecommunications		466		418			428			351		396		884		814
Other non-interest expense		2,428		2,057			1,670			3,706		1,576		4,485		3,476
Total non-interest expense	$	45,770	$	31,919		$	30,358		$	31,065	$	29,249	$	77,689	$	58,100

Non-interest expense for the second quarter of 2018 was $45.8 million, an increase of $13.9 million from $31.9 million for the first quarter of 2018.

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

•

An increase of $8.1 million in data processing expense, primarily due to contract termination expenses relating to the Bank’s anticipated core system conversion;

•

An increase of $2.6 million in legal, audit and other professional fees, primarily due to professional services incurred related to the acquisition;

•

An increase of $1.0 million in salaries and employee benefits, primarily due to additional salary and employee benefit expenses subsequent to the acquisition closing, partially offset by a $523,000 decrease in payroll taxes; and

•

An increase of $744,000 in occupancy expense, primarily due to $738,000 of expenses associated with branch consolidations.

The Company’s efficiency ratio was 83.35% for the second quarter of 2018, compared with 69.04% for the first quarter of 2018. Approximately $9.0 million of expenses were recognized during the quarter relating to the Bank’s anticipated core system conversion, including consulting fees and contract termination expense. Excluding merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, the Company’s adjusted efficiency ratio was 63.48% for the second quarter of 2018.

INCOME TAXES

The Company recorded income tax expense of $1.1 million during the second quarter of 2018, an effective tax rate of 27.8%, compared to $1.3 million during the first quarter of 2018, a decrease of $257,000.

Byline Bancorp, Inc.

Page 7 of 22

STATEMENTS OF FINANCIAL CONDITION

Total assets were $4.8 billion at June 30, 2018, an increase of $1.3 billion from $3.5 billion at March 31, 2018, and an increase of $1.4 billion compared to $3.4 billion at June 30, 2017.

The increase was primarily due to:

•

An increase in loans and leases of $1.1 billion, primarily due to an increase of $882.3 million in our acquired loan portfolio largely from the acquisition and an increase of $186.0 million in our originated loan portfolio;

•

An increase in securities of $126.1 million mainly due to the acquisition of the First Evanston securities portfolio, which included agency, municipal, and U.S. Treasury securities; and

•

An increase in goodwill of $73.0 million due to the premium value associated with the acquisition.

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

	June 30, 2018						March 31, 2018						December 31, 2017
(dollars in thousands)	Amount			% of Total			Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	539,529			16.1	%	$	485,324			21.3	%	$	513,622			22.5	%
Residential real estate		413,956			12.4	%		397,516			17.4	%		400,571			17.6	%
Construction, land development, and other land		134,004			4.0	%		110,092			4.8	%		97,638			4.3	%
Commercial and industrial		556,340			16.6	%		470,689			20.6	%		416,499			18.3	%
Installment and other		4,898			0.1	%		3,645			0.2	%		3,724			0.2	%
Leasing financing receivables		156,017			4.7	%		151,468			6.7	%		141,329			6.2	%
Total originated loans and leases	$	1,804,744			53.9	%	$	1,618,734			71.0	%	$	1,573,383			69.1	%
Acquired impaired loans
Commercial real estate	$	162,621			4.9	%	$	157,956			7.0	%	$	166,712			7.3	%
Residential real estate		129,737			3.9	%		139,858			6.1	%		144,562			6.4	%
Construction, land development, and other land		4,860			0.1	%		5,156			0.2	%		5,946			0.3	%
Commercial and industrial		15,347			0.4	%		8,055			0.4	%		10,008			0.4	%
Installment and other		521			0.0	%		449			0.0	%		462			0.0	%
Total acquired impaired loans	$	313,086			9.3	%	$	311,474			13.7	%	$	327,690			14.4	%
Acquired non-impaired loans and leases
Commercial real estate	$	532,837			15.9	%	$	197,589			8.7	%	$	211,359			9.3	%
Residential real estate		155,895			4.7	%		30,785			1.3	%		32,085			1.4	%
Construction, land development, and other land		49,752			1.5	%		1,822			0.1	%		1,845			0.1	%
Commercial and industrial		454,133			13.6	%		89,985			3.9	%		94,731			4.1	%
Installment and other		7,387			0.2	%		36			0.0	%		42			0.0	%
Leasing financing receivables		30,858			0.9	%		29,993			1.3	%		36,357			1.6	%
Total acquired non-impaired loans and leases	$	1,230,862			36.8	%	$	350,210			15.3	%	$	376,419			16.5	%
Total loans and leases	$	3,348,692			100.0	%	$	2,280,418			100.0	%	$	2,277,492			100.0	%
Allowance for loan and lease losses		(19,687	)					(17,640	)					(16,706	)
Total loans and leases, net of allowance for loan and lease losses	$	3,329,005					$	2,262,778					$	2,260,786

Byline Bancorp, Inc.

Page 8 of 22

ASSET QUALITY

Non-Performing Assets

The following table sets forth the amounts of non-performing loans and leases, non-performing assets, and other real estate owned at the dates indicated:

	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2018			2018			2017			2017			2017
Nonperforming assets:
Non-accrual loans and leases	$	25,742		$	23,626		$	15,763		$	15,121		$	15,296
Past due loans and leases 90 days or more and still accruing interest		197			—			—			—			—
Accruing troubled debt restructured loans		1,238			1,037			1,061			1,631			981
Total non-performing loans and leases		27,177			24,663			16,824			16,752			16,277
Other real estate owned		6,402			10,466			10,626			13,859			12,684
Total non-performing assets	$	33,579		$	35,129		$	27,450		$	30,611		$	28,961
Total non-performing loans and leases as a percentage of total loans and leases		0.81	%		1.08	%		0.74	%		0.76	%		0.76	%
Total non-performing assets as a percentage of total assets		0.70	%		1.01	%		0.82	%		0.93	%		0.86	%
Allowance for loan and lease losses as a percentage of non-performing loans and leases		72.44	%		71.52	%		99.30	%		95.39	%		85.82	%

Nonperforming assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	6,810		$	6,266		$	4,543		$	3,501		$	3,202
Past due loans 90 days or more and still accruing interest guaranteed		152			—			—			—			—
Accruing troubled debt restructured loans guaranteed		—			—			—			—			—
Total non-performing loans and leases guaranteed		6,962			6,266			4,543			3,501			3,202
Other real estate owned guaranteed		298			482			—			—			—
Total non-performing assets guaranteed	$	7,260		$	6,748		$	4,543		$	3,501		$	3,202
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.60	%		0.81	%		0.54	%		0.60	%		0.61	%
Total non-performing assets not guaranteed as a percentage of total assets		0.55	%		0.82	%		0.68	%		0.82	%		0.77	%

Variances in non-performing assets:

•

Non-performing loans and leases were $27.2 million at June 30, 2018, an increase of $2.5 million from $24.7 million at March 31, 2018, partially consisting of government guaranteed loans; and

•

Other real estate owned was $6.4 million at June 30, 2018, a decrease of $4.1 million from $10.5 million at March 31, 2018, primarily due to sales of other real estate owned properties during the second quarter of 2018.

Non-performing assets consisted of $7.3 million and $6.7 million of government guaranteed balances at June 30, 2018 and March 31, 2018, respectively.

Byline Bancorp, Inc.

Page 9 of 22

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															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands)	2018			2018			2017			2017			2017			2018			2017
Allowance for loan and lease losses, beginning of period	$	17,640		$	16,706		$	15,980		$	13,969		$	11,817		$	16,706		$	10,923
Provision for loan and lease losses		3,956			5,115			3,347			3,900			3,515			9,071			5,406
Net charge-offs of loans		(1,909	)		(4,181	)		(2,621	)		(1,889	)		(1,363	)		(6,090	)		(2,360	)
Allowance for loan and lease losses, end of period	$	19,687		$	17,640		$	16,706		$	15,980		$	13,969		$	19,687		$	13,969

Allowance for loan and lease losses to period end total loans held for investment		0.59	%		0.77	%		0.73	%		0.72	%		0.65	%		0.59	%		0.65	%
Net charge-offs (annualized) to average loans outstanding during the period		0.29	%		0.75	%		0.46	%		0.34	%		0.26	%		0.50	%		0.22	%
Provision for loan and lease losses to net charge-offs during the period	2.07x			1.22x			1.28x				2.06	x		2.58	x	1.49x			2.29x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment decreased from 0.77% at March 31, 2018 to 0.59% at June 30, 2018, primarily due to the acquisition.

Net Charge-Offs

Net charge-offs during the second quarter of 2018 were $1.9 million, or 0.29% of average loans and leases, on an annualized basis, a decrease of $2.3 million compared to $4.2 million, or 0.75% of average loans, during the first quarter of 2018, and a slight increase from 0.26% for the second quarter of 2017. The decrease was primarily due to a charge-off related to one commercial loan relationship that was downgraded to non-accrual status during the first quarter.

Net charge-offs for the second quarter of 2018 included $1.7 million in the unguaranteed portion of government guaranteed loans while net charge-offs for the first quarter of 2018 included $1.9 million in the unguaranteed portion of government guaranteed loans and $2.0 million for commercial banking.

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Deposits and Other Liabilities

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

	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2018		2018		2017		2017		2017
Non-interest bearing demand deposits	$	1,193,057	$	749,892	$	760,887	$	753,662	$	781,636
Interest bearing checking accounts		287,330		196,802		186,611		187,232		182,351
Money market demand accounts		617,108		382,282		349,862		418,006		353,304
Other savings		487,130		439,277		437,212		435,536		445,220
Time deposits (below $250,000)		879,643		665,541		627,255		643,112		680,893
Time deposits ($250,000 and above)		180,609		90,753		81,502		83,381		97,194
Total deposits	$	3,644,877	$	2,524,547	$	2,443,329	$	2,520,929	$	2,540,598

Total deposits were $3.6 billion at June 30, 2018, an increase of $1.1 billion compared to both the previous quarter and June 30, 2017, primarily due to assumed deposits from the acquisition. Non-interest bearing deposits to total deposits increased from 29.7% at March 31, 2018 to 32.7% at June 30, 2018.

The increase in the current quarter was primarily due to:

•

An increase in non-interest bearing demand deposits of $443.2 million, from $749.9 million at March 31, 2018 to $1.2 billion at June 30, 2018, primarily driven by the assumption of the First Evanston deposits;

•

An increase in time deposits of $304.0 million, from $756.3 million at March 31, 2018 to $1.1 billion at June 30, 2018, primarily driven by the assumption of First Evanston time deposits as well continuing promotional campaigns; and

•

An increase in money market demand deposits of $234.8 million, from $382.3 million at March 31, 2018 to $617.1 million at June 30, 2018, primarily driven by the First Evanston deposits as well as an ongoing promotional campaign.

Total borrowings and other liabilities were $544.0 million at June 30, 2018, an increase of $69.1 million from $474.9 million at March 31, 2018.

The increase in the current quarter was primarily due to:

•

An increase in Federal Home Loan Bank advances of $40.0 million, from $380.0 million at March 31, 2018 to $420.0 million at June 30, 2018, primarily due to the Bank’s ongoing funding needs;

•

An increase in accrued expenses and other liabilities of $22.7 million, from $37.7 million at March 31, 2018 to $60.3 million at June 30, 2018, partially due to additional accrued expenses and other liabilities resulting from the core system conversion and acquisition and loan purchases of $10.0 million not yet settled during the quarter; and

•

An increase in junior subordinated debentures of $8.7 million, from $27.8 million at March 31, 2018 to $36.5 million at June 30, 2018, partially due to an additional contractual $10.0 million of junior subordinated debentures assumed as a result of the acquisition.

Partially offset by:

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•

A decrease of $3.2 million in securities sold under agreements to repurchase, from $27.8 million at March 31, 2018 to $24.7 million at June 30, 2018, primarily due to net repurchases during the quarter.

Stockholders’ Equity

Total stockholders’ equity was $616.4 million at June 30, 2018, an increase of $153.5 million from $462.9 million at March 31, 2018, and an increase of $168.7 million from $447.7 million at June 30, 2017, primarily due to a $151.1 million increase from the acquisition.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of June 30, 2018:

	Actual					Minimum Capital Required					Required for the Bank to be Considered Well Capitalized
June 30, 2018	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	496,926		12.92	%	$	307,793		8.00	%	N/A		N/A
Bank		474,663		12.32	%		308,217		8.00	%	$	385,272		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	475,381		12.36	%	$	230,845		6.00	%	N/A		N/A
Bank		453,118		11.76	%		231,163		6.00	%	$	308,217		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	418,443		10.88	%	$	173,134		4.50	%	N/A		N/A
Bank		453,118		11.76	%		173,372		4.50	%	$	250,427		6.50	%
Tier 1 capital to average assets:
Company	$	475,381		10.57	%	$	179,841		4.00	%	N/A		N/A
Bank		453,118		10.07	%		180,066		4.00	%	$	225,083		5.00	%

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

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) on Friday, July 27, 2018 to discuss its quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at (888) 317-6016. A recorded replay can be accessed through August 10, 2018 by dialing (877) 344-7529; passcode: 10121933.

A slide presentation relating to the second quarter 2018 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the News and Events page of the Company’s 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

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Bank has approximately $4.8 billion in assets and operates more than 50 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 10 Small Business Administration lenders in the United States.

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, 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 share, tangible common equity to tangible assets, and net interest margin excluding loan accretion. 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 “Reconciliation of Non-GAAP Financial Measures” in the financial schedules included in this press release for a reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures.

Adjusted net income and adjusted diluted earnings per share exclude certain significant items, which include incremental income tax benefit related to Illinois corporate income tax rate increases, incremental income tax expense or benefit related to federal corporate income tax reductions, impairment charges on assets held for sale, merger related expenses, and core system conversion expenses adjusted for applicable income tax. Management believes the significant items are not indicative of or useful to measure the Company’s operating performance on an ongoing basis.

Adjusted non-interest expense is non-interest expense excluding certain significant items, which include impairment charges on assets held for sale, merger-related expenses, and core system conversion expenses.

Adjusted efficiency ratio is adjusted non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted non-interest expense to average assets is adjusted non-interest expense divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted return on average stockholders’ equity is adjusted net income divided by average stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

Adjusted return on average assets is adjusted net income divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

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Non-interest income to total revenues is non-interest income divided by net interest income plus non-interest income. Management believes that it is standard practice in the industry to present non-interest income as a percentage of total revenue. Accordingly, management believes providing these measures may be useful for peer comparison.

Pre‑tax pre‑provision income is pre‑tax income plus the provision for loan and lease losses. Management believes this metric is important due to the tax benefit resulting from the reversal of the deferred tax asset valuation allowance, the decrease in the federal corporate income tax rate, and the increase in the Illinois state corporate income tax rate.

Pre-tax pre-provision return on average assets is pre-tax income plus the provision for loan and lease losses, divided by average assets. Management believes this metric is important due to the change in tax expense or benefit resulting from the recent decrease in the federal corporate income tax rate and the recent increase in the Illinois state income tax rate. The ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for loan and lease losses. Adjusted pre-tax pre-provision return on average assets excludes certain significant items, which include impairment charges on assets held for sale, merger related expenses, and core system conversion expenses.

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.

Tangible assets is defined as total assets reduced by goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

Tangible book value per share is calculated as tangible common equity, which is stockholders’ equity reduced by preferred stock and goodwill and other intangible assets, divided by total shares of common stock outstanding. Management believes this metric is important due to the relative changes in the book value per share exclusive of changes in intangible assets.

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 measure 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.

Net interest margin excluding loan accretion is calculated as reported net interest margin less the effect of accretion income net of contractual interest collected on acquired loans. Management believes that this metric is important as it illustrates the impact of net accretion income from acquired loans on the net interest margin.

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 and its business. 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

Byline Bancorp, Inc.

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comparable words or phrases of a future or forward-looking nature. Forward-looking statements 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. 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 reliable, accurate or complete based on current reasonable assumptions. You should not place undue reliance on any forward-looking statements contained in this communication. Forward-looking statements speak only as of the date they are made, and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Contacts:

Investors:	Media:
Allyson Pooley/Tony Rossi	Erin O’Neill
Financial Profiles, Inc.	Director of Marketing
IRBY@bylinebank.com	Byline Bank
	773-475-2901
	eoneill@bylinebank.com

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BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2018			2018			2017			2017			2017
ASSETS
Cash and due from banks	$	25,299		$	17,396		$	19,404		$	16,193		$	17,740
Interest bearing deposits with other banks		127,417			110,645			38,945			46,043			62,081
Cash and cash equivalents		152,716			128,041			58,349			62,236			79,821
Securities available-for-sale, at fair value		757,825			626,057			583,236			584,684			591,933
Securities held-to-maturity, at amortized cost		106,613			112,266			117,163			121,453			127,397
Restricted stock, at cost		18,977			17,177			16,343			10,628			11,978
Loans held for sale		5,822			8,219			5,212			2,087			6,835
Loans and leases:
Loans and leases		3,348,692			2,280,418			2,277,492			2,216,499			2,149,390
Allowance for loan and lease losses		(19,687	)		(17,640	)		(16,706	)		(15,980	)		(13,969	)
Net loans and leases		3,329,005			2,262,778			2,260,786			2,200,519			2,135,421
Servicing assets, at fair value		21,587			21,615			21,400			21,669			21,424
Accrued interest receivable		10,670			6,971			7,670			7,183			6,961
Premises and equipment, net		107,300			94,014			95,224			96,334			98,891
Assets held for sale		11,428			9,030			9,779			12,938			13,666
Other real estate owned, net		6,402			10,466			10,626			13,859			12,684
Goodwill		127,536			54,562			54,562			51,975			51,975
Other intangible assets, net		37,139			15,991			16,756			17,522			18,290
Bank-owned life insurance		5,886			5,838			5,718			5,680			5,643
Deferred tax assets, net		48,936			47,371			47,376			60,350			58,784
Due from broker		—			—			—			—			82,699
Due from counterparty		25,569			19,987			39,824			21,084			19,257
Other assets		31,869			21,989			16,106			15,241			16,463
Total assets	$	4,805,280		$	3,462,372		$	3,366,130		$	3,305,442		$	3,360,122
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing demand deposits	$	1,193,057		$	749,892		$	760,887		$	753,662		$	781,636
Interest bearing deposits:
NOW, savings accounts, and money market accounts		1,391,568			1,018,361			973,685			1,040,774			980,875
Time deposits		1,060,252			756,294			708,757			726,493			778,087
Total deposits		3,644,877			2,524,547			2,443,329			2,520,929			2,540,598
Accrued interest payable		2,562			1,612			1,306			1,184			1,562
Line of credit		—			—			—			—			16,150
Federal Home Loan Bank advances		420,000			380,000			361,506			234,559			219,611
Securities sold under agreements to repurchase		24,653			27,815			31,187			30,807			32,429
Junior subordinated debentures issued to capital trusts, net		36,452			27,800			27,647			27,482			27,309
Accrued expenses and other liabilities		60,330			37,662			42,577			30,948			74,732
Total liabilities		4,188,874			2,999,436			2,907,552			2,845,909			2,912,391
STOCKHOLDERS’ EQUITY
Preferred stock		10,438			10,438			10,438			10,438			10,438
Common stock		360			293			292			292			292
Additional paid-in capital		544,686			392,932			391,586			391,040			390,660
Retained earnings		71,257			68,687			61,349			62,311			52,753
Accumulated other comprehensive loss, net of tax		(10,335	)		(9,414	)		(5,087	)		(4,548	)		(6,412	)
Total stockholders’ equity		616,406			462,936			458,578			459,533			447,731
Total liabilities and stockholders’ equity	$	4,805,280		$	3,462,372		$	3,366,130		$	3,305,442		$	3,360,122

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BYLINE BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended														Six Months Ended
	June 30,		March 31,			December 31,			September 30,			June 30,			June 30,		June 30,
(dollars in thousands, except share and per share data)	2018		2018			2017			2017			2017			2018		2017
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	39,627	$	33,654		$	31,896		$	30,933		$	29,181		$	73,281	$	57,577
Interest on taxable securities		4,572		4,055			3,679			3,720			3,703			8,627		7,493
Interest on tax-exempt securities		229		174			176			174			151			403		284
Other interest and dividend income		413		259			205			217			280			672		449
Total interest and dividend income		44,841		38,142			35,956			35,044			33,315			82,983		65,803
INTEREST EXPENSE
Deposits		3,745		2,498			2,218			2,112			1,923			6,243		3,406
Federal Home Loan Bank advances		1,360		1,358			1,009			850			772			2,718		1,432
Subordinated debentures and other borrowings		680		591			578			670			809			1,271		1,616
Total interest expense		5,785		4,447			3,805			3,632			3,504			10,232		6,454
Net interest income		39,056		33,695			32,151			31,412			29,811			72,751		59,349
PROVISION FOR LOAN AND LEASE LOSSES		3,956		5,115			3,347			3,900			3,515			9,071		5,406
Net interest income after provision for loan and lease losses		35,100		28,580			28,804			27,512			26,296			63,680		53,943
NON-INTEREST INCOME
Fees and service charges on deposits		1,456		1,312			1,304			1,418			1,348			2,768		2,567
Net servicing fees		459		563			704			959			1,076			1,022		1,995
ATM and interchange fees		1,141		1,218			1,498			1,495			1,499			2,359		2,847
Net gains on sales of securities available-for- sale		4		—			—			—			—			4		8
Net gains on sales of loans		9,723		7,476			9,036			7,499			8,445			17,199		16,527
Wealth management and trust income		192		—			—			—			—			192		—
Other non-interest income		1,527		859			97			547			825			2,386		1,557
Total non-interest income		14,502		11,428			12,639			11,918			13,193			25,930		25,501
NON-INTEREST EXPENSE
Salaries and employee benefits		19,244		18,278			17,118			16,323			17,226			37,522		33,828
Occupancy expense, net		4,499		3,755			3,553			3,301			3,485			8,254		7,224
Equipment expense		558		603			663			630			616			1,161		1,179
Loan and lease related expenses		1,471		1,400			1,116			891			801			2,871		1,678
Legal, audit and other professional fees		4,418		1,851			2,658			1,608			1,090			6,269		2,761
Data processing		10,371		2,301			2,284			2,399			2,447			12,672		4,856
Net loss (gain) recognized on other real estate owned and other related expenses		472		(1	)		(430	)		565			141			471		(429	)
Regulatory assessments		366		241			299			326			384			607		568
Other intangible assets amortization expense		1,130		767			767			769			769			1,897		1,538
Advertising and promotions		347		249			232			196			318			596		607
Telecommunications		466		418			428			351			396			884		814
Other non-interest expense		2,428		2,057			1,670			3,706			1,576			4,485		3,476
Total non-interest expense		45,770		31,919			30,358			31,065			29,249			77,689		58,100
INCOME BEFORE PROVISION FOR INCOME TAXES		3,832		8,089			11,085			8,365			10,240			11,921		21,344
PROVISION (BENEFIT) FOR INCOME TAXES		1,064		1,321			11,851			(1,390	)		4,094			2,385		8,638
NET INCOME (LOSS)		2,768		6,768			(766	)		9,755			6,146			9,536		12,706
Dividends on preferred shares		198		193			196			195			10,697			391		10,886
INCOME AVAILABLE (LOSS ATTRIBUTABLE) TO COMMON STOCKHOLDERS	$	2,570	$	6,575		$	(962	)	$	9,560		$	(4,551	)	$	9,145	$	1,820
EARNINGS (LOSS) PER COMMON SHARE
Basic	$	0.08	$	0.22		$	(0.03	)	$	0.33		$	(0.18	)	$	0.30	$	0.07
Diluted	$	0.08	$	0.22		$	(0.03	)	$	0.32		$	(0.18	)	$	0.29	$	0.07
Weighted average common shares outstanding for basic earnings (loss) per common share		31,614,973		29,291,179			29,246,900			29,246,900			24,667,587			30,459,495		24,642,287
Diluted weighted average common shares outstanding for diluted earnings (loss) per common share		32,568,396		29,913,633			29,246,900			29,752,331			24,667,587			31,448,320		25,106,887

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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
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands, except share and per share data)	2018			2018			2017			2017			2017			2018			2017
Summary of Operations
Net interest income	$	39,056		$	33,695		$	32,151		$	31,412		$	29,811		$	72,751		$	59,349
Provision for loan and lease losses		3,956			5,115			3,347			3,900			3,515			9,071			5,406
Non-interest income		14,502			11,428			12,639			11,918			13,193			25,930			25,501
Non-interest expense		45,770			31,919			30,358			31,065			29,249			77,689			58,100
Income before provision for income taxes		3,832			8,089			11,085			8,365			10,240			11,921			21,344
Provision (benefit) for income taxes		1,064			1,321			11,851			(1,390	)		4,094			2,385			8,638
Net income (loss)		2,768			6,768			(766	)		9,755			6,146			9,536			12,706
Dividends on preferred shares		198			193			196			195			10,697			391			10,886
Net income available (loss attributable) to common stockholders	$	2,570		$	6,575		$	(962	)	$	9,560		$	(4,551	)	$	9,145		$	1,820

Earnings per Common Share
Basic earnings (loss) per common share	$	0.08		$	0.22		$	(0.03	)	$	0.33		$	(0.18	)	$	0.30		$	0.07
Diluted earnings (loss) per common share	$	0.08		$	0.22		$	(0.03	)	$	0.32		$	(0.18	)	$	0.29		$	0.07
Adjusted diluted earnings (loss) per common share⁽²⁾⁽³⁾	$	0.32		$	0.21		$	0.24		$	0.18		$	(0.18	)	$	0.52		$	0.07
Weighted average common shares outstanding (basic)		31,614,973			29,291,179			29,246,900			29,246,900			24,667,587			30,459,495			24,642,287
Weighted average common shares outstanding (diluted)		32,568,396			29,913,633			29,246,900			29,752,331			24,667,587			31,448,320			25,106,887
Common shares outstanding		36,218,955			29,404,048			29,317,298			29,305,400			29,246,900			36,218,955			29,246,900

Key Ratios and performance metrics (annualized where applicable)
Net interest margin		4.43	%		4.45	%		4.26	%		4.18	%		4.02	%		4.44	%		4.01	%
Cost of deposits		0.52	%		0.41	%		0.35	%		0.33	%		0.30	%		0.47	%		0.27	%
Efficiency ratio⁽¹⁾		83.35	%		69.04	%		66.06	%		69.92	%		66.23	%		76.81	%		66.66	%
Adjusted efficiency ratio^(1)(2)(3)		63.48	%		68.77	%		63.23	%		67.72	%		66.23	%		65.90	%		66.66	%
Non-interest expense to average assets		4.75	%		3.85	%		3.64	%		3.73	%		3.57	%		4.34	%		3.55	%
Adjusted non-interest expense to average assets⁽²⁾⁽³⁾		3.65	%		3.84	%		3.49	%		3.61	%		3.57	%		3.73	%		3.55	%
Return (loss) on average stockholders' equity		2.14	%		5.97	%		(0.66	)%		8.44	%		6.21	%		3.93	%		6.52	%
Adjusted Return on average stockholders' equity⁽²⁾⁽³⁾		8.18	%		5.41	%		6.22	%		4.79	%		6.21	%		6.89	%		6.52	%
Return (loss) on average assets		0.29	%		0.82	%		(0.09	)%		1.17	%		0.75	%		0.53	%		0.78	%
Adjusted return on average assets⁽²⁾⁽³⁾		1.10	%		0.74	%		0.87	%		0.66	%		0.75	%		0.93	%		0.78	%
Non-interest income to total revenues⁽²⁾		27.08	%		25.33	%		28.22	%		27.51	%		30.68	%		26.28	%		30.05	%
Pre-tax pre-provision return on average assets⁽²⁾		0.81	%		1.59	%		1.73	%		1.47	%		1.68	%		1.17	%		1.63	%
Adjusted pre-tax pre-provision return on average assets(2)(3)		1.91	%		1.61	%		1.89	%		1.59	%		1.68	%		1.77	%		1.63	%
Non-interest bearing deposits to total deposits		32.73	%		29.70	%		31.14	%		29.90	%		30.77	%		32.73	%		30.77	%
Deposits per branch	$	61,778		$	45,081		$	43,631		$	44,227		$	44,572		$	61,778		$	44,572
Loans and leases held for sale and loans and lease held for investment to total deposits		92.03	%		90.66	%		93.43	%		88.01	%		84.87	%		92.03	%		84.87	%
Deposits to total liabilities		87.01	%		84.17	%		84.03	%		88.58	%		87.23	%		87.01	%		87.23	%
Tangible book value per common share⁽²⁾	$	12.18		$	12.99		$	12.85		$	12.95		$	12.55		$	12.18		$	12.55

Asset Quality Ratios
Non-performing loans and leases to total loan and leases held for investment, net before ALLL		0.81	%		1.08	%		0.74	%		0.76	%		0.76	%		0.81	%		0.76	%
ALLL to total loans and leases held for investment, net before ALLL		0.59	%		0.77	%		0.73	%		0.72	%		0.65	%		0.59	%		0.65	%
Net charge-offs to average total loans and leases held for investment, net before ALLL		0.29	%		0.75	%		0.46	%		0.34	%		0.26	%		0.50	%		0.22	%
Acquisition accounting adjustments⁽⁴⁾	$	52,090		$	28,058		$	31,693		$	34,249		$	37,713		$	52,090		$	37,713

Capital Ratios
Common equity to assets		12.63	%		13.07	%		13.31	%		13.59	%		13.01	%		12.63	%		13.01	%
Tangible common equity to tangible assets⁽²⁾		9.51	%		11.26	%		11.44	%		11.73	%		11.16	%		9.51	%		11.16	%
Leverage ratio		10.57	%		12.14	%		12.25	%		11.95	%		11.73	%		10.57	%		11.73	%
Common equity tier 1 capital ratio		10.88	%		13.49	%		13.77	%		13.93	%		13.61	%		10.88	%		13.61	%
Tier 1 capital ratio		12.36	%		15.30	%		15.27	%		15.38	%		15.06	%		12.36	%		15.06	%
Total capital ratio		12.92	%		16.05	%		15.98	%		16.08	%		15.68	%		12.92	%		15.68	%

(1)

Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.

(2)

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.

(3)

Calculation excludes impairment charges, merger-related expenses, and core systems conversion expense

(4)

Represents the remaining unamortized premium or unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.

Byline Bancorp, Inc.

Page 18 of 22

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,
	2018								2017
(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	$	68,019		$	199		1.17	%	$	80,327		$	174		0.87	%
Loans and leases⁽¹⁾		2,638,757			39,627		6.02	%		2,153,482			29,181		5.44	%
Securities available-for-sale		694,154			4,203		2.43	%		605,688			3,134		2.08	%
Securities held-to-maturity		96,414			583		2.42	%		116,931			675		2.32	%
Tax-exempt securities⁽²⁾		36,749			229		2.50	%		21,413			151		2.83	%
Total interest-earning assets	$	3,534,093		$	44,841		5.09	%	$	2,977,841		$	33,315		4.49	%
Allowance for loan and lease losses		(18,292	)							(12,377	)
All other assets		347,383								319,201
TOTAL ASSETS	$	3,863,184							$	3,284,665
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	227,760		$	124		0.22	%	$	187,825		$	31		0.07	%
Money market accounts		469,066			781		0.67	%		374,383			226		0.24	%
Savings		454,295			83		0.07	%		447,324			79		0.07	%
Time deposits		864,348			2,757		1.28	%		799,285			1,587		0.80	%
Total interest-bearing deposits		2,015,469			3,745		0.75	%		1,808,817			1,923		0.43	%
Federal Home Loan Bank advances		342,825			1,360		1.59	%		225,579			772		1.37	%
Other borrowed funds		57,644			680		4.73	%		76,255			809		4.26	%
Total borrowings		400,469			2,040		2.04	%		301,834			1,581		2.10	%
Total interest-bearing liabilities	$	2,415,938		$	5,785		0.96	%	$	2,110,651		$	3,504		0.67	%
Non-interest bearing demand deposits		891,175								745,907
Other liabilities		37,524								31,290
Total stockholders’ equity		518,547								396,817
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,863,184							$	3,284,665
Net interest spread⁽³⁾							4.13	%							3.82	%
Net interest income				$	39,056							$	29,811
Net interest margin⁽⁴⁾							4.43	%							4.02	%

Net loan accretion impact on margin				$	3,604		0.41	%				$	2,471		0.33	%
Net interest margin excluding loan accretion⁽⁶⁾							4.02	%							3.69	%

(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.

(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.

(6)

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.

Byline Bancorp, Inc.

Page 19 of 22

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,
	2018								2017
(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	$	53,337		$	281		1.06	%	$	58,218		$	222		0.77	%
Loans and leases⁽¹⁾		2,458,019			73,281		6.01	%		2,174,118			57,577		5.34	%
Securities available-for-sale		661,697			7,825		2.38	%		614,367			6,344		2.08	%
Securities held-to-maturity		99,109			1,193		2.43	%		119,518			1,376		2.32	%
Tax-exempt securities⁽²⁾		32,140			403		2.53	%		19,933			284		2.87	%
Total interest-earning assets	$	3,304,302		$	82,983		5.06	%	$	2,986,154		$	65,803		4.44	%
Allowance for loan and lease losses		(17,828	)							(11,772	)
All other assets		327,357								325,075
TOTAL ASSETS	$	3,613,831							$	3,299,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	207,337		$	162		0.16	%	$	184,881		$	58		0.06	%
Money market accounts		407,647			1,152		0.57	%		370,848			438		0.24	%
Savings		445,663			159		0.07	%		447,107			158		0.07	%
Time deposits		799,410			4,770		1.20	%		794,950			2,752		0.70	%
Total interest-bearing deposits		1,860,057			6,243		0.68	%		1,797,786			3,406		0.38	%
Federal Home Loan Bank advances		353,125			2,718		1.55	%		263,268			1,432		1.10	%
Other borrowed funds		57,061			1,271		4.49	%		73,065			1,616		4.46	%
Total borrowings		410,186			3,989		1.96	%		336,333			3,048		1.83	%
Total interest-bearing liabilities	$	2,270,243		$	10,232		0.91	%	$	2,134,119		$	6,454		0.61	%
Non-interest bearing demand deposits		817,908								731,117
Other liabilities		36,476								40,972
Total stockholders’ equity		489,204								393,249
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,613,831							$	3,299,457
Net interest spread⁽³⁾							4.15	%							3.83	%
Net interest income				$	72,751							$	59,349
Net interest margin⁽⁴⁾							4.44	%							4.01	%

Net loan accretion impact on margin				$	5,941		0.36	%				$	4,181		0.28	%
Net interest margin excluding loan accretion⁽⁶⁾							4.08	%							3.73	%

(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.

(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.

(6)

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.

Byline Bancorp, Inc.

Page 20 of 22

BYLINE BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

	As of or For the Three Months Ended															As of or for the Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands, per share data)	2018			2018			2017			2017			2017			2018			2017
Net income (loss) and earnings per share excluding significant items
Reported Net Income (Loss)	$	2,768		$	6,768		$	(766	)	$	9,755		$	6,146		$	9,536		$	12,706
Significant items:
Incremental income tax benefit of state tax rate change		—			—		—				(4,790	)		—			—			—
Incremental income tax (benefit) expense attributed to federal income tax reform		—			(724	)		7,154			—			—			(724	)		—
Impairment charges on assets held for sale		117			—		—				951			—			117			—
Merger-related expense		1,517			123			1,272			—			—			1,640			—
Core system conversion expense		9,009			—			—			—			—			9,009			—
Tax benefit on significant items		(2,832	)		(34	)		(395	)		(386	)		—			(2,866	)		—
Adjusted Net Income	$	10,579		$	6,133		$	7,265		$	5,530		$	6,146		$	16,712		$	12,706
Reported Diluted Earnings (Loss) per Share	$	0.08		$	0.22		$	(0.03	)	$	0.32		$	(0.18	)	$	0.29		$	0.07
Significant items:
Incremental income tax benefit of state tax rate change		—			—		—				(0.16	)		—			—			—
Incremental income tax (benefit) expense attributed to federal income tax reform		—			(0.02	)		0.24			—			—			(0.02	)		—
Impairment charges on assets held for sale		—			—		—				0.03			—			—			—
Merger-related expense		0.05			0.01			0.04			—			—			0.06			—
Core system conversion expense		0.28			—			—			—			—			0.28			—
Tax benefit on significant items		(0.09	)		—			(0.01	)		(0.01	)		—			(0.09	)		—
Adjusted Diluted Earnings (Loss) per Share	$	0.32		$	0.21		$	0.24		$	0.18		$	(0.18	)	$	0.52		$	0.07

Byline Bancorp, Inc.

Page 21 of 22

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
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands, except share and per share data)(ratios annualized, where applicable)	2018			2018			2017			2017			2017			2018			2017
Net interest margin:
Reported net interest margin		4.43	%		4.45	%		4.26	%		4.18	%		4.02	%		4.44	%		4.01	%
Effect of accretion income on acquired loans		(0.41	)%		(0.31	)%		(0.30	)%		(0.29	)%		(0.33	)%		(0.36	)%		(0.28	)%
Net interest margin excluding accretion		4.02	%		4.14	%		3.96	%		3.89	%		3.69	%		4.08	%		3.73	%
Total revenues:
Net interest income	$	39,056		$	33,695		$	32,151		$	31,412		$	29,811		$	72,751		$	59,349
Add: Non-interest income		14,502			11,428			12,639			11,918			13,193			25,930			25,501
Total revenues	$	53,558		$	45,123		$	44,790		$	43,330		$	43,004		$	98,681		$	84,850
Adjusted efficiency ratio:
Non-interest expense excluding amortization of intangible assets	$	44,640		$	31,152		$	29,591		$	30,296		$	28,480		$	75,792		$	56,562
Total revenues		53,558			45,123			44,790			43,330			43,004			98,681			84,850
Efficiency ratio		83.35	%		69.04	%		66.06	%		69.92	%		66.23	%		76.81	%		66.66	%
Less: significant adjusted items		10,643			123			1,272			951			—			10,766			—
Adjusted efficiency ratio		63.48	%		68.77	%		63.23	%		67.72	%		66.23	%		65.90	%		66.66	%
Adjusted non-interest expense to average assets:
Total average assets	$	3,863,184		$	3,362,071		$	3,303,673		$	3,307,186		$	3,284,665		$	3,613,831		$	3,299,457
Non-interest expense		45,770			31,919			30,358			31,065			29,249			77,689			58,100
Less: significant adjusted items		10,643			123			1,272			951			—			10,766			—
Adjusted non-interest expense to average assets		3.65	%		3.84	%		3.49	%		3.61	%		3.57	%		3.73	%		3.55	%
Adjusted return on average stockholders' equity:
Average stockholders' equity	$	518,547		$	459,535		$	463,301		$	458,443		$	396,818		$	489,204		$	393,249
Net income (loss)		2,768			6,768			(766	)		9,755			6,146			9,536			12,706
Less: significant adjusted items		7,811			(635	)		8,031			(4,225	)		—			7,176			—
Adjusted return on average stockholders' equity		8.18	%		5.41	%		6.22	%		4.79	%		6.21	%		6.89	%		6.52	%
Adjusted return on average assets:
Total average assets	$	3,863,184		$	3,362,071		$	3,303,673		$	3,307,186		$	3,284,665		$	3,613,831		$	3,299,457
Net income (loss)		2,768		$	6,768		$	(766	)	$	9,755		$	6,146		$	9,536		$	12,706
Less: significant adjusted items		7,811			(635	)		8,031			(4,225	)		—			7,176			—
Adjusted return on average assets		1.10	%		0.74	%		0.87	%		0.66	%		0.75	%		0.93	%		0.78	%
Non-interest income to total revenues:
Non-interest income	$	14,502		$	11,428		$	12,639		$	11,918		$	13,193		$	25,930		$	25,501
Total revenues		53,558			45,123			44,790			43,330			43,004			98,681			84,850
Non-interest income to total revenues		27.08	%		25.33	%		28.22	%		27.51	%		30.68	%		26.28	%		30.05	%
Pre-tax pre-provision net income:
Pre-tax income	$	3,832		$	8,089		$	11,085		$	8,365		$	10,240		$	11,921		$	21,344
Add: Provision for loan and lease losses		3,956			5,115			3,347			3,900			3,515			9,071			5,406
Pre-tax pre-provision net income	$	7,788		$	13,204		$	14,432		$	12,265		$	13,755		$	20,992		$	26,750

Byline Bancorp, Inc.

Page 22 of 22

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
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(dollars in thousands, except share and per share data)(ratios annualized, where applicable)	2018			2018			2017			2017			2017			2018			2017
Pre-tax pre-provision return on average assets:
Total average assets	$	3,863,184		$	3,362,071		$	3,303,673		$	3,307,186		$	3,284,665		$	3,613,831		$	3,299,457
Pre-tax pre-provision net income		7,788			13,204			14,432			12,265			13,755			20,992			26,750
Pre-tax pre-provision return on average assets		0.81	%		1.59	%		1.73	%		1.47	%		1.68	%		1.17	%		1.63	%
Adjusted pre-tax pre-provision return on average assets:
Total average assets	$	3,863,184		$	3,362,071		$	3,303,673		$	3,307,186		$	3,284,665		$	3,613,831		$	3,299,457
Pre-tax pre-provision net income		7,788			13,204			14,432			12,265			13,755			20,992			26,750
Less: significant adjusted items		10,643			123			1,272			951			—			10,766			—
Adjusted pre-tax pre-provision return on average assets:		1.91	%		1.61	%		1.89	%		1.59	%		1.68	%		1.77	%		1.63	%
Tangible common equity:
Total stockholders' equity	$	616,406		$	462,936		$	458,578		$	459,533		$	447,731		$	616,406		$	447,731
Less: Preferred stock		10,438			10,438			10,438			10,438			10,438			10,438			10,438
Less: Goodwill		127,536			54,562			54,562			51,975			51,975			127,536			51,975
Less: Core deposit intangibles and other intangibles		37,139			15,991			16,756			17,522			18,290			37,139			18,290
Tangible common equity	$	441,293		$	381,945		$	376,822		$	379,598		$	367,028		$	441,293		$	367,028
Tangible assets:
Total assets	$	4,805,280		$	3,462,372		$	3,366,130		$	3,305,442		$	3,360,122		$	4,805,280		$	3,360,122
Less: Goodwill		127,536			54,562			54,562			51,975			51,975			127,536			51,975
Less: Core deposit intangibles and other intangibles		37,139			15,991			16,756			17,522			18,290			37,139			18,290
Tangible assets		4,640,605			3,391,819			3,294,812			3,235,945			3,289,857			4,640,605			3,289,857
Tangible book value per share:
Tangible common equity	$	441,293		$	381,945		$	376,822		$	379,598		$	367,028		$	441,293		$	367,028
Shares of common stock outstanding		36,218,955			29,404,048			29,317,298			29,305,400			29,246,900			36,218,955			29,246,900
Tangible book value per share		12.18			12.99			12.85			12.95			12.55			12.18			12.55
Tangible common equity to tangible assets:
Tangible common equity	$	441,293		$	381,945		$	376,822		$	379,598		$	367,028		$	441,293		$	367,028
Tangible assets		4,640,605			3,391,819			3,294,812			3,235,945			3,289,857			4,640,605			3,289,857
Tangible common equity to tangible assets		9.51	%		11.26	%		11.44	%		11.73	%		11.16	%		9.51	%		11.16	%

BYLINE BANCORP, INC. - FORM 8-K - EX-99 - EX-99.1 - July 26, 2018

Attached files