Byline Bancorp, Inc. Reports Third Quarter 2020 Financial Results

Byline Bancorp, Inc. (the “Company” or “Byline”)(NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $13.1 million, or $0.34 per diluted share, for the third quarter of 2020, compared with net income of $9.1 million, or $0.24 per diluted share, for the second quarter of 2020, and net income of $15.3 million, or $0.39 per diluted share, for the third quarter of 2019.

Alberto J. Paracchini, President and Chief Executive Officer of Byline, commented, "Our results for the quarter continues to show solid performance in a challenging operating environment. We saw strong growth in pre-tax, pre-provision income driven by improved business activity, strong fee income and disciplined expense management. This allowed us to continue to build our allowance for loan and lease losses and add to our capital base.

“This quarter we also announced the additional consolidation of 11 branch locations in order to better align our spending with current customer behaviors and continue investing in our digital capabilities and franchise. Looking forward, our focus remains on supporting new and existing customers, executing our strategy and growing the value of our franchise,” said Mr. Paracchini.

Third Quarter 2020 Updates

Branch Consolidations

On September 18, 2020, we announced plans to optimize our branch network as part of efforts to accommodate changing customer behaviors while also recognizing operating efficiencies. Byline Bank plans to consolidate 11 of its 57 full-service offices, or approximately 20% of its branch network. Most of the impacted branches are located within two miles of another Byline Bank branch that will continue to operate within the respective market. These branch consolidations are scheduled to commence on December 31, 2020 and will result in a one-time charge of approximately $5.9 million, including $696,000 recognized during the third quarter 2020 related to salaries and employee benefit expenses. We anticipate annualized cost savings of approximately $4.3 million beginning in 2021, an estimated 25% of which will be utilized to increase investment in our digital banking platform and the continued renovation and upgrading of other retail branches.

Deferrals and Paycheck Protection Program

We continue working with our customers and borrowers impacted by the pandemic through deferrals and PPP loans. During the third quarter 2020:

• Active deferrals on loans and leases decreased to $27.9 million, or 0.7%² of loans and leases at September 30, 2020, from $204.1 million or 5.4%² of loans and leases at June 30, 2020.
  • Active second deferrals on loans and leases decreased in the quarter to $19.5 million at September 30, 2020 from $34.4 million at June 30, 2020.
• Continued processing PPP loans efficiently through our SBA platform and funded over 165 loans totaling $8.9 million in the third quarter 2020.
• Over $160 million of PPP loans in various stages of the SBA forgiveness process as of October 20, 2020.

2	Excludes PPP loans.

The following table presents information regarding the net PPP loans as of September 30, 2020:

		PPP Loan Size
(dollars in thousands)		$0 - $50,000				$50,001 - $150,000					$150,001 - $2,000,000			Over $2,000,000				Total
Principal outstanding		$	37,993			$	84,385			$	428,361			$	84,639			$	635,378
Unearned processing fee			(1,479	)			(3,254	)			(12,157	)			(653	)			(17,543	)
Deferred cost			2,138				1,089				1,098				31				4,356
PPP loans, net		$	38,652			$	82,220			$	417,302			$	84,017			$	622,191
Number of loans			1,831				951				958				27				3,767

STATEMENTS OF OPERATIONS

Net Interest Income

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

		Three Months Ended																				Nine Months Ended
(dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2020				2020				2020				2019				2019				2020				2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases		$	51,036			$	50,153			$	54,158			$	58,203			$	63,391			$	155,347			$	177,298
Interest on securities			7,070				7,530				8,016				7,212				7,040				22,616				19,807
Other interest and dividend income			128				222				992				500				598				1,342				1,794
Total interest and dividend income			58,234				57,905				63,166				65,915				71,029				179,305				198,899
INTEREST EXPENSE
Deposits			2,760				4,246				7,804				9,325				9,618				14,810				27,000
Other borrowings			465				476				1,897				1,989				2,835				2,838				7,266
Subordinated notes and debentures			1,485				574				640				687				738				2,699				2,262
Total interest expense			4,710				5,296				10,341				12,001				13,191				20,347				36,528
Net interest income		$	53,524			$	52,609			$	52,825			$	53,914			$	57,838			$	158,958			$	162,371

The following table presents the average interest-earning assets and average interest-bearing liabilities for the periods indicated:

		For the Three Months Ended
		September 30, 2020												June 30, 2020
(dollars in thousands)		Average Balance(5)				Interest Inc / Exp				Average Yield / Rate				Average Balance(5)				Interest Inc / Exp				Average Yield / Rate
ASSETS
Cash and cash equivalents		$	48,678			$	25				0.20	%		$	58,971			$	25				0.17	%
Loans and leases(1)			4,360,203				51,036				4.66	%			4,283,654				50,153				4.71	%
Taxable securities			1,364,516				6,341				1.85	%			1,243,604				7,021				2.27	%
Tax-exempt securities(2)			143,157				832				2.31	%			117,340				706				2.42	%
Total interest-earning assets		$	5,916,554			$	58,234				3.92	%		$	5,703,569			$	57,905				4.08	%
Allowance for loan and lease losses			(53,964	)											(43,009	)
All other assets			538,700												526,414
TOTAL ASSETS		$	6,401,290											$	6,186,974
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking		$	565,917			$	226				0.16	%		$	392,070			$	165				0.17	%
Money market accounts			1,202,016				634				0.21	%			1,214,713				946				0.31	%
Savings			535,396				64				0.05	%			511,049				61				0.05	%
Time deposits			870,227				1,836				0.84	%			976,710				3,074				1.27	%
Total interest-bearing deposits			3,173,556				2,760				0.35	%			3,094,542				4,246				0.55	%
Other borrowings			538,237				465				0.34	%			534,766				476				0.36	%
Subordinated notes and debentures			100,756				1,485				5.86	%			40,180				574				5.75	%
Total borrowings			638,993				1,950				1.21	%			574,946				1,050				0.73	%
Total interest-bearing liabilities		$	3,812,549			$	4,710				0.49	%		$	3,669,488			$	5,296				0.58	%
Non-interest-bearing demand deposits			1,742,787												1,692,723
Other liabilities			54,843												48,884
Total stockholders’ equity			791,111												775,879
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,401,290											$	6,186,974
Net interest spread(3)											3.43	%											3.50	%
Net interest income						$	53,524											$	52,609
Net interest margin(4)											3.60	%											3.71	%
Net loan accretion impact on margin						$	3,911				0.26	%						$	3,172				0.22

(1)	Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances.
(2)	Interest income and rates 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.

Net interest income for the third quarter of 2020 was $53.5 million, an increase of $915,000, or 1.7%, from the second quarter of 2020.

The increase in net interest income was primarily due to:

• A decrease of $1.5 million in interest expense on deposits, due to maturities of higher-rate time deposits and lower rates paid on money market accounts;
• An increase of $883,000 in interest income on loans and leases, due to higher accretion on acquired loans resulting from cash recoveries;

Offset by:

• An increase of $900,000 in interest expense on total borrowings, primarily driven by a full quarter of interest expense on subordinated notes; and,
• A decrease of $680,000 in interest income on taxable securities, due to increased prepayments on securities and lower yields.

Net interest margin for the third quarter of 2020 was 3.60%, a decrease of 11 basis points compared to 3.71% for the second quarter of 2020. Total net accretion income on acquired loans contributed 26 basis points to the net interest margin for the third quarter of 2020 compared to 22 basis points for the second quarter of 2020, an increase of 4 basis points. The net interest margin decrease during the third quarter of 2020 was primarily driven by decreased loan and lease yields largely resulting from the impact of decreases in short-term rates and lower-yielding PPP loan balances. Net interest margin was also impacted by an increase in borrowed funds costs due to the full quarter impact of interest accrual on the subordinated notes. These decreases were partly offset by a decrease in the cost of funds and higher average non-interest-bearing demand deposit balances.

The average cost of total deposits was 0.22% for the third quarter of 2020, a decrease of 14 basis points compared to the second quarter of 2020, mainly due to a lower average cost of money market accounts and time deposits as well as a favorable change in deposit mix. Average non-interest-bearing demand deposits grew by $50.1 million, while average time deposits decreased by $106.5 million. Average non-interest-bearing demand deposits were 35.4% of average total deposits for the third quarter of 2020 unchanged compared to the second quarter of 2020.

Provision for Loan and Lease Losses

The provision for loan and lease losses was $15.7 million for the third quarter of 2020, an increase of $222,000 compared to $15.5 million for the second quarter of 2020. The third quarter included allocations of $14.8 million for originated loans and leases, $1.0 million for acquired impaired loans, and a credit of $118,000 for acquired non-impaired loans. The provision during the third quarter of 2020 included $6.4 million in specific impairments, including $3.3 million related to the unguaranteed portion of government guaranteed loans. The third quarter provision included $8.4 million to address the continued economic uncertainty caused by the COVID-19 pandemic and the uncertainty around additional government relief.

Non-interest Income

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

		Three Months Ended																				Nine Months Ended
(dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2020				2020				2020				2019				2019				2020				2019
NON-INTEREST INCOME
Fees and service charges on deposits		$	1,603			$	1,455			$	1,673			$	1,635			$	1,612			$	4,731			$	4,823
Loan servicing revenue			2,936				2,980				2,758				2,834				2,692				8,674				7,861
Loan servicing asset revaluation			1,122				(711	)			(3,064	)			(2,545	)			(1,610	)			(2,653	)			(4,094	)
ATM and interchange fees			1,028				845				1,216				1,150				973				3,089				2,635
Net gains on sales of securities available-for-sale			1,037				—				1,375				—				178				2,412				1,151
Change in fair value of equity securities, net			154				766				(619	)			381				(15	)			301				1,035
Net gains on sales of loans			12,671				6,456				4,773				8,735				9,405				23,900				23,110
Wealth management and trust income			693				608				669				704				653				1,970				1,874
Other non-interest income			1,008				389				392				1,622				918				1,789				2,582
Total non-interest income		$	22,252			$	12,788			$	9,173			$	14,516			$	14,806			$	44,213			$	40,977

Non-interest income for the third quarter of 2020 was $22.3 million, an increase of $9.5 million, or 74.0% compared to $12.8 million for the second quarter of 2020.

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

• An increase of $6.2 million in net gains on sales of loans, mainly due to an increase in volume of sales of government guaranteed loans and higher premiums received on loans sold;
• A $1.8 million increase in loan servicing asset revaluation due to lower prepayments speeds and higher premiums on government guaranteed loans; and,
• An increase of $1.0 million in net gains on sales of securities available-for-sale as a result of sales during the third quarter of 2020 compared to no sales during the second quarter of 2020.

During the third quarter of 2020, we sold $121.2 million of U.S. government guaranteed loans compared to $78.7 million during the second quarter of 2020. The increase in sales was driven by increased SBA 7(a) origination volumes and higher demand for U.S. government guaranteed loans.

Non-interest Expense

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

		Three Months Ended																				Nine Months Ended
(dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2020				2020				2020				2019				2019				2020				2019
NON-INTEREST EXPENSE
Salaries and employee benefits		$	23,126			$	19,405			$	24,666			$	24,228			$	24,537			$	67,197			$	71,081
Occupancy and equipment expense, net			5,220				5,359				5,524				5,241				4,512				16,103				14,530
Loan and lease related expenses			2,053				1,260				1,311				2,648				1,949				4,624				5,367
Legal, audit and other professional fees			2,390				2,078				2,334				2,340				4,066				6,802				9,113
Data processing			2,661				2,826				2,665				2,678				4,062				8,152				11,055
Net loss recognized on other real estate owned and other related expenses			349				456				519				122				95				1,324				543
Other intangible assets amortization expense			1,947				1,892				1,893				2,002				2,003				5,732				5,735
Other non-interest expense			3,959				3,736				4,615				4,435				4,224				12,310				12,657
Total non-interest expense		$	41,705			$	37,012			$	43,527			$	43,694			$	45,448			$	122,244			$	130,081

Non-interest expense for the third quarter of 2020 was $41.7 million, an increase of $4.7 million, or 12.7%, from $37.0 million for the second quarter of 2020.

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

• An increase of $3.7 million in salaries and employee benefits, mainly due to costs deferred as a result of PPP loan originations during the second quarter of 2020; and
• An increase of $793,000 in loan and lease related expenses mostly due to higher expenses associated with government guaranteed loan originations.

Our efficiency ratio was 52.47% for the third quarter of 2020 compared to 53.70% for the second quarter of 2020.

INCOME TAXES

We recorded income tax expense of $5.3 million during the third quarter of 2020, an effective tax rate of 28.7% compared to $3.7 million during the second quarter of 2020, an effective tax rate of 29.0%.

STATEMENTS OF FINANCIAL CONDITION

Total assets were $6.5 billion at September 30, 2020, an increase of $103.8 million compared to $6.4 billion at June 30, 2020, and an increase of $1.1 billion compared to $5.4 billion at September 30, 2019.

The current quarter increase was primarily due to:

• An increase in securities of $82.5 million, principally a result of purchases of mortgage-backed securities during the quarter;
• An increase in loans held for sale of $46.0 million, due to the timing of government guaranteed loans sold during the quarter; and,
• An increase in accrued interest receivable and other assets of $38.0 million due to timing of settlement of government guaranteed loans during the quarter.

Partially offset by:

• A decrease in cash and cash equivalents of $38.9 million, due to the increase in securities for the quarter;
• A decrease in loans and leases of $16.6 million, due to decreases in the real estate portfolios offset by increases to lease financing receivables; and,
• An increase in allowance for loan and lease losses of $10.0 million, due to continued economic uncertainty from the COVID-19 pandemic.

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

		September 30, 2020								June 30, 2020								September 30, 2019
(dollars in thousands)		Amount				% of Total				Amount				% of Total				Amount				% of Total
Originated loans and leases
Commercial real estate		$	919,862				21.0	%		$	919,510				20.9	%		$	772,559				20.2	%
Residential real estate			458,364				10.5	%			480,692				10.9	%			497,839				13.0	%
Construction, land development, and other land			234,017				5.3	%			219,261				5.0	%			236,780				6.2	%
Commercial and industrial			1,214,099				27.8	%			1,200,996				27.4	%			1,096,400				28.6	%
Paycheck protection program			622,191				14.2	%			611,664				13.9	%			—				0.0	%
Installment and other			2,346				0.1	%			2,714				0.1	%			7,818				0.2	%
Leasing financing receivables			185,700				4.2	%			160,741				3.7	%			156,758				4.1	%
Total originated loans and leases		$	3,636,579				83.1	%		$	3,595,578				81.9	%		$	2,768,154				72.3	%
Acquired impaired loans
Commercial real estate		$	117,114				2.7	%		$	126,405				2.9	%		$	142,435				3.7	%
Residential real estate			84,197				1.9	%			90,784				2.1	%			109,409				2.9	%
Construction, land development, and other land			4,804				0.1	%			4,784				0.1	%			4,562				0.1	%
Commercial and industrial			10,489				0.3	%			13,485				0.3	%			18,349				0.5	%
Installment and other			214				0.0	%			226				0.0	%			267				0.0	%
Total acquired impaired loans		$	216,818				5.0	%		$	235,684				5.4	%		$	275,022				7.2	%
Acquired non-impaired loans and leases
Commercial real estate		$	310,879				7.1	%		$	305,041				6.9	%		$	391,294				10.2	%
Residential real estate			90,835				2.1	%			99,288				2.2	%			141,855				3.7	%
Construction, land development, and other land			213				0.0	%			21,958				0.5	%			39,657				1.0	%
Commercial and industrial			104,221				2.4	%			116,668				2.7	%			187,413				4.9	%
Installment and other			583				0.0	%			818				0.0	%			1,269				0.0	%
Leasing financing receivables			14,389				0.3	%			16,087				0.4	%			26,426				0.7	%
Total acquired non-impaired loans and leases		$	521,120				11.9	%		$	559,860				12.7	%		$	787,914				20.5	%
Total loans and leases		$	4,374,517				100.0	%		$	4,391,122				100.0	%		$	3,831,090				100.0	%
Allowance for loan and lease losses			(61,258	)							(51,300	)							(31,585	)
Total loans and leases, net of allowance for loan and lease losses		$	4,313,259							$	4,339,822							$	3,799,505

ASSET QUALITY

Non-Performing Assets

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

		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2020				2020				2020				2019				2019
Non-performing assets:
Non-accrual loans and leases		$	43,196			$	40,505			$	48,964			$	36,272			$	39,528
Past due loans and leases 90 days or more and still accruing interest			—				—				—				—				—
Total non-performing loans and leases		$	43,196			$	40,505			$	48,964			$	36,272			$	39,528
Other real estate owned			8,150				8,652				9,273				9,896				6,502
Total non-performing assets		$	51,346			$	49,157			$	58,237			$	46,168			$	46,030
Total non-performing loans and leases as a percentage of total loans and leases			0.99	%			0.92	%			1.27	%			0.96	%			1.03	%
Total non-performing assets as a percentage of total assets			0.79	%			0.77	%			1.02	%			0.84	%			0.85	%
Allowance for loan and lease losses as a percentage of non-performing loans and leases			141.81	%			126.65	%			85.45	%			88.05	%			79.91	%
Accruing troubled debt restructured loans (1)		$	2,293			$	3,151			$	1,725			$	1,771			$	2,204
Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed		$	3,749			$	3,755			$	4,957			$	4,232			$	4,167
Past due loans 90 days or more and still accruing interest guaranteed			—				—				—				—				—
Total non-performing loans guaranteed		$	3,749			$	3,755			$	4,957			$	4,232			$	4,167
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases			0.90	%			0.84	%			1.14	%			0.85	%			0.92	%
Total non-performing assets not guaranteed as a percentage of total assets			0.73	%			0.71	%			0.93	%			0.76	%			0.77	%
Accruing troubled debt restructured loans guaranteed (1)		$	—			$	—			$	—			$	—			$	—

(1)	Accruing troubled debt restructured loans are not included in total non-performing loans and leases or in non-performing assets.

Variances in non-performing assets were:

• Non-performing loans and leases were $43.2 million at September 30, 2020, an increase of $2.7 million from $40.5 million at June 30, 2020.
• Other real estate owned was $8.2 million at September 30, 2020, a decrease of $502,000 from $8.7 million at June 30, 2020 due to sales and valuation adjustments.

U.S. government guaranteed balances of non-performing loans were $3.7 million at September 30, 2020 and $3.8 million at June 30, 2020.

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																				Nine Months Ended
(dollars in thousands)		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2020				2020				2020				2019				2019				2020				2019
Allowance for loan and lease losses, beginning of period		$	51,300			$	41,840			$	31,936			$	31,585			$	31,132			$	31,936			$	25,201
Provision for loan and lease losses			15,740				15,518				14,455				4,387				5,931				45,713				16,321
Net charge-offs of loans and leases			(5,782	)			(6,058	)			(4,551	)			(4,036	)			(5,478	)			(16,391	)			(9,937	)
Allowance for loan and lease losses, end of period		$	61,258			$	51,300			$	41,840			$	31,936			$	31,585			$	61,258			$	31,585
Allowance for loan and lease losses to period end total loans and leases held for investment			1.40	%			1.17	%			1.08	%			0.84	%			0.82	%			1.40	%			0.82	%
Net charge-offs (annualized) to average loans and leases outstanding during the period			0.53	%			0.57	%			0.48	%			0.42	%			0.56	%			0.53	%			0.36	%
Provision for loan and lease losses to net charge-offs during the period		2.72x				2.56x				3.18x				1.09x				1.08x					2.79	x		1.64x

The allowance for loan and lease losses as a percentage of total loans and leases held for investment increased to 1.40% at September 30, 2020 compared to 1.17% at June 30, 2020 and 0.82% at September 30, 2019. The allowance for loan and lease losses as a percentage of total loans and leases held for investment excluding PPP loans increased to 1.63% at September 30, 2020 from 1.36% at June 20, 2020.

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

Net Charge-Offs

Net charge-offs during the third quarter of 2020 were $5.8 million, or 0.53% of average loans and leases, on an annualized basis, a decrease of $276,000 compared to $6.1 million, or 0.57% of average loans and leases, during the second quarter of 2020, and an increase of $304,000 from $5.5 million, or 0.56% of average loans and leases, for the comparable quarter one year ago.

Net charge-offs for the third quarter of 2020 included $4.1 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the second quarter of 2020 included $2.0 million and for the third quarter of 2019 included $4.8 million in the unguaranteed portion of U.S. government guaranteed loans.

Deposits and Other Liabilities

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

		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2020				2020				2020				2019				2019
Non-interest-bearing demand deposits		$	1,718,682			$	1,768,675			$	1,290,896			$	1,279,641			$	1,221,431
Interest-bearing checking accounts			584,682				503,909				355,678				338,185				372,049
Money market demand accounts			1,153,433				1,233,748				1,104,276				881,387				745,154
Other savings			542,741				525,043				486,131				475,839				471,878
Time deposits (below $250,000)			622,328				710,429				800,759				916,723				966,866
Time deposits ($250,000 and above)			188,379				216,541				201,096				255,802				302,936
Total deposits		$	4,810,245			$	4,958,345			$	4,238,836			$	4,147,577			$	4,080,314

Total deposits were $4.8 billion at September 30, 2020, a decrease of $148.1 million, or 3.0% compared to June 30, 2020. Non-interest-bearing deposits were 35.7% of total deposits at September 30, 2020 and June 30, 2020.

The decrease in the current quarter was primarily due to:

• A decrease in non-interest-bearing deposits of $50.0 million, mostly due to seasonality;
• A decrease in money market demand deposits of $80.3 million, due to a decrease in purchased money market deposits that were replaced by lower-cost funding sources; and,
• A decrease in time deposits of $116.3 million, principally driven by decreases in personal certificates.

Partially offset by:

• An increase in interest-bearing checking accounts of $80.8 million, mostly due to increases in public funds in interest bearing checking accounts.

Total borrowings and other liabilities were $891.6 million at September 30, 2020, an increase of $237.3 million from $654.2 million at June 30, 2020, primarily driven by an increase in Federal Home Loan Bank advances and the additional subordinated notes offering during the quarter, as described in more detail below.

Stockholders’ Equity

Total stockholders’ equity was $794.7 million at September 30, 2020, an increase of $13.8 million from $780.9 million at June 30, 2020. The increase was primarily due to net income generated during the quarter less dividends declared.

The following table presents the actual regulatory capital dollar amounts and ratios of the Company and Byline Bank as of September 30, 2020:

		Actual								Minimum Capital Required								Required to be Considered Well Capitalized
September 30, 2020		Amount				Ratio				Amount				Ratio				Amount				Ratio
Total capital to risk weighted assets:
Company		$	757,133				16.67	%		$	363,274				8.00	%		N/A				N/A
Bank			656,395				14.50	%			362,063				8.00	%		$	452,579				10.00	%
Tier 1 capital to risk weighted assets:
Company		$	625,287				13.77	%		$	272,456				6.00	%		N/A				N/A
Bank			599,736				13.25	%			271,547				6.00	%		$	362,063				8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company		$	569,849				12.55	%		$	204,342				4.50	%		N/A				N/A
Bank			599,736				13.25	%			203,661				4.50	%		$	294,176				6.50	%
Tier 1 capital to average assets:
Company		$	625,287				10.93	%		$	228,874				4.00	%		N/A				N/A
Bank			599,736				10.49	%			228,729				4.00	%		$	285,912				5.00	%

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

On August 3, 2020, we completed a public offering of an additional $25.0 million aggregate principal amount of 6.00% fixed-to-floating rate subordinated notes due July 1, 2030. The subordinated notes are part of the same series of notes as the $50.0 million in aggregate principal amount of subordinated notes issued on June 26, 2020. The notes bear a fixed interest rate of 6.00% until July 1, 2025 or earlier redemption, and a floating interest rate equal to a benchmark rate, which is expected to be three-month term SOFR plus 588 basis points thereafter until maturity or earlier redemption. The subordinated notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

Conference Call, Webcast and Slide Presentation

We will host a conference call and webcast at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) on Friday, October 23, 2020 to discuss our quarterly financial results. Analysts and investors may participate in the question-and-answer session. The call can be accessed via telephone at [phone]. A recorded replay can be accessed through November 7, 2020 by dialing [phone]; passcode: 10146069.

A slide presentation relating to the third quarter 2020 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 Bank has approximately $6.5 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 five 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 common share, tangible common equity to tangible assets, return on average tangible common stockholders' equity, and adjusted return on average tangible common stockholders' equity. Management believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP; however, management acknowledges that our non-GAAP financial measures have a number of limitations. As such, these disclosures should not be viewed as a substitute for results determined in accordance with GAAP financial measures that we and other companies use. Management also uses these measures for peer comparison. See “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. Additionally, please refer to the Company’s Annual Report on Form 10-K for the detailed definitions of these non-GAAP financial measures.

Forward-Looking Statements

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

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

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

Certain risks and important factors that could affect Byline’s future results are identified in its Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission, including among other things under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2019, and its Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020. Any forward-looking statement speaks only as of the date on which it is made, and Byline undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise unless required under the federal securities laws.

BYLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2020				2020				2020				2019				2019
ASSETS
Cash and due from banks		$	47,433			$	51,818			$	45,233			$	48,228			$	75,275
Interest bearing deposits with other banks			53,645				88,113				74,386				32,509				33,564
Cash and cash equivalents			101,078				139,931				119,619				80,737				108,839
Equity and other securities, at fair value			8,335				8,181				7,413				8,031				7,648
Securities available-for-sale, at fair value			1,509,211				1,426,871				1,299,483				1,186,292				1,031,933
Securities held-to-maturity, at amortized cost			4,400				4,404				4,408				4,412				4,417
Restricted stock, at cost			9,652				6,232				24,197				22,127				24,331
Loans held for sale			49,049				3,031				13,299				11,732				7,176
Loans and leases:
Loans and leases			4,374,517				4,391,122				3,860,259				3,785,661				3,831,090
Allowance for loan and lease losses			(61,258	)			(51,300	)			(41,840	)			(31,936	)			(31,585	)
Net loans and leases			4,313,259				4,339,822				3,818,419				3,753,725				3,799,505
Servicing assets, at fair value			21,267				18,351				17,800				19,471				19,939
Premises and equipment, net			94,638				95,546				96,446				96,140				96,006
Other real estate owned, net			8,150				8,652				9,273				9,896				6,502
Goodwill and other intangible assets, net			174,523				176,470				178,362				180,255				179,543
Bank-owned life insurance			9,952				9,896				9,898				9,750				9,699
Deferred tax assets, net			35,945				37,082				33,845				38,315				33,388
Accrued interest receivable and other assets			157,054				119,049				102,292				100,926				109,352
Total assets		$	6,496,513			$	6,393,518			$	5,734,754			$	5,521,809			$	5,438,278
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits		$	1,718,682			$	1,768,675			$	1,290,896			$	1,279,641			$	1,221,431
Interest-bearing deposits			3,091,563				3,189,670				2,947,940				2,867,936				2,858,883
Total deposits			4,810,245				4,958,345				4,238,836				4,147,577				4,080,314
Other borrowings			710,560				510,414				640,647				539,638				538,290
Subordinated notes, net			73,299				48,777				—				—				—
Junior subordinated debentures issued to capital trusts, net			36,331				36,206				37,462				37,334				37,207
Accrued expenses and other liabilities			71,382				58,841				55,142				47,145				46,601
Total liabilities			5,701,817				5,612,583				4,972,087				4,771,694				4,702,412
STOCKHOLDERS’ EQUITY
Preferred stock			10,438				10,438				10,438				10,438				10,438
Common stock			383				381				380				379				378
Additional paid-in capital			586,057				583,307				582,517				580,965				579,564
Retained earnings			180,162				168,444				160,652				159,033				144,525
Treasury stock			(1,668	)			(1,668	)			(1,668	)			—				—
Accumulated other comprehensive income (loss), net of tax			19,324				20,033				10,348				(700	)			961
Total stockholders’ equity			794,696				780,935				762,667				750,115				735,866
Total liabilities and stockholders’ equity		$	6,496,513			$	6,393,518			$	5,734,754			$	5,521,809			$	5,438,278

BYLINE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
		Three Months Ended																				Nine Months Ended
(dollars in thousands, except per share data)		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
		2020				2020				2020				2019				2019				2020				2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases		$	51,036			$	50,153			$	54,158			$	58,203			$	63,391			$	155,347			$	177,298
Interest on securities			7,070				7,530				8,016				7,212				7,040				22,616				19,807
Other interest and dividend income			128				222				992				500				598				1,342				1,794
Total interest and dividend income			58,234				57,905				63,166				65,915				71,029				179,305				198,899
INTEREST EXPENSE
Deposits			2,760				4,246				7,804				9,325				9,618				14,810				27,000
Other borrowings			465				476				1,897				1,989				2,835				2,838				7,266
Subordinated notes and debentures			1,485				574				640				687				738				2,699				2,262
Total interest expense			4,710				5,296				10,341				12,001				13,191				20,347				36,528
Net interest income			53,524				52,609				52,825				53,914				57,838				158,958				162,371
PROVISION FOR LOAN AND LEASE LOSSES			15,740				15,518				14,455				4,387				5,931				45,713				16,321
Net interest income after provision for loan and lease losses			37,784				37,091				38,370				49,527				51,907				113,245				146,050
NON-INTEREST INCOME
Fees and service charges on deposits			1,603				1,455				1,673				1,635				1,612				4,731				4,823
Loan servicing revenue			2,936				2,980				2,758				2,834				2,692				8,674				7,861
Loan servicing asset revaluation			1,122				(711	)			(3,064	)			(2,545	)			(1,610	)			(2,653	)			(4,094	)
ATM and interchange fees			1,028				845				1,216				1,150				973				3,089				2,635
Net gains on sales of securities available-for-sale			1,037				—				1,375				—				178				2,412				1,151
Change in fair value of equity securities, net			154				766				(619	)			381				(15	)			301				1,035
Net gains on sales of loans			12,671				6,456				4,773				8,735				9,405				23,900				23,110
Wealth management and trust income			693				608				669				704				653				1,970				1,874
Other non-interest income			1,008				389				392				1,622				918				1,789				2,582
Total non-interest income			22,252				12,788				9,173				14,516				14,806				44,213				40,977
NON-INTEREST EXPENSE
Salaries and employee benefits			23,126				19,405				24,666				24,228				24,537				67,197				71,081
Occupancy and equipment expense, net			5,220				5,359				5,524				5,241				4,512				16,103				14,530
Loan and lease related expenses			2,053				1,260				1,311				2,648				1,949				4,624				5,367
Legal, audit, and other professional fees			2,390				2,078				2,334				2,340				4,066				6,802				9,113
Data processing			2,661				2,826				2,665				2,678				4,062				8,152				11,055
Net loss recognized on other real estate owned and other related expenses			349				456				519				122				95				1,324				543
Other intangible assets amortization expense			1,947				1,892				1,893				2,002				2,003				5,732				5,735
Other non-interest expense			3,959				3,736				4,615				4,435				4,224				12,310				12,657
Total non-interest expense			41,705				37,012				43,527				43,694				45,448				122,244				130,081
INCOME BEFORE PROVISION FOR INCOME TAXES			18,331				12,867				4,016				20,349				21,265				35,214				56,946
PROVISION FOR INCOME TAXES			5,260				3,728				1,050				4,497				5,923				10,038				15,796
NET INCOME			13,071				9,139				2,966				15,852				15,342				25,176				41,150
Dividends on preferred shares			196				195				196				196				196				587				587
INCOME AVAILABLE TO COMMON STOCKHOLDERS		$	12,875			$	8,944			$	2,770			$	15,656			$	15,146			$	24,589			$	40,563
EARNINGS PER COMMON SHARE
Basic		$	0.34			$	0.24			$	0.07			$	0.41			$	0.40			$	0.65			$	1.09
Diluted		$	0.34			$	0.24			$	0.07			$	0.41			$	0.39			$	0.64			$	1.07

BYLINE BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (unaudited)
		As of or For the Three Months Ended																				As of or For the Nine Months Ended
(dollars in thousands, except share and per share data)		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019				September 30, 2020				September 30, 2019
Common Share Data
Basic earnings per common share		$	0.34			$	0.24			$	0.07			$	0.41			$	0.40			$	0.65			$	1.09
Diluted earnings per common share		$	0.34			$	0.24			$	0.07			$	0.41			$	0.39			$	0.64			$	1.07
Adjusted diluted earnings per common share(2)(3)(4)		$	0.34			$	0.24			$	0.09			$	0.42			$	0.41			$	0.65			$	1.20
Weighted average common shares outstanding (basic)			38,057,350				37,919,480				37,943,333				37,872,835				37,831,356				37,973,694				37,094,083
Weighted average common shares outstanding (diluted)			38,249,335				38,027,289				38,663,658				38,537,899				38,487,180				38,251,963				37,818,868
Common shares outstanding			38,568,916				38,383,217				38,383,021				38,256,500				38,169,126				38,568,916				38,169,126
Cash dividends per common share		$	0.03			$	0.03			$	0.03			$	0.03			N/A				$	0.09			N/A
Dividend payout ratio on common stock			8.82	%			12.50	%			42.86	%			7.32	%		N/A					14.06	%		N/A
Tangible book value per common share(1)		$	15.81			$	15.47			$	14.95			$	14.62			$	14.30			$	15.81			$	14.30
Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin			3.60	%			3.71	%			4.17	%			4.32	%			4.62	%			3.81	%			4.52	%
Average cost of deposits			0.22	%			0.36	%			0.75	%			0.88	%			0.94	%			0.43	%			0.91	%
Efficiency ratio(2)			52.47	%			53.70	%			67.16	%			60.93	%			59.81	%			57.35	%			61.15	%
Adjusted efficiency ratio(1)(2)(3)			52.43	%			53.70	%			66.00	%			60.51	%			58.17	%			56.98	%			57.87	%
Non-interest expense to average assets			2.59	%			2.41	%			3.15	%			3.19	%			3.32	%			2.70	%			3.33	%
Adjusted non-interest expense to average assets(1)(3)			2.59	%			2.41	%			3.09	%			3.17	%			3.23	%			2.68	%			3.16	%
Return on average stockholders' equity			6.57	%			4.74	%			1.56	%			8.43	%			8.34	%			4.33	%			7.91	%
Adjusted return on average stockholders' equity(1)(3)(4)			6.58	%			4.74	%			1.83	%			8.54	%			8.78	%			4.42	%			8.86	%
Return on average assets			0.81	%			0.59	%			0.21	%			1.16	%			1.12	%			0.56	%			1.05	%
Adjusted return on average assets(1)(3)(4)			0.81	%			0.59	%			0.25	%			1.17	%			1.18	%			0.57	%			1.18	%
Non-interest income to total revenues(1)			29.37	%			19.56	%			14.79	%			21.21	%			20.38	%			21.76	%			20.15	%
Pre-tax pre-provision return on average assets(1)			2.12	%			1.85	%			1.33	%			1.81	%			1.98	%			1.79	%			1.87	%
Adjusted pre-tax pre-provision return on average assets(1)(3)			2.12	%			1.85	%			1.39	%			1.83	%			2.07	%			1.80	%			2.04	%
Return on average tangible common stockholders' equity(1)			9.39	%			7.05	%			2.89	%			12.20	%			12.22	%			6.51	%			11.66	%
Adjusted return on average tangible common stockholders' equity(1)(3)			9.40	%			7.05	%			3.25	%			12.35	%			12.82	%			6.63	%			12.94	%
Non-interest-bearing deposits to total deposits			35.73	%			35.67	%			30.45	%			30.85	%			29.93	%			35.73	%			29.93	%
Loans and leases held for sale and loans and lease held for investment to total deposits			91.96	%			88.62	%			91.38	%			91.56	%			94.07	%			91.96	%			94.07	%
Deposits to total liabilities			84.36	%			88.34	%			85.25	%			86.92	%			86.77	%			84.36	%			86.77	%
Deposits per branch		$	84,389			$	86,989			$	74,366			$	67,993			$	66,890			$	84,389			$	66,890
Asset Quality Ratios
Non-performing loans and leases to total loans and leases held for investment, net before ALLL			0.99	%			0.92	%			1.27	%			0.96	%			1.03	%			0.99	%			1.03	%
ALLL to total loans and leases held for investment, net before ALLL			1.40	%			1.17	%			1.08	%			0.84	%			0.82	%			1.40	%			0.82	%
Net charge-offs to average total loans and leases held for investment, net before ALLL			0.53	%			0.57	%			0.48	%			0.42	%			0.56	%			0.53	%			0.36	%
Acquisition accounting adjustments(4)		$	17,133			$	19,324			$	25,889			$	28,511			$	31,053			$	17,133			$	31,053
Capital Ratios
Common equity to total assets			12.08	%			12.05	%			13.12	%			13.40	%			13.34	%			12.08	%			13.34	%
Tangible common equity to tangible assets(1)			9.65	%			9.55	%			10.33	%			10.47	%			10.38	%			9.65	%			10.38	%
Leverage ratio			10.93	%			10.29	%			11.18	%			11.39	%			11.14	%			10.93	%			11.14	%
Common equity tier 1 capital ratio			12.55	%			12.33	%			12.24	%			12.36	%			12.12	%			12.55	%			12.12	%
Tier 1 capital ratio			13.77	%			13.56	%			13.52	%			13.67	%			13.43	%			13.77	%			13.43	%
Total capital ratio			16.67	%			15.86	%			14.50	%			14.43	%			14.19	%			16.67	%			14.19	%

(1)	Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.
(2)	Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.
(3)	Calculation excludes impairment charges, merger-related expenses, and core systems conversion expense.
(4)	Represents the remaining net unaccreted discount as a result of applying the fair value adjustment at the time of the business combination on acquired loans.

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 September 30,
		2020												2019
(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		$	48,678			$	25				0.20	%		$	34,225			$	253				2.93	%
Loans and leases(1)			4,360,203				51,036				4.66	%			3,860,770				63,391				6.51	%
Taxable securities			1,364,516				6,341				1.85	%			996,750				6,899				2.75	%
Tax-exempt securities(2)			143,157				832				2.31	%			76,161				486				2.53	%
Total interest-earning assets		$	5,916,554			$	58,234				3.92	%		$	4,967,906			$	71,029				5.67	%
Allowance for loan and lease losses			(53,964	)											(32,246	)
All other assets			538,700												500,102
TOTAL ASSETS		$	6,401,290											$	5,435,762
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking		$	565,917			$	226				0.16	%		$	358,185			$	524				0.58	%
Money market accounts			1,202,016				634				0.21	%			735,724				1,917				1.03	%
Savings			535,396				64				0.05	%			475,417				114				0.10	%
Time deposits			870,227				1,836				0.84	%			1,270,050				7,063				2.21	%
Total interest-bearing deposits			3,173,556				2,760				0.35	%			2,839,376				9,618				1.34	%
Other borrowings			538,237				465				0.34	%			563,026				2,834				2.00	%
Subordinated notes and debentures			100,756				1,485				5.86	%			37,109				739				7.89	%
Total borrowings			638,993				1,950				1.21	%			600,135				3,573				2.36	%
Total interest-bearing liabilities		$	3,812,549			$	4,710				0.49	%		$	3,439,511			$	13,191				1.52	%
Non-interest-bearing demand deposits			1,742,787												1,223,556
Other liabilities			54,843												42,914
Total stockholders’ equity			791,111												729,781
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,401,290											$	5,435,762
Net interest spread(3)											3.43	%											4.15	%
Net interest income						$	53,524											$	57,838
Net interest margin(4)											3.60	%											4.62	%
Net loan accretion impact on margin						$	3,911				0.26	%						$	7,703				0.62	%

(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.

BYLINE BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE STATEMENT OF AVERAGE INTEREST-EARNING ASSETS AND AVERAGE INTEREST-BEARING LIABILITIES (unaudited)
		For the Nine Months Ended September 30,
		2020												2019
(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		$	48,861			$	207				0.57	%		$	45,327			$	798				2.35	%
Loans and leases(1)			4,148,465				155,347				5.00	%			3,719,323				177,298				6.37	%
Taxable securities			1,261,458				21,678				2.30	%			966,449				19,546				2.70	%
Tax-exempt securities(2)			115,161				2,073				2.40	%			66,635				1,257				2.52	%
Total interest-earning assets		$	5,573,945			$	179,305				4.30	%		$	4,797,734			$	198,899				5.54	%
Allowance for loan and lease losses			(43,584	)											(28,626	)
All other assets			522,321												457,383
TOTAL ASSETS		$	6,052,682											$	5,226,491
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking		$	432,785			$	651				0.20	%		$	328,558			$	1,390				0.57	%
Money market accounts			1,126,588				3,794				0.45	%			682,020				5,166				1.01	%
Savings			509,001				186				0.05	%			474,815				371				0.10	%
Time deposits			986,419				10,179				1.38	%			1,248,258				20,073				2.15	%
Total interest-bearing deposits			3,054,793				14,810				0.65	%			2,733,651				27,000				1.32	%
Other borrowings			531,395				2,838				0.71	%			498,229				7,266				1.95	%
Subordinated notes and debentures			59,591				2,699				6.05	%			36,964				2,262				8.18	%
Total borrowings			590,986				5,537				1.25	%			535,193				9,528				2.38	%
Total interest-bearing liabilities		$	3,645,779			$	20,347				0.75	%		$	3,268,844			$	36,528				1.49	%
Non-interest-bearing demand deposits			1,578,704												1,221,375
Other liabilities			50,677												40,705
Total stockholders’ equity			777,522												695,547
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,052,682											$	5,226,471
Net interest spread(3)											3.55	%											4.05	%
Net interest income						$	158,958											$	162,371
Net interest margin(4)											3.81	%											4.52	%
Net loan accretion impact on margin						$	10,754				0.26	%						$	17,772				0.50	%

(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.

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 Nine Months Ended
(dollars in thousands, except per share data)		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019				September 30, 2020				September 30, 2019
Net income and earnings per share excluding significant items
Reported Net Income		$	13,071			$	9,139			$	2,966			$	15,852			$	15,342			$	25,176			$	41,150
Significant items:
Impairment charges on assets held for sale			32				—				715				111				67				747				459
Merger-related expense			—				—				—				127				1,043				—				4,213
Core system conversion expense			—				—				—				48				77				—				2,001
Tax benefit on impairment charges and merger-related expenses			(9	)			—				(199	)			(79	)			(369	)			(208	)			(1,751	)
Adjusted Net Income		$	13,094			$	9,139			$	3,482			$	16,059			$	16,160			$	25,715			$	46,072
Reported Diluted Earnings per Share		$	0.34			$	0.24			$	0.07			$	0.41			$	0.39			$	0.64			$	1.07
Significant items:
Impairment charges on assets held for sale			—				—				0.02				—				—				0.02				0.01
Merger-related expense			—				—				—				0.01				0.03				—				0.11
Core system conversion expense			—				—				—				—				—				—				0.05
Tax benefit on impairment charges and merger-related expenses			—				—				—				—				(0.01	)			(0.01	)			(0.04	)
Adjusted Diluted Earnings per Share		$	0.34			$	0.24			$	0.09			$	0.42			$	0.41			$	0.65			$	1.20

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 Nine Months Ended
(dollars in thousands, except per share data, ratios annualized, where applicable)		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019				September 30, 2020				September 30, 2019
Adjusted non-interest expense:
Non-interest expense		$	41,705			$	37,012			$	43,527			$	43,694			$	45,448			$	122,244			$	130,081
Less: Significant items
Impairment charges on assets held for sale			32				—				715				111				67				747				459
Merger-related expense			—				—				—				127				1,043				—				4,213
Core system conversion expense			—				—				—				48				77				—				2,001
Adjusted non-interest expense		$	41,673			$	37,012			$	42,812			$	43,408			$	44,261			$	121,497			$	123,408
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense		$	41,673			$	37,012			$	42,812			$	43,408			$	44,261			$	121,497			$	123,408
Less: Amortization of intangible assets			1,947				1,892				1,893				2,002				2,003				5,732				5,735
Adjusted non-interest expense excluding amortization of intangible assets		$	39,726			$	35,120			$	40,919			$	41,406			$	42,258			$	115,765			$	117,673
Pre-tax pre-provision net income:
Pre-tax income		$	18,331			$	12,867			$	4,016			$	20,349			$	21,265			$	35,214			$	56,946
Add: Provision for loan and lease losses			15,740				15,518				14,455				4,387				5,931				45,713				16,321
Pre-tax pre-provision net income		$	34,071			$	28,385			$	18,471			$	24,736			$	27,196			$	80,927			$	73,267
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income		$	34,071			$	28,385			$	18,471			$	24,736			$	27,196			$	80,927			$	73,267
Impairment charges on assets held for sale			32				—				715				111				67				747				459
Merger-related expense			—				—				—				127				1,043				—				4,213
Core system conversion expense			—				—				—				48				77				—				2,001
Adjusted pre-tax pre-provision net income		$	34,103			$	28,385			$	19,186			$	25,022			$	28,383			$	81,674			$	79,940
Total revenues:
Net interest income		$	53,524			$	52,609			$	52,825			$	53,914			$	57,838			$	158,958			$	162,371
Add: Non-interest income			22,252				12,788				9,173				14,516				14,806				44,213				40,977
Total revenues		$	75,776			$	65,397			$	61,998			$	68,430			$	72,644			$	203,171			$	203,348
Tangible common stockholders' equity:
Total stockholders' equity		$	794,696			$	780,935			$	762,667			$	750,115			$	735,866			$	794,696			$	735,866
Less: Preferred stock			10,438				10,438				10,438				10,438				10,438				10,438				10,438
Less: Goodwill and other intangibles			174,523				176,470				178,362				180,255				179,543				174,523				179,543
Tangible common stockholders' equity		$	609,735			$	594,027			$	573,867			$	559,422			$	545,885			$	609,735			$	545,885
Tangible assets:
Total assets		$	6,496,513			$	6,393,518			$	5,734,754			$	5,521,809			$	5,438,278			$	6,496,513			$	5,438,278
Less: Goodwill and other intangibles			174,523				176,470				178,362				180,255				179,543				174,523				179,543
Tangible assets		$	6,321,990			$	6,217,048			$	5,556,392			$	5,341,554			$	5,258,735			$	6,321,990			$	5,258,735
Average tangible common stockholders' equity:
Average total stockholders' equity		$	791,111			$	765,427			$	745,745			$	729,781			$	696,928			$	777,522			$	695,547
Less: Average preferred stock			10,438				10,438				10,438				10,438				10,438				10,438				10,438
Less: Average goodwill and other intangibles			175,444				179,416				179,192				180,740				175,236				177,426				172,373
Average tangible common stockholders' equity		$	605,229			$	575,573			$	556,115			$	538,603			$	511,254			$	589,658			$	512,736
Average tangible assets:
Average total assets		$	6,401,290			$	6,186,974			$	5,565,952			$	5,427,046			$	5,435,762			$	6,052,682			$	5,226,491
Less: Average goodwill and other intangibles			175,444				179,416				179,192				180,740				175,236				177,426				172,373
Average tangible assets		$	6,225,846			$	6,007,558			$	5,386,760			$	5,246,306			$	5,260,526			$	5,875,256			$	5,054,118
Tangible net income available to common stockholders:
Net income available to common stockholders		$	12,875			$	8,944			$	2,770			$	15,656			$	15,146			$	24,589			$	40,563
Add: After-tax intangible asset amortization			1,405				1,365				1,366				1,445				1,445				4,136				4,138
Tangible net income available to common stockholders		$	14,280			$	10,309			$	4,136			$	17,101			$	16,591			$	28,725			$	44,701
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders		$	14,280			$	10,309			$	4,136			$	17,101			$	16,591			$	28,725			$	44,701
Impairment charges on assets held for sale			32				—				715				111				67				747				459
Merger-related expense			—				—				—				127				1,043				—				4,213
Core system conversion expense			—				—				—				48				77				—				2,001
Tax benefit on significant items			(9	)			—				(199	)			(79	)			(369	)			(208	)			(1,751	)
Adjusted tangible net income available to common stockholders		$	14,303			$	10,309			$	4,652			$	17,308			$	17,409			$	29,264			$	49,623

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 Nine Months Ended
(dollars in thousands, except share and per share data, ratios annualized, where applicable)		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019				September 30, 2020				September 30, 2019
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income		$	34,071			$	28,385			$	18,471			$	24,736			$	27,196			$	80,927			$	73,267
Average total assets			6,401,290				6,186,974				5,565,952				5,427,046				5,435,762				6,052,682				5,226,491
Pre-tax pre-provision return on average assets			2.12	%			1.85	%			1.33	%			1.81	%			1.98	%							1.87	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income		$	34,103			$	28,385			$	19,186			$	25,022			$	28,383			$	81,674			$	79,940
Average total assets			6,401,290				6,186,974				5,565,952				5,427,046				5,435,762				6,052,682				5,226,491
Adjusted pre-tax pre-provision return on average assets			2.12	%			1.85	%			1.39	%			1.83	%			2.07	%			1.80	%			2.04	%
Non-interest income to total revenues:
Non-interest income		$	22,252			$	12,788			$	9,173			$	14,516			$	14,806			$	44,213			$	40,977
Total revenues			75,776				65,397				61,998				68,430				72,644				203,171				203,348
Non-interest income to total revenues			29.37	%			19.56	%			14.79	%			21.21	%			20.38	%			21.76	%			20.15	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense		$	41,673			$	37,012			$	42,812			$	43,408			$	44,261			$	121,497			$	123,408
Average total assets			6,401,290				6,186,974				5,565,952				5,427,046				5,435,762				6,052,682				5,226,491
Adjusted non-interest expense to average assets			2.59	%			2.41	%			3.09	%			3.17	%			3.23	%			2.68	%			3.16	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets		$	39,726			$	35,120			$	40,919			$	41,406			$	42,258			$	115,765			$	117,673
Total revenues			75,776				65,397				61,998				68,430				72,644				203,171				203,348
Adjusted efficiency ratio			52.43	%			53.70	%			66.00	%			60.51	%			58.17	%			56.98	%			57.87	%
Adjusted return on average assets:
Adjusted net income		$	13,094			$	9,139			$	3,482			$	16,059			$	16,160			$	25,715			$	46,072
Average total assets			6,401,290				6,186,974				5,565,952				5,427,046				5,435,762				6,052,682				5,226,491
Adjusted return on average assets			0.81	%			0.59	%			0.25	%			1.17	%			1.18	%			0.57	%			1.18	%
Adjusted return on average stockholders' equity:
Adjusted net income		$	13,094			$	9,139			$	3,482			$	16,059			$	16,160			$	25,715			$	46,072
Average stockholders' equity			791,111				765,427				745,745				729,781				696,928				777,522				695,547
Adjusted return on average stockholders' equity			6.58	%			4.74	%			1.83	%			8.54	%			8.78	%			4.42	%			8.86	%
Tangible common equity to tangible assets:
Tangible common equity		$	609,735			$	594,027			$	573,867			$	559,422			$	545,885			$	609,735			$	545,885
Tangible assets			6,321,990				6,217,048				5,556,392				5,341,554				5,258,735				6,321,990				5,258,735
Tangible common equity to tangible assets			9.65	%			9.55	%			10.33	%			10.47	%			10.38	%			9.65	%			10.38	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders		$	14,280			$	10,309			$	4,136			$	17,101			$	16,591			$	28,725			$	44,701
Average tangible common stockholders' equity			605,229				575,573				556,115				538,603				511,254				589,658				512,736
Return on average tangible common stockholders' equity			9.39	%			7.05	%			2.89	%			12.20	%			12.22	%			6.51	%			11.66	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders		$	14,303			$	10,309			$	4,652			$	17,308			$	17,409			$	29,264			$	49,623
Average tangible common stockholders' equity			605,229				575,573				556,115				538,603				511,254				589,658				512,736
Adjusted return on average tangible common stockholders' equity			9.40	%			7.05	%			3.25	%			12.35	%			12.82	%			6.63	%			12.94	%
Tangible book value per share:
Tangible common equity		$	609,735			$	594,027			$	573,867			$	559,422			$	545,885			$	609,735			$	545,885
Common shares outstanding			38,568,916				38,383,217				38,383,021				38,256,500				38,169,126				38,568,916				38,169,126
Tangible book value per share		$	15.81			$	15.47			$	14.95			$	14.62			$	14.30			$	15.81			$	14.30

 

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