• Net Income (Full Year 2024): $121 million or $2.75 per diluted share.
• Revenue (Full Year 2024): $407 million, up 5% year-on-year.
• Net Income (Q4 2024): $30.3 million or $0.69 per diluted share.
• Revenue (Q4 2024): $105 million, up 3% from the prior quarter and 4% year-on-year.
• Return on Assets (ROA): 131 basis points for both full year and Q4 2024.
• Return on Tangible Common Equity (ROTCE): Just under 15% for the full year and just under 14% for Q4 2024.
• Loan Growth (Full Year 2024): 3%, funded by a 4% increase in deposits.
• Net Interest Margin (Q4 2024): 4.01%, up 13 basis points from the prior quarter.
• Noninterest Income (Q4 2024): $16.1 million, up 12.3% from the prior quarter.
• Efficiency Ratio (Q4 2024): 53.6%.
• Allowance for Credit Losses (ACL): $98 million, with nonperforming loans at 90 basis points of total loans.
• Common Equity Tier 1 (CET1) Ratio: 11.7%, up 35 basis points from the prior quarter.
• Tangible Common Equity (TCE) Ratio: 9.61%.
• Quarterly Dividend Increase: 11.1% increase from the previous dividend.

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Release Date: January 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Byline Bancorp Inc (NYSE:BY) reported strong results for the fourth quarter and full year 2024, with net income of $121 million and a 5% increase in revenue year-over-year.
• The company achieved record profitability for the full year 2024 and increased its quarterly dividend by 11.1%.
• Byline Bancorp Inc (NYSE:BY) maintained a strong asset quality with a decrease in non-performing loans and a stable allowance for credit losses.
• The company successfully managed loan growth, with a 3% increase in loans funded by a 4% growth in deposits.
• Capital levels remained robust, with CET1 at just under 12% and total capital at roughly 15%, allowing for early repayment of transaction-related balances.

Negative Points

• The company faced a challenging rate environment, with a moderate decline in short-term rates impacting net interest income.
• Payoff activity increased for the third consecutive quarter, which could potentially affect future loan growth.
• Operating expenses rose to $57.4 million, driven by higher incentive accruals, leading to an increase in the efficiency ratio.
• The SBA portfolio showed signs of gradual deterioration, requiring proactive management to mitigate risks.
• The company anticipates continued volatility in net charge-offs, particularly related to the resolution of acquired loans.

Q & A Highlights

Q: Alberto, could you provide an update on the SBA portfolio's credit quality and any initiatives to de-risk it? A: We continue to see consistent trends in the SBA portfolio. Since the end of the COVID pandemic, we've been actively monitoring this portfolio, especially as borrowers transitioned from government support. We've seen gradual deterioration, which we anticipated and managed proactively. The unguaranteed portion of our SBA book has decreased from 15% in 2016 to about 6.1% today, reflecting our efforts to de-risk the portfolio.

Q: How do you foresee the net interest income (NII) and margin trends if the Fed remains on pause this year? A: If the Fed remains on pause, we expect NII to be flat to slightly up, subject to balance sheet changes. We are asset-sensitive, so fewer rate cuts could lead to increased NII. We also reduced our interest rate sensitivity this quarter, which could help manage risks better.

Q: Can you discuss the repricing gap within the CD portfolio and potential funding cost leverage? A: Our average CDs yield about 4.39%, with new CDs repricing at around 3.60%. On the asset side, we have about $900 million in loans that will reset higher, and our securities portfolio will also see a yield increase. The normalized yield curve is making liquid accounts more attractive than CDs, which could provide some upside in liability repricing.

Q: What are your expectations for loan growth and payoff activity in 2025? A: We expect mid-single-digit loan growth in 2025. Payoff activity, particularly from noncore portfolios like the inland transaction, was around $100 million last quarter. We anticipate this will slow down, allowing us to redeploy cash into customer relationships. Our diversified business lines, including commercial banking and leasing, are well-positioned for growth.

Q: Could you clarify the expense guidance for 2025 and whether it includes the First Security transaction? A: Our expense guidance for 2025 is $55 million to $57 million per quarter, which is on a standalone basis and does not include the First Security transaction. We will provide updated guidance after the transaction closes and we have a quarter of results.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.