Brandon Rud

Brandon Rud asked for a general timeline and the expected benefits, such as quality of life improvements for clients or long-term expense savings, related to modernizing the core banking system as mentioned on slide 18. He also inquired about the impact of increased competition in the Twin Cities market on loan spreads and new deposit rates, specifically asking if the bank was observing any 'irrational competitors'.

Answer

Joe Chybowski, President and CFO, explained that modernizing the core banking system is a long-term, ongoing initiative aimed at achieving internal efficiencies, better serving clients, and leveraging emerging technologies to decouple from Fiserv's innovation stack. Nick Place, Chief Banking Officer, acknowledged increased competition on the loan front in 2025 but viewed it as healthy for the local economy. He noted that while their pipeline remains strong (75-80% of its peak), they are willing to let some transactions go if competitors are overly aggressive, focusing on their next opportunities.

Brandon Rud from Stephens asked about the volume of fixed-rate loans maturing over the next 12 months and their yields compared to new originations. He also inquired about Byline Bancorp's Non-Deposit Funding Institution (NDFI) exposure, including its size and the types of clients it encompasses. Lastly, he sought clarification on the Q4 non-interest expense guidance and its applicability as a run rate for 2026.

Answer

Tom Bell (CFO) stated that roughly $750 million in fixed-rate loans are maturing in 2026, with yields at or slightly higher than current rates. Alberto Paracchini (President) clarified that NDFI exposure is around $221 million (under 3% of total loans), consisting of granular, commercial-related transactions like financing RIA practice acquisitions, and is materially different from the NDFI issues seen at other institutions. Tom Bell (CFO) indicated that Q4 expenses would be similar to Q3 but expected 2026 expenses to be lower due to the reset of incentive compensation accruals.

Brandon Rud inquired about the amount of fixed-rate loans maturing over the next 12 months and their yields relative to new originations. He also asked for details on Byline Bancorp's NDFI (Non-Deposit Financial Institutions) exposure, including its size and client types, and sought guidance on the Q4 and 2026 non-interest expense run rate.

Answer

CFO Tom Bell stated that approximately $750 million in fixed-rate loans are maturing in 2026, with yields at or slightly higher than current rates. President Alberto Paracchini clarified that NDFI exposure is around $221 million (under 3% of total loans), consisting of granular commercial-related transactions like financing RIA acquisitions, distinct from private credit or structured asset-backed financing. Tom Bell indicated Q4 non-interest expense would be similar to Q3, but 2026 expenses might be lower due to incentive compensation resetting.

Brandon Rud, on for Terry McEvoy, asked for the industry of the recently downgraded commercial relationship, the reason for the expected plateau in leasing charge-offs, and the spread between maturing and new commercial loan yields.

Answer

President & CEO Tyler Wilcox identified the downgrade as a C&I loan to an Ohio-based wholesaler/manufacturer, noting it's not part of a concentrated industry risk. He attributed the charge-off trend to the active workout of high-balance accounts in a shrinking portfolio. Both Wilcox and CFO Kathryn Bailey confirmed that loan pricing spreads have been stable and are expected to remain so.

Brandon Rud from Stephens Inc. asked for the industry classification of the recently downgraded commercial relationship and the bank's total exposure to that sector. He also sought more detail on the drivers behind the expected plateau in leasing charge-offs and the current spread between new and maturing commercial loan yields.

Answer

President & CEO Tyler Wilcox identified the downgraded credit as a C&I loan to an Ohio-based wholesaler/manufacturer, emphasizing it is part of a granular portfolio with no significant industry concentration. He explained the leasing charge-off plateau is a direct result of actively working out the shrinking high-balance account portfolio. Both executives affirmed that loan pricing discipline remains strong and spreads are expected to be stable, moving in line with the broader market.

Brandon Rud, on for Terry McEvoy, asked for the industry classification of the recently downgraded commercial relationship and the bank's total exposure to that sector. He also sought more detail on the drivers behind the expected plateau in leasing charge-offs and the current spread between new production yields and maturing commercial loans.

Answer

Tyler Wilcox, President, CEO & Director, identified the downgraded credit as a C&I loan to a wholesaler/manufacturer in Ohio, emphasizing it is part of a granular portfolio with no significant concentration in that specific industry. He explained the leasing charge-off plateau is a direct result of actively working out high-balance accounts within a shrinking portfolio. Both Wilcox and CFO Kathryn Bailey noted that loan pricing spreads have been stable and are expected to remain so, moving in line with the broader market.

Brandon Rud, on for Terry McEvoy, asked for the industry of the recently downgraded commercial relationship and the bank's total exposure to that sector. He also sought clarification on the drivers behind the expected plateau in leasing charge-offs and the current spread between maturing commercial loans and new production yields.

Answer

President and CEO Tyler Wilcox identified the downgraded credit as a C&I loan to a wholesaler/manufacturer in Ohio, clarifying it is part of a granular portfolio with no specific industry concentration. He explained that the leasing charge-off plateau is a result of actively working out high-balance accounts in a shrinking portfolio. Both Wilcox and CFO Kathryn Bailey stated that loan pricing spreads are expected to remain stable, as they have been consistent and disciplined.

Brandon Rud, on behalf of Terry McEvoy at Stephens Inc., asked for details on the recently downgraded commercial relationship, including its industry and the bank's total exposure. He also sought clarification on the drivers for the expected plateau in leasing charge-offs and the current spread between new and maturing commercial loan yields.

Answer

President & CEO Tyler Wilcox identified the downgraded credit as a C&I loan to a wholesaler/manufacturer in Ohio, noting it is part of a granular portfolio with no correlation to other concentrations. He explained the leasing charge-off plateau is due to the active workout of high-balance accounts in a shrinking portfolio. CFO Katie Bailey added that loan pricing spreads have been stable and the bank will maintain its discipline, moving with the market if industry-wide rates change.

Brandon Rud, on behalf of Terry McEvoy from Stephens Inc., asked for the industry of the large C&I charge-off, confirmation of no further expenses on an OREO sale, and commentary on the competitive landscape and its impact on loan spreads.

Answer

Executive James Eccher stated he could not disclose the C&I credit's industry due to legal proceedings but confirmed it is not a focus area for the bank. He expressed confidence that the OREO properties will sell without further write-downs. He also noted that the competitive environment is unchanged and that the bank's 2024 loan growth pullback was a strategic choice to avoid lower-yielding credits.

Brandon Rud, on behalf of Terry McEvoy at Stephens Inc., asked for a medium-term target for the net overhead ratio or the expense-to-average-assets ratio. He also inquired about the yields on new loans being originated.

Answer

David Stoehr, CFO, explained that Wintrust focuses on the net overhead ratio, targeting a level below 1.50%, as it better reflects the profitability of commission-heavy businesses. Richard Murphy, EVP and Chief Credit Officer, added that new loan yields vary significantly by category, ranging from spreads in the low 200s for core commercial relationships to substantially higher yields in premium finance.

Brandon Rud from Stephens Inc., on for Terry McEvoy, asked for more detail on the 'more selective' approach to new loan production, the target size for the equipment finance portfolio, and the outlook for net interest income (NII) in dollar terms.

Answer

Executive Jeffrey Ludwig clarified that the selective approach to new loans is broad-based, not limited to a specific category, though he noted CRE balances declined slightly. Executive Eric Lemke indicated the equipment finance portfolio is at a comfortable level around 17-18% of total loans and the bank would prefer to keep it in the 15-20% range. He also stated that the company is focused on growing NII in dollar terms and believes it can increase through asset repricing and loan growth, despite some pressure from the GreenSky runoff.