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BYLINE BANCORP, INC. (BY)·Q1 2025 Earnings Summary

Executive Summary

  • Solid quarter with diluted EPS $0.64 and adjusted EPS $0.65; NIM expanded 6 bps to 4.07% as deposit costs fell, while total revenue was $103.1M; deposits up $94.7M and loans up $137.1M QoQ .
  • EPS modestly declined QoQ and YoY as provision for credit losses increased to $9.2M, while non-interest income fell on lower SBA gains-on-sale volume; efficiency ratio remained ~54% .
  • Management guided Q2 NII to $87–$89M excluding First Security, noninterest expense $55–$57M per quarter, and SBA gains-on-sale averaging ~$5M per quarter; First Security integration completed mid-April with clean inclusion from Q2 .
  • Catalysts: KBRA credit rating upgrade (BBB+/A-), NIM resilience as rates ease, steady PTPP ROAA >2%, and acquisition integration progress toward crossing $10B in assets timeline .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expansion to 4.07% driven by lower cost of deposits and stable NII; average deposit cost fell 18 bps QoQ to 2.30% .
    • Deposit growth (+$94.7M) and loan growth (+$137.1M) with improved mix (shift to money market and business checking), supporting funding cost reductions .
    • Credit ratings upgrade by KBRA; management highlighted “top quartile profitability” and strong capital (CET1 11.78%, TCE/TA 9.95%) .
    • Management quote: “We advanced our strategic priorities… net interest margin expansion, stable deposit and loan growth, repayment of our term loan, and controlled expenses” – Alberto Paracchini .

  • What Went Wrong

    • Provision for credit losses increased to $9.2M (vs $6.9M in Q4) mainly due to higher allowance needs in government-guaranteed collectively assessed loans .
    • Non-interest income decreased 8% QoQ to $14.9M on lower gains on sales of guaranteed loans (volume sold $70.2M vs $88.9M in Q4) .
    • Efficiency ratio ticked up to 53.66% and ROAA declined to 1.25% as linked-quarter profitability softened; diluted EPS fell to $0.64 (vs $0.69 in Q4) .
    • Analyst concerns addressed on criticized/classified loans (moved up slightly without common theme) and CECL sensitivity to macro forecasts (Moody’s scenarios) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total revenue ($USD Millions)101.84 104.67 103.08
Net interest income ($USD Millions)87.46 88.52 88.22
Non-interest income ($USD Millions)14.39 16.15 14.86
Non-interest expense ($USD Millions)54.33 57.43 56.43
Provision for credit losses ($USD Millions)7.48 6.88 9.18
Diluted EPS ($USD)0.69 0.69 0.64
Adjusted diluted EPS ($USD)0.70 0.69 0.65
Net interest margin (%)3.88% 4.01% 4.07%
Efficiency ratio (%)52.02% 53.58% 53.66%
ROAA (%)1.29% 1.31% 1.25%
Loans and leases, period-end ($USD Billions)6.88 6.91 7.03
Total deposits, period-end ($USD Billions)7.50 7.46 7.55
KPIQ3 2024Q4 2024Q1 2025
NPL / Total loans (%)1.02% 0.90% 0.76%
NPA / Total assets (%)0.75% 0.71% 0.62%
Net charge-offs ($USD Millions)8.47 7.79 6.64
ACL ($USD Millions)98.86 97.99 100.42
CET1 (%)11.35% 11.70% 11.78%
TCE / TA (%)9.72% 9.61% 9.95%
Tangible book value per share ($USD)20.21 20.09 20.91
Deposit Composition ($USD Millions)Q3 2024Q4 2024Q1 2025
Non-interest-bearing demand1,729.9 1,756.1 1,715.6
Interest-bearing checking749.7 767.8 840.4
Money market2,426.5 2,518.2 2,759.2
Savings489.6 483.7 483.1
Time deposits (<$250k)1,639.7 1,498.3 1,326.4
Time deposits (≥$250k)462.5 434.6 428.6
Total deposits7,497.9 7,458.6 7,553.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income ($USD Millions)Q1 2025$86–$88M (given on Q4 call) Actual $88.22 Achieved high end
Net Interest Income ($USD Millions)Q2 2025n/a$87–$89M (ex-First Security) New guidance
Noninterest Expense ($USD Millions per quarter)FY 2025$54–$57 (Q3 call outlook) $55–$57 (Q1 call) Raised lower bound
SBA Gains-on-Sale ($USD Millions per quarter)FY 2025Avg $5M (Q4 call) Avg $5M (Q1 call) Maintained
Dividend per common share ($USD)Q1 2025$0.09 (declared Jan) $0.10 (declared Apr) Raised

Earnings Call Themes & Trends

TopicQ3 2024 (Prev)Q4 2024 (Prev)Q1 2025 (Current)Trend
Macro/tariffs & client sentimentStrong momentum; announced First Security deal Strategy consistent; optimism for 2025 Clients “wait-and-see”; trade policy uncertainty; anticipate more caution in CapEx/M&A More cautious tone
Deposit repricing & rate sensitivityNIM 3.88%; sensitivity -$12M per 100 bps ramp; plan for stable-to-growing NII Q1 NII guide $86–$88; deposit costs -28 bps QoQ NIM 4.07%; sensitivity ~$9M per 100 bps down; deposit cost -18 bps; Q2 NII $87–$89 (ex-FS) Improving margin; lower sensitivity
SBA program & underwriting changesGains-on-sale volume stable; exposure detailed in deck SBA charge-offs centered; normalized within range Welcomes tighter SBA standards; underwriting remained consistent Stable/improving underwriting quality
M&A / Crossing $10BAnnounced First Security merger Crossing $10B now late-2025/2026; preparation underway FS closed 4/1; integration complete; Q2 inclusion; $10B timeline reiterated Execution progressing
Sponsor finance portfolioNot highlightedNot highlighted~$700M outstanding; senior-only, lower middle market, no losses in 10 years Stable/low loss profile
CRE officeNon-owner occupied office down YoY; portfolio metrics show improved NPL/NCO Continued moderation highlighted Not specifically emphasized this quarterGradual improvement

Management Commentary

  • Strategic focus: “Our focus remains on executing our strategy of becoming the preeminent commercial bank in Chicago” – CEO Roberto R. Herencia .
  • Quarter highlights: “Steady earnings and profitability, net interest margin expansion, stable deposit and loan growth… and controlled expenses” – President Alberto J. Paracchini .
  • Capital and ratings: CFO noted “growing and strong capital metrics” and KBRA upgrade reinforces financial strength; tangible book value per share up 4% QoQ and 14% YoY; CET1 11.78% .
  • Integration: “Transaction closed effective April 1… systems conversion successfully completed mid-month… all key integration tasks completed” – President .

Q&A Highlights

  • Loan growth outlook: Pipelines healthy; expect mid-single-digit loan growth; payoffs moderating; line utilization ticked up to ~60% .
  • NII and margin: Q2 NII guide $87–$89M (ex-First Security); deposit repricing continues; SBA reset lags prime; margin stable-to-slightly up depending on Fed path .
  • SBA gains-on-sale: Average ~$5M per quarter; premiums ~9.5–10%; volume seasonality acknowledged .
  • CECL and reserves: Uses Moody’s base with weighted alternatives; reserve builds path-dependent; criticized/classified uptick driven by idiosyncratic items .
  • Sponsor finance: ~$700M senior loans, 62 portfolio companies, target 2–8M EBITDA, ≤3x senior leverage; no losses in a decade .
  • Crossing $10B: Timeline late-2025 into 2026, requires four consecutive quarters; preparatory investments in people, systems, risk .

Estimates Context

Metric (Q1 2025)S&P Global ConsensusActualSurprise
EPS (Primary, $USD)0.62333*0.64 +0.0167 (+2.7%)*
Total revenue ($USD Millions)100.90*103.08 +2.18 (+2.2%)*

Values retrieved from S&P Global. Note: Byline reports “Total revenue” as net interest income plus non-interest income, a non-GAAP measure; consensus revenue definitions may vary .

Key Takeaways for Investors

  • Margin resilience as rate easing unfolds: NIM up to 4.07%, deposit betas falling; model modest NII growth with lower asset sensitivity (~$9M per 100 bps down) .
  • Credit metrics improving: NPLs and NPAs declined QoQ; net charge-offs moderated; ACL increased to support government-guaranteed portfolios .
  • Capital strength and returns: CET1 11.78%; TCE/TA 9.95%; TBV/share up; supports dividend increase and selective buybacks/inorganic actions .
  • SBA engine steady but normalized: Gains-on-sale run-rate ~$5M/quarter; volume and premiums sensitive to mix/market; underwriting standards consistent and tightening at agency level .
  • Integration catalyst: First Security closed and converted; expect clean inclusion in Q2; monitor operating leverage and deposit mix benefits .
  • Near-term trading: Focus on Q2 NII execution vs guidance, deposit mix shifts (time to MM/IBDDA), and further rate cuts impact on SBA variable-rate reset .
  • Medium-term thesis: Continued top-quartile profitability (PTPP ROAA >2%), strategic M&A in fragmented market, and pathway to crossing $10B with infrastructure readiness .