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BYLINE BANCORP, INC. (BY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong profitability: diluted EPS $0.69, net income $30.3M, NIM rose 13 bps QoQ to 4.01%, and non-interest income increased 12.3% QoQ; PTPP ROAA stayed >2.0% for the ninth consecutive quarter .
  • Balance sheet quality improved: NPA/Assets fell to 0.71% (-4 bps QoQ), NPLs/Loans declined to 0.90% (-12 bps), and ACL/Loans edged down to 1.42%; net charge-offs moderated to 0.45% annualized .
  • Capital strengthened: CET1 rose 35 bps QoQ to 11.70%; tangible book value per share up 11.7% YoY to $20.09; the quarterly dividend was increased to $0.10 (+11.1%) effective Q1 2025 .
  • 2025 outlook and catalysts: management guided Q1 2025 NII to $86–$88M, 2025 quarterly NIE $55–$57M, and average quarterly gain-on-sale ~$5M; First Security closing expected early Q2 2025; deposit cost tailwinds and dividend increase are potential stock reaction catalysts .

What Went Well and What Went Wrong

What Went Well

  • Net interest income increased to $88.5M (+1.2% QoQ) on lower deposit costs; tax-equivalent NIM rose to 4.02% (+13 bps QoQ) with loan accretion contributing 12 bps .
  • Non-interest income rose to $16.1M (+12.3% QoQ) on stronger gain on sale of guaranteed loans ($7.1M; $88.9M sold vs. $79.5M in Q3) and higher premiums; management: “strong earnings and profitability” cap a successful 2024 .
  • Credit metrics improved: NPLs/Loans fell to 0.90% (-12 bps QoQ), NPA/Assets to 0.71% (-4 bps), and net charge-offs declined to $7.8M from $8.5M; management highlighted SBA portfolio proactively de-risked since 2021–2022 .

What Went Wrong

  • Efficiency ratio worsened to 53.58% (+156 bps QoQ) on higher salaries/benefits and OREO-related losses; adjusted efficiency ratio rose to 53.37% (+175 bps QoQ) .
  • NII sensitivity to rate cuts remains: over a one-year horizon, a 100 bps decline implies ~$8–$10M NII reduction depending on ramp vs. shock scenarios; SBA reset lag also pressures near-term NII .
  • Deposit balances modestly declined QoQ (-$39M to $7.46B), with time deposits down; deposit mix shifts and competitive pricing continued to weigh on funding costs despite QoQ relief .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$99.370 $101.840 $104.673
Net Interest Income ($USD Millions)$86.526 $87.455 $88.524
Non-Interest Income ($USD Millions)$12.844 $14.385 $16.149
Net Income ($USD Millions)$29.671 $30.328 $30.320
Diluted EPS ($USD)$0.68 $0.69 $0.69
NIM (%)3.98% 3.88% 4.01%
Efficiency Ratio (%)52.19% 52.02% 53.58%
ROAA (%)1.31% 1.29% 1.31%
ROTCE (%)15.27% 14.49% 13.92%

Non-Interest Income breakdown:

Component ($USD Millions)Q2 2024Q3 2024Q4 2024
Fees & Service Charges on Deposits$2.548 $2.591 $2.648
Loan Servicing Revenue$3.216 $3.174 $3.151
Loan Servicing Asset Revaluation$(2.468) $(2.183) $(1.350)
ATM & Interchange Fees$1.163 $1.143 $1.083
Change in Fair Value of Equity Securities$(0.390) $0.388 $0.732
Net Gains on Sales of Loans$6.036 $5.864 $7.107
Wealth Mgmt & Trust Income$0.942 $1.101 $1.110
Other Non-Interest Income$1.797 $2.307 $2.367
Total Non-Interest Income$12.844 $14.385 $16.149

Key KPIs:

KPIQ2 2024Q3 2024Q4 2024
Government-Guaranteed Loans Sold ($USD Millions)$73.9 $79.5 $88.9
Avg Cost of Total Deposits (%)2.63% 2.76% 2.48%
Non-Interest-Bearing Deposits / Total (%)23.99% 23.07% 23.54%
Loans & Leases / Total Deposits (%)93.98% 92.02% 92.64%
NPA / Total Assets (%)0.67% 0.75% 0.71%
NPLs / Loans (%)0.93% 1.02% 0.90%
ACL / Loans (%)1.45% 1.44% 1.42%
Net Charge-Offs (Annualized) / Avg Loans (%)0.56% 0.49% 0.45%

Note: Total Revenue is non-GAAP (NII + non-interest income) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income ($USD Millions)Q1 2025N/A$86–$88 (partly day count) New
Net Interest Income ($USD Millions)Q4 2024$85–$87 Actual $88.5 Beat vs guidance
Non-Interest Expense ($USD Millions/quarter)2025$55–$57 (Q4 guide) $55–$57 (stand-alone) Maintained
Gain on Sale of Loans ($USD Millions/quarter)2025$5–$6 (Q4 2024 guide) ~$5 avg; lower in Q1 seasonally Lower run-rate
Tax Rate2025N/A“Very consistent” (no change) Maintained
First Security Acquisition Close2025First half 2025 Early Q2 2025 Narrowed timing
Rate Sensitivity (NII impact)1-year horizon-100 bps ≈ $12M (Q3) Ramp -100 bps ≈ $8M; Shock -100 bps ≈ $10M (Q4) Improved profile
Dividend per ShareQ1 2025$0.09 (Q4 2024) $0.10 (+11.1%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Margin/NII outlookNII guided $85–$87M for Q4; core NIM stable ex accretion; BTFP dragged ~8 bps Q1 2025 NII guided $86–$88M; NIM 4.01% up 13 bps QoQ; SBA reset lag noted Slightly improving NII; margin firming
Deposit costs/mixDeposit betas peaking; mix shift to interest-bearing; DDA ~24–25% Avg deposit cost down 28 bps QoQ to 2.48%; shift from CDs to money market with positive curve Cost relief; mix optimization
SBA portfolio creditProactive derisking; NPLs ex-guaranteed ~86 bps; NCOs elevated partly from PCD Loss content centered in SBA; unguaranteed exposure reduced from ~15% (2016) to ~6.1%; NCOs down QoQ Normalizing; active resolution
Office CRE exposureNOO office ~2.6% of loans; diversified tenants/markets NOO office ~2.3% of loans; metrics improved (DLQ, NPL) Lower exposure; gradual improvement
M&A/disruptionFirst Security announced; expect more consolidation; strong talent attraction First Security closing early Q2 2025; disruption seen as opportunity Executing pipeline
<$10B regulatory prepCrossing timeline 2H25–1H26; prep ongoing Crossing now guided latter 2025 to 2026; four quarters >$10B before rules apply Plan intact
Fee diversificationSwaps and wealth mgmt building; gain-on-sale $5–$6M guide 2025 gain-on-sale average ~$5M; swaps to offset potential SBA variability Balanced fees

Management Commentary

  • “We continued to execute our strategy of becoming the preeminent commercial bank in Chicago… delivering record full-year financial results… and executing our M&A strategy with our pending acquisition of First Security Bancorp, Inc.” — Roberto R. Herencia (CEO) .
  • “Our results in the fourth quarter, highlighted by strong earnings and profitability, cap off a successful 2024… we’re pleased with our progress and excited about the opportunities ahead.” — Alberto J. Paracchini (President) .
  • CFO on outlook: “Our net interest margin grew to 4.01%, up 13 bps… outlook… assumes a 50 bps decline in Fed funds for 2025… NII range of $86M to $88M for the first quarter.” — Thomas J. Bell .
  • “We lowered our overall cost of deposits… by 28 basis points to 2.48%… driven by higher DDA balances and disciplined deposit pricing.” — CFO .
  • “We remain on track… expect [First Security] to close early in the second quarter.” — President .

Q&A Highlights

  • SBA credit quality and derisking: Management emphasized proactive monitoring post-COVID, gradual deterioration anticipated and managed, and reduced unguaranteed exposure to ~6.1% of loans .
  • NII/margin trajectory: With fewer rate cuts, NII seen flat to slightly up; asset sensitivity reduced via hedging; SBA reset impacts January NII .
  • CD repricing leverage: Average CDs ~4.39% reprice to ~3.60% today; deposit flows shifting to liquid accounts as curve normalizes, aiding funding costs .
  • <$10B preparations: Crossing timeline late 2025 to 2026 with ~four quarters needed above threshold before new rules; internal prep well underway (including new General Counsel) .
  • Expense and fee guidance: 2025 NIE $55–$57M per quarter (stand-alone); average quarterly gain-on-sale ~$5M with swaps/wealth mgmt offset; Q1 seasonally lower .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to access limits at the time of retrieval. As a result, we cannot benchmark the quarter versus S&P Global consensus in this recap.
  • Where guidance was provided, the company exceeded its own Q4 NII guidance ($88.5M actual vs. $85–$87M), and guided Q1 2025 NII to $86–$88M, with 2025 NIE at $55–$57M per quarter .

Key Takeaways for Investors

  • Deposit cost tailwinds and a positively sloped curve drove a meaningful NIM inflection in Q4; expect continued relief in 2025 as CDs reprice and mix shifts to liquid accounts. Near-term NII guided at $86–$88M for Q1 .
  • Credit normalization continues, centered in SBA; proactive reserving and reduced unguaranteed exposure support manageable charge-off levels (~30–40 bps normalized), with Q4 NCOs down QoQ .
  • Capital strength (CET1 11.70%) and dividend increase to $0.10 signal confidence; potential for incremental capital return alongside organic growth and M&A execution .
  • Strategic M&A (First Security) and talent acquisition remain catalysts to deepen core commercial relationships, bolster deposits, and sustain top-quartile profitability .
  • Watch guidance cadence: 2025 NIE discipline ($55–$57M/qtr) and average gain-on-sale ~$5M help offset fee variability; swaps/wealth management provide diversification .
  • Short-term trading: positive reaction possible on dividend raise, NIM improvement, and NII beat vs Q4 guidance; sensitivity to rate path and SBA resolution pace remain risk factors .
  • Medium-term thesis: asset-sensitive balance sheet, granular deposit base with high insured ratio, and consistent >2% PTPP ROAA underpin durable returns through cycle .