BY 10-Q Quarterly Report Sept. 30, 2024

BYLINE BANCORP, INC.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number 001-38139

Byline Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

     
        (State or Other Jurisdiction of
       
        Incorporation or Organization)
       
        (IRS Employer
       
        Identification Number)

180 North LaSalle Street , Suite 300

Chicago , Illinois 60601

(Address of Principal Executive Offices)

( 773 ) 244-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	BY	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $0.01 par value, 44,385,204 shares outstanding as of October 30, 2024

BYLINE BANCORP, INC.

FORM 10-Q

September 30, 2024

INDEX


		Page

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements. The Unaudited Interim Condensed Consolidated Financial Statements of Byline Bancorp, Inc.	3
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	80
Item 4.	Controls and Procedures	81

PART II.	OTHER INFORMATION	82
Item 1.	Legal Proceedings	82
Item 1A.	Risk Factors	82
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83

PART I – FINANC IAL INFORMATION

Item 1. Financ ial Statements

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)



(dollars in thousands, except share data)	September 30, 2024			December 31, 2023
ASSETS
Cash and due from banks	$	77,047		$	60,431
Interest bearing deposits with other banks		375,549			165,705
Cash and cash equivalents		452,596			226,136
Equity and other securities, at fair value		9,132			8,743
Securities available-for-sale, at fair value (amortized cost at September 30, 2024—$ 1,635,419 ; December 31, 2023—$ 1,516,801 )		1,502,108			1,342,480
Securities held-to-maturity, at amortized cost (fair value at September 30, 2024—$ 603 ; December 31, 2023 —$ 1,149 )		605			1,157
Restricted stock, at cost		22,743			16,304
Loans held for sale		19,955			18,005
Loans and leases:
Loans and leases		6,879,446			6,684,306
Allowance for credit losses - loans and leases		( 98,860	)		( 101,686	)
Net loans and leases		6,780,586			6,582,620
Servicing assets, at fair value		18,945			19,844
Premises and equipment, net		63,135			66,627
Goodwill and other intangible assets, net		199,443			203,478
Bank-owned life insurance		99,295			96,900
Deferred tax assets, net		37,737			50,058
Accrued interest receivable and other assets		218,036			249,615
Total assets	$	9,424,316		$	8,881,967
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest-bearing demand deposits	$	1,729,908		$	1,905,876
Interest-bearing deposits		5,767,979			5,271,123
Total deposits		7,497,887			7,176,999
Other borrowings		518,786			395,190
Subordinated notes, net		73,997			73,866
Junior subordinated debentures issued to capital trusts, net		70,783			70,452
Accrued interest payable and other liabilities		166,551			175,309
Total liabilities		8,328,004			7,891,816
COMMITMENTS AND CONTINGENT LIABILITIES (Note 14)
STOCKHOLDERS’ EQUITY
Preferred stock		—			—
Common stock		454			451
Additional paid-in capital		714,864			710,488
Retained earnings		507,576			429,036
Treasury stock, at cost		( 47,904	)		( 49,707	)
Accumulated other comprehensive loss, net of tax		( 78,678	)		( 100,117	)
Total stockholders’ equity		1,096,312			990,151
Total liabilities and stockholders’ equity	$	9,424,316		$	8,881,967


	September 30, 2024				December 31, 2023
	Preferred Shares		Common Shares		Preferred Shares		Common Shares
Par value	$	0.01	$	0.01	$	0.01	$	0.01
Shares authorized		25,000,000		150,000,000		25,000,000		150,000,000
Shares issued		—		46,180,735		—		45,714,241
Shares outstanding		—		44,384,706		—		43,764,056
Treasury shares		—		1,796,029		—		1,950,185

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEM ENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands, except share and per share data)	2024			2023			2024			2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans and leases	$	128,336		$	125,465		$	378,651		$	316,942
Interest on securities		11,260			8,415			31,508			21,574
Other interest and dividend income		6,840			2,710			16,167			5,348
Total interest and dividend income		146,436			136,590			426,326			343,864
INTEREST EXPENSE
Deposits		52,076			37,163			145,641			78,184
Other borrowings		3,919			3,981			12,203			14,110
Subordinated notes and debentures		2,986			2,994			8,960			7,234
Total interest expense		58,981			44,138			166,804			99,528
Net interest income		87,455			92,452			259,522			244,336
PROVISION FOR CREDIT LOSSES		7,475			8,803			20,163			24,418
Net interest income after provision for credit losses		79,980			83,649			239,359			219,918
NON-INTEREST INCOME
Fees and service charges on deposits		2,591			2,372			7,566			6,725
Loan servicing revenue		3,174			3,369			9,754			10,126
Loan servicing asset revaluation		( 2,183	)		( 3,646	)		( 5,354	)		( 3,855	)
ATM and interchange fees		1,143			1,205			3,381			3,380
Change in fair value of equity securities, net		388			( 313	)		390			230
Net gains on sales of loans		5,864			6,473			17,433			17,325
Wealth management and trust income		1,101			939			3,200			2,902
Other non-interest income		2,307			1,977			6,332			4,979
Total non-interest income		14,385			12,376			42,702			41,812
NON-INTEREST EXPENSE
Salaries and employee benefits		34,974			34,969			102,838			95,005
Occupancy and equipment expense, net		4,373			5,314			14,296			14,162
Impairment charge on assets held for sale		—			—			—			20
Loan and lease related expenses		703			836			2,129			2,287
Legal, audit and other professional fees		3,643			3,805			10,070			10,594
Data processing		4,215			6,472			12,396			14,527
Net (gain) loss recognized on other real estate owned and other related expenses		74			111			( 86	)		296
Other intangible assets amortization expense		1,345			1,551			4,035			4,461
Other non-interest expense		5,000			4,833			15,668			14,667
Total non-interest expense		54,327			57,891			161,346			156,019
INCOME BEFORE PROVISION FOR INCOME TAXES		40,038			38,134			120,715			105,711
PROVISION FOR INCOME TAXES		9,710			9,912			30,276			27,437
NET INCOME	$	30,328		$	28,222		$	90,439		$	78,274
EARNINGS PER COMMON SHARE
Basic	$	0.70		$	0.66		$	2.08		$	2.01
Diluted	$	0.69		$	0.65		$	2.07		$	1.98

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF C OMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2024			2023			2024			2023
Net income	$	30,328		$	28,222		$	90,439		$	78,274
Securities available-for-sale
Unrealized holding gains (losses) arising during the period		53,138			( 37,330	)		41,010			( 36,553	)
Tax effect		( 14,172	)		9,970			( 10,937	)		9,763
Net of tax		38,966			( 27,360	)		30,073			( 26,790	)
Cash flow hedges
Unrealized holding gains (losses) arising during the period		( 3,784	)		4,648			2,417			13,357
Reclassification adjustments for net gains included in net income		( 4,637	)		( 4,562	)		( 14,192	)		( 10,381	)
Tax effect		2,246			( 23	)		3,141			( 795	)
Net of tax		( 6,175	)		63			( 8,634	)		2,181
Total other comprehensive income (loss)		32,791			( 27,297	)		21,439			( 24,609	)
Comprehensive income	$	63,119		$	925		$	111,878		$	53,665

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)


					Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock				Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares		Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, June 30, 2023		37,752,002	$	391	$	599,718		$	379,078		$	( 50,383	)	$	( 114,862	)	$	813,942
Net income		—		—		—			28,222			—			—			28,222
Other comprehensive loss, net of tax		—		—		—			—			—			( 27,297	)		( 27,297	)
Issuance of common stock upon exercise of stock options, net		29,766		—		347			—			—			—			347
Restricted stock activity, net		5,112		—		( 113	)		—			54			—			( 59	)
Issuance of common stock due to business combination, net of issuance costs		5,932,323		59		106,958			—			—			—			107,017
Cash dividends declared on common stock ($ 0.09 per share)		—		—		—			( 3,932	)		—			—			( 3,932	)
Share-based compensation expense		—		—		1,705			—			—			—			1,705
Balance, September 30, 2023		43,719,203	$	450	$	708,615		$	403,368		$	( 50,329	)	$	( 142,159	)	$	919,945

					Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock				Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares		Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, January 1, 2023		37,492,775	$	389	$	598,297		$	335,794		$	( 51,114	)	$	( 117,550	)	$	765,816
Net income		—		—		—			78,274			—			—			78,274
Other comprehensive loss, net of tax		—		—		—			—			—			( 24,609	)		( 24,609	)
Issuance of common stock upon exercise of stock options, net		29,766		—		347			—			—			—			347
Restricted stock activity, net		225,217		2		( 1,909	)		—			77			—			( 1,830	)
Issuance of common stock in connection with employee stock purchase plan		39,122		—		—			—			708			—			708
Issuance of common stock due to business combination, net of issuance costs		5,932,323		59		106,958			—			—			—			107,017
Cash dividends declared on common stock ($ 0.27 per share)		—		—		—			( 10,700	)		—			—			( 10,700	)
Share-based compensation expense		—		—		4,922			—			—			—			4,922
Balance, September 30, 2023		43,719,203	$	450	$	708,615		$	403,368		$	( 50,329	)	$	( 142,159	)	$	919,945

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)


						Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock					Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares			Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, June 30, 2024		44,180,829		$	452	$	710,792		$	481,232		$	( 47,993	)	$	( 111,469	)	$	1,033,014
Net income		—			—		—			30,328			—			—			30,328
Other comprehensive income, net of tax		—			—		—			—			—			32,791			32,791
Issuance of common stock upon exercise of stock options, net		205,652			2		2,314			—			—			—			2,316
Restricted stock activity, net		( 1,775	)		—		( 137	)		—			89			—			( 48	)
Cash dividends declared on common stock ($ 0.09 per share)		—			—		—			( 3,984	)		—			—			( 3,984	)
Share-based compensation expense		—			—		1,895			—			—			—			1,895
Balance, September 30, 2024		44,384,706			454	$	714,864		$	507,576		$	( 47,904	)	$	( 78,678	)	$	1,096,312

						Additional									Accumulated Other			Total
(dollars in thousands,	Common Stock					Paid-In			Retained			Treasury			Comprehensive			Stockholders’
except share data)	Shares			Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance, January 1, 2024		43,764,056		$	451	$	710,488		$	429,036		$	( 49,707	)	$	( 100,117	)	$	990,151
Net income		—			—		—			90,439			—			—			90,439
Other comprehensive income, net of tax		—			—		—			—			—			21,439			21,439
Issuance of common stock upon exercise of stock options, net		293,638			2		2,205			—			( 671	)		—			1,536
Restricted stock activity, net		294,256			1		( 3,411	)		—			1,696			—			( 1,714	)
Issuance of common stock in connection with employee stock purchase plan		32,756			—		—			—			778			—			778
Cash dividends declared on common stock ($ 0.27 per share)		—			—		—			( 11,899	)		—			—			( 11,899	)
Share-based compensation expense		—			—		5,582			—			—			—			5,582
Balance, September 30, 2024		44,384,706		$	454	$	714,864		$	507,576		$	( 47,904	)	$	( 78,678	)	$	1,096,312

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEM ENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended
	September 30,
(dollars in thousands)	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	90,439		$	78,274
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		20,163			24,418
Impairment loss on premises and equipment		1,069			—
Impairment loss on operating lease right-of-use asset		194			395
Impairment loss on assets held for sale		—			20
Depreciation and amortization of premises and equipment		3,829			3,188
Net amortization (accretion) of securities		( 1,383	)		1,497
Net change in fair value of equity securities		( 390	)		( 230	)
Net losses (gains) on sales and disposal of premises and equipment		( 477	)		142
Net gains on sales of loans		( 17,433	)		( 17,325	)
Originations of U.S. government guaranteed loans		( 230,848	)		( 231,091	)
Proceeds from U.S. government guaranteed loans sold		216,376			256,601
Accretion of premiums and discounts on acquired loans, net		( 10,922	)		( 11,616	)
Net change in servicing assets		899			( 571	)
Net losses (gains) on sales and valuation adjustments of other real estate owned		( 37	)		444
Net amortization of other acquisition accounting adjustments		4,877			5,447
Amortization of subordinated debt issuance cost		131			131
Accretion of junior subordinated debentures discount		331			337
Share-based compensation expense		5,582			4,922
Deferred tax benefit (expense)		4,523			( 196	)
Increase in cash surrender value of bank owned life insurance		( 2,396	)		( 1,712	)
Changes in assets and liabilities:
Accrued interest receivable and other assets		16,107			8,452
Accrued interest payable and other liabilities		21,641			49,506
Net cash provided by operating activities		122,275			171,033
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available-for-sale		( 316,869	)		( 121,166	)
Proceeds from maturities and calls of securities available-for-sale		88,330			7,480
Proceeds from paydowns of securities available-for-sale		110,708			76,451
Proceeds from sales of securities available-for-sale		—			163,649
Proceeds from maturities and calls of securities held-to-maturity		550			1,545
Redemptions (purchases) of Federal Home Loan Bank stock, net		( 6,439	)		755
Proceeds from other loans sold		—			6,750
Net change in loans and leases		( 208,445	)		( 382,183	)
Purchases of premises and equipment		( 1,892	)		( 2,856	)
Proceeds from sales of premises and equipment		365			—
Proceeds from sales of assets held for sale		2,221			1,359
Proceeds from sales of other real estate owned		740			3,173
Net cash received in acquisition of business		—			7,834
Net cash used in investing activities		( 330,731	)		( 237,209	)

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)


	Nine Months Ended
	September 30,
(dollars in thousands)	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits	$	320,046		$	293,092
Proceeds from line of credit		—			15,000
Repayments of line of credit		( 11,250	)		—
Proceeds from term loan		—			20,000
Repayments of term loan		( 5,000	)		—
Proceeds from short-term borrowings		2,170,000			15,643,200
Repayments of short-term borrowings		( 2,025,000	)		( 15,668,200	)
Proceeds from BTFP advances		200,000			—
Repayments of BTFP advances		( 200,000	)		—
Net increase (decrease) in securities sold under agreements to repurchase		( 5,154	)		22,379
Dividends paid on common stock		( 11,920	)		( 10,709	)
Proceeds from issuance of common stock		3,194			949
Net cash provided by financing activities		434,916			315,711
NET CHANGE IN CASH AND CASH EQUIVALENTS		226,460			249,535
CASH AND CASH EQUIVALENTS, beginning of period		226,136			179,353
CASH AND CASH EQUIVALENTS, end of period	$	452,596		$	428,888
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	167,158		$	82,310
Cash paid during the period for taxes	$	3,229		$	6,352
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfer of loans to other real estate owned	$	35		$	571
Total assets acquired from acquisition	$	—		$	1,160,491
Value ascribed to goodwill	$	—		$	33,352
Total liabilities assumed from acquisition	$	—		$	1,054,929
Common stock issued due to acquisition of business	$	—		$	107,017
Right-of-use assets exchanged for operating lease liabilities	$	1,803		$	956
Common share withholding	$	2,716		$	1,830
Common dividend declared, not paid	$	( 21	)	$	( 9	)

See accompanying Notes to Unaudited Interim Condensed Consolidated Financial Statements.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 1—Basis of Present ation

These unaudited interim condensed consolidated financial statements include the accounts of Byline Bancorp, Inc., a Delaware corporation (the “Company,” “Byline,” “we,” “us,” “our”), a bank holding company whose principal activity is the ownership and management of its Illinois state chartered subsidiary bank, Byline Bank (the “Bank”), based in Chicago, Illinois.

These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2024 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Consolidated Financial Statements as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023.

The Company has one reportable segment. The Company’s chief operating decision makers evaluate the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. Therefore, segments disclosures are currently not required.

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent Events,” the Company’s management has evaluated subsequent events for potential recognition or disclosure through the date of the issuance of these condensed consolidated financial statements. No subsequent events were identified that would have required a change to the condensed consolidated financial statements or disclosure in the notes to the condensed consolidated financial statements.

Note 2—Accounting Pronouncements Recently Adopted or Issued

The following reflect recent accounting pronouncements that have been adopted or are pending adoption by the Company.

Adopted Accounting Pronouncements

Fair Value Measurement (Topic 820) - In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The guidance in the ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account on the equity security and, therefore, is not considered in measuring fair value. The ASU also requires additional disclosures about the restriction. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company evaluated the accounting and disclosure requirements of this update and they did not have a material effect on the consolidated financial statements.

Issued Accounting Pronouncements Pending Adoption

Business Combinations (Topic 805) - In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (JV) Formations: Recognition and Initial Measurement. The guidance requires newly-formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations. The new guidance would be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements.

Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280) – In November 2023, the FASB issued ASU 2023-07 to enhance disclosures about significant segment expenses for public entities reporting segment information under Topic 280. It requires that a public entity disclose, on an annual and interim basis, significant expense categories for each reportable segment. Significant expense categories are derived from expenses that are 1) regularly reported to an entity’s chief operating decision-maker ("CODM"), and 2) included in a segment’s reported measure of profit or loss. The disclosures should include an amount for "other segment items," reflecting the difference between 1) segment revenue less significant segment expenses, and 2) the reportable segment’s profit or loss measures. It requires that a public entity disclose the title and position of the CODM and how the CODM uses the reported measure of profit or loss to assess segment

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

performance and to allocate resources. Further it clarifies that entities with a single reportable segment must disclose both new and existing segment reporting requirements. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt the guidance on a retrospective basis. The Company will include the new required disclosures upon adoption and has concluded they will not have a material effect on the consolidated financial statements.

Income Taxes – Improvements to Income Tax Disclosures (Topic 740) – In December 2023, the FASB issued ASU 2023-09 to provide additional transparency into an entity’s income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The standard requires that public business entities disclose, on an annual basis, specific categories in the rate reconciliation and additional information for reconciling items meeting a certain quantitative threshold. The amendments also require that entities disclose on an annual basis: 1) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and 2) the income taxes paid (net of refunds received) disaggregated by individual jurisdictions exceeding 5% of total income taxes paid (net of refunds received). The amendments are effective for public business entities for annual periods beginning after December 15, 2024. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements.

Note 3—Acquisition of a Business

On July 1, 2023 , the Company acquired all of the outstanding common stock of Inland Bancorp, Inc. ("Inland") and its subsidiaries pursuant to an Agreement and Plan of Merger, dated as of November 30, 2022 (the "Merger Agreement"). Inland was merged with and into Byline. As a result of the merger, Inland’s wholly owned subsidiary bank, Inland Bank and Trust, was merged with and into Byline Bank, with Byline Bank as the surviving bank. The acquisition improves the Company’s footprint in the Chicagoland market, diversifies its commercial banking business, and strengthens the core deposit base.

In a related but separate transaction, on March 31, 2023, Byline entered into a side letter agreement with the majority shareholder of Inland in which Byline agreed to purchase 2,408,992 shares of Inland common stock. The purchase price was calculated based on the terms of the Merger Agreement. The transaction was completed on June 30, 2023 , which resulted in the payment of cash in the amount of $ 9.9 million.

At the effective time of the merger (the "Effective Time"), each share of Inland’s common stock was converted into the right to receive: (1) 0.19 shares of Byline’s common stock, par value $ 0.01 per share, and (2) a cash payment in the amount of $ 0.68 per share, with cash paid in lieu of any fractional shares. The per share cash consideration was based on the total $ 21.2 million divided by the outstanding shares of Inland common stock. Based on the closing price of shares of the Company’s common stock of $ 18.09 , as reported by the New York Stock Exchange, and 5,932,323 shares of common stock issued with respect to the outstanding shares of Inland common stock, the stock consideration was valued at $ 107.3 million. Options to acquire 288,200 shares of Inland common stock that were outstanding at the Effective Time were canceled, at the option holders' election, in exchange for a cash payment in accordance with the Merger Agreement of $ 424,000 , to be paid after the closing date. In addition, the 2,408,992 shares of Inland common stock purchased on June 30, 2023 were canceled as of the effective time of the transaction. The value of the total merger consideration at closing was $ 138.9 million. Stock issuance costs were $ 299,000 .

The transaction resulted in goodwill of $ 33.4 million, which is nondeductible for tax purposes, as this acquisition was a nontaxable transaction. Goodwill represents the premium paid over the fair value of the net tangible and intangible assets acquired and reflects related synergies expected from the combined operations.

Inland merger-related expenses, including salaries and employee benefits of $ 2.3 million, core system conversion expenses of $ 2.2 million, acquisition advisory expenses of $ 1.5 million, and other non-interest expenses of $ 301,000 related to the Inland acquisition are reflected in non-interest expense on the Consolidated Statements of Operations for the three months ended September 30, 2023.

Inland merger-related expenses including core system conversion expenses of $ 3.0 million, acquisition advisory expenses of $ 2.4 million, salaries and employee benefits of $ 2.4 million, and other non-interest expenses of $ 397,000 related to the Inland acquisition are reflected in non-interest expense on the Consolidated Statements of Operations for the nine months ended September 30, 2023.

There were no Inland merger-related expenses in the three and nine months ended September 30, 2024.

The acquisition of Inland was accounted for using the acquisition method of accounting in accordance with ASC Topic 805. Assets acquired, liabilities assumed, and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

used to calculate estimated fair values. Fair value adjustments associated with this transaction were finalized during the second quarter of 2024.

The following table presents a summary of the fair values of assets acquired and liabilities assumed as of the acquisition date:


Assets
Cash and cash equivalents	$	39,731
Securities available-for-sale		239,602
Restricted stock		3,058
Loans		808,000
Allowance for credit losses		( 10,596	)
Premises and equipment		11,307
Operating lease right-of-use asset		3,813
Other intangible assets		17,250
Bank-owned life insurance		12,455
Deferred tax assets, net		14,848
Other assets		21,023
Total assets acquired		1,160,491
Liabilities
Deposits		964,491
Federal Home Loan Bank advances		40,000
Securities sold under agreements to repurchase		455
Junior subordinated debentures		32,661
Operating lease liability		4,034
Accrued expenses and other liabilities		13,288
Total liabilities assumed		1,054,929
Net assets acquired	$	105,562
Consideration paid
Common stock ( 5,932,323 shares issued at $ 18.09 per share)		107,017
Cash paid		31,897
Total consideration paid		138,914
Goodwill	$	33,352

The following table presents the fair value and gross contractual amounts receivable of acquired non-credit-deteriorated loans from the Inland acquisition, and their respective expected contractual cash flows as of the acquisition date:


Fair value	$	582,831
Gross contractual amounts receivable		699,918
Estimate of contractual cash flows not expected to be collected (1)		4,239
Estimate of contractual cash flows expected to be collected		695,679

(1) Includes interest payments not expected to be collected due to loan prepayments as well as principal and interest payments not expected to be collected due to customer default.

The following table provides the unaudited pro forma information for the results of operations for the nine months ended September 30, 2023, as if the acquisition had occurred on January 1, 2023. The pro forma results combine the historical results of Inland into the Company’s Consolidated Statements of Operations, including the impact of certain acquisition accounting adjustments, which includes loan discount accretion, intangible assets amortization, deposit premium accretion, fixed assets amortization, and borrowing discount amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2023. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. Recognized acquisition-related expenses and other adjustments related to the timing of expenses, are included in net income in the following table:

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


	For the Nine Months Ended
	September 30,
	2023
Total revenues (net interest income and non-interest income)	$	310,507
Net income	$	82,424
Earnings per share—basic	$	1.92
Earnings per share—diluted	$	1.90

Revenues and earnings of the acquired company since the acquisition date have not been disclosed as it is not practicable as Inland was merged into the Company and separate financial information is not readily available.

Note 4—Securities

The following tables summarize the amortized cost and fair values of securities available-for-sale and securities held-to-maturity as of the dates shown and the corresponding amounts of gross unrealized gains and losses:


September 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale
U.S. Treasury Notes	$	42,740	$	63	$	( 291	)	$	42,512
U.S. Government agencies		163,197		124		( 12,782	)		150,539
Obligations of states, municipalities, and political subdivisions		85,185		532		( 3,434	)		82,283
Residential mortgage-backed securities
Agency		882,382		8,766		( 78,361	)		812,787
Non-agency		146,384		102		( 18,156	)		128,330
Commercial mortgage-backed securities
Agency		258,543		891		( 27,265	)		232,169
Corporate securities		40,637		3		( 2,563	)		38,077
Asset-backed securities		16,351		7		( 947	)		15,411
Total	$	1,635,419	$	10,488	$	( 143,799	)	$	1,502,108


September 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held-to-maturity
Obligations of states, municipalities, and political subdivisions	$	605	$	—	$	( 2	)	$	603
Total	$	605	$	—	$	( 2	)	$	603


December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale
U.S. Treasury Notes	$	116,398	$	61	$	( 1,025	)	$	115,434
U.S. Government agencies		147,062		37		( 16,404	)		130,695
Obligations of states, municipalities, and political subdivisions		86,022		396		( 4,143	)		82,275
Residential mortgage-backed securities
Agency		786,970		4,247		( 95,414	)		695,803
Non-agency		122,359		—		( 22,099	)		100,260
Commercial mortgage-backed securities
Agency		181,452		—		( 34,248	)		147,204
Corporate securities		40,681		—		( 4,510	)		36,171
Asset-backed securities		35,857		2		( 1,221	)		34,638
Total	$	1,516,801	$	4,743	$	( 179,064	)	$	1,342,480

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held-to-maturity
Obligations of states, municipalities, and political subdivisions	$	1,157	$	—	$	( 8	)	$	1,149
Total	$	1,157	$	—	$	( 8	)	$	1,149

The Company did no t classify securities as trading during the nine months ended September 30, 2024 or during 2023.

Gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2024 and December 31, 2023, are summarized as follows:


			Less than 12 Months					12 Months or Longer					Total
September 30, 2024	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available-for-sale
U.S. Treasury Notes		6	$	—	$	—		$	32,646	$	( 291	)	$	32,646	$	( 291	)
U.S. Government agencies		17		—		—			122,805		( 12,782	)		122,805		( 12,782	)
Obligations of states, municipalities and political subdivisions		53		2,677		( 6	)		52,003		( 3,428	)		54,680		( 3,434	)
Residential mortgage-backed securities
Agency		101		20,016		( 146	)		516,354		( 78,215	)		536,370		( 78,361	)
Non-agency		20		18,406		( 79	)		96,546		( 18,077	)		114,952		( 18,156	)
Commercial mortgage-backed securities
Agency		49		23,077		( 138	)		147,021		( 27,127	)		170,098		( 27,265	)
Corporate securities		20		1,455		( 37	)		35,619		( 2,526	)		37,074		( 2,563	)
Asset-backed securities		1		—		—			6,073		( 947	)		6,073		( 947	)
Total		267	$	65,631	$	( 406	)	$	1,009,067	$	( 143,393	)	$	1,074,698	$	( 143,799	)
Held-to-maturity
Obligations of states, municipalities, and political subdivisions		1	$	—	$	—		$	603	$	( 2	)	$	603	$	( 2	)
Total		1	$	—	$	—		$	603	$	( 2	)	$	603	$	( 2	)

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


			Less than 12 Months					12 Months or Longer					Total
December 31, 2023	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available-for-sale
U.S. Treasury Notes		7	$	5,018	$	( 4	)	$	31,843	$	( 1,021	)	$	36,861	$	( 1,025	)
U.S. Government agencies		18		535		( 9	)		119,109		( 16,395	)		119,644		( 16,404	)
Obligations of states, municipalities and political subdivisions		61		12,267		( 156	)		49,617		( 3,987	)		61,884		( 4,143	)
Residential mortgage-backed securities
Agency		102		8,332		( 49	)		543,648		( 95,365	)		551,980		( 95,414	)
Non-agency		20		636		—			99,624		( 22,099	)		100,260		( 22,099	)
Commercial mortgage-backed securities
Agency		48		6,765		( 1,517	)		140,439		( 32,731	)		147,204		( 34,248	)
Corporate securities		21		—		—			36,171		( 4,510	)		36,171		( 4,510	)
Asset-backed securities		6		—		—			25,653		( 1,221	)		25,653		( 1,221	)
Total		283	$	33,553	$	( 1,735	)	$	1,046,104	$	( 177,329	)	$	1,079,657	$	( 179,064	)
Held-to-maturity
Obligations of states, municipalities and political subdivisions		2	$	—	$	—		$	1,149	$	( 8	)	$	1,149	$	( 8	)
Total		2	$	—	$	—		$	1,149	$	( 8	)	$	1,149	$	( 8	)

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. The Company evaluated the securities which had unrealized losses for potential credit losses and determined there were none. There were 267 securities available-for-sale with unrealized losses at September 30, 2024 . There was one security held-to-maturity with unrealized losses at September 30, 2024. There was no allowance for credit losses for held-to-maturity debt securities at September 30, 2024 or December 31, 2023. The evaluation for potential credit losses is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing payment performance of the securities.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security types. The Company’s held-to-maturity portfolio contains municipal bonds that are typically rated by major rating agencies as ‘Aa’ or better. The Company uses industry historical credit loss information adjusted for current conditions to establish an allowance for credit losses. Accrued interest receivable on securities available-for-sale and held-to-maturity totaled $ 5.3 million and $ 4.5 million at September 30, 2024 and December 31, 2023, respectively, and are excluded from the estimate of credit losses.

The Company anticipates full recovery of amortized cost with respect to these securities by maturity. The Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

There were no proceeds from sales of securities available-for-sale, nor associated gains and losses on sales and calls of securities, for the three and nine months ended September 30, 2024 and 2023, respectively.

Securities posted and pledged as collateral were $ 589.8 million and $ 464.5 million at September 30, 2024 and December 31, 2023. At September 30, 2024 and December 31, 2023 , of those pledged, the carrying amounts of securities pledged as collateral for public fund deposits were $ 521.8 million and $ 390.3 million, respectively, and for customer repurchase agreements of $ 40.4 million and $ 47.8 million, respectively. There were no securities pledged to the Federal Reserve Bank ("FRB") at September 30, 2024 or December 31, 2023. At September 30, 2024 and December 31, 2023 , there were no securities pledged for advances from the Federal Home Loan Bank. Other securities were pledged for letters of credit and for purposes required or permitted by law. At September 30, 2024 and December 31, 2023 , there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10 % of stockholders’ equity.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

At September 30, 2024, the amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	54,931	$	54,139
Due from one to five years		92,138		88,523
Due from five to ten years		157,619		146,197
Due after ten years		43,422		39,963
Mortgage-backed securities		1,287,309		1,173,286
Total	$	1,635,419	$	1,502,108
Held-to-maturity
Due in one year or less	$	605	$	603
Total	$	605	$	603

Note 5—Loan and Lease Receivables and Allowance for Credit Losses

Loan and Lease Receivables

Outstanding loan and lease receivables as of the dates shown were categorized as follows:


	September 30,			December 31,
	2024			2023
Commercial real estate	$	2,359,354		$	2,317,289
Residential real estate		709,612			718,733
Construction, land development, and other land		501,181			528,275
Commercial and industrial		2,586,890			2,444,405
Installment and other		3,912			3,138
Lease financing receivables		705,110			659,686
Total loans and leases		6,866,059			6,671,526
Net unamortized deferred fees and costs		7,118			6,600
Initial direct costs		6,269			6,180
Allowance for credit losses - loans and leases		( 98,860	)		( 101,686	)
Net loans and leases	$	6,780,586		$	6,582,620


	September 30,			December 31,
	2024			2023
Lease financing receivables
Net minimum lease payments	$	676,240		$	644,507
Unguaranteed residual values		115,439			92,127
Unearned income		( 86,569	)		( 76,948	)
Total lease financing receivables		705,110			659,686
Initial direct costs		6,269			6,180
Lease financial receivables before allowance for credits losses - loans and leases	$	711,379		$	665,866

Total loans and leases consist of originated loans and leases, purchased credit deteriorated ("PCD") and acquired non-credit-deteriorated loans and leases. At September 30, 2024 and December 31, 2023, total loans and leases included the guaranteed amount of U.S. government guaranteed loans of $ 88.1 million a nd $ 93.3 million, respectively. At September 30, 2024 and December 31, 2023 , the discount on the unguaranteed portion of U.S. government guaranteed loans was $ 25.6 million and $ 26.2 million, respectively, which are included in total loans and leases. At September 30, 2024 and December 31, 2023 , installment and other loans included overdraft deposits of $ 618,000 and $ 754,000 , respectively, which were reclassified as loans. At September 30, 2024 and December 31, 2023 , loans and leases and loans held for sale pledged as security for borrowings were $ 2.0 billion and $ 2.2 billion, respectively. Accrued interest on loans and leases was $ 34.7 million and $ 38.9 million for the quarters ended September 30, 2024 and December 31, 2023, respectively, and is included in the accrued interest receivable and other assets line item on the Condensed Consolidated Statement of Financial Condition.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The minimum annual lease payments for lease financing receivables as of September 30, 2024 are summarized as follows:


	Minimum Lease Payments
2024	$	56,032
2025		232,899
2026		183,571
2027		121,473
2028		63,854
Thereafter		18,411
Total	$	676,240

Originated loans and leases represent originations excluding loans initially acquired in a business combination. However, once an acquired loan reaches its maturity date, and is re-underwritten and renewed, it is internally classified as an originated loan. PCD loans are those acquired from a business combination with evidence of credit quality deterioration and are accounted for under ASC Topic 326. Acquired non-credit-deteriorated loans and leases represent loans and leases acquired with an outstanding balance from a business combination without more than insignificant evidence of credit quality deterioration and are accounted for under ASC Topic 310-20. The following tables summarize the balances for each respective loan and lease category as of September 30, 2024 and December 31, 2023:


September 30, 2024	Originated		Purchased Credit Deteriorated		Acquired Non-Credit- Deteriorated		Total
Commercial real estate	$	2,040,072	$	95,240	$	227,035	$	2,362,347
Residential real estate		497,034		31,362		181,976		710,372
Construction, land development, and other land		415,636		4		84,172		499,812
Commercial and industrial		2,476,177		14,526		100,852		2,591,555
Installment and other		3,839		110		32		3,981
Lease financing receivables		711,233		—		146		711,379
Total loans and leases	$	6,143,991	$	141,242	$	594,213	$	6,879,446


December 31, 2023	Originated		Purchased Credit Deteriorated		Acquired Non-Credit- Deteriorated		Total
Commercial real estate	$	1,907,029	$	137,807	$	275,476	$	2,320,312
Residential real estate		465,133		42,510		211,887		719,530
Construction, land development, and other land		415,162		25,331		86,344		526,837
Commercial and industrial		2,311,563		19,460		117,538		2,448,561
Installment and other		2,919		125		156		3,200
Lease financing receivables		665,239		—		627		665,866
Total loans and leases	$	5,767,045	$	225,233	$	692,028	$	6,684,306

PCD loans — The unpaid principal balance and carrying amount of PCD loans excluding an allowance for credit losses - loans and leases o f $ 4.9 million and $ 10.0 milli on at September 30, 2024 and December 31, 2023, respectively, were as follows:


	September 30, 2024				December 31, 2023
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial real estate	$	138,363	$	95,240	$	185,007	$	137,807
Residential real estate		75,970		31,362		88,036		42,510
Construction, land development, and other land		6,673		4		32,140		25,331
Commercial and industrial		19,757		14,526		21,870		19,460
Installment and other		774		110		789		125
Total purchased credit deteriorated loans	$	241,537	$	141,242	$	327,842	$	225,233

The following table is a reconciliation of acquired Inland PCD loans between their purchase price and their par value at the time of the acquisition. Refer to Note 3—Acquisition of a Business for further information.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


Fair value of loans at acquisition	$	214,573
Allowance for credit losses - loans and leases, at acquisition		10,596
Non-credit discount/premium at acquisition		17,909
Par value of acquired PCD loans at acquisition	$	243,078

Acquired non-credit-deteriorated loans and leases — The unpaid principal balance and carrying value for acquired non-credit deteriorated loans and leases, excluding an allowance for credit losses o f $ 3.8 million and $ 4.7 mil lion at September 30, 2024 and December 31, 2023, respectively, were as follows:


	September 30, 2024				December 31, 2023
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial real estate	$	233,775	$	227,035	$	284,819	$	275,476
Residential real estate		195,134		181,976		227,392		211,887
Construction, land development, and other land		84,663		84,172		87,143		86,344
Commercial and industrial		105,482		100,852		123,540		117,538
Installment and other		39		32		170		156
Lease financing receivables		146		146		628		627
Total acquired non-credit-deteriorated loans and leases	$	619,239	$	594,213	$	723,692	$	692,028

The Company hedges interest rates on certain loans using interest rate swaps through which the Company pays variable amounts and receives fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

Allowance for Credit Losses

Loans and leases considered for inclusion in the allowance for credit losses include acquired non-credit-deteriorated loans and leases, purchased credit deteriorated loans, and originated loans and leases.

The Bank’s credit risk rating methodology assigns risk ratings from 1 to 10, where a higher rating represents higher risk. Risk ratings for all loans of $ 1.0 million or more are reviewed annually. The risk rating categories are described by the following groupings:

Pass —1‑4, risk levels of borrowers and guarantors that offer a minimal to an acceptable level of risk.

Watch —5, credit exposure that presents higher than average risk and warrants greater than routine attention.

Special Mention —6, potential weaknesses that if left uncorrected may result in deterioration of the repayment prospects.

Substandard Accrual —7, weaknesses in cash flow and collateral coverage resulting in a distinct possibility of losses if not corrected. Used in limited cases, where the borrower is current on payments and an agreed plan for credit remediation.

Substandard Non‑Accrual —8, well‑defined weakness or weaknesses in cash flow and collateral coverage resulting in the distinct possibility of losses if not corrected.

Doubtful —9, weaknesses inherent in substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loss —10, is considered uncollectible and of such little value that its continuance as a realizable asset is not warranted.

Revolving loans that are converted to term loans are treated as new originations and are presented by year of origination. Generally, existing term loans that are re-underwritten are reflected in the table in the year of renewal.

The following tables summarize the risk rating categories of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation, as of September 30, 2024 and December 31, 2023:

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


	Term loans amortized cost by origination year												Revolving		Total
September 30, 2024	2024		2023		2022		2021		2020		Prior		Loans		Loans
Commercial Real Estate
Pass	$	234,817	$	240,042	$	412,993	$	465,184	$	219,570	$	469,298	$	15,414	$	2,057,318
Watch		2,389		39,813		37,636		41,665		31,925		66,246		—		219,674
Special Mention		—		—		4,330		6,084		2,548		27,329		—		40,291
Substandard		—		1,590		3,747		8,612		836		30,279		—		45,064
Total	$	237,206	$	281,445	$	458,706	$	521,545	$	254,879	$	593,152	$	15,414	$	2,362,347
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	1,424	$	295	$	187	$	718	$	2,489	$	—	$	5,113
Residential Real Estate
Pass	$	30,218	$	48,700	$	130,936	$	117,898	$	50,426	$	233,043	$	60,491	$	671,712
Watch		—		—		2,609		595		13,835		11,166		1,082		29,287
Special Mention		—		—		—		—		3,732		—		—		3,732
Substandard		—		579		2,249		100		—		1,700		1,013		5,641
Total	$	30,218	$	49,279	$	135,794	$	118,593	$	67,993	$	245,909	$	62,586	$	710,372
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction, Land Development, & Land
Pass	$	18,408	$	157,084	$	143,776	$	97,798	$	37,236	$	2,852	$	345	$	457,499
Watch		—		4,765		4,387		15,645		—		3,081		—		27,878
Special Mention		—		1,391		1,559		11,485		—		—		—		14,435
Substandard		—		—		—		—		—		—		—		—
Total	$	18,408	$	163,240	$	149,722	$	124,928	$	37,236	$	5,933	$	345	$	499,812
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial & Industrial
Pass	$	281,416	$	423,375	$	451,891	$	251,322	$	89,779	$	181,871	$	518,089	$	2,197,743
Watch		2,196		68,233		36,815		30,408		1,842		26,717		81,386		247,597
Special Mention		—		319		10,334		25,073		3,546		11,001		23,931		74,204
Substandard	$	749	$	7,584	$	26,625	$	8,888	$	3,868	$	15,547	$	8,750		72,011
Total	$	284,361	$	499,511	$	525,665	$	315,691	$	99,035	$	235,136	$	632,156	$	2,591,555
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	1,534	$	4,377	$	1,538	$	1,264	$	11,384	$	—	$	20,097
Installment and Other
Pass	$	670	$	342	$	89	$	39	$	4	$	388	$	2,425	$	3,957
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		1		1
Substandard		—		—		—		23		—		—		—		23
Total	$	670	$	342	$	89	$	62	$	4	$	388	$	2,426	$	3,981
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Lease Financing Receivables
Pass	$	222,254	$	259,993	$	148,903	$	59,646	$	16,351	$	483	$	—	$	707,630
Watch		295		734		48		—		8		—		—		1,085
Special Mention		—		—		—		—		160		—		—		160
Substandard		—		613		1,099		791		—		1		—		2,504
Total	$	222,549	$	261,340	$	150,050	$	60,437	$	16,519	$	484	$	—	$	711,379
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	434	$	560	$	463	$	58	$	34	$	—	$	1,549
Total Loans and Leases
Pass	$	787,783	$	1,129,536	$	1,288,588	$	991,887	$	413,366	$	887,935	$	596,764	$	6,095,859
Watch		4,880		113,545		81,495		88,313		47,610		107,210		82,468		525,521
Special Mention		—		1,710		16,223		42,642		9,986		38,330		23,932		132,823
Substandard		749		10,366		33,720		18,414		4,704		47,527		9,763		125,243
Total	$	793,412	$	1,255,157	$	1,420,026	$	1,141,256	$	475,666	$	1,081,002	$	712,927	$	6,879,446
Gross charge-offs for the nine months ended September 30, 2024	$	—	$	3,392	$	5,232	$	2,188	$	2,040	$	13,907	$	—	$	26,759

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)


	Term loans amortized cost by origination year												Revolving		Total
December 31, 2023	2023		2022		2021		2020		2019		Prior		Loans		Loans
Commercial Real Estate
Pass	$	247,856	$	452,127	$	516,624	$	229,053	$	143,283	$	388,872	$	28,360	$	2,006,175
Watch		12,501		22,094		26,408		46,713		20,364		68,003		—		196,083
Special Mention		—		799		10,752		2,618		12,751		25,790		—		52,710
Substandard		—		2,888		5,841		1,771		7,483		46,532		829		65,344
Total	$	260,357	$	477,908	$	559,625	$	280,155	$	183,881	$	529,197	$	29,189	$	2,320,312
Gross charge-offs, year ended December 31, 2023	$	—	$	193	$	60	$	1,511	$	4,054	$	3,911	$	—	$	9,729
Residential Real Estate
Pass	$	55,178	$	135,477	$	104,005	$	54,651	$	37,806	$	225,593	$	57,865	$	670,575
Watch		—		4,811		—		17,417		7,167		8,708		1,597		39,700
Special Mention		—		—		—		3,594		127		1		413		4,135
Substandard		—		—		107		189		349		3,523		952		5,120
Total	$	55,178	$	140,288	$	104,112	$	75,851	$	45,449	$	237,825	$	60,827	$	719,530
Gross charge-offs, year ended December 31, 2023	$	—	$	—	$	—	$	—	$	—	$	21	$	—	$	21
Construction, Land Development, & Land
Pass	$	82,449	$	145,174	$	184,544	$	35,466	$	9,772	$	1,429	$	174	$	459,008
Watch		1,392		13,990		21,313		18,716		3,125		—		—		58,536
Special Mention		—		—		9,279		—		—		—		—		9,279
Substandard		—		—		—		—		—		14		—		14
Total	$	83,841	$	159,164	$	215,136	$	54,182	$	12,897	$	1,443	$	174	$	526,837
Gross charge-offs, year ended December 31, 2023	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial & Industrial
Pass	$	475,720	$	514,902	$	288,392	$	109,430	$	73,059	$	147,168	$	524,348	$	2,133,019
Watch		41,027		33,080		50,407		1,385		6,951		18,180		39,531		190,561
Special Mention		—		6,164		10,595		2,631		1,112		6,643		36,354		63,499
Substandard		—		7,332		6,067		6,431		10,116		18,381		13,155		61,482
Total	$	516,747	$	561,478	$	355,461	$	119,877	$	91,238	$	190,372	$	613,388	$	2,448,561
Gross charge-offs, year ended December 31, 2023	$	1,518	$	1,938	$	5,372	$	4,451	$	1,087	$	1,045	$	—	$	15,411
Installment and Other
Pass	$	564	$	132	$	79	$	133	$	28	$	424	$	1,814	$	3,174
Watch		—		—		25		—		—		1		—		26
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	564	$	132	$	104	$	133	$	28	$	425	$	1,814	$	3,200
Gross charge-offs, year ended December 31, 2023	$	—	$	—	$	—	$	—	$	—	$	3	$	—	$	3
Lease Financing Receivables
Pass	$	327,099	$	207,640	$	93,242	$	29,343	$	5,443	$	856	$	—	$	663,623
Watch		—		67		1,008		16		—		—		—		1,091
Special Mention		—		—		—		179		101		36		—		316
Substandard		259		138		384		55		—		—		—		836
Total	$	327,358	$	207,845	$	94,634	$	29,593	$	5,544	$	892	$	—	$	665,866
Gross charge-offs, year ended December 31, 2023	$	734	$	886	$	549	$	139	$	75	$	54	$	—	$	2,437
Total Loans and Leases
Pass	$	1,188,866	$	1,455,452	$	1,186,886	$	458,076	$	269,391	$	764,342	$	612,561	$	5,935,574
Watch		54,920		74,042		99,161		84,247		37,607		94,892		41,128		485,997
Special Mention		—		6,963		30,626		9,022		14,091		32,470		36,767		129,939
Substandard		259		10,358		12,399		8,446		17,948		68,450		14,936		132,796
Total	$	1,244,045	$	1,546,815	$	1,329,072	$	559,791	$	339,037	$	960,154	$	705,392	$	6,684,306
Gross charge-offs, year ended December 31, 2023	$	2,252	$	3,017	$	5,981	$	6,101	$	5,216	$	5,034	$	—	$	27,601

At September 30, 2024 and at December 31, 2023 there were no loans or leases which were risk rated Doubtful or Loss. As of September 30, 2024 and December 31, 2023 , respectively, there were $ 78.4 million and $ 52.2 million of term loans that had been converted from revolving loans.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The following tables summarize contractual delinquency information of the loans and leases considered for inclusion in the allowance for credit losses - loans and leases calculation at September 30, 2024 and December 31, 2023:


September 30, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total Loans
Commercial Real Estate
Current	$	237,081	$	279,855	$	455,422	$	517,237	$	254,618	$	568,823	$	15,414	$	2,328,450
30-59 Days Past Due		125		—		—		—		—		2,920		—		3,045
60-89 Days Past Due		—		—		636		—		—		914		—		1,550
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		1,590		2,648		4,308		261		20,495		—		29,302
Total Past Due		125		1,590		3,284		4,308		261		24,329		—		33,897
Total	$	237,206	$	281,445	$	458,706	$	521,545	$	254,879	$	593,152	$	15,414	$	2,362,347
Residential Real Estate
Current	$	30,218	$	49,279	$	133,545	$	118,493	$	67,993	$	244,299	$	61,218	$	705,045
30-59 Days Past Due		—		—		—		—		—		44		355		399
60-89 Days Past Due		—		—		—		—		—		—		—		—
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		2,249		100		—		1,566		1,013		4,928
Total Past Due		—		—		2,249		100		—		1,610		1,368		5,327
Total	$	30,218	$	49,279	$	135,794	$	118,593	$	67,993	$	245,909	$	62,586	$	710,372
Construction, Land Development, & Land
Current	$	18,408	$	163,240	$	149,722	$	124,928	$	37,236	$	5,933	$	345	$	499,812
30-59 Days Past Due		—		—		—		—		—		—		—		—
60-89 Days Past Due		—		—		—		—		—		—		—		—
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		—		—		—		—		—		—
Total Past Due		—		—		—		—		—		—		—		—
Total	$	18,408	$	163,240	$	149,722	$	124,928	$	37,236	$	5,933	$	345	$	499,812
Commercial & Industrial
Current	$	283,611	$	491,992	$	512,755	$	313,279	$	95,712	$	219,696	$	628,404	$	2,545,449
30-59 Days Past Due		—		—		158		—		—		—		359		517
60-89 Days Past Due		658		370		1,753		256		628		7,689		479		11,833
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		92		7,149		10,999		2,156		2,695		7,751		2,914		33,756
Total Past Due		750		7,519		12,910		2,412		3,323		15,440		3,752		46,106
Total	$	284,361	$	499,511	$	525,665	$	315,691	$	99,035	$	235,136	$	632,156	$	2,591,555
Installment and Other
Current	$	670	$	342	$	89	$	39	$	4	$	388	$	2,426	$	3,958
30-59 Days Past Due		—		—		—		—		—		—		—		—
60-89 Days Past Due		—		—		—		—		—		—		—		—
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		—		23		—		—		—		23
Total Past Due		—		—		—		23		—		—		—		23
Total	$	670	$	342	$	89	$	62	$	4	$	388	$	2,426	$	3,981
Lease Financing Receivables
Current	$	220,256	$	257,011	$	146,932	$	58,597	$	16,238	$	478	$	—	$	699,512
30-59 Days Past Due		1,724		2,118		889		341		120		5		—		5,197
60-89 Days Past Due		569		1,598		1,130		714		161		—		—		4,172
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		613		1,099		785		—		1		—		2,498
Total Past Due		2,293		4,329		3,118		1,840		281		6		—		11,867
Total	$	222,549	$	261,340	$	150,050	$	60,437	$	16,519	$	484	$	—	$	711,379
Total Loans and Leases
Current	$	790,244	$	1,241,719	$	1,398,465	$	1,132,573	$	471,801	$	1,039,617	$	707,807	$	6,782,226
30-59 Days Past Due		1,849		2,118		1,047		341		120		2,969		714		9,158
60-89 Days Past Due		1,227		1,968		3,519		970		789		8,603		479		17,555
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		92		9,352		16,995		7,372		2,956		29,813		3,927		70,507
Total Past Due		3,168		13,438		21,561		8,683		3,865		41,385		5,120		97,220
Total	$	793,412	$	1,255,157	$	1,420,026	$	1,141,256	$	475,666	$	1,081,002	$	712,927	$	6,879,446

Total non-accrual loans without an allowance included $ 6.5 million of commercial real estate loans, $ 3.0 million of residential real estate, and $ 3.3 million of commercial and industrial loans as of September 30, 2024 . The Company

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

recognized $ 514,000 and $ 1.8 million of interest income on non-accrual loans and leases for the three and nine months ended September 30, 2024, respectively.


December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total Loans
Commercial Real Estate
Current	$	259,998	$	474,878	$	558,236	$	279,098	$	178,729	$	501,620	$	29,189	$	2,281,748
30-59 Days Past Due		359		648		638		74		3,176		484		—		5,379
60-89 Days Past Due		—		826		—		286		—		1,208		—		2,320
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		1,556		751		697		1,976		25,885		—		30,865
Total Past Due		359		3,030		1,389		1,057		5,152		27,577		—		38,564
Total	$	260,357	$	477,908	$	559,625	$	280,155	$	183,881	$	529,197	$	29,189	$	2,320,312

Residential Real Estate
Current	$	55,178	$	136,448	$	102,973	$	75,125	$	45,050	$	230,102	$	59,476	$	704,352
30-59 Days Past Due		—		3,840		1,032		537		29		4,122		399		9,959
60-89 Days Past Due		—		—		—		—		21		127		—		148
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		107		189		349		3,474		952		5,071
Total Past Due		—		3,840		1,139		726		399		7,723		1,351		15,178
Total	$	55,178	$	140,288	$	104,112	$	75,851	$	45,449	$	237,825	$	60,827	$	719,530

Construction, Land Development, & Land
Current	$	83,841	$	156,815	$	215,136	$	54,182	$	12,897	$	1,443	$	174	$	524,488
30-59 Days Past Due		—		—		—		—		—		—		—		—
60-89 Days Past Due		—		2,349		—		—		—		—		—		2,349
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		—		—		—		—		—		—
Total Past Due		—		2,349		—		—		—		—		—		2,349
Total	$	83,841	$	159,164	$	215,136	$	54,182	$	12,897	$	1,443	$	174	$	526,837

Commercial & Industrial
Current	$	516,747	$	552,251	$	351,534	$	114,859	$	83,780	$	177,239	$	611,766	$	2,408,176
30-59 Days Past Due		—		1,545		1,099		238		2,513		400		455		6,250
60-89 Days Past Due		—		1,505		—		234		3,416		1,139		496		6,790
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		6,177		2,828		4,546		1,529		11,594		671		27,345
Total Past Due		—		9,227		3,927		5,018		7,458		13,133		1,622		40,385
Total	$	516,747	$	561,478	$	355,461	$	119,877	$	91,238	$	190,372	$	613,388	$	2,448,561

Installment and Other
Current	$	564	$	132	$	104	$	133	$	28	$	425	$	1,814	$	3,200
30-59 Days Past Due		—		—		—		—		—		—		—		—
60-89 Days Past Due		—		—		—		—		—		—		—		—
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		—		—		—		—		—		—		—		—
Total Past Due		—		—		—		—		—		—		—		—
Total	$	564	$	132	$	104	$	133	$	28	$	425	$	1,814	$	3,200

Lease Financing Receivables
Current	$	325,833	$	206,800	$	93,795	$	29,292	$	5,537	$	889	$	—	$	662,146
30-59 Days Past Due		726		426		153		38		4		2		—		1,349
60-89 Days Past Due		540		481		302		218		3		1		—		1,545
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		259		138		384		45		—		—		—		826
Total Past Due		1,525		1,045		839		301		7		3		—		3,720
Total	$	327,358	$	207,845	$	94,634	$	29,593	$	5,544	$	892	$	—	$	665,866

Total Loans and Leases
Current	$	1,242,161	$	1,527,324	$	1,321,778	$	552,689	$	326,021	$	911,718	$	702,419	$	6,584,110
30-59 Days Past Due		1,085		6,459		2,922		887		5,722		5,008		854		22,937
60-89 Days Past Due		540		5,161		302		738		3,440		2,475		496		13,152
Greater than 90 Accruing		—		—		—		—		—		—		—		—
Non-accrual		259		7,871		4,070		5,477		3,854		40,953		1,623		64,107
Total Past Due		1,884		19,491		7,294		7,102		13,016		48,436		2,973		100,196
Total	$	1,244,045	$	1,546,815	$	1,329,072	$	559,791	$	339,037	$	960,154	$	705,392	$	6,684,306

Total non-accrual loans without an allo wance included $ 1.6 million of commercial real estate loans, $ 3.6 million of residential real e state loans , and $ 2.3 million of commercial and industrial loans , as of December 31, 2023. The Company

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

recognized $ 770,000 and $ 2.8 million of interest income on non-accrual loans and leases for the three and nine months ended September 30, 2023, respectively.

The following table summarize the balance and activity within the allowance for credit losses - loans and leases, the components of the allowance for credit losses - loans and leases by loans and leases individually and collectively evaluated for impairment, and corresponding loan and lease balances by type for the three and nine months ended September 30, 2024 are as follows:


September 30, 2024	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other		Lease Financing Receivables			Total
Allowance for credit losses - loans and leases
Three months ended
Beginning balance	$	27,852		$	3,023		$	2,723		$	57,584		$	30	$	8,518		$	99,730
Provision/(recapture)		1,210			( 121	)		( 115	)		6,286			16		321			7,597
Charge-offs		( 1,615	)		—			—			( 6,948	)		—		( 496	)		( 9,059	)
Recoveries		193			3			—			313			—		83			592
Ending balance	$	27,640		$	2,905		$	2,608		$	57,235		$	46	$	8,426		$	98,860
Nine months ended
Beginning balance	$	33,237		$	3,495		$	2,906		$	53,782		$	36	$	8,230		$	101,686
Provision/(recapture)		( 1,592	)		( 595	)		( 298	)		22,683			10		1,158			21,366
Charge-offs		( 5,113	)		—			—			( 20,097	)		—		( 1,549	)		( 26,759	)
Recoveries		1,108			5			—			867			—		587			2,567
Ending balance	$	27,640		$	2,905		$	2,608		$	57,235		$	46	$	8,426		$	98,860
Ending balance:
Individually evaluated for impairment	$	6,547		$	82		$	—		$	18,364		$	—	$	—		$	24,993
Collectively evaluated for impairment		21,093			2,823			2,608			38,871			46		8,426			73,867
Total allowance for credit losses - loans and leases	$	27,640		$	2,905		$	2,608		$	57,235		$	46	$	8,426		$	98,860

Loans and leases ending balance:
Individually evaluated for impairment	$	34,260		$	3,591		$	—		$	50,627		$	—	$	—		$	88,478
Collectively evaluated for impairment		2,328,087			706,781			499,812			2,540,928			3,981		711,379			6,790,968
Total loans and leases	$	2,362,347		$	710,372		$	499,812		$	2,591,555		$	3,981	$	711,379		$	6,879,446

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The following table summarize the balance and activity within the allowance for credit losses - loans and leases, the components of the allowance for credit losses - loans and leases by loans and leases individually and collectively evaluated for impairment, loans acquired with deteriorated credit quality, and corresponding loan and lease balances by type for the three and nine months ended September 30, 2023:


September 30, 2023	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Allowance for credit losses - loans and leases
Three months ended
Beginning balance	$	26,377		$	2,544		$	1,935		$	53,640		$	43		$	8,126		$	92,665
Adjustment for acquired PCD loans		8,230			660			97			1,609			—			—			10,596
Provision		1,614			941			1,168			3,329			4			809			7,865
Charge-offs		( 1,360	)		( 12	)		—			( 4,200	)		( 3	)		( 604	)		( 6,179	)
Recoveries		124			18			—			460			—			147			749
Ending balance	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Nine months ended
Beginning balance	$	26,061		$	3,140		$	3,134		$	41,889		$	24		$	7,676		$	81,924
Adjustment for acquired PCD loans		8,230			660			97			1,609			—			—			10,596
Provision/(recapture)		4,854			290			( 31	)		17,293			19			1,619			24,044
Charge-offs		( 5,271	)		( 21	)		—			( 8,087	)		( 3	)		( 1,370	)		( 14,752	)
Recoveries		1,111			82			—			2,134			4			553			3,884
Ending balance	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Ending balance:
Individually evaluated for impairment	$	13,199		$	—		$	—		$	15,135		$	—		$	—		$	28,334
Collectively evaluated for impairment		21,786			4,151			3,200			39,703			44			8,478			77,362
Total allowance for credit losses - loans and leases	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696

Loans and leases ending balance:
Individually evaluated for impairment	$	67,596		$	—		$	—		$	48,814		$	—		$	—		$	116,410
Collectively evaluated for impairment		2,221,164			722,032			523,008			2,385,511			3,246			641,932			6,496,893
Total loans and leases	$	2,288,760		$	722,032		$	523,008		$	2,434,325		$	3,246		$	641,932		$	6,613,303

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The Company decreased the allowance for credit losses - loans and leases by $ 870,000 and $ 2.8 million for the three and nine months ended September 30, 2024 , respectively. The Company increased the allowance for credit losses - loans and leases by $ 13.0 million and $ 23.8 million for the three and nine months ended September 30, 2023 , respectively. In 2023, a $ 10.6 million adjustment was made to the allowance for credit losses to account for acquired PCD loans, as a result of the Inland acquisition.

For loans individually evaluated for impairment, the Company increased the allowance for credit losses - loans and leases by $ 1.4 million and decreased it by $ 2.2 million for the three and nine months ended September 30, 2024 , and increased the allowance for credit losses for loans individually evaluated by $ 2.4 million and $ 13.0 million for the three and nine months ended September 30, 2023, respectively.

For loans and leases collectively evaluated for impairment, the allowance for credit losses decreased by $ 2.3 million and $ 578,000 for the three and nine months ended September 30, 2024 , respectively. For loans and leases collectively evaluated for impairment, the allowance for credit losses increased by $ 10.7 million and $ 10.8 million for the three and nine months ended September 30, 2023, respectively.

The decrease in the allowance for credit losses - loans and leases was mainly due to charge-offs of individually assessed loans previously reserved for and improvement in macro-economic factors impacting the collectively assessed portfolio.

T he following table presents loans to borrowers experiencing financial difficulty and with modified terms for the three and nine months ended September 30, 2024:


Three Months Ended September 30, 2024	Term Modification		Total Modified by Class		% of Class of Loans and Leases
Commercial real estate	$	3,877	$	3,877		0.2	%
Commercial and industrial		245		245		0.0	%
Total loans and leases	$	4,122	$	4,122		0.1	%

Nine Months Ended September 30, 2024	Term Modification		Total Modified by Class		% of Class of Loans and Leases
Commercial real estate	$	5,320	$	5,320		0.2	%
Commercial and industrial		2,298		2,298		0.1	%
Total loans and leases	$	7,618	$	7,618		0.1	%

For the three months ended September 30, 2024, t he financial effect of the term modifications presented above reflects a five months weighted average extension of maturity date. For the nine months ended September 30, 2024, the financial effect of the term modifications presented above reflects a four months weighted average extension of maturity date.

The following table presents the amortized cost basis of loans that were both experiencing financial difficulty and modified during the three and nine months ended September 30, 2023, by type of modification:


Three Months Ended September 30, 2023	Payment Delay		Term Modification		Combination Term Modification and Interest Rate Reduction		Total Modified by Class		% of Class of Loans and Leases
Commercial and industrial	$	—	$	25,136	$	—	$	25,136		1.1	%
Total modified loans	$	—	$	25,136	$	—	$	25,136		0.4	%

Nine Months Ended September 30, 2023	Payment Delay		Term Modification		Combination Term Modification and Interest Rate Reduction		Total Modified by Class		% of Class of Loans and Leases
Commercial and industrial	$	383	$	62,394	$	374	$	63,151		2.6	%
Total modified loans	$	383	$	62,394	$	374	$	63,151		1.0	%

Loans reflected as having a payment delay included a general adjustment in loan terms similar to those of pass-rated credits. Loans having term modifications included extension of term as a result of a new borrower structure and other

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

miscellaneous term adjustments. Loans having a combination of term modification and interest rate reduction reflect a longer amortization period and a reduced weighted average contractual rate from 8.85 % to 7.01 %.

As of September 30, 2024 , the amortized cost of commercial real estate loans that had a payment default and were modified in the twelve months prior to default was $ 2.8 million, which represented 0.12 % of outstanding commercial real estate loans. Additionally, the amortized cost of commercial and industrial loans that had a payment default and were modified in the twelve months prior to default was $ 8.2 million, which represented 0.32 % of outstanding commercial and industrial loans at September 30, 2024.

As of December 31, 2023, the amortized cost of commercial and industrial loans that had a payment default and were modified in the twelve months prior to default was $ 406,000 , which represented 0.02 % of outstanding commercial and industrial loans.

Modified loans are either collectively assessed based on portfolio risk segment and risk rating or individually assessed for loans exceeding $ 500,000 . Upon the Company’s determination that a modified loan has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There was $ 1.5 million in outstanding commitments on modified loans as of September 30, 2024. There was $ 9.1 million in outstanding commitments on modified loans at December 31, 2023.

The following table presents the amortized cost basis of collateral-dependent loans and leases, which are individually evaluated to determine expected credit losses as of September 30, 2024 and December 31, 2023:


September 30, 2024	Commercial Construction		Non-owner Occupied Commercial		Owner-Occupied Commercial		Multi-Family		Single Family Residence (1st Lien)		Single Family Residence (2nd Lien)		Business Assets		Other Assets		Total
Commercial real estate	$	—	$	6,775	$	27,485	$	—	$	—	$	—	$	—	$	—	$	34,260
Residential real estate		—		—		—		2,221		790		579		—		—		3,590
Commercial and industrial		—		—		—		—		—		—		38,578		1,661		40,239
Total	$	—	$	6,775	$	27,485	$	2,221	$	790	$	579	$	38,578	$	1,661	$	78,089

December 31, 2023	Commercial Construction		Non-owner Occupied Commercial		Owner-Occupied Commercial		Multi-Family		Single Family Residence (1st Lien)		Single Family Residence (2nd Lien)		Business Assets		Other Assets		Total
Commercial real estate	$	—	$	28,767	$	35,572	$	—	$	—	$	—	$	—	$	—	$	64,339
Residential real estate		—		—		—		2,793		800		—		—		—		3,593
Construction, land development, and other land		813		—		—		—		—		—		—		—		813
Commercial and industrial		—		—		—		—		—		—		44,749		—		44,749
Total	$	813	$	28,767	$	35,572	$	2,793	$	800	$	—	$	44,749	$	—	$	113,494

The following table presents the change in the balance of the allowance for credit losses - unfunded commitments as of September 30, 2024 and 2023:


	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2024			2023		2024			2023
Beginning balance	$	2,555		$	3,639	$	3,636		$	4,203
Provision/(recapture) for unfunded commitments		( 122	)		937		( 1,203	)		373
Ending balance	$	2,433		$	4,576	$	2,433		$	4,576

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 6—Servicing Assets

Activity for servicing assets and the related changes in fair value for the three and nine months ended September 30, 2024 and 2023 was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Beginning balance	$	19,617		$	21,715		$	19,844		$	19,172
Additions, net		1,511			1,674			4,455			4,426
Changes in fair value		( 2,183	)		( 3,646	)		( 5,354	)		( 3,855	)
Ending balance	$	18,945		$	19,743		$	18,945		$	19,743

Loans serviced for others are not included in the Condensed Consolidated Statements of Financial Condition. The unpaid principal balances of these loans serviced for others as of September 30, 2024 and December 31, 2023 were as follows:


	September 30,		December 31,
	2024		2023
Loan portfolios serviced for:
SBA guaranteed loans	$	1,514,175	$	1,530,401
USDA guaranteed loans		188,337		197,942
Total	$	1,702,512	$	1,728,343

Loan servicing revenue totaled $ 3.2 mill ion and $ 3.4 million for the three months ended September 30, 2024 and 2023 , respectively. Loan servicing revenue totaled $ 9.8 million and $ 10.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, resulted in a downward valuation adjustment of $ 2.2 million and $ 3.6 million for the three months ended September 30, 2024 and 2023 , respectively. Loan servicing asset revaluation resulted in a downward valuation adjustment of $ 5.4 million and $ 3.9 million for nine months ended September 30, 2024 and 2023, respectively.

The fair value of servicing rights is highly sensitive to changes in underlying assumptions. Changes in secondary market premiums and prepayment speed assumptions have the most significant impact on the fair value of servicing rights. Generally, as interest rates rise on variable rate loans, loan prepayments increase due to an increase in refinance activity, which may result in a decrease in the fair value of servicing assets. Measurement of fair value is limited to the conditions existing and the assumptions used as of a particular point in time, and those assumptions may change over time. Refer to Note 15—Fair Value Measurement for further details.

Note 7—Other Real Estate Owned

Other real estate owned ("OREO") is included in accrued interest receivable and other assets in the Company's Condensed Consolidated Statements of Financial Condition. The following table presents the change in OREO for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Beginning balance	$	780		$	2,265		$	1,200		$	4,717
Net additions to OREO		30			72			35			571
Proceeds from sales of OREO		( 260	)		( 614	)		( 740	)		( 3,173	)
Gains (losses) on sales of OREO		( 18	)		( 39	)		37			( 88	)
Valuation adjustments		—			( 13	)		—			( 356	)
Ending balance	$	532		$	1,671		$	532		$	1,671

At September 30, 2024, and December 31, 2023, the balance of real estate owned did not include any foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At September 30, 2024 , and December 31, 2023, there was $ 818,000 and $ 27,000 of consumer mortgage loans secured by residential real estate properties in foreclosure, respectively.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

There were no internally financed sales of OREO for the three and nine months ended September 30, 2024 and 2023 .

Note 8—Leases

The Company enters into leases in the normal course of business primarily for its banking facilities and branches. The Company’s operating leases have varying maturity dates through year end 2036 , some of which include renewal or termination options to extend the lease. In addition, the Company leases or subleases real estate to third parties. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less ("short-term leases") on the Company’s Condensed Consolidated Statements of Financial Condition.

Leases are classified at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The following table summarizes the amount and balance sheet line item for our operating lease right-of-use asset and liability as of the periods indicated:


	Balance Sheet Line Item	September 30, 2024		December 31, 2023
Operating lease right-of-use asset	Accrued interest receivable and other assets	$	10,070	$	12,474
Operating lease liability	Accrued interest payable and other liabilities		11,361		14,268

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company’s incremental borrowing rate is based on the Federal Home Loan Bank regular advance rate, adjusted for the lease term and other factors. At September 30, 2024, the weighted average discount rate of operating leases wa s 3.10 % and the weighted average remaining life of operating leases was 5.1 years, compared to 2.90 % and 6.1 years as of Dece mber 31, 2023.

The following table presents components of total lease costs included as a component of occupancy expense on the Condensed Consolidated Statements of Operations for the following periods:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating lease cost	$	666		$	770		$	2,051		$	2,014
Short-term lease cost		120			127			386			295
Variable lease cost		423			470			1,257			1,239
Less: Sublease income		( 131	)		( 160	)		( 391	)		( 475	)
Total lease cost, net	$	1,078		$	1,207		$	3,303		$	3,073

Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $ 950,000 and $ 1.4 million for the three months ended September 30, 2024 and 2023 , respectively. For the quarter ended September 30, 2023, operating cash flows paid included early termination payments of $ 471,000 for two of the Company’s previously closed branch facilities, resulting in a gain of $ 838,000 . Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $ 3.1 million for each of the nine months ended September 30, 2024 and 2023, respectively.

The Company recorded $ 687,000 and $ 3.8 million of right-of-use lease assets in exchange for operating lease liabilities for the three months ended September 30, 2024 and 2023 , respectively. The Company recorded $ 1.8 million and $ 4.8 million of right-of-use lease assets in exchange for operating lease liabilities for the nine months ended September 30, 2024 and 2023 , respectively. During the three and nine months ended September 30, 2023, the additions recorded to right-of-use assets and operating lease liabilities included $ 3.8 million related to the acquisition of Inland.

During the nine months ended September 30, 2024 , the Company recorded $ 194,000 of impairment related to two branch facilities that were closed in the of the second quarter of 2024. There were no impairment charges taken during the three months ended September 30, 2024. Impairments were recognized on operating lease right-of-use assets and are reflected in

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

other non-interest expense. D uring the three and nine months ended September 30, 2023, the Company recorded $ 394,000 of impairment related to an acquired non-branch facility lease. Impairments were recognized on leasehold improvements and are reflected in other non-interest expense.

The future minimum lease payments for operating leases, subsequent to September 30, 2024, as recorded on the Condensed Consolidated Statements of Financial Condition, are summarized as follows:


	Operating Lease Commitments
2024	$	945
2025		3,395
2026		2,484
2027		1,576
2028		1,254
Thereafter		2,927
Total undiscounted lease payments		12,581
Less: Imputed interest		( 1,220	)
Net lease liabilities	$	11,361

The total amount of minimum rentals to be recei ved in the future on these subleases is approximately $ 974,000 , and the leases have contractual lives extending through 2028 . In addition to the above required lease payments, the Company has contractual obligations related primarily to information technology c ontracts and other maintenance contracts.

Note 9—Goodwill, Core Deposit Intangible and Other Intangible Assets

The following tables summarize the changes in the Company’s goodwill, core deposit intangible assets, and customer relationship intangible assets for the three and nine months ended September 30, 2024 and 2023:


	For the Three Months Ended September 30,
	2024								2023
	Goodwill		Core Deposit Intangible			Customer Relationship Intangible			Goodwill		Core Deposit Intangible			Customer Relationship Intangible
Beginning balance	$	181,705	$	17,837		$	1,246		$	148,353	$	6,110		$	1,514
Additions		—		—			—			33,352		17,250			—
Amortization		—		( 1,278	)		( 67	)		—		( 1,484	)		( 67	)
Ending balance	$	181,705	$	16,559		$	1,179		$	181,705	$	21,876		$	1,447
Accumulated amortization	N/A		$	56,157		$	2,037		N/A		$	50,840		$	1,769
Weighted average remaining amortization period	N/A		7.7 years			4.4 years			N/A		8.4 years			5.4 years


	For the Nine Months Ended September 30,
	2024								2023
	Goodwill		Core Deposit Intangible			Customer Relationship Intangible			Goodwill		Core Deposit Intangible			Customer Relationship Intangible
Beginning balance	$	181,705	$	20,393		$	1,380		$	148,353	$	8,886		$	1,648
Additions		—		—			—			33,352		17,250			—
Amortization		—		( 3,834	)		( 201	)		—		( 4,260	)		( 201	)
Ending balance	$	181,705	$	16,559		$	1,179		$	181,705	$	21,876		$	1,447
Accumulated amortization	N/A		$	56,157		$	2,037		N/A		$	50,840		$	1,769
Weighted average remaining amortization period	N/A		7.7 years			4.4 years			N/A		8.4 years			5.4 years

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The Company added additional goodwill and core deposit intangible assets in conjunction with the Inland acquisition. Please refer to Note 3 — Acquisition of a Business for further details.

The following table presents the estimated amortization expense for core deposit intangible and customer relationship intangible assets remaining at September 30, 2024:


	Estimated Amortization
2024	$	1,345
2025		4,473
2026		3,566
2027		2,676
2028		2,101
Thereafter		3,577
Total	$	17,738

Note 10—Income Taxes

The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income, permanent tax differences and statutory tax rates.

The effective tax rate for the nine months ended September 30, 2024 and 2023 was 25.1 % and 26.0 %, respectively. The Company recorded discrete income tax benefit of $ 1.3 million and $ 196,000 related to the exercise of stock options and vesting of restricted shares for the nine months ended September 30, 2024 and 2023, respectively.

Net deferred tax assets decreased to $ 37.7 million at September 30, 2024 compared to $ 50.1 million at December 31, 2023. The net decrease in the total net deferred tax assets was primarily a result of a decreases in unrealized losses on available-for-sale securities.

D uring the second quarter 2024, Illinois House Bill 4951 was enacted, which amends numerous Illinois tax law provisions, including a temporary limitation on Net Loss Deduction ("NLD") usage. For tax years 2024, 2025, and 2026, C Corporations are limited to applying a maximum of $ 500,000 of NLD to taxable income.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 11—Deposits

The composition of deposits was as follows as of September 30, 2024 and December 31, 2023:


	September 30,		December 31,
	2024		2023
Non-interest-bearing demand deposits	$	1,729,908	$	1,905,876
Interest-bearing checking accounts		749,721		577,609
Money market demand accounts		2,426,522		2,266,030
Other savings		489,618		542,532
Time deposits (below $250,000)		1,639,658		1,520,082
Time deposits ($250,000 and above)		462,460		364,870
Total deposits	$	7,497,887	$	7,176,999

There were $ 428.6 million and $ 480.0 m illion of brokered deposits included in time deposits below $ 250,000 at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the scheduled maturities of time deposits were:


	Scheduled Maturities
2024	$	638,936
2025		1,448,003
2026		8,622
2027		4,981
2028		1,121
Thereafter		455
Total	$	2,102,118

The Company hedges interest rates on certain money market accounts using interest rate swaps through which the Company receives variable amounts and pays fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

Note 12—Other Borrowings

The following is a summary of the Company’s other borrowings as of the dates presented:


	September 30,		December 31,
	2024		2023
Federal Home Loan Bank advances	$	470,000	$	325,000
Securities sold under agreements to repurchase		35,453		40,607
Term loan		13,333		18,333
Line of credit		—		11,250
Total	$	518,786	$	395,190

Byline Bank has the capacity to borrow funds from the discount window of the Federal Reserve System. As of September 30, 2024 and December 31, 2023 , there were no outstanding advances under the Federal Reserve Bank discount window line. We pledge loans and leases as collateral for the FRB discount window borrowing. Refer to Note 5—Loan and Lease Receivables and Allowance for Credit Losses for additi onal discussion.

On January 17, 2024, we entered into a Letter Agreement with the Federal Reserve Bank of Chicago ("FRB") that allowed the Bank to access the Bank Term Funding Program ("BTFP") . On January 22, 2024, we opened an advance of $ 200.0 million from the FRB as part of the BTFP. Under the terms of the BTFP, the Bank pledged securities to the FBR as collateral for available advances. The advance carried a fixed interest rate of 4.91 %. Advances under the BTFP are prepayable at any time without a prepayment penalty. On September 19, 2024, we repaid the BTFP advance in full.

At September 30, 2024, one variable-rate Federal Home Loan Bank (“FHLB”) advance totaled $ 250.0 million, with an interest rate of 5.00 % and a maturity in December 2024. One fixed-rate advance was $ 220.0 million at September 30, 2024 , with an interest rates of 4.94 % that matured in October 2024. Advances from the FHLB are collateralized by residential real estate loans and commercial real estate loans. The Bank’s maximum borrowing capacity is limited to 35 % of total assets. Required investment in FHLB stock is $ 4.50 for every $100 in advances thereafter.

Securities sold under agreements to repurchase represent a demand deposit product offered to customers that sweep balances in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance limit into overnight repurchase

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

agreements. The Company pledges securities as collateral for the repurchase agreements. Refer to Note 4—Securities for additional discussion.

On October 13, 2016, we entered into a $ 30.0 million revolving credit agreement with a correspondent bank. Through subsequent amendments, the revolving credit agreement was reduced to $ 15.0 million. The amended revolving line of credit bears interest at either the Secured Overnight Financing Rate ("SOFR") plus 205 basis points or Prime Rate minus 75 basis points, not to be less than 2.00%, based on the Company’s election, which is required to be communicated at least three business days prior to the commencement of an interest period. If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. On May 24, 2024, we entered into the First Amendment to the Second Amended and Restated Term Loan and Revolving Credit Agreement (the "Amendment") with the lender, which is effective May 26, 2024, and provides for: (1) the renewal of the revolving line-of-credit facility of up to $ 15.0 million, and (2) extending its maturity date to May 25, 2025 , subject to the existing Negative Pledge Agreement dated October 11, 2018, as amended.

At September 30, 2024 , the variable term loan had an interest rate of 7.50 % and an outstanding balance of $ 13.3 million. At December 31, 2023, the variable term loan had an interest rate of 7.64 % and an outstanding balance of $ 18.3 million. At September 30, 2024 , the line of credit had a no outstanding balance. At December 31, 2023 , the line of credit had a $ 11.3 million outstanding balance and an interest rate of 7.39 %.

The following table presents short-term credit lines available for use as of the dates presented:


	September 30,		December 31,
	2024		2023
Federal Home Loan Bank line	$	2,878,966	$	2,781,747
Federal Reserve Bank of Chicago discount window line		780,977		866,490
Available federal funds lines		127,500		123,750

The Company hedges interest rates on borrowed funds using interest rate swaps through which the Company receives variable amounts and pays fixed amounts. Refer to Note 16—Derivative Instruments and Hedging Activities for additional discussion.

Note 13—Subordinated Notes and Junior Subordinated Debentures

In 2020, the Company issued $ 75.0 million in fixed-to-floating subordinated notes that mature on July 1, 2030 . The subordinated notes bear a fixed interest rate of 6.00 % until July 1, 2025 and a floating interest rate equal to a benchmark rate, which is expected to be the three-month SOFR, plus 588 basis points thereafter until maturity. The transaction resulted in debt issuance costs of approximately $ 1.7 million that is being amortized over 10 years .

As of September 30, 2024, the net liability outstanding of the subordinated notes was $ 74.0 million. The Company may, at its option, redeem the notes, in whole or in part, on a semi-annual basis beginning on July 1, 2025, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required. The subordinated notes qualify as Tier 2 capital for regulatory capital purposes.

At September 30, 2024 and December 31, 2023, the Company’s junior subordinated debentures by issuance were as follows:


		Aggregate Principal Amount
Name of Trust	Stated Maturity	September 30, 2024			December 31, 2023			Contractual Rate September 30, 2024	Interest Rate Spread (1)
Metropolitan Statutory Trust I	March 17, 2034	$	35,000		$	35,000		7.99 %	SOFR + spread adjustment + 2.79 %
First Evanston Bancorp Trust I	March 15, 2035		10,000			10,000		6.99 %	SOFR + spread adjustment + 1.78 %
AmeriMark Capital Trust I	April 23, 2034		5,000			5,000		8.29 %	SOFR + spread adjustment + 2.75 %
Inland Bancorp Trust II	September 15, 2035		10,000			10,000		6.81 %	SOFR + spread adjustment + 1.60 %
Inland Bancorp Trust III	December 15, 2036		10,000			10,000		6.86 %	SOFR + spread adjustment + 1.65 %
Inland Bancorp Trust IV	June 6, 2037		7,000			7,000		6.88 %	SOFR + spread adjustment + 1.62 %
Inland Bancorp Trust V	September 15, 2037		10,000			10,000		6.63 %	SOFR + spread adjustment + 1.42 %
Total liability, at par			87,000			87,000
Discount			( 16,217	)		( 16,548	)
Total liability, at carrying value		$	70,783		$	70,452

(1) SOFR is three-month SOFR and the spread adjustment is 0.26161 %

In 2004, the Company’s predecessor, Metropolitan Bank Group, Inc., issued $ 35.0 million floating rate junior subordinated debentures to Metropolitan Statutory Trust I, which was formed for the issuance of trust preferred securities. Beginning on September 14, 2023, the interest rate reset to the three-month SOFR plus a tenor spread adjustment of 0.26161 %

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

plus 2.79 % ( 7.99 % and 8.43 % at September 30, 2024 and December 31, 2023, respectively). Interest is paid on a quarterly basis. The Company has the right to redeem the debentures, in whole or in part, on any interest payment date on or after March 2009.

As part of the First Evanston acquisition, the Company assumed the obligations to First Evanston Bancorp Trust I of $ 10.0 million in principal amount, which was formed for the issuance of trust preferred securities. Beginning on September 15, 2023, the interest rate reset to the three-month SOFR plus a tenor spread adjustment of 0.26161 % plus 1.78 % ( 6.99 % and 7.43 % at September 30, 2024 and December 31, 2023, respectively), which is in effect until the debentures mature in 2035. Interest is paid on a quarterly basis. The Company has the right to redeem the debentures, in whole or in part, on any interest payment date on or after March 2010. The Company has the option to defer interest payments on the debentures from time to time for a period not to exceed five consecutive years.

As part of the Inland acquisition, the Company assumed the obligations to several trust preferred securities. Refer to Note 3—Acquisition of a Business for further details. Interest rates are calculated as the three-month SOFR plus a tenor spread adjustment of 0.26161 % plus negotiated additional basis points. Refer to table above for contractual rates and interest rate spread calculation. Interest is paid on a quarterly basis.

The Trusts are not consolidated with the Company. Accordingly, the Company reports the subordinated debentures held by the Trusts as liabilities. The Company owns all of the common securities of each trust. The junior subordinated debentures qualify, and are treated as, Tier 1 regulatory capital of the Company subject to regulatory limitations. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment.

Note 14—Commitments and Contingent Liabilities

Legal contingencies —In the ordinary course of business, the Company and Bank have various outstanding commitments and contingent liabilities that are not recognized in the accompanying consolidated financial statements. In addition, the Company may be a defendant in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is currently not expected to have a material adverse effect on the Company’s Consolidated Financial Statements.

Operating lease commitments —Refer to Note 8—Leases for discussion of operating lease commitments.

Commitments to extend credit —The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Condensed Consolidated Statements of Financial Condition. The contractual or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for funded instruments. The Company does not anticipate any material losses as a result of the commitments and letters of credit.

The following table summarizes the contract or notional amount of outstanding loan and lease commitments at September 30, 2024 and December 31, 2023:


	September 30, 2024						December 31, 2023
	Fixed Rate		Variable Rate		Total		Fixed Rate		Variable Rate		Total
Commitments to extend credit	$	204,866	$	1,845,018	$	2,049,884	$	269,325	$	2,013,819	$	2,283,144
Letters of credit		630		63,404		64,034		612		67,443		68,055
Total	$	205,496	$	1,908,422	$	2,113,918	$	269,937	$	2,081,262	$	2,351,199

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

based on management’s credit evaluation of the counterparty. Collateral is primarily obtained in the form of commercial and residential real estate (including income producing commercial properties).

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 1.00 % to 15.00 % and maturities up to 2052 . Variable rate loan commitments have interest rates ranging from 4.00 % to 18.00 % and maturities up to 2053 .

Note 15—Fair Value Measurement

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In addition, the Company has the ability to obtain fair values for markets that are not accessible.

These types of inputs create the following fair value hierarchy:

Level 1 —Quoted prices in active markets for identical assets or liabilities.

Level 2 —Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available. The Company’s own data used to develop unobservable inputs may be adjusted for market considerations when reasonably available.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to assets and liabilities.

The Company used the following methods and significant assumptions to estimate fair value for certain assets measured and carried at fair value on a recurring basis:

Securities available-for-sale —The Company obtains fair value measurements from an independent pricing service. Management reviews the procedures used by the third party, including significant inputs used in the fair value calculations. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. When market quotes are not readily accessible or available, alternative approaches are utilized, such as matrix or model pricing.

The Company’s methodology for pricing non-rated bonds focuses on three distinct inputs: equivalent rating, yield and other pricing terms. To determine the rating for a given non-rated municipal bond, the Company references a publicly issued bond by the same issuer if available as well as other additional key metrics to support the credit worthiness. Typically, pricing for these types of bonds would require a higher yield than a similar rated bond from the same issuer. A reduction in price is applied to the rating obtained from the comparable bond, as the Company believes if liquidated, a non-rated bond would be valued less than a similar bond with a verifiable rating. The reduction applied by the Company is one notch lower (i.e. a “AA” rating for a comparable bond would be reduced to “AA-” for the Company’s valuation). In 2024 and 2023, all of the ratings derived by the Company were “BBB-” or better with and without comparable bond proxies. All of the ratings of non-Agency backed bonds derived by the Company were investment grade. The fair value measurement of municipal bonds is sensitive to the rating input, as a higher rating typically results in an increased valuation. The remaining pricing inputs used in the bond valuation are observable. Based on the rating determined, the Company obtains a corresponding current market yield curve available to market participants. Other terms including coupon, maturity date, redemption price, number of coupon payments per year, and accrual method are obtained from the individual bond term sheets.

Equity and other securities —The Company utilizes the same fair value measurement methodology for equity and other securities as detailed in the securities available-sale portfolio above.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Servicing assets —Fair value is based on a loan-by-loan basis taking into consideration the original term to maturity, the current age of the loan and the remaining term to maturity. The valuation methodology utilized for the servicing assets begins with generating estimated future cash flows for each servicing asset, based on their unique characteristics and market-based assumptions for prepayment speeds and costs to service. The present value of the future cash flows are then calculated utilizing market-based discount rate assumptions.

Derivative instruments —Interest rate derivatives are valued by a third party, using models that primarily use market observable inputs, such as yield curves, and are validated by comparison with valuations provided by the respective counterparties. Derivative financial instruments are included in accrued interest receivable and other assets, and accrued interest payable and other liabilities in the Condensed Consolidated Statements of Financial Condition.

The following tables summarize the Company’s financial assets and liabilities that were measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023:


			Fair Value Measurements Using
September 30, 2024	Fair Value		Level 1		Level 2		Level 3
Financial assets
Securities available-for-sale
U.S. Treasury Notes	$	42,512	$	42,512	$	—	$	—
U.S. Government agencies		150,539				150,539
Obligations of states, municipalities, and political subdivisions		82,283		—		82,283		—
Mortgage-backed securities; residential
Agency		812,787		—		812,787		—
Non-Agency		128,330		—		128,330		—
Mortgage-backed securities; commercial
Agency		232,169		—		232,169		—
Corporate securities		38,077		—		38,077		—
Asset-backed securities		15,411		—		15,411		—
Equity and other securities, at fair value
Mutual funds		2,605		2,605		—		—
Equity securities		6,527		—		6,239		288
Servicing assets		18,945		—		—		18,945
Derivative assets		40,620		—		40,620		—
Financial liabilities
Derivative liabilities		14,513		—		14,513		—


			Fair Value Measurements Using
December 31, 2023	Fair Value		Level 1		Level 2		Level 3
Financial assets
Securities available-for-sale
U.S. Treasury Notes	$	115,434	$	115,434	$	—	$	—
U.S. Government agencies		130,695		—		130,695		—
Obligations of states, municipalities, and political subdivisions		82,275		—		82,275
Mortgage-backed securities; residential
Agency		695,803		—		695,803		—
Non-Agency		100,260		—		100,260		—
Mortgage-backed securities; commercial
Agency		147,204		—		147,204		—
Corporate securities		36,171		—		36,171		—
Asset-backed securities		34,638		—		34,638		—
Equity and other securities, at fair value
Mutual funds		2,554		2,554		—		—
Equity securities		6,189		—		5,908		281
Servicing assets		19,844		—		—		19,844
Derivative assets		56,923		—		56,923		—
Financial liabilities
Derivative liabilities		19,345		—		19,345		—

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The following table presents additional information about financial assets measured at fair value on recurring basis for which the Company used significant unobservable inputs (Level 3):


	Nine Months Ended September 30,
	2024		2023			2024			2023
	Investment Securities					Servicing Assets
Balance, beginning of period	$	281	$	666		$	19,844		$	19,172
Additions, net		—		—			4,455			4,426
Maturity		—		( 400	)		—			—
Accretion of discount		—		82			—			—
Change in fair value		7		( 67	)		( 5,354	)		( 3,855	)
Balance, end of period	$	288	$	281		$	18,945		$	19,743

The Company did no t have any transfers to or from Level 3 of the fair value hierarchy during the nine months ended September 30, 2024 and 2023.

The following table presents additional information about the unobservable inputs used in the fair value measurements on recurring basis that were categorized within Level 3 of the fair value hierarchy as of September 30, 2024:

         
            Financial Instruments
           
            Valuation Technique
           
            Unobservable Inputs
           
            Range of
            
            Inputs
           
            Weighted
            
            Average
            
            Range
           
            Impact to
            
            Valuation from an
            
            Increased or
            
            Higher Input Value

           
            Single issuer trust preferred

           
            Discounted cash flow

           
              Discount rate

7.9

           
              Decrease

           
              Servicing assets

           
            Discounted cash flow

           
            Prepayment speeds

           
             16.8

           
              Decrease

           
            Discount rate

           
             11.7

           
              Decrease

         
            Expected weighted
            
            average loan life
           
              0.0
             
            -
           
              8.0
             
            Years
           
              3.6
             
            Years
           
              Increase

The Company used the following methods and significant assumptions to estimate fair value for certain assets measured and carried at fair value on a no n-recurring basis:

Individually evaluated loans —The Company individually evaluates loans that do not share similar risk characteristics, including non-accrual loans. Specific allowance for credit losses is measured based on a discounted cash flow of ongoing operations, discounted at the loan's original effective interest rate, or a calculation of the fair value of the underlying collateral less estimated selling costs. Valuations of individually assessed loans that are collateral dependent are supported by third party appraisals in accordance with the Bank's credit policy. Accordingly, individually evaluated loans are classified as Level 3.

Assets held for sale —Assets held for sale consist of former branch locations and real estate previously purchased for expansion. Assets are considered held for sale when management has approved to sell the assets following a branch closure or other events. The properties are being actively marketed and transferred to assets held for sale based on the lower of carrying value or its fair value, less estimated costs to sell. The Company records assets held for sale on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets.

Other real estate owned —Certain assets held within other real estate owned represent real estate or other collateral that has been adjusted to its estimated fair value, less cost to sell, as a result of transferring from the loan portfolio at the time of foreclosure or repossession and based on management’s periodic impairment evaluation. From time to time, non-recurring fair value adjustments to other real estate owned are recorded to reflect partial write-downs based on an observable market price or current appraised value of property.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Adjustments to fair value based on such non-recurring transactions generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment. The following tables summarize the Company’s assets that were measured at fair value on a non-recurring basis, as of September 30, 2024 and December 31, 2023:


			Fair Value Measurements Using
September 30, 2024	Fair Value		Level 1		Level 2		Level 3
Non-recurring
Individually evaluated loans
Commercial real estate	$	27,713	$	—	$	—	$	27,713
Residential real estate		3,509		—		—		3,509
Commercial and industrial		32,263		—		—		32,263
Assets held for sale		2,676		—		—		2,676
Other real estate owned		532		—		—		532


			Fair Value Measurements Using
December 31, 2023	Fair Value		Level 1		Level 2		Level 3
Non-recurring
Individually evaluated loans
Commercial real estate	$	51,978	$	—	$	—	$	51,978
Residential real estate		3,593		—		—		3,593
Construction, land development, and other land		813		—		—		813
Commercial and industrial		29,869		—		—		29,869
Assets held for sale		4,484		—		—		4,484
Other real estate owned		1,200		—		—		1,200

The following methods and assumptions were used by the Company in estimating fair values of other assets and liabilities for disclosure purposes:

Cash and cash equivalents and interest bearing deposits with other banks —For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities held-to-maturity —The Company obtains fair value measurements from an independent pricing service. Management reviews the procedures used by the third party, including significant inputs used in the fair value calculations. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. When market quotes are not readily accessible or available, alternative approaches are utilized, such as matrix or model pricing.

Restricted stock —The fair value has been determined to approximate cost.

Loans held for sale— The fair value of loans held for sale are based on quoted market prices, where available, and determined by discounted estimated cash flows using interest rates approximating the Company’s current origination rates for similar loans adjusted to reflect the inherent credit risk.

Loan and lease receivables, net —For certain variable rate loans that reprice frequently and with no significant changes in credit risk, fair value is estimated at carrying value. The fair value of other types of loans is estimated using an exit price notion. It is estimated by discounting future cash flows, using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits —The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated by discounting future cash flows, using rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank advances —The fair value of FHLB advances is estimated by discounting the agreements based on maturities using rates currently offered for FHLB advances of similar remaining maturities adjusted for prepayment penalties that would be incurred if the borrowings were paid off on the measurement date.

Securities sold under agreements to repurchase —The carrying amount approximates fair value due to maturities of less than ninety days.

Term Loan —The carrying amount approximates fair value given the variable interest rate and repricing of interest.

Line of credit —The carrying amount approximates fair value given the variable interest rate and repricing of interest.

Subordinated notes —The fair value is based on available market prices.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Junior subordinated debentures —The fair value of junior subordinated debentures, in the form of trust preferred securities, is determined using rates currently available to the Company for debt with similar terms and remaining maturities.

Accrued interest receivable and payable —The carrying amount approximates fair value.

Commitments to extend credit and letters of credit —The fair values of these off-balance sheet commitments to extend credit and commercial and letters of credit are not considered practicable to estimate because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs.

The estimated fair values of financial instruments not carried at fair value and levels within the fair value hierarchy are as follows:


			September 30,				December 31,
	Fair Value		2024				2023
	Hierarchy Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets
Cash and due from banks		1	$	77,047	$	77,047	$	60,431	$	60,431
Interest bearing deposits with other banks		2		375,549		375,549		165,705		165,705
Securities held-to-maturity		2		605		603		1,157		1,149
Restricted stock		2		22,743		22,743		16,304		16,304
Loans held for sale		3		19,955		20,672		18,005		19,136
Loans and lease receivables, net (less impaired loans at fair value)		3		6,717,101		6,538,295		6,496,367		6,326,413
Accrued interest receivable		3		40,731		40,731		43,922		43,922
Financial liabilities
Non-interest-bearing deposits		2		1,729,908		1,729,908		1,905,876		1,905,876
Interest-bearing deposits		2		5,767,979		5,770,206		5,271,123		5,268,926
Accrued interest payable		2		20,162		20,162		22,233		22,233
Federal Home Loan Bank advances		2		470,000		470,000		325,000		325,000
Securities sold under repurchase agreement		2		35,453		35,453		40,607		40,607
Term Loan		2		13,333		13,333		18,333		18,333
Line of credit		2		—		—		11,250		11,250
Subordinated notes		2		73,997		73,802		73,866		76,063
Junior subordinated debentures		3		70,783		74,635		70,452		72,701

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 16—Derivative Instruments and Hedge Activities

As required by ASC 815, the Company records all derivatives on the Condensed Consolidated Statements of Financial Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. The Company records derivative assets and derivative liabilities on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively. The following tables present the fair value of the Company’s derivative financial instruments and classification on the Condensed Consolidated Statements of Financial Condition as of September 30, 2024 and December 31, 2023:


	September 30, 2024							December 31, 2023
			Fair Value							Fair Value
	Notional Amount		Other Assets		Other Liabilities			Notional Amount		Other Assets		Other Liabilities
Derivatives designated as hedging instruments
Interest rate swaps designated as cash flow hedges	$	650,000	$	26,198	$	—		$	650,000	$	37,475	$	—
Derivatives not designated as hedging instruments
Other interest rate derivatives		804,488		14,417		( 14,485	)		706,126		19,447		( 19,345	)
Other credit derivatives		12,718		5		( 28	)		3,602		1		—
Total derivatives	$	1,467,206	$	40,620	$	( 14,513	)	$	1,359,728	$	56,923	$	( 19,345	)

As of the effective time of the transaction reported in Note 3—Acquisition of a Business, Byline acquired and assumed two types of derivative instruments. Interest rate swap agreements previously designated as cash flow hedges of certain junior subordinated debentures issued to capital trusts had notional amounts of $ 42.0 million and had a fair value of $ 3.5 million included in accrued interest receivable and other assets. In July 2023, the Company terminated the interest rate swap agreements that resulted in a net gain of $ 6,000 . Other interest rate swap agreements not designated as hedging instruments had notional amounts of $ 67.7 million and fair values of $ 6.2 million reported in accrued interest receivable and other assets and accrued interest payable and other liabilities.

Interest rate swaps designated as cash flow hedges —Cash flow hedges of interest payments associated with certain financial instruments had notional amounts totaling $ 650.0 million as of September 30, 2024 and December 31, 2023, respectively. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value of the derivatives hedging instrument with the fair value of the designated hedged transactions. As of September 30, 2024 , the cash flow hedges aggregating $ 650.0 million in notional amounts are comprised of $ 450.0 million pay-fixed interest rate swaps associated with certain deposits and other borrowings, and $ 200.0 million receive-fixed interest rate swaps associated with certain variable rate loans.

As of September 30, 2024, pay-fixed interest rate swaps are comprised of six effective hedges, and the receive-fixed interest rate swaps are comprised of four effective hedges.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivatives is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest income or expense in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest in come or expense as interest payments are made on the hedged instruments. Interest recorded on these swap transactions included $ 4.6 million of interest income recorded for each of the three months ended September 30, 2024 and 2023 , and is reported as a component of interest expense on deposits and other borrowings. Interest recorded on these swap transactions included $ 14.2 million and $ 10.4 million of interest income recorded during nine months ended September 30, 2024 and 2023, respectively, and is reported as a component of interest expense on deposits and other borrowings. As of September 30, 2024, the Company estimate s $ 13.5 millio n of the net unrealized gain to be reclassified as a net decrease to interest expense during the next twelve months.

Accumulated other comprehensive income (loss) also includes the amortization of the remaining balance related to terminated interest rate swaps designated as cash flow hedges, which are over the original life of the cash flow hedge. In March 2023, the Company terminated interest rate swaps designated as cash flow hedges totaling $ 100.0 million, of which $ 50.0 million became effective in May 2023 and $ 50.0 million became effective in June 2023. The transaction resulted in a gain of $ 4.2 million, net of tax, which was the clean value at termination date and began amortizing as a decrease to interest expense

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

on the effective dates. The remaining unamortized balance was $ 3.0 million and $ 3.7 million as of September 30, 2024 and December 31, 2023, respectively.

The following table reflects the cash flow hedges as of September 30, 2024:


Notional amounts	$	650,000
Derivative assets fair value		26,198
Derivative liabilities fair value		—
Weighted average remaining maturity	2.2 years

Receive rates are determined at the time the swaps become effective. As of September 30, 2024, the weighted average pay rates of the pay-fixed hedges for $ 450.0 million were 1.04 % and the weighted average receive rates were 5.13 %. As of September 30, 2024 , the weighted average pay rates of the receive-fixed interest rate swaps of $ 200.0 million were 8.30 % and the weighted average receive rates were 7.30 %.

The following table reflects the net gains (losses) recorded in accumulated other comprehensive income (loss) and the Condensed Consolidated Statements of Operations relating to the cash flow derivative instruments for the nine months ended:


	September 30, 2024						September 30, 2023
	Amount of Gain Recognized in OCI		Amount of Net Gain Reclassified from OCI to Income as an Increase to Net Interest Income		Amount of Gain (Loss) Recognized in Other Non-Interest Income		Amount of Gain Recognized in OCI		Amount of Net Gain Reclassified from OCI to Income as an Increase to Net Interest Income		Amount of Gain (Loss) Recognized in Other Non-Interest Income
Interest rate swaps	$	2,417	$	14,192	$	—	$	13,357	$	10,381	$	—

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

Other interest rate derivatives —The total combined notional amount was $ 804.5 million as of September 30, 2024 with maturities ranging from October 2024 to March 2033 . The fair values of the interest rate derivative agreements are reflected in other assets and other liabilities with corresponding gains or losses reflected in non-interest income. During the three months ended September 30, 2024 and 2023, there were $ 811,000 and $ 115,000 of net transaction fees, included in other non-interest income, related to these derivative instruments. During the nine months ended September 30, 2024 and 2023, there were $ 925,000 and $ 587,000 of net transaction fees, included in other non-interest income, related to these derivative instruments.

These instruments are inherently subject to market risk and credit risk. Market risk is associated with changes in interest rates and credit risk relates to the Company’s risk of loss when the counterparty to a derivative contract fails to perform according to the terms of the agreement. Market and credit risks are managed and monitored as part of the Company’s overall asset-liability management process. The credit risk related to derivatives entered into with certain qualified borrowers is managed through the Company’s loan underwriting process. The Company’s loan underwriting process also approves the Bank’s swap counterparty used to mirror the borrowers’ swap. The Company has a bilateral agreement with each swap counterparty that provides that fluctuations in derivative values are to be fully collateralized with either cash or securities.

The following table reflects other interest rate derivatives as of September 30, 2024:


Notional amounts	$	804,488
Derivative assets fair value		14,417
Derivative liabilities fair value		14,485
Weighted average pay rates		4.59	%
Weighted average receive rates		5.41	%
Weighted average remaining maturity	4.0 years

Other derivatives — The Company has entered into risk participation agreements with counterparty banks to assume a portion of the credit risk related to borrower transactions. As of September 30, 2024 and December 31, 2023, the notional amount of risk participated in was $ 10.4 million and $ 1.2 million, respectively, and the notional amount of risk participated

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

out was $ 2.3 million and $ 2.4 million, respectively. The credit risk related to these other derivatives is managed through the Company’s loan underwriting process. Additionally, the Company enters into foreign currency contracts to manage foreign exchange risk associated with certain customer foreign currency transactions. These transactions were not material to the consolidated financial statements as of September 30, 2024 and December 31, 2023. The fair values of the credit derivatives is reflected in accrued interest receivable and other assets and accrued interest payable and other liabilities with corresponding gains or losses reflected in non-interest income or other comprehensive income.

The Company has agreements with its derivative counterparties that contain a cross-default provision under which if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has agreements with certain derivative counterparties that contain a provision where if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations resulted in a net asset position.

The following table reflects amounts included in non-interest income in the Condensed Consolidated Statements of Operations relating to derivative instruments that are not designated in a hedging relationship for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024			2023
Other interest rate derivatives	$	263	$	423	$	170		$	230
Other credit derivatives		7		—		( 47	)		—
Total	$	270	$	423	$	123		$	230

The Company records interest rate derivatives subject to master netting agreements at their gross value and does not offset derivative asset and liabilities on the Condensed Consolidated Statements of Financial Condition. The table below summarizes the Company’s interest rate derivatives and offsetting positions as of the periods indicated:


	September 30, 2024						December 31, 2023
	Derivative Assets Fair Value			Derivative Liabilities Fair Value			Derivative Assets Fair Value			Derivative Liabilities Fair Value
Gross amounts recognized	$	40,620		$	( 14,513	)	$	56,923		$	( 19,345	)
Less: Amounts offset in the Condensed Consolidated Statements of Financial Condition		—			—			—			—
Net amount presented in the Condensed Consolidated Statements of Financial Condition	$	40,620		$	( 14,513	)	$	56,923		$	( 19,345	)
Gross amounts not offset in the Condensed Consolidated Statements of Financial Condition
Offsetting derivative positions		( 2,021	)		2,021			( 925	)		925
Collateral posted		( 35,590	)		—			( 54,930	)		—
Net credit exposure	$	3,009		$	( 12,492	)	$	1,068		$	( 18,420	)

As of September 30, 2024, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 14.5 million . If the Company had breached any of these provisions at September 30, 2024 , it could have been required to settle its obligations under the agreements at their termination value less offsetting positions of $ 2.0 million. For purposes of this disclosure, the amount of posted collateral by the Company and counterparties is limited to the amount offsetting the derivative asset and derivative liability.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 17 – Share-Based Compensation

In June 2017, the Company's Board of Directors adopted, and the Company's stockholder approved, the 2017 Omnibus Incentive Compensation Plan (the “Omnibus Plan”). The Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other equity-based, equity-related or cash-based awards. A total of 2,600,000 shares of our common stock have been reserved for issuance under the Omnibus Plan. As of September 30, 2024, there were 806,210 shares available for future grants under the Omnibus Plan.

The Company primarily grants time-based restricted share awards that vest over a one to four year period, subject to continued employment. The Company also grants performance-based restricted share awards. The number of shares which may be earned under the award is dependent upon the Company’s return on average assets, weighted equally over a three-year period and measured against a peer group consisting of publicly-traded bank holding companies. Results will be measured cumulatively at the end of the three years. Any earned shares will vest on the third anniversary of the grant date.

During 2024, the Company granted 376,799 shares of restricted common stock, par value $ 0.01 per share. Of this total, 294,819 restricted shares will vest ratably over three years on each anniversary of the grant date, 12,861 restricted shares will cliff vest on the third anniversary of the grant date, and 3,083 restricted shares will vest on the first anniversary of the grant date, all subject to continued employment. In addition, 66,036 performance-based restricted shares were included in the 2024 grant. The number of performance-based shares which may be earned under the award is dependent upon the Company’s total stockholder return and return on average assets, weighted equally, over a three-year period ending December 31, 2026, measured against the KBW Regional Bank Index. Results will be measured cumulatively at the end of the three years and any earned shares will vest on the third anniversary of the grant date.

The following table discloses the changes in restricted shares for the nine months ended September 30, 2024:


	Omnibus Plan
	Number of Shares			Weighted Average Grant Date Fair Value
Beginning balance, January 1, 2024		627,271		$	24.24
Granted		376,799			20.92
Incremental performance shares issued and vested		13,632
Vested		( 240,380	)		22.57
Forfeited		( 15,148	)		24.28
Ending balance outstanding at September 30, 2024		762,174		$	23.04

A total o f 240,380 r estricted shares vested during the nine months ended September 30, 2024. A total of 238,638 restricted shares vested during the year ended December 31, 2023. The fair value of restricted shares that vested during the nine months ended September 30, 2024 was $ 5.1 million. The fair value of restricted shares that vested during the year ended December 31, 2023 was $ 5.7 million.

The Company recognizes share-based compensation based on the estimated fair value of the restricted stock at the grant date. Share-based compensation expense is included in non-interest expense in the Condensed Consolidated Statements of Operations. The fair value of the total stock return performance-based awards granted in 2024 and 2023 were calculated based on a Monte Carlo simulation, using the following assumptions:


	Performance Based Grants
	2024			2023
Risk-free interest rate		4.47	%		4.42	%
Expected term (years)	2.85 years			2.85 years
Expected stock price volatility	29.28 % - 33.68 %			38.11 % - 39.80 %
Weighted average grant date fair value	$	20.18		$	25.20

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The following table summarizes restricted stock compensation expense for the nine months ended September 30, 2024 and 2023:


	Nine Months Ended September 30,
	2024		2023
Total share-based compensation - restricted stock	$	5,582	$	4,922
Income tax benefit		1,517		1,322
Unrecognized compensation expense		11,567		11,189
Weighted average remaining amortization period	1.9 years		2.1 years

The fair value of the unvested restricted stock awards at September 30, 2024 was $ 20.4 million.

In October 2014, the Company adopted the Byline Bancorp, Inc. Equity Incentive Plan (“BYB Plan”). The maximum number of shares available for grants under this plan was 2,476,122 shares. The Company granted 1,846,968 options to purchase shares under this plan. In June 2017, the Board of Directors terminated the BYB Plan and no future grants can be made under this plan. Options to purchase a total of 365,423 shares remain outstanding under the BYB Plan at September 30, 2024.

The types of stock options granted under the BYB Plan were Time Options and Performance Options. The exercise price of each option is equal to the fair value of the stock as of the date of grant. These option awards have vesting periods ranging from one to five years and have 10-year contractual terms. Stock volatility was computed as the average of the volatilities of peer group companies. All outstanding stock options were fully vested and exercisable at September 30, 2024.

The fair values of the stock options were determined using the Black-Scholes-Merton model for Time Options and a Monte Carlo simulation model for Performance Options.

The following table discloses the activity in shares subject to options and the weighted average exercise prices, in actual dollars, for the nine months ended September 30, 2024:


	BYB Plan
	Number of Shares			Weighted Average Exercise Price		Intrinsic Value		Weighted Average Remaining Contractual Term (in Years)
Beginning balance, January 1, 2024		768,564		$	11.31	$	9,413		1.5
Exercised		( 403,141	)		11.18	$	5,556
Expired		—
Ending balance outstanding at September 30, 2024		365,423		$	11.46	$	5,596		0.8
Exercisable at September 30, 2024		365,423		$	11.46	$	5,596		0.8

A total of 403,141 stock options were exercised during the nine months ended September 30, 2024 . Proceeds from exercise of stock options were $ 2.1 million and had a related tax benefit of $ 1.5 million for the nine months ended September 30, 2024 . No stock options were exercised during the year ended December 31, 2023. No stock options vested during the nine months ended September 30, 2024 or the year ended December 31, 2023. No stock option compensation expense was recognized for the nine months ended September 30, 2024 or the year ended December 31, 2023.

Pursuant to the terms of the Agreement and Plan of Merger with First Evanston and its subsidiaries, dated as of November 27, 2017 (the "First Evanston Merger Agreement"), each outstanding First Evanston option held by a participant in the First Evanston Bancorp, Inc. Stock Incentive Plan (the "FEB Plan") ceased to represent a right to acquire shares of First Evanston common stock and was assumed and converted automatically into a fully vested and exercisable adjusted option to purchase shares of Byline common stock (each an "Adjusted Option"). In accordance with the First Evanston Merger Agreement, the number of shares of Byline common stock to which each such Adjusted Option relates is equal to the product (rounded down to the nearest whole share of Byline common stock) of: (a) the number of shares of First Evanston common stock subject to the First Evanston option immediately prior to May 31, 2018, multiplied by (b) 4.725 . Each Adjusted Option has an exercise price per share of Byline common stock equal to the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price of such First Evanston option immediately prior to May 31, 2018, divided by (y) 4.725 . The description of the conversion process is based on, and qualified by, the First Evanston Merger Agreement.

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

The following table discloses the activity in shares subject to options under the FEB Plan and the weighted average exercise prices, in actual dollars, for the nine months ended September 30, 2024:


	FEB Plan
	Number of Shares			Weighted Average Exercise Price		Intrinsic Value		Weighted Average Remaining Contractual Term (in Years)
Beginning balance, January 1, 2024		103,135		$	11.95	$	1,197		1.9
Exercised		( 36,805	)	$	11.68	$	554
Expired		—
Ending balance outstanding at September 30, 2024		66,330		$	12.10	$	973		1.6
Exercisable at September 30, 2024		66,330		$	12.10	$	973		1.6

A total of 36,805 stock Adjusted Options were exercised during the nine months ended September 30, 2024 . Proceeds from exercise of Adjusted Options were $ 430,000 and had a related tax benefit of $ 148,000 for the nine months ended September 30, 2024 . A total of 59,153 Adjusted Options were exercised during the during the year ended December 31, 2023, with proceeds of $ 659,000 and a related tax benefit of $ 158,000 .

Note 18—Earnings per Share

A reconciliation of the numerators and denominators for earnings per common share computations is presented below. Incremental shares represent outstanding stock options for which the exercise price is less than the average market price of the Company’s common stock during the periods presented. Options to purchase 431,753 and 901,086 shares of common stock were outstanding as of September 30, 2024 and 2023 , respectively. There were 762,174 and 675,222 restricted stock awards outstanding at September 30, 2024 and 2023, respectively. For the three and nine months ended September 30, 2024 and 2023 , there were no anti-dilutive weighted average shares outstanding.

The following represent the calculation of basic and diluted earnings per share for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	30,328	$	28,222	$	90,439	$	78,274
Weighted-average common stock outstanding:
Weighted-average common stock outstanding (basic)		43,516,006		43,025,927		43,379,038		39,027,450
Incremental shares		450,183		432,183		384,156		435,402
Weighted-average common stock outstanding (dilutive)		43,966,189		43,458,110		43,763,194		39,462,852
Basic earnings per common share	$	0.70	$	0.66	$	2.08	$	2.01
Diluted earnings per common share	$	0.69	$	0.65	$	2.07	$	1.98

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 19—Stockholders’ Equity

A summary of the Company’s preferred and common stock at September 30, 2024 and December 31, 2023 is as follows:


	September 30,		December 31,
	2024		2023
Preferred stock
Par value	$	0.01	$	0.01
Shares authorized		25,000,000		25,000,000
Shares issued		—		—
Shares outstanding		—		—
Common stock, voting
Par value	$	0.01	$	0.01
Shares authorized		150,000,000		150,000,000
Shares issued		46,180,735		45,714,241
Shares outstanding		44,384,706		43,764,056
Treasury shares		1,796,029		1,950,185

On December 12, 2022, we announced that our Board of Directors approved a stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program was in effect from January 1, 2023 until December 31, 2023. No shares were repurchased under this program.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of the Company’s outstanding common stock. The program is in effect from January 1, 2024 until December 31, 2024, unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal requirements. The shares authorized to be repurchased represented approximately 2.9 % of the Company’s outstanding common stock at December 31, 2023.

We did no t purchase any shares under either stock repurchase program during the three or nine months ended September 30, 2024 and 2023.

Repurchased shares are recorded as treasury shares on the trade date using the treasury stock method, and the cash paid is recorded as treasury stock. Treasury stock acquired is recorded at cost and is carried as a reduction of stockholders’ equity in the Condensed Consolidated Statements of Financial Condition.

For each of the three months ended September 30, 2024 and 2023, cash dividends were declared and paid to stockholders of record of our common stock of $ 0.09 per share. For each of the nine months ended September 30, 2024 and 2023, cash dividends were declared and paid to stockholders of record of our common stock of $ 0.27 per share.

On October 22, 2024, our Board of Directors declared a cash dividend of $ 0.09 per share payable on November 19, 2024 to stockholders of record of our common stock as of November 5, 2024 .

BYLINE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Table dollars in thousands, except share and per share data) (Unaudited)

Note 20—Consolidated Statements of Changes in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023:


(dollars in thousands)	Unrealized Gains on Cash Flow Hedges			Unrealized Losses on Available-for-Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance, June 30, 2023	$	36,433		$	( 151,295	)	$	( 114,862	)
Other comprehensive income (loss), net of tax		63			( 27,360	)		( 27,297	)
Balance, September 30, 2023	$	36,496		$	( 178,655	)	$	( 142,159	)

Balance, January 1, 2023	$	34,315		$	( 151,865	)	$	( 117,550	)
Other comprehensive income (loss), net of tax		2,181			( 26,790	)		( 24,609	)
Balance, September 30, 2023	$	36,496		$	( 178,655	)	$	( 142,159	)

Balance, June 30, 2024	$	27,672		$	( 139,141	)	$	( 111,469	)
Other comprehensive income (loss), net of tax		( 6,175	)		38,966			32,791
Balance, September 30, 2024	$	21,497		$	( 100,175	)	$	( 78,678	)

Balance, January 1, 2024	$	30,131		$	( 130,248	)	$	( 100,117	)
Other comprehensive income (loss), net of tax		( 8,634	)		30,073			21,439
Balance, September 30, 2024	$	21,497		$	( 100,175	)	$	( 78,678	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of Byline Bancorp, Inc.’s financial condition and results of operations and should be read in conjunction with our Unaudited Interim Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report. The words “the Company,” “we,” “Byline,” “management,” “our” and “us” refer to Byline Bancorp, Inc. and its consolidated subsidiaries, unless we indicate otherwise. In addition to historical information, this discussion contains forward looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Special Note Regarding Forward Looking Statements” and “Risk Factors”. Byline assumes no obligation to update any of these forward looking statements.

Forward-Looking Statements

Statements contained in this report and in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”) that are not historical facts may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, strategies, predictions, forecasts, objectives or assumptions of future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “expects,” “can,” “could,” “may,” “predicts,” “potential,” “opportunity,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “seeks,” “intends” and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual strategies, actions or results to differ materially from those expressed in such statements, and are not guarantees of future results or other events or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions or results, based on management’s current expectations, assumptions and estimates on the date hereof, and there can be no assurance that actual strategies, actions or results will not differ materially from expectations, readers are cautioned not to place undue reliance on such statements.

Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results or conditions to differ materially from those reflected in forward-looking statements include:

•

uncertainty regarding domestic, foreign, and geopolitical developments and the United States and global economic outlook that may impact market conditions or affect demand for certain banking products and services, and the impact on our customers, which could impair the ability of our borrowers to repay outstanding loans and leases, impair collateral values and further increase our allowance for credit losses - loans and leases, as well as result in possible asset impairment charges;

•

unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than we have anticipated in our allowance for credit losses - loans and leases or changes in the value of our investments;

•

commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;

•

deterioration in the financial condition of our borrowers resulting in significant increases in our loan and lease losses and provisions for those losses and other related adverse impacts to our results of operations and financial condition;

•

fair value estimates of certain of our assets and liabilities, which could change in value significantly from period to period;

•

competitive pressures in the financial services industry in our market areas relating to both pricing and loan and lease structures, which may impact our growth rate;

•

demand for loan products and deposit flows;

•

unanticipated developments in pending or prospective loan and/or lease transactions or greater-than-expected paydowns or payoffs of existing loans and leases;

•

inaccurate information and assumptions in our analytical and forecasting models used to manage our balance sheet;

•

unanticipated changes in monetary policies of the Federal Reserve or significant adjustments in the pace of, or market expectations for, future interest rate changes;

•

availability of sufficient and cost-effective sources of liquidity, funding, and capital as and when needed;

•

our ability to attract, retain or the loss of key personnel or an inability to recruit appropriate talent cost-effectively;

•

adverse effects on our information technology systems resulting from failures, human error or cyberattack, including the potential impact of disruptions or security breaches at our third-party service providers, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;

•

greater-than-anticipated costs to support the growth of our business, including investments in new lines of business, products and services, or technology, process improvements or other infrastructure enhancements, or greater-than-anticipated compliance or regulatory costs and burdens;

•

the impact of possible future acquisitions, if any, including the costs and burdens of integration efforts;

•

the ability of the Company to receive dividends from Byline Bank;

•

legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;

•

changes in Small Business Administration ("SBA") and U.S. Department of Agriculture ("USDA") U.S. government guaranteed lending rules, regulations, loan and lease products and funding limits, including specifically the SBA Section 7(a) program, as well as changes in SBA or USDA standard operating procedures or changes to the status of Byline Bank as an SBA Preferred Lender;

•

changes in accounting principles, policies and guidelines applicable to bank holding companies and banking generally;

•

the impact of a possible change in the federal or state income tax rates on our deferred tax assets and provision for income tax expense;

•

our ability to implement our growth strategy, including via acquisitions;

•

the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period;

•

the risk that the integration of acquisition operations will be materially delayed or will be more costly or difficult than expected;

•

the effect of mergers on customer relationships and operating results; and

•

other risks detailed from time to time in filings we make with the SEC.

These risks and uncertainties should be considered in evaluating any forward-looking statements, and undue reliance should not be placed on such statements. Forward looking statements speak only as of the date they are made. You should also consider the risks, assumptions and uncertainties set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on March 4, 2024, as well as those set forth in the reports we file with the SEC. We assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Overview

Our Business

We are a bank holding company headquartered in Chicago, Illinois, and conduct all our business activities through our subsidiary, Byline Bank, a full service commercial bank, and Byline Bank’s subsidiaries. Through Byline Bank, we offer a broad range of banking products and services to small and medium sized businesses, commercial real estate and financial sponsors and to consumers who generally live or work near our branches. We also offer online account opening to consumer and business customers through our website and provide trust and wealth management services to our customers. In addition to our traditional commercial banking business, we provide small ticket equipment leasing solutions through Byline Financial Group, a wholly-owned subsidiary of Byline Bank, headquartered in Bannockburn, Illinois, with sales offices in Illinois, and sales representatives in Illinois, Michigan, New Jersey, and New York. We participate in U.S. government guaranteed lending programs and originate U.S. government guaranteed loans. Byline Bank is a leading originator of SBA loans and was the most active 7(a) and 504 lender in Illinois for the fiscal year ended September 30, 2024.

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provision for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

We reported consolidated net income of $30.3 million, or $0.70 per basic and $0.69 diluted common share, and $90.4 million or $2.08 per basic and $2.07 per diluted share for the three and nine months ended September 30, 2024, compared to net income of $28.2 million, or $0.66 per basic and $0.65 per diluted common share, and $78.3 million or $2.01 per basic and $1.98 per diluted share and for the three and nine months ended September 30, 2023, an increase of $2.1 million and $12.2 million, respectively.

For the three months ended September 30, 2024 compared to the same period in the prior year, the increase in net income was attributable to a $3.6 million decrease in non-interest expense, and a $2.0 million increase in non-interest income, offset by a $5.0 million decrease in net interest income. For the nine months ended September 30, 2024 compared to the same period in the prior year, the increase to net income was primarily attributable to a $15.2 million increase in net interest income and a $4.3 million decrease in the provision for credit losses, offset by a $5.3 million increase in non-interest expenses and a $2.8 million increase to the provision for income taxes.

Dividends declared on common shares were $4.0 million and $3.9 million for the three months ended September 30, 2024 and 2023, respectively. Dividends paid on common shares were $3.9 million and $4.1 million for the three months ended September 30, 2024 and 2023, respectively. Dividends declared on common shares were $11.9 million and $10.7 million for the nine months ended September 30, 2024 and 2023, respectively. Dividends paid on common shares were $11.9 million and $10.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Our results of operations for the three months ended September 30, 2024 and 2023 yielded an annualized return on average assets of 1.29% and 1.30% and an annualized return on average stockholders’ equity of 11.39% and 12.11%, respectively. Our results of operations for the nine months ended September 30, 2024 and 2023 yielded an annualized return on average assets of 1.32% and 1.34% and an annualized return on average stockholders’ equity of 11.81% and 12.48%, respectively.

As of September 30, 2024, we had consolidated total assets of $9.4 billion, total gross loans and leases outstanding of $6.9 billion, total deposits of $7.5 billion, and total stockholders’ equity of $1.1 billion.

Inland Bancorp, Inc. Acquisition

On July 1, 2023, we completed our acquisition of Inland Bancorp, Inc., ("Inland") under the terms of a definitive merger agreement. As a result of the merger, Inland's wholly-owned bank subsidiary, Inland Bank and Trust, was merged with and into Byline Bank. Refer to Note 3—Acquisition of a Business of our Unaudited Interim Condensed Financial Statements as of September 30, 2024, which is included in this report, for additional information.

First Security Bancorp, Inc. Acquisition

On September 30, 2024, we announced the execution of an Agreement and Plan of Merger in connection with a proposed acquisition of First Security Bancorp, Inc., a Delaware corporation ("First Security Bancorp"), a nd First Security Bancorp's wholly-owned bank subsidiary, First Security Trust and Savings Bank (“First Security’), an Illinois chartered bank. As of June 30, 2024, First Security Bancorp reported $354.8 million in assets, $201.4 million of loans, and $321.8 million of deposits. The consideration to be paid by the Company will consist of shares of Byline common stock (currently estimated at approximately 1.5 million shares), subject to adjustments as set forth in the merger agreement. Outstanding First Security Bancorp preferred shares will be redeemed in cash at closing with an estimated aggregated value of approximately $2.6 million. Completion of the transaction is subject to regulatory approvals, the approval of First Security Bancorp's stockholders, and the satisfaction of certain other closing conditions. We expect the acquisition to close in the first half of 2025.

Critical Accounting Policies and Significant Estimates

Our accounting and reporting policies conform to GAAP and to general practices within the banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes, which are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

These critical accounting policies and estimates include (i) determination of the allowance for credit losses, (ii) the valuation of intangible assets such as goodwill, and assessment of impairment, (iii) fair value estimations, and (iv) the determination and assessment of impairment for other intangible assets.

The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 of our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, that we filed with the SEC on March 4, 2024.

Allowance for credit losses

The allowance for credit losses ("ACL") represents management’s estimate of current expected credit losses over the life of a financial asset carried at amortized cost at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loss reserves.

The ACL is maintained at a level that management believes is appropriate to provide for current expected credit losses as of the dates of the Consolidated Statements of Financial Condition, and we have established methodologies for the determination of its adequacy. The methodologies are set forth in a formal policy and take into consideration relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. We increase our ACL by recording provisions for credit losses against our income and decrease by charge‑offs, net of recoveries.

The evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management uses available information to recognize losses on loans and leases, changes in economic or other conditions may necessitate revision of the estimate in future periods.

For each portfolio, management estimates expected credit losses over the life of each loan and lease utilizing lifetime or cumulative loss rate methodology. The lifetime loss rates are estimated by analyzing a combination of internal and external data related to historical performance of each loan and lease pool over a complete economic cycle. Loss rates are based on historical averages for each loan and lease pool, adjusted to reflect the impact of a forward-looking forecast of certain macroeconomic variables, primarily unemployment rates, which management considers to be both reasonable and supportable. Various economic scenarios are considered and weighted to arrive at the forecast that most reflects management’s expectation of future conditions. After a one-year forecast period, a one-year reversion period adjusts loss experience to the historical average on a straight-line basis.

Management also considers qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history. Each risk factor is assigned an allowance level based on management’s judgment as to the expected impact of each risk factor on each loan and lease portfolio and is monitored quarterly. All loans and leases of $500,000 or greater with an internal risk rating of substandard or below, or on nonaccrual status are individually evaluated for impairment on a quarterly basis.

The Company also maintains an allowance for credit losses on off-balance sheet credit exposures for unfunded loan commitments. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life based on management’s consideration of past events, current conditions, and reasonable and supportable economic forecasts. Management tracks the level and trends in unused commitments and takes into consideration the same factors as those considered for purposes of the allowance for credit losses on outstanding loans.

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in connection with our recapitalization and acquisitions using the acquisition method of accounting. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC 350.

Impairment testing is performed using either a qualitative or quantitative approach at the reporting unit level. Our goodwill is allocated to Byline Bank, which is our only applicable reporting unit for the purposes of testing goodwill for impairment. We have selected November 30 as the date to perform the annual goodwill impairment test. Additionally, we perform a goodwill impairment evaluation on an interim basis when events or circumstances indicate impairment potentially exists.

Other intangible assets

Other intangible assets primarily consist of core deposit intangible assets and customer relationship intangible. In valuing intangible assets, we consider variables such as servicing costs, attrition rates and market discount rates. Intangible assets are reviewed annually, or more frequently when events or changes in circumstances occur that indicate that their carrying values may not be recoverable. If the recoverable amount of the intangible asset is determined to be less than its carrying value, we would then measure the amount of impairment based on an estimate of the fair value at that time. We also evaluate whether the events or circumstances have occurred that warrant a revision

to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life. Core deposit intangibles are currently amortized over an approximate ten-year period and customer intangibles are amortized over a twelve-year period.

Fair value of Financial Instruments

ASC Topic 820, Fair Value Measurement, defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.

The degree of management judgment involved in determining the fair value of assets and liabilities is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not available, management judgment is necessary to estimate fair value. In addition, changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we would use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement.

See Note 15 of our Unaudited Interim Condensed Consolidated Financial Statements as of September 30, 2024, included in this report, for a complete discussion of our use of fair value of financial assets and liabilities and their related measurement practices.

Recently Issued Accounting Pronouncements

Refer to Note 2 of our Unaudited Interim Condensed Consolidated Financial Statements as of September 30, 2024, which is included in this report, for a description of recent accounting pronouncements, including the effective dates of adoption and anticipated effects on our results of operations and financial condition.

Primary Factors Used to Evaluate Our Business

As a financial institution, we manage and evaluate various aspects of both our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our consolidated financial statements as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance, and the final condition and performance of comparable financial institutions in our region. Comparison of our financial performance against other financial institutions is impacted by the accounting for acquired non‑credit-deteriorated and purchased credit deteriorated loans.

Results of Operations

Overview

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provisions for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

Selected Financial Data


	As of or for the Three Months Ended						As of or for the Nine Months Ended
	September 30,						September 30,
(dollars in thousands, except share and per share data)	2024			2023			2024			2023
Summary of Operations
Common Share Data
Basic earnings per common share	$	0.70		$	0.66		$	2.08		$	2.01
Diluted earnings per common share	$	0.69		$	0.65		$	2.07		$	1.98
Adjusted diluted earnings per share (1)(3)	$	0.70		$	0.77		$	2.08		$	2.15
Weighted-average common shares outstanding (basic)		43,516,006			43,025,927			43,379,038			39,027,450
Weighted-average common shares outstanding (diluted)		43,966,189			43,458,110			43,763,194			39,462,852
Common shares outstanding		44,384,706			43,719,203			44,384,706			43,719,203
Cash dividends per common share	$	0.09		$	0.09		$	0.27		$	0.27
Dividend payout ratio on common stock		13.04	%		13.85	%		13.04	%		13.64	%
Book value per common share	$	24.70		$	21.04		$	24.70		$	21.04
Tangible book value per common share (1)	$	20.21		$	16.35		$	20.21		$	16.35
Key Ratios and Performance Metrics (annualized where applicable)
Net interest margin		3.88	%		4.46	%		3.95	%		4.39	%
Net interest margin, fully taxable equivalent (1)(4)		3.89	%		4.47	%		3.96	%		4.40	%
Average cost of deposits		2.76	%		2.13	%		2.65	%		1.70	%
Efficiency ratio (2)		52.02	%		53.75	%		52.05	%		52.96	%
Adjusted efficiency ratio (1)(2)(3)		51.62	%		47.35	%		51.85	%		49.96	%
Non-interest income to total revenues (1)		14.13	%		11.81	%		14.13	%		14.61	%
Non-interest expense to average assets		2.31	%		2.66	%		2.35	%		2.67	%
Adjusted non-interest expense to average assets (1)(3)		2.29	%		2.35	%		2.34	%		2.53	%
Return on average stockholders' equity		11.39	%		12.11	%		11.81	%		12.48	%
Adjusted return on average stockholders' equity (1)(3)		11.53	%		14.30	%		11.88	%		13.54	%
Return on average assets		1.29	%		1.30	%		1.32	%		1.34	%
Adjusted return on average assets (1)(3)		1.30	%		1.53	%		1.32	%		1.46	%
Pre-tax pre-provision return on average assets (1)		2.02	%		2.16	%		2.05	%		2.23	%
Adjusted pre-tax pre-provision return on average assets (1)(3)		2.03	%		2.46	%		2.06	%		2.38	%
Return on average tangible common stockholders' equity (1)		14.49	%		16.15	%		15.19	%		16.37	%
Adjusted return on average tangible common stockholders' equity (1)(3)		14.67	%		18.95	%		15.28	%		17.72	%
Non-interest-bearing deposits to total deposits		23.07	%		28.18	%		23.07	%		28.18	%
Loans and leases held for sale and loans and leases held for investment to total deposits		92.02	%		95.21	%		92.02	%		95.21	%
Deposits to total liabilities		90.03	%		86.67	%		90.03	%		86.67	%
Deposits per branch	$	162,998		$	144,869		$	162,998		$	144,869
Asset Quality Ratios (annualized where applicable)
Non-performing loans and leases to total loans and leases held for investment		1.02	%		0.79	%		1.02	%		0.79	%
Non-performing assets to total assets		0.75	%		0.60	%		0.75	%		0.60	%
ACL to total loans and leases held for investment, net before ACL		1.44	%		1.60	%		1.44	%		1.60	%
Net charge-offs to average total loans and leases held for investment, net before ACL - loans and leases		0.49	%		0.33	%		0.48	%		0.25	%
Capital Ratios
Common equity to total assets		11.63	%		10.29	%		11.63	%		10.29	%
Tangible common equity to tangible assets (1)		9.72	%		8.18	%		9.72	%		8.18	%
Leverage ratio		11.18	%		10.75	%		11.18	%		10.75	%
Common equity tier 1 capital ratio		11.35	%		10.08	%		11.35	%		10.08	%
Tier 1 capital ratio		12.39	%		11.12	%		12.39	%		11.12	%
Total capital ratio		14.41	%		13.17	%		14.41	%		13.17	%

(1) Represents a non-GAAP financial measure. See “Reconciliations of non-GAAP Financial Measures” for a reconciliation 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 on assets held for sale and ROU assets, and merger-related expenses.

(4) Interest income and rates include the effects of a tax equivalent adjustment to adjust tax-exempt investment income on tax-exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

We reported consolidated net income of $30.3 million for the three months ended September 30, 2024 compared to net income of $28.2 million for the three months ended September 30, 2023, an increase of $2.1 million. The increase in net income was attributable to a $3.6 million decrease in non-interest expense, and a $2.0 million increase in non-interest income, offset by a $5.0 million decrease in net interest income. Net income was $0.70 per basic and $0.69 per diluted common share, for the three months ended September 30, 2024 compared to $0.66 per basic and $0.65 per diluted common share, for the three months ended September 30, 2023.

The decrease in non-interest expense was primarily due to decreases in data processing expense attributable to the Inland transaction. The increase in non-interest income was mainly due to a decrease in the downward revaluation of the loan servicing asset. The decrease in net interest income was mainly a result of higher rates paid on deposits.

Our annualized return on average assets was 1.29% for the three months ended September 30, 2024 compared to 1.30% for the three months ended September 30, 2023. Our annualized return on average stockholders’ equity was 11.39% for the three months ended September 30, 2024 compared to 12.11% for the three months ended September 30, 2023. Our efficiency ratio was 52.02% for the three months ended September 30, 2024 compared to 53.75% for the three months ended September 30, 2023.

We reported consolidated net income of $90.4 million for the nine months ended September 30, 2024 compared to net income of $78.3 million for the nine months ended September 30, 2023, an increase of $12.2 million. The increase in net income was primarily attributable to a $15.2 million increase in net interest income and a decrease of $4.3 million in provision for credit losses, offset by an $5.3 million increase in non-interest expense, and a $2.8 million increase in the provision for income taxes. Net income was $2.08 per basic and $2.07 per diluted common share, for the nine months ended September 30, 2024 compared to $2.01 per basic and $1.98 per diluted common share, for the nine months ended September 30, 2023.

The increase in net interest income during the nine months ended September 30, 2024 was mainly a result of increased average balances and higher yields on loans and leases. The increase in non-interest expense was mostly due to an increase in salaries and employee benefits.

Our annualized return on average assets was 1.32% for the nine months ended September 30, 2024 compared to 1.34% for the nine months ended September 30, 2023. Our annualized return on average stockholders’ equity was 11.81% for the nine months ended September 30, 2024 compared to 12.48% for the nine months ended September 30, 2023. Our efficiency ratio was 52.05% for the nine months ended September 30, 2024 compared to 52.96% for the nine months ended September 30, 2023.

Net Interest Income

Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest and dividends on interest-earning assets, which include loans, leases and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, which include interest-bearing deposits, subordinated debt, Federal Home Loan Bank advances, junior subordinated debentures and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread, and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as the annualized net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Because of our recapitalization and acquisitions, we derive a portion of our interest income from the accretable discounts on purchase credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan. This accretion will continue to have an impact on our net interest income as long as loans acquired with a discount at acquisition represent a meaningful portion of our interest-earning assets. As of September 30, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 2.1% of our total loan and lease portfolio compared to 3.4% at December 31, 2023.

Changes in the market interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. In addition, our interest income includes the accretion of the discounts on our acquired loans, which will also affect our net interest spread, net interest margin and net interest income.

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Yields have been calculated on a pre-tax basis (dollars in thousands).


	Three Months Ended September 30,
	2024								2023
	Average Balance (5)			Interest Inc / Exp		Average Yield / Rate			Average Balance (5)			Interest Inc / Exp		Average Yield / Rate
ASSETS
Cash and cash equivalents	$	468,852		$	5,771		4.90	%	$	195,019		$	1,724		3.51	%
Loans and leases (1)		6,827,726			128,336		7.48	%		6,484,875			125,465		7.68	%
Taxable securities		1,508,987			11,467		3.02	%		1,371,979			8,465		2.45	%
Tax-exempt securities (2)		156,085			1,091		2.78	%		168,805			1,184		2.78	%
Total interest-earning assets	$	8,961,650		$	146,665		6.51	%	$	8,220,678		$	136,838		6.60	%
Allowance for credit losses - loans and leases		(101,001	)							(108,315	)
All other assets		513,200								521,982
TOTAL ASSETS	$	9,373,849							$	8,634,345
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	754,586		$	4,439		2.34	%	$	579,917		$	2,208		1.51	%
Money market accounts		2,386,909			21,371		3.56	%		2,040,476			16,676		3.24	%
Savings		495,541			190		0.15	%		594,555			228		0.15	%
Time deposits		2,134,587			26,076		4.86	%		1,706,531			18,051		4.20	%
Total interest-bearing deposits		5,771,623			52,076		3.59	%		4,921,479			37,163		3.00	%
Other borrowings		474,498			3,919		3.29	%		463,561			3,981		3.41	%
Subordinated notes and debentures		144,702			2,986		8.21	%		144,171			2,994		8.24	%
Total borrowings		619,200			6,905		4.44	%		607,732			6,975		4.55	%
Total interest-bearing liabilities	$	6,390,823		$	58,981		3.67	%	$	5,529,211		$	44,138		3.17	%
Non-interest-bearing demand deposits		1,741,250								1,987,996
Other liabilities		182,148								192,860
Total stockholders’ equity		1,059,628								924,278
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	9,373,849							$	8,634,345
Net interest spread (3)							2.84	%							3.43	%
Net interest income, fully taxable equivalent				$	87,684							$	92,700
Net interest margin, fully taxable equivalent (2)(4)							3.89	%							4.47	%
Reconciliation to reported net interest income:
Less: Tax-equivalent adjustment					229		0.01	%					248		0.01	%
Net interest income				$	87,455							$	92,452
Net interest margin (4)							3.88	%							4.46	%

Net loan accretion impact on margin				$	2,982		0.13	%				$	10,276		0.50	%

(1)

Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Non-accrual loans and leases are included in total loan and lease balances.

(2)

Interest income and rates include the effects of a tax equivalent adjustment to adjust tax-exempt investment income on tax-exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

(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 interest-earning assets.

(5)

Average balances are average daily balances.


	For the Nine Months Ended September 30,
	2024								2023
	Average Balance (5)			Interest Inc / Exp		Average Yield / Rate			Average Balance (5)			Interest Inc / Exp		Average Yield / Rate
ASSETS
Cash and cash equivalents	$	371,747		$	12,914		4.64	%	$	142,890		$	3,207		3.00	%
Loans and leases (1)		6,772,585			378,651		7.47	%		5,838,611			316,942		7.26	%
Taxable securities		1,468,365			32,158		2.93	%		1,299,732			21,220		2.18	%
Tax-exempt securities (2)		157,569			3,294		2.79	%		157,338			3,158		2.68	%
Total interest-earning assets	$	8,770,266		$	427,017		6.50	%	$	7,438,571		$	344,527		6.19	%
Allowance for credit losses - loans and leases		(102,170	)							(95,234	)
All other assets		514,447								455,850
TOTAL ASSETS	$	9,182,543							$	7,799,187
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Interest checking	$	687,746		$	10,964		2.13	%	$	575,558		$	6,877		1.60	%
Money market accounts		2,298,479			61,009		3.55	%		1,682,311			35,203		2.80	%
Savings		513,815			581		0.15	%		594,396			675		0.15	%
Time deposits		2,026,526			73,087		4.82	%		1,336,584			35,429		3.54	%
Total interest-bearing deposits		5,526,566			145,641		3.52	%		4,188,849			78,184		2.50	%
Other borrowings		489,507			12,182		3.32	%		515,068			14,074		3.65	%
Federal funds purchased		465			21		6.05	%		916			36		5.30	%
Subordinated notes and debentures		144,546			8,960		8.28	%		122,296			7,234		7.91	%
Total borrowings		634,518			21,163		4.46	%		638,280			21,344		4.47	%
Total interest-bearing liabilities	$	6,161,084		$	166,804		3.62	%	$	4,827,129		$	99,528		2.76	%
Non-interest-bearing demand deposits		1,810,648								1,970,724
Other liabilities		188,263								162,542
Total stockholders’ equity		1,022,548								838,792
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	9,182,543							$	7,799,187
Net interest spread (3)							2.88	%							3.43	%
Net interest income, fully taxable equivalent				$	260,213							$	244,999
Net interest margin, fully taxable equivalent (2)(4)							3.96	%							4.40	%
Reconciliation to reported net interest income:
Less: Tax-equivalent adjustment					691		0.01	%					663		0.01	%
Net interest income				$	259,522							$	244,336
Net interest margin (4)							3.95	%							4.39	%

Net loan accretion impact on margin				$	10,922		0.17	%				$	11,616		0.21	%

(1)

Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Non-accrual loans and leases are included in total loan and lease balances.

(2)

(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 interest-earning assets.

(5)

Average balances are average daily balances.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Changes applicable to both volume and rate have been allocated to volume. Yields have been calculated on a pre-tax basis. The table below is a summary of increases and decreases in interest income and interest expense resulting from changes in average balances (volume) and changes in average interest rates (dollars in thousands):


	Three Months Ended September 30, 2024
	Compared to Three Months Ended September 30, 2023
	Increase (Decrease) Due to
	Volume			Rate			Total
Interest income
Cash and cash equivalents	$	3,366		$	681		$	4,047
Loans and leases (1)		6,131			(3,260	)		2,871
Taxable securities		1,036			1,966			3,002
Tax-exempt securities		(93	)		—			(93	)
Total interest income	$	10,440		$	(613	)	$	9,827
Interest expense
Deposits
Interest checking	$	1,021		$	1,210		$	2,231
Money market accounts		3,054			1,641			4,695
Savings		(38	)		—			(38	)
Time deposits		5,194			2,831			8,025
Total interest-bearing deposits		9,231			5,682			14,913
Other borrowings		79			(141	)		(62	)
Subordinated notes and debentures		3			(11	)		(8	)
Total borrowings		82			(152	)		(70	)
Total interest expense	$	9,313		$	5,530		$	14,843
Net interest income, fully taxable equivalent	$	1,127		$	(6,143	)	$	(5,016	)

(1)

Includes loans and leases on non-accrual status.


	Nine Months Ended September 30, 2024
	Compared to Nine Months Ended September 30, 2023
	Increase (Decrease) Due to
	Volume			Rate			Total
Interest income
Cash and cash equivalents	$	7,953		$	1,754		$	9,707
Loans and leases (1)		52,530			9,179			61,709
Taxable securities		3,640			7,298			10,938
Tax-exempt securities		6			130			136
Total interest income	$	64,129		$	18,361		$	82,490
Interest expense
Deposits
Interest checking	$	1,803		$	2,284		$	4,087
Money market accounts		16,360			9,446			25,806
Savings		(94	)		—			(94	)
Time deposits		24,850			12,808			37,658
Total interest-bearing deposits		42,919			24,538			67,457
Other borrowings		(623	)		(1,269	)		(1,892	)
Federal funds purchased		(20	)		5			(15	)
Subordinated notes and debentures		1,386			340			1,726
Total borrowings		743			(924	)		(181	)
Total interest expense	$	43,662		$	23,614		$	67,276
Net interest income, fully taxable equivalent	$	20,467		$	(5,253	)	$	15,214

(1)

Includes loans and leases on non-accrual status.

Net interest income for the three months ended September 30, 2024 was $87.5 million compared to $92.5 million during the same period in 2023, a decrease of $5.0 million, or 5.4%. Interest income increased $9.8 million for the three months ended September 30, 2024 compared to the same period in 2023 primarily a result of growth in the loan and lease portfolio, including acquired loans, and higher yields on interest earning assets. Interest expense increased by $14.8 million for the three months ended September 30, 2024 compared to the same period in 2023 mostly due growth of the deposit portfolio, including assumed deposits, change in deposit mix, and higher rates paid on interest-bearing deposits.

Net interest income for the nine months ended September 30, 2024 was $259.5 million compared to $244.3 million during the same period in 2023, an increase of $15.2 million, or 6.2%. Interest income increased $82.5 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarily a result of growth in the loan and lease portfolio. Interest expense increased by $67.3 million for the nine months ended September 30, 2024 compared to the same period in 2023 mostly due growth of the deposit portfolio, including assumed deposits, change in deposit mix, and higher rates paid on interest-bearing deposits.

The net interest margin for the three months ended September 30, 2024 was 3.88%, a decrease of 58 basis points compared to 4.46% for the three months ended September 30, 2023. The decrease was primarily attributable to lower loan accretion income and higher rates paid on deposits. The net interest margin for the nine months ended September 30, 2024 was 3.95%, a decrease of 44 basis points compared to 4.39% for the nine months ended September 30, 2023. The decrease was primarily attributable to higher rates paid on deposits.

Net loan accretion income was $3.0 million for the three months ended September 30, 2024 compared to $10.3 million for the three months ended September 30, 2023, a decrease of $7.3 million mainly due to lower accretion on loans acquired in the Inland acquisition. Total net loan accretion on acquired loans contributed 13 basis points to the net interest margin for the three months ended September 30, 2024 compared to 50 basis points for the three months ended September 30, 2023.

Net loan accretion income was $10.9 million for the nine months ended September 30, 2024 compared to $11.6 million for the nine months ended September 30, 2023, a decrease of $694,000 due to lower accretion on loans acquired in the Inland acquisition. Total net loan accretion on acquired loans contributed 17 basis points to the net interest margin for the nine months ended September 30, 2024 compared to 21 basis points for the nine months ended September 30, 2023.

Assuming no additional acquisitions, we expect loan accretion income to decline over time. Based on our portfolio, the estimated projected accretion income for the remaining periods as of September 30, 2024 is summarized as follows (dollars in thousands):


	Estimated Projected Accretion (1)(2)
Remainder of 2024	$	1,774
2025		6,011
2026		4,397
2027		2,744
2028		1,558
Thereafter		11,583
Total	$	28,067

(1) Estimated projected accretion excludes contractual interest income on acquired loans and leases.

(2) Projections are undated quarterly, assume no prepayments, and are subject to change.

Provision for Credit Losses

The provision for credit losses reflects the amount required to maintain the ACL at an appropriate level based upon management’s evaluation of collectively and individually evaluated loss reserves. The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management’s evaluation, is appropriate to provide coverage for current expected credit losses in the loan and lease portfolio. The ACL is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior charge-offs.

The provision for credit losses was $7.5 million for the three months ended September 30, 2024, compared to $8.8 million for the three months ended September 30, 2023, a decrease of $1.3 million and is comprised of a provision for credit losses - loans and leases and a provision for credit losses - unfunded commitments. Provision for credit losses - loans and leases was $7.6 million for the three months ended September 30, 2024, and $7.9 million for the three months ended September 30, 2023, a decrease of $268,000. On July 1, 2023, a $2.7 million provision for credit losses was recorded on acquired non-credit-deteriorated loans related to the Inland transaction. The provision for credit losses - unfunded commitments was a recapture of $122,000 and a provision of $937,000 for the three months ended September 30, 2024 and 2023, respectively.

The provision for credit losses was $20.2 million for the nine months ended September 30, 2024, compared to $24.4 million for the nine months ended September 30, 2023, a decrease of $4.3 million. Provision for credit losses - loans and leases was $21.4 million for the nine months ended September 30, 2024, and $24.0 million for the nine months ended September 30, 2023, a decrease of $2.7 million. The provision for credit losses - unfunded commitments reflects a recapture of $1.2 million and a provision of $373,000 for the nine months ended September 30, 2024 and 2023, respectively.

Non-Interest Income

The following table presents the major components of non-interest income for the three and nine months ended September 30, 2024 and 2023, respectively (dollars in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						QTD 2024 Compared to 2023						YTD 2024 Compared to 2023
	2024			2023			2024			2023			$ Change			% Change			$ Change			% Change
Fees and service charges on deposits	$	2,591		$	2,372		$	7,566		$	6,725		$	219			9.2	%	$	841			12.5	%
Loan servicing revenue		3,174			3,369			9,754			10,126			(195	)		(5.8	)%		(372	)		(3.7	)%
Loan servicing asset revaluation		(2,183	)		(3,646	)		(5,354	)		(3,855	)		1,463			(40.1	)%		(1,499	)		38.9	%
ATM and interchange fees		1,143			1,205			3,381			3,380			(62	)		(5.2	)%		1			0.0	%
Change in fair value of equity securities, net		388			(313	)		390			230			701		NM				160			69.4	%
Net gains on sales of loans		5,864			6,473			17,433			17,325			(609	)		(9.4	)%		108			0.6	%
Wealth management and trust income		1,101			939			3,200			2,902			162			17.2	%		298			10.3	%
Other non-interest income		2,307			1,977			6,332			4,979			330			16.7	%		1,353			27.2	%
Total non-interest income	$	14,385		$	12,376		$	42,702		$	41,812		$	2,009			16.2	%	$	890			2.1	%

Fees and service charges on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but are not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $2.6 million and $2.4 million for the three months ended September 30, 2024 and 2023, respectively. Fees and service charges on deposits were $7.6 million and $6.7 million for the nine months ended September 30, 2024 and 2023, respectively. The increases were primarily due to increases in deposit balances.

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of loans that we sell are retained by us. In exchange for continuing to service loans that have been sold, we receive servicing revenue from a portion of the interest cash flow of the loan. We generated $3.2 million and $3.4 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the three months ended September 30, 2024 and 2023, respectively. We generated $9.8 million and $10.1 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024 and 2023, the outstanding balance of guaranteed loans serviced was $1.7 billion.

Loan servicing asset revaluation represents net changes in the fair value of our servicing assets. Loan servicing asset revaluation had a downward adjustment of $2.2 million and $3.6 million for the three months ended September 30, 2024 and 2023, respectively, a change of $1.5 million. Change in the quarterly revaluation was mainly due to a decline in the discount rate. Loan servicing asset revaluation had a downward adjustment of $5.4 million and $3.9 million for the nine months ended September 30, 2024 and 2023, respectively, a change of $1.5 million. Change in the year-to-date revaluation was mainly due to a decline in overall loans serviced balances and higher prepayment speeds.

Net gains on sales of loans were $5.9 million for the three months ended September 30, 2024 compared to $6.5 million for the three months ended September 30, 2023, a decrease of $609,000 or 9.4%, driven mainly by lower volume, offset by higher premiums. We sold $79.5 million of U.S. government guaranteed loans during the three months ended September 30, 2024 compared to $101.6 million during the three months ended September 30, 2023. Net gains on sales of loans were $17.4 million for the nine months ended September 30, 2024 compared to $17.3 million for the nine months ended September 30, 2023, an increase of $108,000 or 0.6%, driven by average higher premiums received in the current year, offset by a lower volume of loans sold. We sold $225.9 million of U.S. government guaranteed loans during the nine months ended September 30, 2024 compared to $253.4 million during the nine months ended September 30, 2023.

Wealth management and trust income represents fees charged to customers for investment, trust, or wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $1.1 million for the three months ended September 30, 2024 compared to $939,000 for the three months ended September 30, 2023, an increase of $162,000 or 17.2%. Wealth management and trust income was $3.2 million for the nine months ended September 30, 2024 compared to $2.9 million for the nine months ended September 30, 2023, an increase of $298,000 or 10.3%. Assets under administration were $747.7 million and $742.6 million as of September 30, 2024 and 2023, respectively. The increases were primarily driven by higher fees on managed assets and new products and services.

Other non-interest income was $2.3 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023, an increase of $330,000 or 16.7%. The increase was primarily driven by increased swap fee income. Other non-interest income was $6.3 million for the nine months ended September 30, 2024 compared to $5.0 million for the nine months ended September 30, 2023, an increase of $1.4 million or 27.2%. The increase was primarily driven by net gains on sales of leased equipment, income associated with bank owned life insurance, and increased swap fee income.

Non-Interest Expense

The following table presents the major components of non-interest expense for the three and nine months ended September 30, 2024 and 2023, respectively (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					QTD 2024 Compared to 2023						YTD 2024 Compared to 2023
	2024		2023		2024			2023		$ Change			% Change			$ Change			% Change
Salaries and employee benefits	$	34,974	$	34,969	$	102,838		$	95,005	$	5			0.0	%	$	7,833			8.2	%
Occupancy and equipment expense, net		4,373		5,314		14,296			14,162		(941	)		(17.7	)%		134			0.9	%
Impairment charge on assets held for sale		—		—		—			20		—			0.0	%		(20	)		(100.0	)%
Loan and lease related expenses		703		836		2,129			2,287		(133	)		(15.9	)%		(158	)		(6.9	)%
Legal, audit and other professional fees		3,643		3,805		10,070			10,594		(162	)		(4.3	)%		(524	)		(5.0	)%
Data processing		4,215		6,472		12,396			14,527		(2,257	)		(34.9	)%		(2,131	)		(14.7	)%
Net (gain) loss recognized on other real estate owned and other related expenses		74		111		(86	)		296		(37	)		(32.7	)%		(382	)	NM
Other intangible assets amortization expense		1,345		1,551		4,035			4,461		(206	)		(13.2	)%		(426	)		(9.6	)%
Other non-interest expense		5,000		4,833		15,668			14,667		167			3.5	%		1,001			6.8	%
Total non-interest expense	$	54,327	$	57,891	$	161,346		$	156,019	$	(3,564	)		(6.2	)%	$	5,327			3.4	%

Salaries and employee benefits, the single largest component of our non-interest expense, totaled $35.0 million for each of the three months ended September 30, 2024 and 2023, respectively. Salaries and employee benefits, totaled $102.8 million for the nine months ended September 30, 2024 compared to $95.0 million for the nine months ended September 30, 2023, an increase of $7.8 million, or 8.2%. The increase was primarily a result of merit increases, lower deferred salaries, and higher commissions paid.

Occupancy and equipment expense, net, was $4.4 million for the three months ended September 30, 2024 compared to $5.3 million for the three months ended September 30, 2023, a decrease of $941,000 or 17.7%. The decrease was primarily as a result of lower rent and building maintenance expense. Occupancy and equipment expense, net, was $14.3 million for the nine months ended September 30, 2024 compared to $14.2 million for the nine months ended September 30, 2023, an increase of $134,000 or 0.9%. The increase was primarily due to branches acquired as a result of the Inland acquisition.

Loan and lease related expenses were $703,000 for the three months ended September 30, 2024 compared to $836,000 for the three months ended September 30, 2023, a decrease of $133,000, or 15.9%. Loan and lease related expenses were $2.1 million for the nine months ended September 30, 2024, compared to $2.3 million for the nine months ended September 30, 2023, a decrease of $158,000 or 6.9%. The decrease was primarily driven by lower government guaranteed loan expenses.

Legal, audit, and other professional fees were $3.6 million for the three months ended September 30, 2024 compared to $3.8 million for the three months ended September 30, 2023, a decrease of $162,000, or 4.3%. Legal, audit, and other professional fees were $10.1 million for the nine months ended September 30, 2024 compared to $10.6 million for the nine months ended September 30, 2023, a decrease of $524,000 or 5.0%. The decreases were principally driven by merger-related expenses incurred during 2023.

Data processing was $4.2 million for the three months ended September 30, 2024 compared to $6.5 million for the three months ended September 30, 2023, a decrease of $2.3 million or 34.9%. Data processing was $12.4 million for the nine months ended September 30, 2024, compared to $14.5 million for the nine months ended September 30, 2023, a decrease of $2.1 million or 14.7%. The decreases were driven by merger-related expenses incurred during 2023.

Other non-interest expense was $5.0 million for the three months ended September 30, 2024 compared to $4.8 million for the three months ended September 30, 2023, an increase of $167,000 or 3.5%. This increase was due to lower gains on sales of assets compared to the same period in the prior year. Other non-interest expense was $15.7 million for the nine months ended September 30, 2024, compared to $14.7 million for the nine months ended September 30, 2023, an increase of $1.0 million or 6.8%. These increases were mostly due to branch consolidation charges taken during the first half of 2024.

Our efficiency ratio was 52.02% for the three months ended September 30, 2024 compared to 53.75% for the three months ended September 30, 2023. The change in our efficiency ratio for the three months ended September 30, 2024 was driven by non-interest income growth and decrease in non-interest expense. Our adjusted efficiency ratio was 51.62% for the three months ended September 30, 2024 compared to 47.35% for the three months ended September 30, 2023. Our efficiency ratio was 52.05% for the nine months ended September 30, 2024, compared to 52.96% for the nine months ended September 30, 2023. The change in our efficiency ratio was due to higher net interest income. Our adjusted efficiency ratio was 51.92% for the nine months ended September 30, 2024, compared to 49.96% for the nine months ended September 30, 2023.

Please refer to the “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

Income Taxes

Our provision for income taxes for the three months ended September 30, 2024 totaled $9.7 million compared to $9.9 million for the three months ended September 30, 2023, a decrease of $202,000, or 2.0%. The decrease in income tax expense was principally due to a higher discrete income tax benefits due to the exercise of stock options and vesting of restricted shares. Our effective tax rate was 24.3% for the three months ended September 30, 2024 and 26.0% for the three months ended September 30, 2023.

Our provision for income taxes for the nine months ended September 30, 2024 totaled $30.3 million compared to $27.4 million for the nine months ended September 30, 2023, an increase of $2.8 million or 10.3%. The increase in income tax expense was principally due to an increase in net income before provision for income taxes. Our effective tax rate was 25.1% for the nine months ended September 30, 2024 and 26.0% for the nine months ended September 30, 2023.

We expect our effective tax rate for 2024 to be approximately 25-27%.

Financial Condition

Condensed Consolidated Statements of Financial Condition Analysis

Our total assets increased by $542.3 million, or 6.1%, to $9.4 billion at September 30, 2024 compared to $8.9 billion at December 31, 2023. The increase in total assets was primarily due to an increase in cash and cash equivalents of $226.5 million, or 100.1%, an increase in securities available for sale of $159.6 million, or 11.9%, and an increase of $195.1 million in loans and leases, or 2.9%, from $6.7 billion at December 31, 2023 to $6.9 billion at September 30, 2024. Our originated loan and lease portfolio increased by $377.0 million and our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio decreased by $181.8 million. The increase in our originated portfolio was primarily attributed to growth in the commercial and industrial and commercial real estate portfolios. The decrease in our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio was attributed to decreases in commercial and residential real estate resulting from resolutions and charge-offs.

Total liabilities increased by $436.2 million, or 5.5%, to $8.3 billion at September 30, 2024 compared to $7.9 billion at December 31, 2023. Total deposits increased by $320.9 million, or 4.5%, driven by growth in time deposits, interest bearing checking accounts, and money market accounts, offset by decreases to non-interest bearing deposits. Other borrowings increased by $123.6 million, or 31.3%, mainly due to increased FHLB advances.

Investment Portfolio

Our investment securities portfolio consists of securities classified as available-for-sale and held-to-maturity. There were no securities classified as trading in our investment portfolio as of September 30, 2024 or December 31, 2023. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest. Securities available-for-sale consist primarily of residential mortgage-backed securities, commercial mortgage-backed securities and U.S. government agencies securities.

Securities available-for-sale increased by $159.6 million, or 11.9%, from $1.3 billion at December 31, 2023 to $1.5 billion at September 30, 2024. The increase was primarily attributed to purchases of securities, net of maturities, calls, and repayments coupled with a decrease in unrealized losses as a result of the current interest rate environment.

At September 30, 2024, our held-to-maturity securities portfolio consists of obligations of states, municipalities and political subdivisions. We carry these securities at amortized cost. Securities held-to-maturity were $605,000 at September 30, 2024, and $1.2 million at December 31, 2023, respectively.

The following table summarizes the fair value of the available-for-sale and held-to-maturity securities portfolio as of the dates presented (dollars in thousands):


	September 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
U.S. Treasury Notes	$	42,740	$	42,512	$	116,398	$	115,434
U.S. Government agencies		163,197		150,539		147,062		130,695
Obligations of states, municipalities, and political subdivisions		85,185		82,283		86,022		82,275
Residential mortgage-backed securities
Agency		882,382		812,787		786,970		695,803
Non-agency		146,384		128,330		122,359		100,260
Commercial mortgage-backed securities
Agency		258,543		232,169		181,452		147,204
Corporate securities		40,637		38,077		40,681		36,171
Asset-backed securities		16,351		15,411		35,857		34,638
Total available-for-sale	$	1,635,419	$	1,502,108	$	1,516,801	$	1,342,480
Held-to-maturity
Obligations of states, municipalities, and political subdivisions	$	605	$	603	$	1,157	$	1,149
Total held-to-maturity	$	605	$	603	$	1,157	$	1,149

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At September 30, 2024, we evaluated the securities that had an unrealized loss for credit losses and determined there were none. There were 268 investment securities with unrealized losses at September 30, 2024. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

The following table (dollars in thousands) set forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of September 30, 2024. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	Maturity as of September 30, 2024
	Due in One Year or Less					Due from One to Five Years					Due from Five to Ten Years					Due after Ten Years
	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)
Available-for-sale
U.S. Treasury Notes	$	27,967		1.60	%	$	14,773		3.78	%	$	—		0.00	%	$	—		0.00	%
U.S. government agencies		22,857		1.44	%		40,774		2.04	%		93,362		2.60	%		6,204		3.74	%
Obligations of states, municipalities, and political subdivisions		4,107		2.79	%		18,999		3.21	%		24,861		3.68	%		37,218		2.49	%
Residential mortgage- backed securities
Agency		—		0.00	%		30,611		1.64	%		46,389		1.56	%		805,382		2.87	%
Non-agency		—		0.00	%		—		0.00	%		—		0.00	%		146,384		2.76	%
Commercial mortgage- backed securities
Agency		—		0.00	%		2,905		2.57	%		12,879		1.71	%		242,759		3.41	%
Corporate securities		—		0.00	%		17,592		4.96	%		23,045		3.65	%		—		0.00	%
Asset-backed securities		—		0.00	%		—		0.00	%		16,351		4.40	%		—		0.00	%
Total available-for-sale	$	54,931		1.62	%	$	125,654		2.74	%	$	216,887		2.70	%	$	1,237,947		2.95	%
Held-to-maturity
Obligations of states, municipalities, and political subdivisions	$	605		2.75	%	$	—		0.00	%	$	—		0.00	%	$	—		0.00	%
Total held-to-maturity	$	605		2.75	%	$	—		0.00	%	$	—		0.00	%	$	—		0.00	%

(1)

The weighted average yields are based on amortized cost.

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $53.4 million at September 30, 2024, a decrease of $2.3 million from December 31, 2023.

There were no holdings of securities of any one issuer, other than U.S. government-sponsored entities and agencies, with total outstanding balances greater than 10% of our stockholders’ equity as of September 30, 2024 or December 31, 2023.

Restricted Stock

As a member of the Federal Home Loan Bank system, Byline Bank is required to maintain an investment in the capital stock of the FHLB. No market exists for this stock, and it has no quoted market value. The stock is redeemable at par by the FHLB and is, therefore, carried at cost. In addition, Byline Bank owns stock of Bankers’ Bank that was acquired as part of a bank acquisition. The stock is redeemable at par and carried at cost. As of September 30, 2024 and December 31, 2023, we held $22.7 million and $16.3 million, respectively, in FHLB and Bankers’ Bank stock. We evaluate impairment of our investment in FHLB and Bankers’ Bank based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. We did not identify any indicators of impairment of FHLB and Bankers’ Bank stock as of September 30, 2024 and December 31, 2023.

Loan and Lease Portfolio

Lending-related income is the most important component of our net interest income and is the main driver of the results of our operations. Total loans and leases at September 30, 2024 and December 31, 2023 were $6.9 billion and $6.7 billion, respectively, an increase of $195.1 million, or 2.9%. Originated loans and leases were $6.1 billion at September 30, 2024, an increase of $376.9 million, or 6.5%, compared to $5.8 billion at December 31, 2023. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $735.5 million at September 30, 2024, a decrease of $181.8 million, or 19.8%, compared to $917.3 million at December 31, 2023. The increase in our originated portfolio was primarily attributed to organic loan and lease growth, and renewals of acquired loans and leases that are now reflected with originated loans. The decrease in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by renewals of acquired loans and leases as well as resolutions and charge-offs.

We strive to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral. Loans, excluding leases, are typically made to real estate, manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and operations. As of September 30, 2024, the loan portfolio included $419.5 million of unguaranteed 7(a) SBA and USDA loans with exposure to the following top three industries: 18.6% retail trade, 13.1% accommodation and food services, and 10.8% manufacturing. The following table shows our allocation of originated, purchase credit deteriorated and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):


	September 30, 2024						December 31, 2023
	Amount			% of Total			Amount			% of Total
Originated loans and leases
Commercial real estate	$	2,040,072			29.7	%	$	1,907,029			28.5	%
Residential real estate		497,034			7.2	%		465,133			7.0	%
Construction, land development, and other land		415,636			6.0	%		415,162			6.2	%
Commercial and industrial		2,476,177			36.0	%		2,311,563			34.6	%
Installment and other		3,839			0.1	%		2,919			0.0	%
Leasing financing receivables		711,233			10.3	%		665,239			10.0	%
Total originated loans and leases	$	6,143,991			89.3	%	$	5,767,045			86.3	%
Purchased credit deteriorated loans
Commercial real estate	$	95,240			1.4	%	$	137,807			2.1	%
Residential real estate		31,362			0.5	%		42,510			0.6	%
Construction, land development, and other land		4			0.0	%		25,331			0.4	%
Commercial and industrial		14,526			0.2	%		19,460			0.3	%
Installment and other		110			0.0	%		125			0.0	%
Total purchased credit deteriorated loans	$	141,242			2.1	%	$	225,233			3.4	%
Acquired non-credit-deteriorated loans and leases
Commercial real estate	$	227,035			3.3	%	$	275,476			4.1	%
Residential real estate		181,976			2.6	%		211,887			3.2	%
Construction, land development, and other land		84,172			1.2	%		86,344			1.3	%
Commercial and industrial		100,852			1.5	%		117,538			1.7	%
Installment and other		32			0.0	%		156			0.0	%
Leasing financing receivables		146			0.0	%		627			0.0	%
Total acquired non-credit-deteriorated loans and leases	$	594,213			8.6	%	$	692,028			10.3	%
Total loans and leases	$	6,879,446			100.0	%	$	6,684,306			100.0	%
Allowance for credit losses - loans and leases		(98,860	)					(101,686	)
Total loans and leases, net of allowance for credit losses - loans and leases	$	6,780,586					$	6,582,620

Loans collateralized by real estate comprised 51.9% and 53.4% of the loan and lease portfolio at September 30, 2024 and December 31, 2023, respectively. Commercial real estate loans comprised the largest portion of the real estate loan portfolio as of September 30, 2024 and December 31, 2023 and totaled $2.4 billion, or 66.1% of real estate loans and 34.4% of the total loan and lease portfolio at September 30, 2024. At December 31, 2023, commercial real estate loans totaled $2.3 billion and comprised 65.1% of real estate loans and 34.7% of the total loan and lease portfolio. Purchased credit deteriorated commercial real estate loans decreased from $137.8 million as of December 31, 2023 to $95.2 million as of September 30, 2024, a decrease of $42.6 million, or 30.9%. At September 30, 2024 and December 31, 2023, commercial real estate loans, including both owner-occupied and non-owner occupied, as a percentage of total capital were 283.2% and 299.6%, respectively. Non-owner occupied commercial real estate loans were $1.0 billion, or 87.4% and 95.9% of total capital, at each of September 30, 2024 and December 31, 2023, respectively.

Residential real estate loans totaled $710.4 million at September 30, 2024 compared to $719.5 million at December 31, 2023, a decrease of $9.2 million, or 1.3%. The residential real estate loan portfolio comprised 19.9% and 20.2% of real estate loans as of September 30, 2024 and December 31, 2023, respectively, and 10.3% and 10.8% of total loans and leases at September 30, 2024 and December 31, 2023, respectively. Purchased credit deteriorated and acquired non-credit-deteriorated residential real estate loans decreased from $254.4 million at December 31, 2023 to $213.3 million at September 30, 2024, a decrease of $41.1 million, or 16.1%. Multifamily real estate loans were $405.3 million and $399.3 million, or 35.0% and 36.8% of total capital, at September 30, 2024 and December 31, 2023, respectively.

Construction, land development, and other land loans totaled $499.8 million at September 30, 2024 compared to $526.8 million at December 31, 2023, a decrease of $27.0 million, or 5.1%. The construction, land development and other land loan portfolio comprised 14.0% and 14.8% of real estate loans at September 30, 2024 and December 31, 2023, respectively, and 7.3% and 7.9% of the total loan and lease portfolio at September 30, 2024 and December 31, 2023, respectively. The construction, land development and other land loan portfolio was 43.1% and 48.3% of total capital, at September 30, 2024 and December 31, 2023, respectively.

Commercial and industrial loans totaled $2.6 billion at September 30, 2024 and $2.4 billion at December 31, 2023, an increase of $143.0 million, or 5.8%. The commercial and industrial loan portfolio comprised 37.7% and 36.6% of the total loan and lease portfolio at September 30, 2024 and December 31, 2023, respectively.

Lease financing receivables comprised 10.3% and 10.0% of the loan and lease portfolio at September 30, 2024 and December 31, 2023, respectively. Total lease financing receivables were $711.4 million and $665.9 million at September 30, 2024 and December 31, 2023, respectively, an increase of $45.5 million, or 6.8%.

Loan and Lease Portfolio Maturities and Interest Rate Sensitivity

The following table shows our loan and lease portfolio by scheduled maturity at September 30, 2024 (dollars in thousands):


	Due in One Year or Less				Due after One Year Through Five Years				Due after Five Years Through Fifteen Years				Due after Fifteen Years
	Fixed Rate		Floating Rate		Fixed Rate		Floating Rate		Fixed Rate		Floating Rate		Fixed Rate		Floating Rate		Total
Originated loans and leases
Commercial real estate	$	125,352	$	260,678	$	816,201	$	386,749	$	180,649	$	114,938	$	10,847	$	144,658	$	2,040,072
Residential real estate		19,177		43,047		167,792		108,260		14,874		82,974		58,271		2,639		497,034
Construction, land development, and other land		20,339		154,579		43,252		176,456		6,668		13,205		495		642		415,636
Commercial and industrial		40,230		528,698		418,122		1,056,618		142,053		251,102		30,328		9,026		2,476,177
Installment and other		648		380		748		1,883		180		—		—		—		3,839
Leasing financing receivables		20,409		—		657,314		—		33,510		—		—		—		711,233
Total originated loans and leases	$	226,155	$	987,382	$	2,103,429	$	1,729,966	$	377,934	$	462,219	$	99,941	$	156,965	$	6,143,991
Purchased credit deteriorated loans
Commercial real estate	$	26,295	$	4,409	$	30,022	$	20,103	$	3,724	$	10,447	$	109	$	131	$	95,240
Residential real estate		2,521		98		16,481		461		3,844		231		4,402		3,324		31,362
Construction, land development, and other land		4		—		—		—		—		—		—		—		4
Commercial and industrial		1,210		—		7,158		128		—		6,030		—		—		14,526
Installment and other		7		—		14		—		89		—		—		—		110
Total purchased credit deteriorated loans	$	30,037	$	4,507	$	53,675	$	20,692	$	7,657	$	16,708	$	4,511	$	3,455	$	141,242
Acquired non-credit- deteriorated loans and leases
Commercial real estate	$	24,256	$	20,475	$	125,025	$	18,341	$	6,202	$	19,313	$	2,302	$	11,121	$	227,035
Residential real estate		1,230		405		51,856		11,585		9,462		9,821		3,451		94,166		181,976
Construction, land development, and other land		11,000		14,614		—		41,417		—		—		2,475		14,666		84,172
Commercial and industrial		2,732		2,211		35,435		7,041		51,656		1,777		—		—		100,852
Installment and other		28		—		4		—		—		—		—		—		32
Leasing financing receivables		146		—		—		—		—		—		—		—		146
Total acquired non-credit- deteriorated loans and leases	$	39,392	$	37,705	$	212,320	$	78,384	$	67,320	$	30,911	$	8,228	$	119,953	$	594,213
Total loans and leases	$	295,584	$	1,029,594	$	2,369,424	$	1,829,042	$	452,911	$	509,838	$	112,680	$	280,373	$	6,879,446

At September 30, 2024, 47.0% of the loan and lease portfolio bears interest at fixed rates and 53.0% at floating rates. The expected life of our loan portfolio will differ from contractual maturities because borrowers may have the right to curtail or prepay their loans with or without penalties. Because a portion of the portfolio is accounted for under ASC 326, the carrying value is significantly affected by estimates and it is impracticable to allocate scheduled payments for those loans based on those estimates. Consequently, the tables presented include information limited to contractual maturities of the underlying loans.

Allowance for Credit Losses - Loans and Leases

The ACL is determined by us on a quarterly basis, although we are engaged in monitoring the appropriate level of the allowance on a more frequent basis. The ACL reflects management’s estimate of current expected credit losses inherent in the loan and lease portfolios. The computation includes elements of judgment and high levels of subjectivity.

Factors considered by us include, but are not limited to, actual loss experience, peer loss experience, changes in size and risk profile of the portfolio, identification of individual problem loan and lease situations that may affect a borrower’s ability to repay, application of a reasonable and supportable forecast, and evaluation of the prevailing economic conditions. Changes in conditions may necessitate revision of the estimate in future periods.

We assess the ACL based on three categories: (i) originated loans and leases, (ii) acquired non-credit-deteriorated loans and leases, and (iii) purchased credit deteriorated loans.

Total ACL was $98.9 million at September 30, 2024 compared to $101.7 million at December 31, 2023, a decrease of $2.8 million or 2.8%. The decrease was primarily due to a decreases associated with individually evaluated loans and decreases in qualitative adjustments. Total ACL to total loans and leases held for investment, net before ACL, was 1.44% and 1.52% of total loans and leases at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, approximately $37.5 million of the ACL was allocated to the unguaranteed portion of SBA 7(a) and USDA loans.

The following tables present an analysis of the allowance for credit losses - loans and leases for the periods presented (dollars in thousands):


	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Balance, June 30, 2024	$	27,852		$	3,023		$	2,723		$	57,584		$	30		$	8,518		$	99,730
Provision/(recapture) for PCD loans		(294	)		(38	)		(169	)		(171	)		—			—			(672	)
Provision/(recapture) for acquired non-credit-deteriorated loans		110			(33	)		(83	)		(73	)		(1	)		(1	)		(81	)
Provision/(recapture) for originated loans		1,394			(50	)		137			6,530			17			322			8,350
Total provision/(recapture)	$	1,210		$	(121	)	$	(115	)	$	6,286		$	16		$	321		$	7,597
Charge-offs for PCD loans		—			—			—			(2,513	)		—			—			(2,513	)
Charge-offs for acquired non-credit deteriorated loans		—			—			—			—			—			—			—
Charge-offs for originated loans		(1,615	)		—			—			(4,435	)		—			(496	)		(6,546	)
Total charge-offs	$	(1,615	)	$	—		$	—		$	(6,948	)	$	—		$	(496	)	$	(9,059	)
Recoveries for PCD loans		79			—			—			—			—			—			79
Recoveries for acquired non-credit deteriorated loans		—			—			—			—			—			—			—
Recoveries for originated loans		114			3			—			313			—			83			513
Total recoveries	$	193		$	3		$	—		$	313		$	—		$	83		$	592
Net (charge-offs) recoveries		(1,422	)		3			—			(6,635	)		—			(413	)		(8,467	)
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Ending ACL Balances
PCD loans		3,782			730			3			340			1			—			4,856
Acquired non-credit-deteriorated loans		1,854			405			326			1,217			—			—			3,802
Originated loans		22,004			1,770			2,279			55,678			45			8,426			90,202
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Loans individually evaluated for impairment	$	6,547		$	82		$	—		$	18,364		$	—		$	—		$	24,993
Loans collectively evaluated for impairment		21,093			2,823			2,608			38,871			46			8,426			73,867
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Loans and leases ending balance
Loans individually evaluated for impairment	$	34,260		$	3,591		$	—		$	50,627		$	—		$	—		$	88,478
Loans collectively evaluated for impairment		2,328,087			706,781			499,812			2,540,928			3,981			711,379			6,790,968
Total loans and leases at September 30, 2024, gross	$	2,362,347		$	710,372		$	499,812		$	2,591,555		$	3,981		$	711,379		$	6,879,446
Ratio of net charge-offs to average loans outstanding during the year
PCD loans		0.00	%		0.00	%		0.00	%		0.14	%		0.00	%		0.00	%		0.14	%
Acquired non-credit-deteriorated loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Originated loans		0.09	%		0.00	%		0.00	%		0.24	%		0.00	%		0.02	%		0.35	%
Loans ending balance as a percentage of total loans, gross
Loans individually evaluated for impairment		0.50	%		0.04	%		0.00	%		0.74	%		0.00	%		0.00	%		1.29	%
Loans collectively evaluated for impairment		33.84	%		10.27	%		7.27	%		36.94	%		0.06	%		10.34	%		98.71	%
Total		34.34	%		10.32	%		7.27	%		37.67	%		0.06	%		10.34	%		100.00	%


	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Balance at December 31, 2023	$	33,237		$	3,495		$	2,906		$	53,782		$	36		$	8,230		$	101,686
Provision/(recapture) for PCD loans		(3,061	)		(172	)		(208	)		784			—			—			(2,657	)
Provision/(recapture) for acquired non-credit-deteriorated loans		(76	)		(231	)		(281	)		(135	)		(2	)		(3	)		(728	)
Provision/(recapture) for originated loans		1,545			(192	)		191			22,034			12			1,161			24,751
Total provision/(recapture)	$	(1,592	)	$	(595	)	$	(298	)	$	22,683		$	10		$	1,158		$	21,366
Charge-offs for PCD loans		(74	)		—			—			(2,513	)		—			—			(2,587	)
Charge-offs for acquired non-credit deteriorated loans		(140	)		—			—			(58	)		—			—			(198	)
Charge-offs for originated loans		(4,899	)		—			—			(17,526	)		—			(1,549	)		(23,974	)
Total charge-offs	$	(5,113	)	$	—		$	—		$	(20,097	)	$	—		$	(1,549	)	$	(26,759	)
Recoveries for PCD loans		84			—			—			—			—			—			84
Recoveries for acquired non-credit deteriorated loans		—			—			—			—			—			—			—
Recoveries for originated loans		1,024			5			—			867			—			587			2,483
Total recoveries	$	1,108		$	5		$	—		$	867		$	—		$	587		$	2,567
Net (charge-offs) recoveries		(4,005	)		5			—			(19,230	)		—			(962	)		(24,192	)
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Ending ACL Balances
PCD loans	$	3,782		$	730		$	3		$	340		$	1		$	—		$	4,856
Acquired non-credit-deteriorated loans		1,854			405			326			1,217			—			—			3,802
Originated loans		22,004			1,770			2,279			55,678			45			8,426			90,202
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Loans individually evaluated for impairment	$	6,547		$	82		$	—		$	18,364		$	—		$	—		$	24,993
Loans collectively evaluated for impairment		21,093			2,823			2,608			38,871			46			8,426			73,867
Balance, September 30, 2024	$	27,640		$	2,905		$	2,608		$	57,235		$	46		$	8,426		$	98,860
Loans and leases ending balance
Loans individually evaluated for impairment	$	34,260		$	3,591		$	—		$	50,627.00		$	—		$	—		$	88,478
Loans collectively evaluated for impairment		2,328,087			706,781			499,812			2,540,928			3,981			711,379			6,790,968
Total loans and leases at September 30, 2024, gross	$	2,362,347		$	710,372		$	499,812		$	2,591,555		$	3,981		$	711,379		$	6,879,446
Ratio of net charge-offs to average loans outstanding during the year
PCD loans		0.00	%		0.00	%		0.00	%		0.05	%		0.00	%		0.00	%		0.05	%
Acquired non-credit-deteriorated loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Originated loans		0.07	%		0.00	%		0.00	%		0.33	%		0.00	%		0.02	%		0.42	%
Loans ending balance as a percentage of total loans, gross
Loans individually evaluated for impairment		0.50	%		0.04	%		0.00	%		0.74	%		0.00	%		0.00	%		1.29	%
Loans collectively evaluated for impairment		33.84	%		10.27	%		7.27	%		36.94	%		0.06	%		10.34	%		98.71	%
Total		34.34	%		10.32	%		7.27	%		37.67	%		0.06	%		10.34	%		100.00	%


	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Balance, June 30, 2023	$	26,377		$	2,544		$	1,935		$	53,640		$	43		$	8,126		$	92,665
Adjustment for acquired PCD loans		8,230			660			97			1,609			—			—			10,596
Provision/(recapture) for PCD loans		(2,904	)		(2	)		217			(543	)		—			—			(3,232	)
Provision/(recapture) for acquired non-credit-deteriorated loans		473			769			694			904			1			(14	)		2,827
Provision/(recapture) for originated loans		4,045			174			257			2,968			3			823			8,270
Total provision/(recapture)	$	1,614		$	941		$	1,168		$	3,329		$	4		$	809		$	7,865
Charge-offs for PCD loans		—			—			—			—			—			—			—
Charge-offs for acquired non-credit deteriorated loans		—			—			—			—			—			—			—
Charge-offs for originated loans		(1,360	)		(12	)		—			(4,200	)		(3	)		(604	)		(6,179	)
Total charge-offs	$	(1,360	)	$	(12	)	$	—		$	(4,200	)	$	(3	)	$	(604	)	$	(6,179	)
Recoveries for PCD loans		—			—			—			—			—			—			—
Recoveries for acquired non-credit deteriorated loans		—			—			—			—			—			—			—
Recoveries for originated loans		124			18			—			460			—			147			749
Total recoveries	$	124		$	18		$	—		$	460		$	—		$	147		$	749
Net (charge-offs) recoveries		(1,236	)		6			—			(3,740	)		(3	)		(457	)		(5,430	)
Balance, September 30, 2023	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Ending ACL Balances
PCD loans	$	6,059		$	999		$	321		$	1,105		$	2		$	—		$	8,486
Acquired non-credit-deteriorated loans		3,534			865			694			1,588			2			3			6,686
Originated loans		25,392			2,287			2,185			52,145			40			8,475			90,524
Balance, September 30, 2023	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Loans individually evaluated for impairment	$	13,199		$	—		$	—		$	15,135		$	—		$	—		$	28,334
Loans collectively evaluated for impairment		21,786			4,151			3,200			39,703			44			8,478			77,362
Balance, September 30, 2023	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Loans and leases ending balance
Loans individually evaluated for impairment	$	67,596		$	—		$	—		$	48,814		$	—		$	—		$	116,410
Loans collectively evaluated for impairment		2,221,164			722,032			523,008			2,385,511			3,246			641,932			6,496,893
Total loans and leases at September 30, 2023, gross	$	2,288,760		$	722,032		$	523,008		$	2,434,325		$	3,246		$	641,932		$	6,613,303
Ratio of net charge-offs to average loans outstanding during the year
PCD loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Acquired non-credit-deteriorated loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Originated loans		0.07	%		0.00	%		0.00	%		0.23	%		0.00	%		0.03	%		0.33	%
Loans ending balance as a percentage of total loans, gross
Loans individually evaluated for impairment		1.02	%		0.00	%		0.00	%		0.74	%		0.00	%		0.00	%		1.76	%
Loans collectively evaluated for impairment		33.59	%		10.92	%		7.91	%		36.07	%		0.05	%		9.71	%		98.24	%
Total		34.61	%		10.92	%		7.91	%		36.81	%		0.05	%		9.71	%		100.00	%


	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Balance at December 31, 2022	$	26,062		$	3,140		$	3,134		$	41,888		$	24		$	7,676		$	81,924
Adjustment for acquired PCD loans		8,230			660			97			1,609			—			—			10,596
Provision/(recapture) for PCD loans		(3,322	)		(335	)		211			(550	)		—			—			(3,996	)
Provision/(recapture) for acquired non-credit-deteriorated loans		(202	)		569			693			359			1			(31	)		1,389
Provision/(recapture) for originated loans		8,378			56			(935	)		17,484			18			1,650			26,651
Total provision	$	4,854		$	290		$	(31	)	$	17,293		$	19		$	1,619		$	24,044
Charge-offs for acquired impaired loans		—			—			—			—			—			—			—
Charge-offs for acquired non-impaired loans and leases		—			—			—			—			—			—			—
Charge-offs for originated loans and leases		(5,271	)		(21	)		—			(8,087	)		(3	)		(1,370	)		(14,752	)
Total charge-offs	$	(5,271	)	$	(21	)	$	—		$	(8,087	)	$	(3	)	$	(1,370	)	$	(14,752	)
Recoveries for acquired impaired loans		—			—			—			—			—			—			—
Recoveries for acquired non-impaired loans and leases		—			—			—			—			—			—			—
Recoveries for originated loans and leases		1,111			82			—			2,134			4			553			3,884
Total recoveries	$	1,111		$	82		$	—		$	2,134		$	4		$	553		$	3,884
Net (charge-offs) recoveries		4,160			(61	)		—			5,953			(1	)		817			10,868.00
Balance, September 30, 2023	$	34,986		$	4,151		$	3,200		$	54,837		$	44		$	8,478		$	105,696
Ending ACL Balances
PCD loans	$	6,059		$	999		$	321		$	1,105		$	2		$	—		$	8,486.00
Acquired non-credit-deteriorated loans		3,534			865			694			1,588			2			3			6,686
Originated loans		25,392			2,287			2,185			52,145			40			8,475			90,524
Balance, September 30, 2023	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Loans individually evaluated for impairment	$	13,199		$	—		$	—		$	15,135		$	—		$	—		$	28,334
Loans collectively evaluated for impairment		21,786			4,151			3,200			39,703			44			8,478			77,362
Balance, September 30, 2023	$	34,985		$	4,151		$	3,200		$	54,838		$	44		$	8,478		$	105,696
Loans and leases ending balance
Loans individually evaluated for impairment	$	67,596		$	—		$	—		$	48,814		$	—		$	—		$	116,410
Loans collectively evaluated for impairment		2,221,164			722,032			523,008			2,385,511			3,246			641,932			6,496,893
Total loans and leases at September 30, 2023, gross	$	2,288,760		$	722,032		$	523,008		$	2,434,325		$	3,246		$	641,932		$	6,613,303
Ratio of net charge-offs to average loans and leases outstanding during the period (annualized)
PCD loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Acquired non-credit-deteriorated loans		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Originated loans		0.09	%		0.00	%		0.00	%		0.14	%		0.00	%		0.02	%		0.25	%
Loans and leases ending balance as a percentage of total loans and leases, gross
Loans individually evaluated for impairment		1.02	%		0.00	%		0.00	%		0.74	%		0.00	%		0.00	%		1.76	%
Loans collectively evaluated for impairment		33.59	%		10.92	%		7.91	%		36.06	%		0.05	%		9.71	%		98.24	%
Total		34.61	%		10.92	%		7.91	%		36.80	%		0.05	%		9.71	%		100.00	%

Non-Performing Assets

Non-performing loans and leases include loans and leases 90 days past due and still accruing and loans and leases accounted for on a non-accrual basis. Non-performing assets consist of non-performing loans and leases plus other real estate owned. Non-performing assets at September 30, 2024 and December 31, 2023 totaled $71.0 million and $65.3 million, with the decrease driven mainly by decreases to non-accrual loans and leases. The U.S. government guaranteed portion of non-performing loans totaled $11.3 million at September 30, 2024 and $4.2 million at December 31, 2023.

Total OREO decreased from $1.2 million at December 31, 2023 to $532,000 at September 30, 2024. The $668,000 decrease in OREO resulted from sales.

The following table sets forth the amounts of non-performing loans and leases, non-performing assets, and OREO at the dates indicated (dollars in thousands):


	September 30,			December 31,
	2024			2023
Non-performing assets:
Non-accrual loans and leases (1)(2)	$	70,507		$	64,107
Past due loans and leases 90 days or more and still accruing interest		—			—
Total non-performing loans and leases		70,507			64,107
Other real estate owned		532			1,200
Total non-performing assets	$	71,039		$	65,307
Total non-performing loans and leases as a percentage of total loans and leases		1.02	%		0.96	%
Total non-accrual loans and leases as a percentage of total loans and leases		1.02	%		0.96	%
Total non-performing assets as a percentage of total assets		0.75	%		0.74	%
Allowance for credit losses - loans and leases, as a percentage of non-performing loans and leases		140.21	%		158.62	%
Allowance for credit losses - loans and leases, as a percentage of non-accrual loans and leases		140.21	%		158.62	%

Non-performing assets guaranteed by U.S. government:
Non-accrual loans guaranteed	$	11,332		$	4,154
Past due loans 90 days or more and still accruing interest guaranteed		—			—
Total non-performing loans guaranteed	$	11,332		$	4,154
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases		0.86	%		0.90	%
Total non-accrual loans and leases not guaranteed as a percentage of total loans and leases		0.86	%		0.90	%
Total non-performing assets not guaranteed as a percentage of total assets		0.63	%		0.69	%

(1)

Includes $4.6 million and $406,000 of non-accrual loan modifications at September 30, 2024 and December 31, 2023, respectively.

(2)

For the nine months ended September 30, 2024 and 2023, $4.8 million and $3.1 million in interest income would have been recorded had non-accrual loans been current.

Deposits

Our loan and lease growth is funded primarily through core deposits. We gather deposits primarily through each of our 45 branch locations in the Chicago metropolitan area and one branch in Wauwatosa, Wisconsin. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, interest-bearing products, savings accounts, and certificates of deposit. Small businesses are a significant source of low cost deposits as they value convenience, flexibility, and access to local decision makers that are responsive to their needs.

Total deposits at September 30, 2024 were $7.5 billion, representing an increase of $320.9 million, or 4.5%, compared to $7.2 billion at December 31, 2023, driven by an increase in time deposits and money market demand accounts. Non-interest-bearing deposits were $1.7 billion, or 23.1% of total deposits, at September 30, 2024, a decrease of $176.0 million, or 9.2%, compared to $1.9 billion at December 31, 2023, or 26.6% of total deposits. Core deposits were 84.8% and 87.0% of total deposits at September 30, 2024 and December 31, 2023, respectively.

The following table shows the average balance amounts and the average contractual rates paid on our deposits for the periods indicated (dollars in thousands):


	For Three Months Ended					For Three Months Ended
	September 30, 2024					September 30, 2023
	Average Balance		Average Rate			Average Balance		Average Rate
Non-interest-bearing demand deposits	$	1,741,250		0.00	%	$	1,987,996		0.00	%
Interest checking		754,586		2.34	%		579,917		1.51	%
Money market accounts		2,386,909		3.56	%		2,040,476		3.24	%
Savings		495,541		0.15	%		594,555		0.15	%
Time deposits (below $100,000)		975,196		4.80	%		923,074		4.37	%
Time deposits ($100,000 and above)		1,159,391		4.91	%		783,457		4.00	%
Total	$	7,512,873		2.76	%	$	6,909,475		2.13	%


	For the Nine Months Ended					For the Nine Months Ended
	September 30, 2024					September 30, 2023
	Average Balance		Average Rate			Average Balance		Average Rate
Non-interest-bearing demand deposits	$	1,810,648		0.00	%	$	1,970,724		0.00	%
Interest checking		687,746		2.13	%		575,558		1.60	%
Money market accounts		2,298,479		3.55	%		1,682,311		2.80	%
Savings		513,815		0.15	%		594,396		0.15	%
Time deposits (below $100,000)		954,539		4.79	%		751,241		3.77	%
Time deposits ($100,000 and above)		1,071,987		4.84	%		585,343		3.25	%
Total	$	7,337,214		2.65	%	$	6,159,573		1.70	%

Our average cost of deposits was 2.76% during the three months ended September 30, 2024, compared to 2.13% for the three months ended September 30, 2023. Our average cost of deposits was 2.65% during the nine months ended September 30, 2024, compared to 1.70% for the nine months ended September 30, 2023. These increases were principally attributed to higher rates on interest-bearing deposits as a result of the rising interest rate environment, an increase in interest bearing deposits and corresponding decrease in non-interest bearing deposits related to deposit flows. The ratio of our average non-interest bearing deposits to total average deposits was 23.2% during the three months ended September 30, 2024, compared to 28.8% during the three months ended September 30, 2023. The ratio of our average non-interest bearing deposits to total average deposits ratios was 24.7% during the nine months ended September 30, 2024 compared to 32.0% during the nine months ended September 30, 2023. We had $428.6 million in brokered time deposits at September 30, 2024 and $480.0 million at December 31, 2023, which represented 5.7% and 6.7% of total deposits, respectively. The decrease in brokered deposits was due to increases in other sources of funding. Our loan and lease to deposit ratio was 92.02% at September 30, 2024 compared to 93.39% at December 31, 2023.

The following table shows time deposits and other time deposits of $250,000 or more by time remaining until maturity as of September 30, 2024 (dollars in thousands):


	Less than $250,000		$250,000 or Greater		Total		Uninsured Portion
Three months or less	$	497,430	$	141,506	$	638,936	$	53,756
Over three months through six months		544,669		171,570		716,239		60,820
Over six months through 12 months		543,122		133,289		676,411		49,539
Over 12 months		54,437		16,095		70,532		7,345
Total	$	1,639,658	$	462,460	$	2,102,118	$	171,460

Total estimated uninsured deposits were $2.2 billion and $1.9 billion as of September 30, 2024 and December 31, 2023. Estimated uninsured deposits reflect amounts disclosed in our regulatory reports, adjusted to exclude related accrued interest and intercompany deposit balances.

Short Term and Long Term Borrowings

In addition to deposits, we also utilize FHLB advances as a supplementary funding source to finance our operations. The Bank’s advances from the FHLB are collateralized by commercial, residential and multi-family real estate loans and securities. At September 30, 2024 and December 31, 2023, we had an available borrowing capacity from the FHLB of $2.9 billion and $2.8 billion, respectively, subject to the availability of collateral. At September 30, 2024, we had $470.0 million of FHLB advances outstanding with a maturities ranging from October 2024 to December 2024. We also had a $13.3 million term loan outstanding maturing in May 2026.

On January 17, 2024, we entered into a Letter Agreement with the FRB that allows the Bank to access the BTFP. On January 22, 2024, we opened an advance of $200.0 million from the FRB as part of the BTFP. On September 19, 2024, we repaid the BTFP advance in full.

We also have the capacity to borrow funds from the discount window of the Federal Reserve System. There were no borrowings outstanding under the Federal Reserve Bank discount window line as of September 30, 2024 and December 31, 2023. We pledge loans as collateral for any borrowings under the Federal Reserve Bank discount window.

The following table sets forth certain information regarding our short-term borrowings at the dates and for the periods indicated (dollars in thousands):


	Nine Months Ended September 30,
	2024			2023
Federal Reserve Bank discount window borrowing:
Average balance outstanding	$	—		$	—
Maximum outstanding at any month-end period during the year		—			—
Balance outstanding at end of period		—			—
Weighted average interest rate during period	N/A			N/A
Weighted average interest rate at end of period	N/A			N/A
Federal Home Loan Bank advances:
Average balance outstanding	$	261,807		$	471,811
Maximum outstanding at any month-end period during the year		670,000			675,000
Balance outstanding at end of period		470,000			640,000
Weighted average interest rate during period		1.98	%		3.67	%
Weighted average interest rate at end of period		4.97	%		5.51	%
Federal funds purchased:
Average balance outstanding	$	465		$	916
Maximum outstanding at any month-end period during the year		—			—
Balance outstanding at end of period		—			—
Weighted average interest rate during period		6.05	%		5.30	%
Weighted average interest rate at end of period	N/A			N/A
Bank Term Funding Program:
Average balance outstanding	$	175,912		$	—
Maximum outstanding at any month-end period during the year		200,000			—
Balance outstanding at end of period		—			—
Weighted average interest rate during period		4.92	%	N/A
Weighted average interest rate at end of period	N/A			N/A
Term Loan:
Average balance outstanding	$	15,000		$	6,593
Maximum outstanding at any month-end period during the year		16,667			20,000
Balance outstanding at end of period		13,333			20,000
Weighted average interest rate during period		7.78	%		7.53	%
Weighted average interest rate at end of period		7.50	%		7.62	%
Revolving Line of Credit:
Average balance outstanding	$	1,766		$	4,945
Maximum outstanding at any month-end period during the year		7,500			15,000
Balance outstanding at end of period		—			15,000
Weighted average interest rate during period		9.76	%		7.88	%
Weighted average interest rate at end of period	N/A				7.38	%

Customer Repurchase Agreements (Sweeps)

Securities sold under agreements to repurchase represent a demand deposit product offered to customers that sweep balances in excess of the FDIC insurance limit into overnight repurchase agreements. We pledge securities as collateral for the repurchase agreements. Securities sold under agreements to repurchase decreased by $5.2 million, from $40.6 million at December 31, 2023 to $35.5 million at September 30, 2024.

Liquidity

We manage liquidity based upon factors that include the amount of core deposits as a percentage of total deposits, the level of diversification of our funding sources, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the availability of assets to be readily converted into cash without undue loss, the amount of cash and liquid securities we hold and the re-pricing characteristics and maturities of our assets when compared to the re-pricing characteristics of our liabilities, the ability to securitize and sell certain pools of assets and other factors.

Our liquidity needs are primarily met by cash and investment securities positions, growth in deposits, cash flow from amortizing loan portfolios, and borrowings from the FHLB. For additional information regarding our operating, investing, and financing cash flows, see Consolidated Statements of Cash Flows in our Unaudited Interim Condensed Consolidated Financial Statements included elsewhere in this report.

As of September 30, 2024, Byline Bank had maximum advance potential from the FHLB of $3.4 billion and $781.0 million from the FRB. As of September 30, 2024, Byline Bank had open FHLB advances of $470.0 million and open letters of credit of $13.9 million. Based on collateral, our available aggregate borrowing capacity at September 30, 2024 was $1.3 billion. In addition, Byline Bank had uncommitted federal funds lines available of $127.5 million available at September 30, 2024.

As of December 31, 2023, Byline Bank had maximum borrowing capacity from the FHLB of $3.1 billion and $866.5 million from the FRB. As of December 31, 2023, Byline Bank had open FHLB advances of $325.0 million and open letters of credit of $19.7 million. Based on collateral and securities pledged, our available aggregate borrowing capacity at December 31, 2023 was $1.6 billion. In addition, Byline Bank had an uncommitted federal funds line available of $135.0 million available at December 31, 2023.

On October 13, 2016, we entered into a $30.0 million revolving credit agreement with a correspondent bank. Through subsequent amendments, the revolving credit agreement was reduced to $15.0 million. The amended revolving line of credit bears interest at either SOFR plus 205 basis points or Prime Rate minus 75 basis points, not to be less than 2.00%, based on our election, which is required to be communicated at least three business days prior to the commencement of an interest period. If we fail to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. On May 24, 2024, we entered into the First Amendment to the Second Amended and Restated Term Loan and Revolving Credit Agreement (the "Amendment") with the lender, which is effective May 26, 2024, and provides for: (1) the renewal of the revolving line-of-credit facility of up to $15.0 million, and (2) extending its maturity date to May 25, 2025, subject to the existing Negative Pledge Agreement dated October 11, 2018, as amended.

At September 30, 2024, the variable term loan had an interest rate of 7.5% and an outstanding balance of $13.3 million. At December 31, 2023, the variable term loan had an interest rate of 7.64% and an outstanding balance of $18.3 million. At September 30, 2024, the line of credit had a no outstanding balance. At December 31, 2023, the line of credit had a $11.3 million outstanding balance and an interest rate of 7.39%

There are regulatory limitations that affect the ability of Byline Bank to pay dividends to the Company. See Note 21 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.

We expect that our cash and liquidity resources will be generated by the operations of Byline Bank, which we expect to be sufficient to satisfy our liquidity and capital requirements for at least the next twelve months.

Capital Resources

Stockholders’ equity at September 30, 2024 was $1.1 billion compared to $990.2 million at December 31, 2023, an increase of $106.2 million, or 10.7%. The increase was primarily driven by an increase in retained earnings and a decrease of in accumulated other comprehensive loss during the nine months ended September 30, 2024, mainly due to a decrease in the unrealized losses in our available-for-sale securities portfolio, which was a $100.2 million unrealized loss at September 30, 2024, compared to a $130.2 million unrealized loss as of December 31, 2023.

The Company and Byline Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.

Under applicable bank regulatory capital requirements, each of the Company and Byline Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Byline Bank must also meet certain specific capital guidelines under the prompt corrective action framework. The capital amounts and classification are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Byline Bank to maintain minimum

amounts and ratios of CET1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets, (referred to as the “leverage ratio”), as defined under these capital requirements.

As of September 30, 2024, Byline Bank exceeded all applicable regulatory capital requirements and was considered “well-capitalized”. There have been no conditions or events since September 30, 2024 that management believes have changed Byline Bank’s classifications.

The regulatory capital ratios for the Company and Byline Bank to meet the minimum capital adequacy standards and for Byline Bank to be considered well capitalized under the prompt corrective action framework and the Company’s and Byline Bank’s actual capital amounts and ratios are set forth in the following tables as of the periods indicated (dollars in thousands):


	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
September 30, 2024	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	1,212,449		14.41	%	$	673,259		8.00	%	N/A		N/A
Bank		1,159,446		13.82	%		671,170		8.00	%	$	838,962		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	1,042,383		12.39	%	$	504,944		6.00	%	N/A		N/A
Bank		1,064,379		12.69	%		503,377		6.00	%	$	671,170		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	955,383		11.35	%	$	378,708		4.50	%	N/A		N/A
Bank		1,064,379		12.69	%		377,533		4.50	%	$	545,325		6.50	%
Tier 1 capital to average assets:
Company	$	1,042,383		11.18	%	$	372,806		4.00	%	N/A		N/A
Bank		1,064,379		11.44	%		372,285		4.00	%	$	465,357		5.00	%


	Actual					Minimum Capital Required					Required to be Considered Well Capitalized
December 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Company	$	1,123,568		13.38	%	$	671,576		8.00	%	N/A		N/A
Bank		1,085,915		12.97	%		669,904		8.00	%	$	837,380		10.00	%
Tier 1 capital to risk weighted assets:
Company	$	956,027		11.39	%	$	503,682		6.00	%	N/A		N/A
Bank		993,375		11.86	%		502,428		6.00	%	$	669,904		8.00	%
Common Equity Tier 1 (CET1) to risk weighted assets:
Company	$	869,027		10.35	%	$	377,762		4.50	%	N/A		N/A
Bank		993,375		11.86	%		376,821		4.50	%	$	544,297		6.50	%
Tier 1 capital to average assets:
Company	$	956,027		10.86	%	$	352,089		4.00	%	N/A		N/A
Bank		993,375		11.30	%		351,735		4.00	%	$	439,669		5.00	%

The ratios above reflect the Company’s election to opt into the regulators’ joint CECL transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the three years beginning January 1, 2022. Accordingly, capital ratios as of September 30, 2024 reflect 75% of the CECL impact and December 31, 2023 reflect 50% of the CECL impact.

The Company and Byline Bank must maintain a capital conservation buffer consisting of CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. The conservation buffers for the Company and Byline Bank exceed the minimum capital requirement as of September 30, 2024.

Provisions of state and federal banking regulations may limit, by statute, the amount of dividends that may be paid to the Company by Byline Bank without prior approval of Byline Bank’s regulatory agencies. The Company is economically dependent on the cash dividends received from Byline Bank. These dividends represent the primary cash flow from operating activities used to service obligations. For the nine months ended September 30, 2024 the Company received $34.5 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note, junior subordinated debentures in connection with its trust preferred securities interest, principal and interest payments related to its term note and revolving line of credit, and to fund other Company-related activities. For the year ended December 31, 2023, the Company received $35.0 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note and junior subordinated debentures in connection with its trust preferred securities interest, principal and interest on its term loan and revolving line of credit, and to fund other Company-related activities.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of the Company’s outstanding common stock. The program will be effect from January 1, 2024 until December 31, 2024, unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal requirements. The shares authorized to be repurchased represented approximately 2.9% of the Company’s outstanding common stock at December 31, 2023. No shares were repurchased under this program during the three and nine months ended September 30, 2024.

On October 22, 2024, our Board of Directors declared a cash dividend of $0.09 per share payable on November 19, 2024 to stockholders of record of our common stock as of November 5, 2024.

Off-Balance Sheet Items and Other Financing Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Condensed Consolidated Statements of Financial Condition. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Byline Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral is primarily obtained in the form of commercial and residential real estate (including income producing commercial properties).

Letters of credit are conditional commitments issued by Byline Bank to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 1.00% to 15.00% and maturities up to 2052. Variable rate loan commitments have interest rates ranging from 4.00% to 18.00% and maturities up to 2053.

Our exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as for funded instruments. We do not anticipate any material losses as a result of the commitments and standby letters of credit.

We enter into interest rate swaps that are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and its known or expected cash payments principally related to certain variable rate loans, money market accounts and variable rate borrowings. We also enter into interest rate swaps with certain qualified borrowers to facilitate the borrowers’ risk management strategies and concurrently entered into mirror-image derivatives with a third party counterparty.

We recognize derivative financial instruments at fair value regardless of the purpose or intent for holding the instrument. We record derivative assets and derivative liabilities on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets, and accrued interest payable and other liabilities, respectively. Because the derivative assets and liabilities recorded on the balance sheet at September 30, 2024 do not represent the amounts that may ultimately be paid under these contracts, these assets and liabilities are listed in the table below (dollars in thousands):


	September 30, 2024
			Fair Value
	Notional		Asset		Liability
Interest rate swaps designated as cash flow hedges	$	650,000	$	26,198	$	—
Other interest rate derivatives		804,488		14,417		(14,485	)
Other credit derivatives		12,718		5		(28	)

See Note 16 of our Unaudited Interim Condensed Consolidated Financial Statements as of September 30, 2024, included in this report, and Note 21 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on derivatives.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in our “Selected Financial Data” are not measures of financial performance in accordance with GAAP. Our management uses the non‑GAAP financial measures set forth below in its analysis of our performance:

•

“Adjusted net income” and “adjusted diluted earnings per share” exclude certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses, adjusted for applicable income tax. Management believes the significant items are not indicative of or useful to measure the Company’s operating performance on an ongoing basis.

•

“Net interest income, fully taxable-equivalent” and “net interest margin, fully taxable-equivalent” are adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. Management believes the metric provides useful comparable information to investors and that these measures may be useful for peer comparison.

•

“Total revenue” is the combination of net interest income and non-interest income. Management believes the metric is an important measure of the Company's operating performance on an ongoing basis.

•

“Adjusted non-interest expense” is non-interest expense excluding certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses.

•

“Adjusted efficiency ratio” is adjusted non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Adjusted non-interest expense to average assets” is adjusted non-interest expense divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Adjusted return on average stockholders’ equity” is adjusted net income divided by average stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Adjusted return on average assets” is adjusted net income divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Non-interest income to total revenues” is non-interest income divided by net interest income plus non-interest income. Management believes that it is standard practice in the industry to present non-interest income as a percentage of total revenue. Accordingly, management believes providing these measures may be useful for peer comparison.

•

“Pre‑tax pre‑provision net income” is pre‑tax income plus the provision for credit losses. Management believes this metric demonstrates income excluding the tax provision or benefit and the provision for credit losses, and enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

•

“Adjusted pre-tax pre-provision net income” is pre-tax pre-provision net income excluding certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Pre‑tax pre‑provision return on average assets” is pre-tax income plus the provision for credit losses, divided by average assets. Management believes this ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for credit losses.

•

“Adjusted pre-tax pre-provision return on average assets” excludes certain significant items, which include impairment charges on assets held for sale and right-of-use assets, and merger-related expenses.

•

“Tangible common equity” is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

•

“Tangible assets” is defined as total assets reduced by goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.

•

“Tangible book value per common share” is calculated as tangible common equity, which is stockholders’ equity reduced by preferred stock and goodwill and other intangible assets, divided by total shares of common stock outstanding. Management believes this metric is important due to the relative changes in the book value per share exclusive of changes in intangible assets.

•

“Tangible common equity to tangible assets” is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this metric is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.

•

“Tangible net income available to common stockholders” is net income available to common stockholders excluding after-tax intangible asset amortization.

•

“Adjusted tangible net income available to common stockholders” is tangible net income available to common stockholders excluding certain significant items. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Return on average tangible common stockholders’ equity” is tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

•

“Adjusted return on average tangible common stockholders’ equity” is adjusted tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

We believe that these non‑GAAP financial measures provide useful information to its management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non‑GAAP financial measures have a number of limitations. As such, you should not view these disclosures 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.

Reconciliations of Non-GAAP Financial Measures


	As of or For the Three Months Ended September 30,						As of or For the Nine Months Ended September 30,
(dollars in thousands, except per share data)	2024			2023			2024			2023
Net income and earnings per share excluding significant items
Reported Net Income	$	30,328		$	28,222		$	90,439		$	78,274
Significant items:
Impairment charges on assets held for sale and ROU asset		—			394			194			414
Merger-related expense		411			6,307			411			8,187
Tax benefit		(32	)		(1,617	)		(84	)		(1,903	)
Adjusted Net Income	$	30,707		$	33,306		$	90,960		$	84,972
Reported Diluted Earnings per Share	$	0.69		$	0.65		$	2.07		$	1.98
Significant items:
Impairment charges on assets held for sale and ROU asset		—			0.01			—			0.01
Merger-related expense		0.01			0.15			0.01			0.21
Tax benefit		—			(0.04	)		—			(0.05	)
Adjusted Diluted Earnings per Share	$	0.70		$	0.77		$	2.08		$	2.15


	As of or For the Three Months Ended September 30,						As of or For the Nine Months Ended September 30,
(dollars in thousands, except per share data)	2024			2023			2024			2023
Adjusted non-interest expense:
Non-interest expense	$	54,327		$	57,891		$	161,346		$	156,019
Less: Impairment charges on assets held for sale and ROU asset		—			394			194			414
Less: Merger-related expenses		411			6,307			411			8,187
Adjusted non-interest expense	$	53,916		$	51,190		$	160,741		$	147,418
Adjusted non-interest expense excluding amortization of intangible assets:
Adjusted non-interest expense	$	53,916		$	51,190		$	160,741		$	147,418
Less: Amortization of intangible assets		1,345			1,551			4,035			4,461
Adjusted non-interest expense excluding amortization of intangible assets	$	52,571		$	49,639		$	156,706		$	142,957
Pre-tax pre-provision net income:
Pre-tax income	$	40,038		$	38,134		$	120,715		$	105,711
Add: Provision for credit losses		7,475			8,803			20,163			24,418
Pre-tax pre-provision net income	$	47,513		$	46,937		$	140,878		$	130,129
Adjusted pre-tax pre-provision net income:
Pre-tax pre-provision net income	$	47,513		$	46,937		$	140,878		$	130,129
Add: Impairment charges on assets held for sale and ROU asset		—			394			194			414
Add: Merger-related expenses		411			6,307			411			8,187
Adjusted pre-tax pre-provision net income	$	47,924		$	53,638		$	141,483		$	138,730
Taxable equivalent net interest income:
Net interest income	$	87,455		$	92,452		$	259,522		$	244,336
Add: Tax-equivalent adjustment		229			248			691			663
Net interest income, fully taxable equivalent	$	87,684		$	92,700		$	260,213		$	244,999
Total revenues:
Net interest income	$	87,455		$	92,452		$	259,522		$	244,336
Add: non-interest income		14,385			12,376			42,702			41,812
Total revenues	$	101,840		$	104,828		$	302,224		$	286,148
Tangible common stockholders' equity:
Total stockholders' equity	$	1,096,312		$	919,945		$	1,096,312		$	919,945
Less: Goodwill and other intangibles		199,443			205,028			199,443			205,028
Tangible common stockholders' equity	$	896,869		$	714,917		$	896,869		$	714,917
Tangible assets:
Total assets	$	9,424,316		$	8,943,368		$	9,424,316		$	8,943,368
Less: Goodwill and other intangibles		199,443			205,028			199,443			205,028
Tangible assets	$	9,224,873		$	8,738,340		$	9,224,873		$	8,738,340
Average tangible common stockholders' equity:
Average total stockholders' equity	$	1,059,628		$	924,278		$	1,022,548		$	838,792
Less: Average goodwill and other intangibles		200,091			202,978			201,426			172,806
Average tangible common stockholders' equity	$	859,537		$	721,300		$	821,122		$	665,986
Average tangible assets:
Average total assets	$	9,373,849		$	8,634,345		$	9,182,543		$	7,799,187
Less: Average goodwill and other intangibles		200,091			202,978			201,426			172,806
Average tangible assets	$	9,173,758		$	8,431,367		$	8,981,117		$	7,626,381
Tangible net income available to common stockholders:
Net income available to common stockholders	$	30,328		$	28,222		$	90,439		$	78,274
Add: After-tax intangible asset amortization		986			1,137			2,959			3,270
Tangible net income available to common stockholders	$	31,314		$	29,359		$	93,398		$	81,544
Adjusted tangible net income available to common stockholders:
Tangible net income available to common stockholders	$	31,314		$	29,359		$	93,398		$	81,544
Add: Impairment charges on assets held for sale and ROU asset		—			394			194			414
Add: Merger-related expenses		411			6,307			411			8,187
Add: Tax benefit on significant items		(32	)		(1,617	)		(84	)		(1,903	)
Adjusted tangible net income available to common stockholders	$	31,693		$	34,443		$	93,919		$	88,242


	As of or For the Three Months Ended September 30,						As of or For the Nine Months Ended September 30,
(dollars in thousands, except share and per share data)	2024			2023			2024			2023
Pre-tax pre-provision return on average assets:
Pre-tax pre-provision net income	$	47,513		$	46,937		$	140,878		$	130,129
Average total assets		9,373,849			8,634,345			9,182,543			7,799,187
Pre-tax pre-provision return on average assets		2.02	%		2.16	%		2.05	%		2.23	%
Adjusted pre-tax pre-provision return on average assets:
Adjusted pre-tax pre-provision net income	$	47,924		$	53,638		$	141,483		$	138,730
Average total assets		9,373,849			8,634,345			9,182,543			7,799,187
Adjusted pre-tax pre-provision return on average assets:		2.03	%		2.46	%		2.06	%		2.38	%
Net interest margin, fully taxable equivalent
Net interest income, fully taxable equivalent	$	87,684		$	92,700		$	260,213		$	244,999
Total average interest-earning assets		8,961,650			8,220,678			8,770,266			7,438,571
Net interest margin, fully taxable equivalent		3.89	%		4.47	%		3.96	%		4.40	%
Non-interest income to total revenues:
Non-interest income	$	14,385		$	12,376		$	42,702		$	41,812
Total revenues		101,840			104,828			302,224			286,148
Non-interest income to total revenues		14.13	%		11.81	%		14.13	%		14.61	%
Adjusted non-interest expense to average assets:
Adjusted non-interest expense	$	53,916		$	51,190		$	160,741		$	147,418
Average total assets		9,373,849			8,634,345			9,182,543			7,799,187
Adjusted non-interest expense to average assets		2.29	%		2.35	%		2.34	%		2.53	%
Adjusted efficiency ratio:
Adjusted non-interest expense excluding amortization of intangible assets	$	52,571		$	49,639		$	156,706		$	142,957
Total revenues		101,840			104,828			302,224			286,148
Adjusted efficiency ratio		51.62	%		47.35	%		51.85	%		49.96	%
Adjusted return on average assets:
Adjusted net income	$	30,707		$	33,306		$	90,960		$	84,972
Average total assets		9,373,849			8,634,345			9,182,543			7,799,187
Adjusted return on average assets		1.30	%		1.53	%		1.32	%		1.46	%
Adjusted return on average stockholders' equity:
Adjusted net income	$	30,707		$	33,306		$	90,960		$	84,972
Average stockholders' equity		1,059,628			924,278			1,022,548			838,792
Adjusted return on average stockholders' equity		11.53	%		14.30	%		11.88	%		13.54	%
Tangible common equity to tangible assets:
Tangible common equity	$	896,869		$	714,917		$	896,869		$	714,917
Tangible assets		9,224,873			8,738,340			9,224,873			8,738,340
Tangible common equity to tangible assets		9.72	%		8.18	%		9.72	%		8.18	%
Return on average tangible common stockholders' equity:
Tangible net income available to common stockholders	$	31,314		$	29,359		$	93,398		$	81,544
Average tangible common stockholders' equity		859,537			721,300			821,122			665,986
Return on average tangible common stockholders' equity		14.49	%		16.15	%		15.19	%		16.37	%
Adjusted return on average tangible common stockholders' equity:
Adjusted tangible net income available to common stockholders	$	31,693		$	34,443		$	93,919		$	88,242
Average tangible common stockholders' equity		859,537			721,300			821,122			665,986
Adjusted return on average tangible common stockholders' equity		14.67	%		18.95	%		15.28	%		17.72	%
Tangible book value per share:
Tangible common equity	$	896,869		$	714,917		$	896,869		$	714,917
Common shares outstanding		44,384,706			43,719,203			44,384,706			43,719,203
Tangible book value per share	$	20.21		$	16.35		$	20.21		$	16.35

It em 3. Quantitative and Qualitative Disclosures About Market Risk.

Our primary market risk is interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates.

We seek to measure and manage the potential impact of interest rate risk. Interest rate risk occurs when interest-earning assets and interest-bearing liabilities mature or re-price at different times, on a different basis or in unequal amounts. Interest rate risk also arises when our assets, liabilities and off-balance sheet contracts each respond differently to changes in interest rates, including as a result of explicit and implicit provisions in agreements related to such assets and liabilities and in off-balance sheet contracts that alter the applicable interest rate and cash flow characteristics as interest rates change.

We are also exposed to interest rate risk through the retained portion of the U.S. government guaranteed loans we make and the related servicing rights. Our U.S. government guaranteed loan portfolio is comprised primarily of SBA 7(a) loans, virtually all of which are quarterly or monthly adjustable with the prime rate. The SBA portfolio reacts differently in a rising rate environment than our other non-guaranteed portfolios. Generally, when interest rates rise, the prepayments in the SBA portfolio tend to increase.

Our management of interest rate risk is overseen by our Board of Directors and management asset liability committees based on a risk management infrastructure approved by our Board of Directors that outline reporting and measurement requirements. Our risk management infrastructure also requires a periodic review of all key assumptions used, such as identifying appropriate interest rate scenarios, setting loan prepayment rates based on historical analysis, non-interest-bearing and interest-bearing demand deposit lives based on historical analysis and the targeted investment term of capital. The committees closely monitor our interest sensitivity exposure, asset and liability allocation decisions, liquidity and capital positions, and local and national economic conditions and attempts to structure the loan and investment portfolios and funding sources to maximize earnings within acceptable risk tolerances.

We manage the interest rate risk associated with our interest-bearing liabilities by managing the interest rates and tenors associated with our borrowings from the FHLB, and deposits from our customers that we rely on for funding. We manage the interest rate risk associated with our interest-earning assets by managing the interest rates and tenors associated with our investment and loan portfolios, from time to time purchasing and selling investment securities.

We utilize interest rate derivatives to hedge our interest rate exposure on commercial loans when it meets our customers’ and Byline Bank’s needs. As of September 30, 2024, we had a notional amount of $1.5 billion of interest rate derivatives outstanding that includes customer swaps and those on Byline Bank's balance sheet. The overall effectiveness of our hedging strategies is subject to market conditions, the quality of our execution, the accuracy of our valuation assumptions, the associated counterparty credit risk and changes in interest rates.

We do not engage in speculative trading activities relating to interest rates, foreign exchange rates, commodity prices, equities or credit.

Evaluation of Interest Rate Risk

We evaluate interest rate risk through the use of two different models: net interest income ("NII") simulations and economic value of equity ("EVE") simulations. The simulations provide an estimate of the impact of changes in interest rates on equity and net interest income based on a variety of assumptions. Changes in assumptions may significantly alter the results of our simulations.

We use an NII simulation model to measure and evaluate potential changes in our net interest income. We run various hypothetical interest rate scenarios at least quarterly and compare these results against a scenario with no changes in interest rates. Our NII simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) predefined credit spreads for both investment securities and loans, (3) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, and (4) the effect of interest rate limitations in our assets, such as floors and caps. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

We use an EVE simulation to analyze the Company's long-term view of interest rate risk as it analyzes the Company's future cash flows. EVE is defined as the present value of the Company's assets, less the present value of its liabilities, adjusted for off-balance sheet items, with the results showing a theoretical change in the economic value of stockholders' equity as interest rates change. Our EVE simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) deposit decay rate assumptions, (3) predefined credit spreads for both investment securities and loans (4) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, (5) amortization schedule, and (6) discount rates associated with the products on balance sheet.

Potential changes to our net interest income and economic value of equity in hypothetical rising and declining interest rate scenarios calculated as of September 30, 2024 are presented below.


	Estimated Increase/Decrease in Net Interest Income		Estimated Percentage Change in EVE
	Twelve Months Ending Septmember 30,		As of
Basis Point Change in Interest Rates	2025	2026	September 30, 2024
+300	10.9%	13.4%	(16.7)%
+200	7.9%	9.6%	(11.0)%
+100	4.3%	5.2%	(5.2)%
-100	(3.2)%	(4.5)%	4.7%
-200	(6.5)%	(9.8)%	8.1%
-300	(8.0)%	(13.0)%	10.0%

We also prepare NII simulations that include a dynamic balance sheet and rate shift scenarios. When preparing, the balance sheet reflects management's growth outlook and interest rates follow a forward yield curve. The shocks are defined as gradual shifts up and down by 1/12th of the total change in rates each month for 12 months. In these dynamic balance sheet and rate shift scenarios, a gradual shift downward of 100 and 200 basis points would result in a 2.5% and 5.0% decrease to net interest income, and a gradual shift upwards of 100 and 200 basis points would result in 2.9% and 5.8% increases to net interest income, respectively, over the next 12 months.

The Bank's aggregate interest rate risk exposure is monitored and managed based on the economic outlook and under guidance of board-approved policy limits. The results of the simulations are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted including the timing, magnitude, frequency of interest rate changes, changes in market conditions, depositor behavior changes, and management strategies.

It em 4. Controls and Procedures.

The Company’s management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of September 30, 2024, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II-OT HER INFORMATION

Item 1. Legal Proceedings.

We operate in a highly regulated environment. From time to time we are a party to various litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.

Ite m 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in the “Risk Factors” section included in our Form 10-K for our fiscal year ended December 31, 2023 that was filed with the SEC on March 4, 2024.

Ite m 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program is in effect from January 1, 2024 until December 31, 2024 unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by us at our discretion and will depend on a number of factors, including the market price of our stock, general market and economic conditions and applicable legal requirements.

The table below includes information regarding purchases of our common stock during the quarter ended September 30, 2024. We did not purchase any shares of our common stock during the third quarter of 2024 under our stock repurchase program.


Issuer Purchases of Equity Securities
							Maximum Number of
	Total		Average		Total Number of Shares		Shares that
	Number of		Price		Purchased as Part of a		May Yet Be
	Shares		Paid per		Publicly Announced		Purchased Under the
	Purchased (1)		Share		Plan or Program		Plan or Program
July 1 - July 31, 2024		—	$	—		—		1,250,000
August 1 - August 31, 2024		1,470		27.11		—		1,250,000
September 1 - September 30, 2024		305		26.50		—		1,250,000
Total		1,775	$	27.00		—

(1)

All shares acquired during the three months ended September 30, 2024 were acquired pursuant to the Company’s 2017 Omnibus Incentive Compensation Plan. Under the terms of the compensation plan, we can accept previously owned shares of common stock to be surrendered to satisfy the exercise price of stock options, the settlement of restricted stock awards and tax withholding obligations upon vesting and/or exercise.

Item 3. Def aults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None .

Ite m 6. Exhibits.


		EXHIBIT
Number		Description
3.1		Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference)
3.2		Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference)
4.1		Certain instruments defining the rights of holders of long-term debt securities of the registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
31.1		Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (a)		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, formatted in Inline XBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Statements of Condition; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements
104		Cover Page Interactive Data File – the cover page XBRL tags are embedded with the Inline XBRL document.

(a)

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNAT URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Byline Bancorp, Inc.
Date: November 1, 2024	By:	/s/	Roberto R. Herencia
			Roberto R. Herencia
			Chief Executive Officer
			(Principal Executive Officer)

Date: November 1, 2024	By:	/s/	Thomas J. Bell III
			Thomas J. Bell III
			Executive Vice President, Chief Financial Officer and Treasurer
			(Principal Financial Officer)

TABLE OF CONTENTS

Part I Financ Item 1. Financial Statements Item 1. Financ Note 1 Basis Of Presentation Note 1 Basis Of Present Note 2 Accounting Pronouncements Recently Adopted Or Issued Note 3 Acquisition Of A Business Note 4 Securities Note 5 Loan and Lease Receivables and Allowance For Credit Losses Note 6 Servicing Assets Note 7 Other Real Estate Owned Note 8 Leases Note 9 Goodwill, Core Deposit Intangible and Other Intangible Assets Note 10 Income Taxes Note 11 Deposits Note 12 Other Borrowings Note 13 Subordinated Notes and Junior Subordinated Debentures Note 14 Commitments and Contingent Liabilities Note 15 Fair Value Measurement Note 16 Derivative Instruments and Hedge Activities Note 17 Share-based Compensation Note 18 Earnings Per Share Note 19 Stockholders Equity Note 20 Consolidated Statements Of Changes in Accumulated Other Comprehensive Income (loss)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part Ii-other Information Part Ii-ot Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 3. Def Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

3.1 Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Companys Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference) 3.2 Amended and Restated Bylaws (filed as Exhibit 3.2 to the Companys Registration Statement on Form S-1, as amended (File No. 333-218362) filed on June 19, 2017 and incorporated herein by reference) 31.1 Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002 32.1(a) Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

BY 10-Q Quarter ended Sept. 30, 2024

Exhibits