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What changed in BYLINE BANCORP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BYLINE BANCORP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+836 added−796 removedSource: 10-K (2024-03-04) vs 10-K (2023-03-07)

Top changes in BYLINE BANCORP, INC.'s 2023 10-K

836 paragraphs added · 796 removed · 635 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

130 edited+45 added−31 removed113 unchanged
Biggest changeOur key programs and initiatives that are focused to attract, develop and retain our diverse workforce include: • The DEI Council , made up of three senior executives and 16 employees with representation across all business units, is the foundation and catalyst for honoring our employees, engaging our customers and community, creating a great place to work, and ultimately driving business success led by our executive team. • We pledge to create an environment where every employee can bring their authentic self to work and knows that their background, ethnicity, experiences, perspective, and contributions serve to strengthen us, and where growth opportunities exist at all levels. • For our customers and community, we seek to demonstrate through our actions our commitment to being better together through community development loans and investments, community service, grants, donations, and sponsorships. • We seek to leverage our current diverse workforce and prominent community outreach efforts to further define and enhance our DEI focus in four key areas: o Workforce – Promoting representation at all levels and in all areas and business lines of the Bank, with attention on recruiting and developing diverse talent and focusing on engagement and employee recognition. o Workplace – Creating a culture where everyone brings their authentic self to work and knows that their unique background, ethnicity, experiences, perspective, and contribution serve to strengthen the Bank. 7 o Community – Building meaningful, supportive relationships in the communities we work. o Marketplace – Provide greater accessibility to banking products, services, and financial education to minority owned small businesses, including in low and moderate income areas.
Biggest changeWe seek to leverage our current diverse workforce and prominent community outreach efforts to further define and enhance our DEI focus in four key areas: • Workforce – Promoting representation at all levels and in all areas and business lines of the Bank, with attention on recruiting and developing diverse talent and focusing on engagement and employee recognition. • Workplace – Creating a culture where everyone brings their authentic self to work and knows that their unique background, ethnicity, experiences, perspective, and contribution serve to strengthen the Bank. • Community – Building meaningful, supportive relationships in the communities we work. • Marketplace – Providing greater accessibility to banking products, services, and education to minority owned small businesses ("SMB") and SMBs in low-and moderate-income areas.
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 offer online account opening to consumer and business customers through our website. We also provide trust and wealth management services to our customers.
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.
One test, referred to as the liquidity coverage ratio, or LCR, is designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30 day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario.
One test, referred to as the liquidity coverage ratio ("LCR"), is designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario.
The federal banking regulators approved final rules implementing the LCR for advanced approaches banking organizations (i.e., banking organizations with $250 billion or more in total consolidated assets or $10 billion or more in total on-balance sheet foreign exposure) and a modified version of the LCR for bank holding companies with at least $50 billion in total consolidated assets that are not advanced approaches banking organizations.
Federal banking regulators approved final rules implementing the LCR for advanced approaches banking organizations (i.e., banking organizations with $250 billion or more in total consolidated assets or $10 billion or more in total on-balance sheet foreign exposure) and a modified version of the LCR for bank holding companies with at least $50 billion in total consolidated assets that are not advanced approaches banking organizations.
Neither of these final versions of the LCR apply to us or our bank. On October 20, 2020, the federal banking regulators also approved a final rule implementing the NSFR that requires certain U.S. banking organizations to ensure that they have access to stable funding over a defined time period.
Neither of these final versions of the LCR apply to us or our bank. On October 20, 2020, federal banking regulators also approved a final rule implementing the NSFR that requires certain U.S. banking organizations to ensure that they have access to stable funding over a defined time period.
Ability-To-Pay Rules and Qualified Mortgages As required by the Dodd-Frank Act, the CFPB issued a series of final rules amending Regulation Z, implementing TILA, which requires mortgage lenders to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a residential mortgage loan has a reasonable ability to repay the loan according to its terms.
Ability-To-Pay Rules and Qualified Mortgages As required by the Dodd-Frank Act, the CFPB issued a series of final rules amending Regulation Z, implementing the TILA, which requires mortgage lenders to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a residential mortgage loan has a reasonable ability to repay the loan according to its terms.
Competition is generally based on the variety, rates and terms of products and services offered to customers and the performance of funds under management. Human Capital At Byline, we are a bank that believes in putting our name behind everything we do and we’re here to roll up our sleeves and help our customers write their stories.
Competition is generally based on the variety, rates and terms of products and services offered to customers and the performance of funds under management. Human Capital At Byline, we are a bank that believes in putting our name behind everything we do and we are here to roll up our sleeves and help our customers write their stories.
Notable amendments include (i) significant changes to the collection of beneficial ownership information and the establishment of a beneficial ownership registry, which requires corporate entities (generally, any corporation, limited liability company, or other similar entity with 20 or fewer employees and annual gross income of $5 million or less) to report beneficial ownership information to FinCEN (which will be maintained by FinCEN and made available upon request to financial institutions); (ii) enhanced whistleblower provisions, which provide that one or more whistleblowers who voluntarily provide original information leading to the successful prosecution of violations of the anti-money laundering laws in any judicial or administrative action brought by the Secretary of the Treasury or the U.S.
Notable amendments include (i) significant changes to the collection of beneficial ownership information ("BOI") and the establishment of a beneficial ownership registry, which requires corporate entities (generally, any corporation, limited liability company, or other similar entity with 20 or fewer employees and annual gross income of $5 million or less) to report BOI to FinCEN (which will be maintained by FinCEN and made available upon request to financial institutions); (ii) enhanced whistleblower provisions, which provide that one or more whistleblowers who voluntarily provide original information leading to the successful prosecution of violations of the anti-money laundering laws in any judicial or administrative action brought by the Secretary of the U.S.
The CFPB also has the authority to require reports from institutions with less than $10 billion in assets, such as our bank, to support the CFPB in implementing 16 federal consumer protection laws, supporting examination activities, and assessing and detecting risks to consumers and financial markets.
The CFPB also has the authority to require reports from institutions with less than $10 billion in assets, such as our bank, to support the CFPB in implementing federal consumer protection laws, supporting examination activities, and assessing and detecting risks to consumers and financial markets.
The FDIA provides that an institution may be reclassified if the appropriate federal banking agency 14 determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.
The FDIA provides that an institution may be reclassified if the appropriate federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.
In reviewing applications seeking approval of merger and acquisition transactions, banking regulators consider, among other things, the competitive effect and public benefits of the transactions, the capital position and managerial resources of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant’s performance record under the Community Reinvestment Act of 1977 (“CRA”), the applicant’s compliance with fair housing and other consumer protection laws and the effectiveness of all organizations involved in combating money laundering activities.
In reviewing applications seeking approval of merger and acquisition transactions, banking regulators consider, among other things, the competitive effect and public benefits of the transactions, the capital position and managerial resources of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant’s performance record under the Community Reinvestment Act of 1977 ("CRA"), the applicant’s compliance with fair housing and other consumer protection laws and the effectiveness of all organizations involved in combating money laundering activities.
We and our bank are responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them 18 and reporting blocked transactions after their occurrence.
We and our bank are responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence.
Future Legislation and Regulation Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
The federal banking regulators previously issued guidance in December 2006, entitled “Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices”, which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (1) total commercial real estate loans represent 300% or more of its total capital and (2) the outstanding balance of such institution’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.
The federal banking regulators previously issued guidance in December 2006, entitled "Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices," which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (1) total commercial real estate loans represent 300% or more of its total capital and (2) the outstanding balance of such institution’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.
Our U.S. government guaranteed lending business serves small businesses in need of, and qualifying for, SBA and USDA loans (referred to together as “U.S. government guaranteed loans”). We provide SBA lending services throughout the country, with a primary focus on the Midwest, Tennessee, Florida, Texas, Colorado, Utah, and California.
Our U.S. government guaranteed lending business serves small businesses in need of, and qualifying for, SBA and USDA loans (referred to together as "U.S. government guaranteed loans"). We provide SBA lending services throughout the country, with a primary focus on the Midwest, Tennessee, Florida, Texas, Colorado, Utah, and California.
With respect to our bank, the Capital Rules also revised the prompt corrective action regulations pursuant to Section 38 of the Federal Deposit Insurance Act (the “FDIA”). On September 17, 2019, pursuant to the Consumer Protection Act, the federal banking regulators issued a final rule meant to simplify the capital rules for community banks.
With respect to our bank, the Capital Rules also revised the prompt corrective action regulations pursuant to Section 38 of the Federal Deposit Insurance Act (the "FDIA"). On September 17, 2019, pursuant to the Consumer Protection Act, the federal banking regulators issued a final rule meant to simplify the capital rules for community banks.
The other test, referred to as the net stable funding ratio, or NSFR, is designed to promote more medium- and long-term funding of the assets and activities of banking entities over a one-year time horizon. These requirements incentivize banking entities to increase their holdings of U.S.
The other test, referred to as the net stable funding ratio, or the ("NSFR"), is designed to promote more medium- and long-term funding of the assets and activities of banking entities over a one-year time horizon. These requirements incentivize banking entities to increase their holdings of U.S. Department of Treasury ("U.S.
Generally, Sections 23A and 23B of the Federal Reserve Act limit the extent to which our bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of our bank’s capital stock and surplus, limits the aggregate amount of all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus, and requires those transactions to be on terms at least as favorable to our bank as if the transaction were conducted with an unaffiliated third-party.
Generally, Sections 23A and 23B of the Federal Reserve Act limit the extent to which our bank or its subsidiaries may engage in "covered transactions" with any one affiliate to an amount equal to 10% of our bank’s capital stock and surplus, limits the aggregate amount of all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus, and requires those transactions to be on terms at least as favorable to our bank as if the transaction were conducted with an unaffiliated third party.
Community Reinvestment Act of 1977 Under the CRA, our bank has an obligation, consistent with safe and sound operations, to help meet the credit needs of the market areas where it operates, which includes providing credit to low- and moderate-income individuals and communities.
Community Reinvestment Legislation Community Reinvestment Act of 1977 (Federal) Under the CRA, our bank has an obligation, consistent with safe and sound operations, to help meet the credit needs of the market areas where it operates, which includes providing credit to low- and moderate-income individuals and communities.
The federal banking agencies have adopted the Interagency Guidelines for Establishing Standards for Safety and Soundness. The guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits.
Federal banking agencies adopted the Interagency Guidelines for Establishing Standards for Safety and Soundness. Such guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits.
Federal Home Loan Bank Membership Byline Bank is a member of the Federal Home Loan Bank of Chicago (“FHLB”), which serves as a central credit facility for its members. The FHLB is funded primarily from proceeds from the sale of obligations of the FHLB system. It makes loans to member banks in the form of FHLB advances.
Federal Home Loan Bank System Byline Bank is a member of the Federal Home Loan Bank of Chicago ("FHLB"), which serves as a central credit facility for its members. The FHLB is funded primarily from proceeds from the sale of obligations of the FHLB system. It makes loans to member banks in the form of FHLB advances.
Under the final rule, should a qualified community bank or its holding company elect to use the community bank leverage ratio and maintain a community bank leverage ratio of greater than 9% then it would not be subject to other risk-based and leverage capital requirements, including the risk-based capital rules relating to high volatility commercial real estate, mortgage servicing rights, certain deferred tax assets and significant investments in non-consolidated financial entities, and would be considered to have met the well capitalized ratio requirements for purposes of Section 38 of the Federal Deposit Insurance Act and the generally applicable capital requirements under the federal banking regulators’ capital rules.
Under the final rule, should a qualified community bank or its holding company elect to use the community bank leverage ratio and maintain a community bank leverage ratio of greater than 9% then it would not be subject to other risk-based and leverage capital requirements, including the risk-based capital rules relating to high volatility commercial real estate, mortgage servicing rights, certain deferred tax assets and significant investments in non-consolidated financial entities, and would be considered to have met the well capitalized ratio requirements for purposes of Section 38 of the FDIA and the generally applicable capital requirements under the federal banking regulators’ capital rules.
Brogan Ptacin, 62, became Executive Vice President and Head of Commercial Banking for Byline Bank in January 2019. Prior to that, Mr. Ptacin served as a Managing Director of First Bank & Trust since 2009 until First Bank & Trust was acquired by Byline in 2018.
Brogan Ptacin, 63, became Executive Vice President and Head of Commercial Banking for Byline Bank in January 2019. Prior to that, Mr. Ptacin served as a Managing Director of First Bank & Trust since 2009 until First Bank & Trust was acquired by Byline in 2018.
Dana Rose, 53, became Executive Vice President and Chief Human Resources Officer of Byline Bank in November 2019. Prior to that, Ms. Rose served as Interim Chief Human Resources Officer for Discover Financial Services and held various other roles at Discover since 1994.
Dana Rose, 54, became Executive Vice President and Chief Human Resources Officer of Byline Bank in November 2019. Prior to that, Ms. Rose served as Interim Chief Human Resources Officer for Discover Financial Services and held various other roles at Discover since 1994.
Our commercial real estate (“CRE”) business focuses on experienced real estate professionals with long track records of performance and access to ample equity capital sources. We believe our specialized expertise and efficient decision making process differentiate us from our competitors.
Our commercial real estate ("CRE") business focuses on experienced real estate professionals with long track records of performance and access to ample equity capital sources. We believe our specialized expertise and efficient decision making process differentiate us from our competitors.
We currently do not conduct any non-banking activities through any non-bank subsidiaries. Bank holding companies that qualify and elect to be treated as “financial holding companies” may engage in a broader range of additional activities than bank holding companies that are not financial holding companies.
We currently do not conduct any non-banking activities through any non-bank subsidiaries. Bank holding companies that qualify and elect to be treated as "financial holding companies" may engage in a broader range of additional activities than bank holding companies that are not financial holding companies.
The Consumer Financial Protection Bureau (“CFPB”), has broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws with respect to certain consumer financial products and services, including the ability to require reimbursements and other payments to customers for alleged legal violations.
The Consumer Financial Protection Bureau (the "CFPB"), has broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws with respect to certain consumer financial products and services, including the ability to require reimbursements and other payments to customers for alleged legal violations.
Nicolas Mando, 51, became Senior Vice President and Chief Technology and Operations Officer of Byline Bank in November 2021. He served as Director of Special Projects of Byline Bank since 2019. Prior to that, Mr. Mando served as Chief Operating Officer at Bridgeview Bank since 2009.
Nicolas Mando, 52, became Senior Vice President and Chief Technology and Operations Officer of Byline Bank in November 2021. He served as Director of Special Projects of Byline Bank since 2019. Prior to that, Mr. Mando served as Chief Operating Officer at Bridgeview Bank since 2009.
Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30% of the monetary sanctions collected and will receive increased protections; (iii) increased penalties for violations of anti-money laundering laws and regulations; (iv) improvements to existing information sharing provisions that permit financial institutions to share information relating to suspicious activity reports with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and (v) expanded duties and enforcement powers for FinCEN.
Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30% of the monetary sanctions collected and will receive increased protections; (iii) increased penalties for violations of anti-money laundering laws and regulations; (iv) improvements to existing information sharing provisions that permit financial institutions to share information relating to suspicious activity reports with foreign branches, subsidiaries, and affiliates (except those located in the People's Republic of China, the Russian Federation or certain other jurisdictions) for the purpose of combating illicit finance risks; and (v) expanded duties and enforcement powers for FinCEN.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, substantially broadened the scope of United States anti money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States in these areas: customer identification programs, money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, substantially broadened the scope of U.S. anti money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the U.S. in these areas: customer identification programs, money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
For additional information, please see our definitive proxy statement for our 2023 Annual Meeting of Stockholders, a copy of which will be filed with the SEC no later than 120 days after the end of our fiscal year.
For additional information, please see our definitive proxy statement for our 2024 Annual Meeting of Stockholders, a copy of which will be filed with the SEC no later than 120 days after the end of our fiscal year.
Our #1 core value, reflected in our “Things That Matter,” is our People, all of whom are encouraged to live out a shared purpose of making people’s lives better, helping businesses thrive, and strengthening the communities we serve . We believe purpose driven leadership facilitates progress in achieving a diverse and inclusive workforce and in driving performance.
Our #1 core value, reflected in our "Things That Matter," is our People, all of whom are encouraged to live out a shared purpose of making people’s lives better, helping businesses thrive, and strengthening the communities we serve. We believe purpose driven leadership facilitates progress in achieving a diverse and inclusive workforce and in driving performance.
Michelle Johnson, 41, became Executive Vice President and Chief Risk Officer of Byline Bank in October 2019. Prior to that, Ms. Johnson served as Deputy Chief Risk Officer since 2018. Ms. Johnson joined Byline Bank in 2015 as Director of IT Risk Management .
Michelle Johnson, 42, became Executive Vice President and Chief Risk Officer of Byline Bank in October 2019. Prior to that, Ms. Johnson served as Deputy Chief Risk Officer since 2018. Ms. Johnson joined Byline Bank in 2015 as Director of IT Risk Management.
For more information on these financial measures at the Company and Byline Bank, see Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report. 11 A significant portion of our income, on a stand-alone basis, comes from dividends from our bank, which is also the primary source of our liquidity.
For more information on these financial measures at the Company and Byline Bank, refer to Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report. A significant portion of our income, on a stand-alone basis, comes from dividends from our bank, which is also the primary source of our liquidity.
The following charts outline the composition of our loan and lease and deposit portfolios as of December 31, 2022: 4 Acquisitions Our ability to engage in certain merger or acquisition transactions depends on a number of factors, including opportunities in our market areas, access to capital, our bank regulators' views at the time as to the capital levels, quality of management and our overall financial condition, in addition to their assessment of a variety of other factors, including our compliance with laws and regulations.
The following charts outline the composition of our loan and lease and deposit portfolios as of December 31, 2023: 4 Table of Contents Acquisitions Our ability to engage in certain merger or acquisition transactions depends on a number of factors, including opportunities in our market areas, access to capital, our bank regulators' views at the time as to the capital levels, quality of management and our overall financial condition, in addition to their assessment of a variety of other factors, including our compliance with laws and regulations.
Bank holding companies such as us who had less than $15 billion in assets as of December 31, 2009 (and who continue to have less than $15 billion in assets) are permitted to include qualifying trust preferred securities issued prior to May 19, 2010 as Additional Tier 1 capital under the Capital Rules, however.
Bank holding companies such as us who had less than $15 billion in 11 Table of Contents assets as of December 31, 2009 (and who continue to have less than $15 billion in assets) are permitted to include qualifying trust preferred securities issued prior to May 19, 2010 as Additional Tier 1 capital under the Capital Rules, however.
For more information on these financial measures at the Company and Byline Bank, see Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report.
For more information on these financial measures at the Company and Byline Bank, refer to Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in 13 Table of Contents any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.
Covered transactions are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the FRB) from the affiliate, certain derivative transactions with an affiliate, the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.
Covered transactions are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of 10 Table of Contents assets (unless otherwise exempted by the FRB) from the affiliate, certain derivative transactions with an affiliate, the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.
Byline Bank was the fifth most active originator of SBA loans in the country and the most active SBA lender in Illinois, and Wisconsin, as reported by the SBA for the fiscal year ended September 30, 2022.
Byline Bank was the fifth most active originator of SBA loans in the country and the most active SBA lender in Illinois, and Wisconsin, as reported by the SBA for the fiscal year ended September 30, 2023.
We must obtain the prior approval of the FRB under the BHC Act before (i) acquiring more than 5% of the voting stock of any FDIC-insured depository institution or other bank holding company (other than directly through our bank), (ii) acquiring all or substantially all of the assets of any bank or bank holding company or (iii) merging or consolidating with any other bank holding company.
We must obtain the prior approval of the FRB under the BHCA before (i) acquiring more than 5% of the voting stock of any FDIC-insured depository institution or other bank holding company(other than directly through our bank), (ii) acquiring all or substantially all of the assets of any bank or bank holding company or (iii) merging or consolidating with any other bank holding company.
Diversity, Equity and Inclusion To facilitate talent attraction, development and retention across our franchise, we strive to make Byline a diverse, inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, health and welfare programs.
To facilitate talent attraction, development and retention across our franchise, we strive to make Byline a diverse, inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, and health and welfare programs.
As part of the adoption of ASU 2016-13, the Company has elected to opt into the regulators’ joint current expected credit losses ("CECL") transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the next three years beginning January 1, 2022.
As part of the adoption of Accounting Standards Update ("ASU") 2016-13, the Company has elected to opt into the regulators’ joint current expected credit losses ("CECL") transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the next three years beginning January 1, 2022.
Our commercial and industrial (“C&I”) group focuses on small and lower middle market businesses with up to $100 million of annual revenue and seeks to establish long term relationships. We believe this customer segment is underserved by larger institutions that do not focus on this space, as well as by smaller institutions that lack product sophistication and capabilities.
Our commercial and industrial ("C&I") group focuses on small and lower middle market businesses with up to $100 million of annual revenue and seeks to establish long term relationships. We believe this customer segment is underserved by larger institutions that do not focus on this space, as well as by smaller institutions that lack product sophistication and capabilities.
In the CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease commercial real estate underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks, and (iii) indicated that they will continue to pay special attention to commercial real estate lending activities and concentrations going forward.
In the CRE Guidance, the federal banking regulators (i) 15 Table of Contents expressed concerns with institutions that ease commercial real estate underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks and (iii) indicated that they will continue to pay special attention to commercial real estate lending activities and concentrations going forward.
The final rule does not apply to U.S. banking organizations with less than $50 billion in total consolidated assets such as us and Byline Bank. Prompt Corrective Action Framework The FDIA also requires the federal banking regulators to take prompt corrective action in respect of depository institutions that fail to meet specified capital requirements.
However, the final rule implementing the NSFR does not apply to U.S. banking organizations with less than $50 billion in total consolidated assets such as us and Byline Bank. Prompt Corrective Action Framework The FDIA requires federal banking regulators to take prompt corrective action in respect of depository institutions that fail to meet specified capital requirements.
Small businesses are a significant source of low-cost deposits and represent opportunities for future growth. We believe our small business customers value our ability to provide convenience and access to local, responsive decision makers. As of December 31, 2022, commercial deposits accounted for 48.5% of total deposits and were 77.5% of non-interest bearing deposits.
Small businesses are a significant source of low-cost deposits and represent opportunities for future growth. We believe our small business customers value our ability to provide convenience and access to local, responsive decision makers. As of December 31, 2023, commercial deposits accounted for 46.5% of total deposits and were 77.5% of non-interest bearing deposits.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including depositors whose deposits are payable only outside of the United States and the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including depositors whose deposits are payable only outside of the U.S. and the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
Accordingly, capital ratios as of December 31, 2022 reflect 25% of the CECL impact. 13 Liquidity Regulations Historically, the regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, without required formulaic measures.
Accordingly, capital ratios as of December 31, 2023 reflect 50% of the CECL impact, and capital ratios as of December 31, 2022 reflect 25% of the CECL impact. Liquidity Regulations Historically, the regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, without required formulaic measures.
Over the past several years, the federal banking regulators have adopted a number of final rules, which we refer to as the Capital Rules, implementing Basel III, various provisions of the Dodd-Frank Act, various provisions of the Economic Growth Regulatory Relief and Consumer Protection Act (the “Consumer Protection Act”) and certain other statutory and regulatory provisions relating to capital requirements .
Over the past several years, the federal banking regulators have adopted a number of final rules, which we refer to as the Capital Rules, implementing Basel III, various provisions of the Dodd-Frank Wall Street and Consumer Protection Act (the "Dodd-Frank Act"), various provisions of the Economic Growth Regulatory Relief and Consumer Protection Act (the "Consumer Protection Act") and certain other statutory and regulatory provisions relating to capital requirements.
Our Products and Services We are a full service, commercial bank offering a broad range of deposit products and lending services to small and medium sized businesses, commercial real estate and financial sponsors, and consumers around our 37 branch locations in the Chicago metropolitan area and one branch in Brookfield, Wisconsin. The products and services we offer are described below.
Our Products and Services We are a full service, commercial bank offering a broad range of deposit products and lending services to small and medium sized businesses, commercial real estate and financial sponsors, and consumers around our 47 branch locations in the Chicago metropolitan area and one branch in Wauwatosa, Wisconsin. The products and services we offer are described below.
Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers.
Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers. Future Legislation and Regulation The U.S.
The end users (i.e., our lessees and borrowers) are primarily physician group practices, other healthcare related entities, manufacturers, retailers, veterinarians, and wholesalers. The average lease size at origination for BFG for the year ended December 31, 2022 was approximately $72,000. Our sales team originates leases throughout the country, and we have lessees in nearly every state.
The end users (i.e., our lessees and borrowers) are primarily manufacturers, retailers, wholesalers, physician group practices and other healthcare related entities. The average lease size at origination for BFG for the year ended December 31, 2023 was approximately $75,000. Our sales team originates leases throughout the country, and we have lessees in nearly every state.
The U.S. Treasury Department’s Financial Crimes Enforcement Network ("FinCEN"), among other federal agencies, also promulgates rules and regulations regarding the USA PATRIOT Act with which financial institutions are required to comply.
The U.S. Treasury’s Financial Crimes Enforcement Network ("FinCEN"), among other federal agencies, also promulgates rules and regulations regarding the USA PATRIOT Act with which financial institutions are required to comply.
Deposit Insurance FDIC insurance assessments As an FDIC-insured bank, our bank must pay deposit insurance assessments to the FDIC based on its average total assets minus its average tangible equity. Deposits are insured up to applicable limits by the FDIC and such insurance is backed by the full faith and credit of the United States Government.
Deposit Insurance FDIC insurance assessments As an FDIC-insured bank, our bank must pay deposit insurance assessments to the FDIC based on its average total assets minus its average tangible equity. Deposits are insured up to applicable limits by the FDIC and such insurance is backed by the full faith and credit of the U.S. government.
We make available at this address, under the “Investor Relations” tab, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We make available at this address, under the "Investor Relations" tab, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
The total unpaid principal balances of SBA and USDA loans serviced for others was $1.7 billion at December 31, 2022. Retail deposits We offer customers traditional retail deposit products through our branch network, consumer and business online account opening through our website, and customer access to their accounts through online and mobile banking platforms.
The total unpaid principal balances of SBA and USDA loans serviced for others was $1.7 billion at December 31, 2023. Community banking We offer customers traditional deposit products through our branch network, consumer and business online account opening through our website, and customer access to their accounts through online and mobile banking platforms.
Depositor Preference The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
Depositor Preference The FDIA provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
Acquisitions by Bank Holding Companies The BHC Act, Section 18(c) of the Federal Deposit Insurance Act, popularly known as the “Bank Merger Act”, the Illinois Banking Act, the Illinois Bank Holding Company Act and other federal and state statutes regulate acquisitions of commercial banks and other FDIC-insured depository institutions.
Acquisitions by Bank Holding Companies The BHCA, Section 18(c) of the Federal Deposit Insurance Act, popularly known as the "Bank Merger Act," the Illinois Banking Act, the Illinois Bank Holding Company Act and other federal and state statutes regulate acquisitions of commercial banks and other FDIC-insured depository institutions.
Herencia, 63, became Chairman of Byline Bancorp, Inc. and Byline Bank in June 2013, and Executive Chairman and Chief Executive Officer in February, 2021. He serves as a member of the Board of Director’s risk, executive credit, trust, and Asset-Liability Committee (‘‘ALCO’’) committees of Byline Bank.
Herencia, 64, became Chairman of Byline Bancorp, Inc. and Byline Bank in June 2013, and Executive Chairman and Chief Executive Officer in February, 2021. He serves as a member of the Board of Director’s risk committee, and as a member of the risk, executive credit, trust, and Asset- Liability Committee ("ALCO") committees of Byline Bank.
See Item 1. “Business—Supervision and Regulation—Prompt Corrective Action Framework”. If an institution fails to comply with such an order, the banking regulator may seek to enforce such order in judicial proceedings and to impose civil money penalties.
See Item 1. "Business—Supervision and Regulation—Prompt Corrective Action Framework." If an institution fails to comply with such an order, the banking regulator may seek to enforce such order in judicial proceedings and to impose civil money penalties.
The syndications group targets transactions in the home mortgage, CRE, and C&I categories that provide attractive risk/reward characteristics, and we continue to maintain the ability to sell loan positions to manage credit and specific customer and industry concentrations. As of December 31, 2022, the group had $329.2 million in loan syndications outstanding. Commercial deposits and treasury management .
The syndications group targets transactions in the home mortgage, CRE, and C&I categories that provide attractive risk/reward characteristics, and we continue to maintain the ability to sell loan positions to manage credit and specific customer and industry concentrations. As of December 31, 2023, the group had $385.7 million in loan syndications outstanding. Commercial deposits and treasury management .
The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks including, among other things, the authority to prohibit “unfair, deceptive, or abusive” acts and practices.
The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks including, among other things, the authority to prohibit "unfair, deceptive, or abusive" acts and practices.
These laws include the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act, the Truth in Lending Act (“TILA”), the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, the Telephone Consumer Protection Act, the CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
These laws include the Equal Credit Opportunity Act (the "ECOA"), the Fair Credit Reporting Act, the Truth in Lending Act (the "TILA"), the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage 14 Table of Contents Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, the Telephone Consumer Protection Act, the CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
We offer a broad range of lending products including term loans, revolving lines of credit and treasury management products and services. As of December 31, 2022, the C&I group managed a portfolio of $2.2 billion in loans outstanding. 5 Commercial real estate .
We offer a broad range of lending products including term loans, revolving lines of credit and treasury management products and services. As of December 31, 2023, the C&I group managed a portfolio of $2.7 billion in loans outstanding. 5 Table of Contents Commercial real estate .
We strive to retain an attractive deposit mix from both large and small customers as well as a broad market reach, which has resulted in our top 50 customers accounting for approximately 12% of all deposits as of December 31, 2022.
We strive to retain an attractive deposit mix from both large and small customers as well as a broad market reach, which has resulted in our top 50 customers accounting for approximately 10.3% of all deposits as of December 31, 2023.
The Capital Rules, among other things, (i) include a capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and (iv) expand the scope of the deductions/adjustments to capital as compared to prior regulations.
The Capital Rules, among other things, (i) include a capital measure called "Common Equity Tier 1" ("CET1"), (ii) specify that Tier 1 capital consists of CET1 and "Additional Tier 1 capital" instruments meeting certain revised requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expand the scope of the deductions/adjustments to capital as compared to prior regulations.
In addition to the business development officers who we rely on to generate new business, we also have a dedicated servicing, portfolio management and workout staff with specialized expertise in U.S. government guaranteed loans. As of December 31, 2022, total loans and leases included the guaranteed amount of U.S. government guaranteed loans of $123.2 million.
In addition to the business development officers who we rely on to generate new business, we also have a dedicated servicing, portfolio management and workout staff with specialized expertise in U.S. government guaranteed loans. As of December 31, 2023, total loans and leases included the guaranteed amount of U.S. government guaranteed loans of $93.3 million.
We support the acquisition, recapitalization and growth investment efforts of private equity firms operating in the lower middle market, and we believe our expertise in this niche is unique for a bank our size. As of December 31, 2022, we had $556.6 million in sponsor finance loans outstanding. Syndications .
We support the acquisition, recapitalization and growth investment efforts of private equity firms operating in the lower middle market, and we believe our expertise in this niche is unique for a bank our size. As of December 31, 2023, we had $658.9 million in sponsor finance loans outstanding. Syndications .
Sherylle Olano, 45, became Senior Vice President and Chief Accounting Officer of Byline and Byline Bank in September 2022. Prior to that, Ms. Olano previously served as Controller since 2014. Alberto J. Paracchini, 52, is President and a Director of Byline Bancorp, Inc. and Chief Executive Officer, President and a Director of Byline Bank. He joined Byline in June 2013.
Sherylle Olano, 46, became Senior Vice President and Chief Accounting Officer of Byline and Byline Bank in August 2022. Prior to that, Ms. Olano previously served as Controller since 2014. Alberto J. Paracchini, 53, is President and a Director of Byline Bancorp, Inc. and Chief Executive Officer, President and a Director of Byline Bank. He joined Byline in June 2013.
As of December 31, 2022, BFG had $524.0 million in leases outstanding with a weighted average life of approximately 3.5 years. 6 Trust and wealth management We provide investment, trust and wealth management services to our customers, such as foundations and endowments and high net worth individuals, which include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services.
As of December 31, 2023, BFG had $665.7 million in leases outstanding with a weighted average life of approximately 3.5 years. 6 Table of Contents Trust and wealth management We provide investment, trust and wealth management services to our customers, such as foundations and endowments and high net worth individuals, which include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services.
On January 1, 2021, Congress passed the Corporate Transparency Act as part of the National Defense Authorization Act, which enacted the most significant overhaul of the anti-money laundering laws since the USA PATRIOT Act.
Congress passed the Corporate Transparency Act as part of the National Defense Authorization Act, which enacted the most significant overhaul of the anti-money laundering laws since the USA PATRIOT Act.
We offer fixed and floating rate term loans, construction financing and revolving lines of credit with a wide range of term options. Our portfolio is broadly diversified by geography and property type including loans secured by multifamily, industrial, retail, and office properties. As of December 31, 2022, the CRE group had $962.7 million in loans outstanding. Sponsor finance .
We offer fixed and floating rate term loans, construction financing and revolving lines of credit with a wide range of term options. Our portfolio is broadly diversified by geography and property type including loans secured by multifamily, industrial, retail, and office properties. As of December 31, 2023, the CRE group had $1.3 billion in loans outstanding. Sponsor finance .
Item 1. Business . General Byline Bancorp, Inc., headquartered in Chicago, Illinois, is a bank holding company and we conduct all our business activities through our subsidiary, Byline Bank, a full service commercial bank, and Byline Bank’s subsidiaries. The words “the Company,” “we,” “Byline,” “our” and “us” refer to Byline Bancorp, Inc. and its consolidated subsidiaries, unless we indicate otherwise.
Item 1. Business . General Byline Bancorp, Inc., headquartered in Chicago, Illinois, is a bank holding company and we conduct all our business activities through our subsidiary, Byline Bank, a full service commercial bank, and Byline Bank’s subsidiaries. The words "the Company," "we," "Byline," "our" and "us" refer to Byline Bancorp, Inc. and its consolidated subsidiaries, unless we indicate otherwise.
These services are provided through credentialed investment, legal, tax, and wealth management professionals who identify opportunities and provide services tailored to our customers’ goals and objectives. Assets under administration were $548.7 million as of December 31, 2022.
These services are provided through credentialed investment, legal, tax, and wealth management professionals who identify opportunities and provide services tailored to our customers’ goals and objectives. Assets under administration were $770.5 million as of December 31, 2023.
We leverage our expansive branch locations and deep network of customer relationships in the Chicago metropolitan area to provide both low cost funding sources for our lending business and deposit related fee income. We had $5.7 billion of deposits at December 31, 2022, and our average cost of deposits was 0.36% for the year ended December 31, 2022.
We leverage our expansive branch locations and deep network of customer relationships in the Chicago metropolitan area to provide both low cost funding sources for our lending business and deposit related fee income. We had $7.2 billion of deposits at December 31, 2023, and our average cost of deposits was 1.90% for the year ended December 31, 2023.
Bell III, 56, became Executive Vice President and Chief Financial Officer of Byline and Byline Bank in September 2022. Mr. Bell has been serving as Corporate Treasurer of Byline Bank since August 2013. Megan Biggam, 44, became Executive Vice President of Retail Banking of Byline Bank in February 2020. Ms.
Bell III, 57, became Executive Vice President and Chief Financial Officer of Byline and Byline Bank in August 2022. Mr. Bell has been serving as Corporate Treasurer of Byline Bank since August 2013. Megan Biggam, 45, became Executive Vice President of Community Banking of Byline Bank in February 2020. Ms.
Regulatory authorities have imposed cease and desist orders and significant civil money penalties against institutions found to be violating these obligations and have in some cases brought criminal actions against some institutions for these types of violations.
Regulatory authorities have imposed cease and desist orders and significant civil money penalties against institutions found to be violating these obligations and have in some cases brought criminal actions against some institutions for these types of violations. On January 1, 2021, the U.S.
As of December 31, 2022, core deposits represented 92.7% of our total deposits. In addition to these products, we offer ATM and debit cards as well as online, mobile, and text banking.
As of December 31, 2023, core deposits represented 87.0% of our total deposits. In addition to these products, we offer ATM and debit cards as well as online, mobile, and text banking.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater and a leverage ratio of 5% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6% or greater and a leverage ratio of 4% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6% or a leverage ratio of less than 4%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6%, a CET1 capital ratio less than 3%, a Tier 1 risk-based capital ratio of less than 4% or a leverage ratio of less than 3%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2% of average quarterly tangible assets.
A bank will be (i) "well capitalized" if the institution has a total risk-based capital ratio of 10% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater and a leverage ratio of 5% or greater, and is not subject to any order 12 Table of Contents or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure;(ii) "adequately capitalized" if the institution has a total risk-based capital ratio of 8% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk- based capital ratio of 6% or greater and a leverage ratio of 4% or greater and is not "well capitalized;" (iii) "undercapitalized" if the institution has a total risk-based capital ratio that is less than 8%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6% or a leverage ratio of less than 4%; (iv) "significantly undercapitalized" if the institution has a total risk-based capital ratio of less than 6%, a CET1 capital ratio less than 3%, a Tier 1 risk-based capital ratio of less than 4% or a leverage ratio of less than 3%; and (v) "critically undercapitalized" if the institution’s tangible equity is equal to or less than 2% of average quarterly tangible assets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinally, if we or other market participants fail to properly plan to implement alternative rates other than LIBOR, it could have an adverse effect on us and the financial system as a whole. 22 Our business, profitability, and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities, or obligations we hold.
Biggest changeOur business, profitability, and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities, or obligations we hold.
Our inability 30 to compete successfully in the markets in which we operate could have a material adverse effect on our business, financial condition, or results of operations. Our principal stockholder, MBG Investors I, L.P. has significant influence over us, and its interests could conflict with those of our other stockholders.
Our inability to compete successfully in the markets in which we operate could have a material adverse effect on our business, financial condition, or results of operations. Our principal stockholder, MBG Investors I, L.P. has significant influence over us, and its interests could conflict with those of our other stockholders.
Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or 29 planned business activities.
Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable 20 forecasts, which could increase the subjectivity of the calculation. This process, which is critical to our financial results and condition, requires difficult, subjective and complex judgments.
Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts, which could increase the subjectivity of the calculation. This process, which is critical to our financial results and condition, requires difficult, subjective and complex judgments.
Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our customers, denial or degradation of service attacks, and malware or other cyberattacks. There continues to be a rise in electronic fraudulent activity, security 25 breaches, and cyberattacks directed at the financial services industry.
Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our customers, denial or degradation of service attacks, and malware or other cyberattacks. There continues to be a rise in electronic fraudulent activity, security breaches, and cyberattacks directed at the financial services industry.
The effects of such policies upon our business, financial condition, and results of operations cannot be predicted. 28 We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
The effects of such policies upon our business, financial condition, and results of operations cannot be predicted. We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Unfavorable or uncertain economic and market conditions can be caused by, among other factors, declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; changes in inflation 24 or interest rates; increases in real estate and other state and local taxes; high unemployment; natural disasters; geopolitical issues and uncertainty; public health concerns; and other external factors or a combination of these or other factors.
Unfavorable or uncertain economic and market conditions can be caused by, among other factors, declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; changes in inflation or interest rates; increases in real estate and other state and local taxes; high unemployment; natural disasters; geopolitical issues, conflicts and uncertainty; public health concerns; and other external factors or a combination of these or other factors.
Acquired non‑credit-deteriorated loans and leases are accounted for under ASC Subtopic 310‑20, Receivables Nonrefundable Fees and Other Costs (“ASC 310‑20”). The difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan.
Acquired non‑credit-deteriorated loans and leases are accounted for under ASC Subtopic 310‑20, Receivables Nonrefundable Fees and Other Costs ("ASC 310‑20"). The difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan.
The weakening of these standards for any reason, a lack of discipline or diligence in underwriting and monitoring loans and leases, the inability to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan and lease portfolio, may result in defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses - loans and leases, each of which could adversely affect our net income.
The weakening of these standards for any reason, a lack of discipline or diligence in underwriting and monitoring loans and leases, the inability to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan and lease portfolio, may result in defaults, foreclosures 19 Table of Contents and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses - loans and leases, each of which could adversely affect our net income.
Loans acquired that have experienced more than insignificant credit deterioration since origination are accounted for under Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses . These purchased credit deteriorated (PCD) loans have experienced more than insignificant credit deterioration since origination, like non-credit-deteriorated loans acquired, and have been recorded at the amount paid.
Loans acquired that have experienced more than insignificant credit deterioration since origination are accounted for under Accounting Standards Codification ("ASC") Topic 326, Financial Instruments – Credit Losses . These purchased credit deteriorated ("PCD") loans have experienced more than insignificant credit deterioration since origination, like non-credit-deteriorated loans acquired, and have been recorded at the amount paid.
In accordance with accounting principles generally accepted in the United States of America (“GAAP”) for business combination accounting, the loans acquired through subsequent bank acquisitions are recorded at their estimated fair value, and an allowance for credit losses associated with those loans also recorded.
In accordance with accounting principles generally accepted in the United States of America ("GAAP") for business combination accounting, the loans acquired through subsequent bank acquisitions are recorded at their estimated fair value, and an allowance for credit losses associated with those loans also recorded.
During 2021, we began a transition to using a forward-looking term rate based upon the Secured the Overnight Financing Rate ("SOFR"), CME Term SOFR (“Term SOFR”) as the replacement benchmark index in lieu of LIBOR. SOFR is the Alternative Reference Rates Committee’s recommended alternative to USD LIBOR.
During 2021, we began a transition to using a forward-looking term rate based upon the Secured the Overnight Financing Rate ("SOFR"), CME Term SOFR ("Term SOFR") as the replacement benchmark index in lieu of LIBOR. SOFR is the Alternative Reference Rates Committee’s recommended alternative to USD LIBOR.
All loans acquired as part of our recapitalization in 2013 as well as loans acquired in connection with our subsequent acquisitions were recorded at their estimated fair value on their acquisition date without a carryover of the related allowance for loan losses.
All loans acquired as part of our recapitalization in 2013 as well as loans acquired in connection with our subsequent acquisitions were recorded at their estimated fair value on their acquisition date without a carryover of the related allowance for credit losses.
In addition, we rely on appraisals and other valuation techniques to establish the value of our other real estate owned (“OREO”) and personal property that we acquire through foreclosure proceedings and to determine certain loan impairments.
In addition, we rely on appraisals and other valuation techniques to establish the value of our other real estate owned ("OREO") and personal property that we acquire through foreclosure proceedings and to determine certain loan impairments.
Failure to successfully keep pace with technological change affecting the financial services industry and failure to avoid interruptions, errors, and delays could have a material adverse effect on our business, financial condition, or results of operations. Guaranteed Loans Risks Small Business Administration lending and other government guaranteed lending is an important part of our business.
Failure to successfully keep pace with technological change affecting the financial services industry and failure to avoid interruptions, errors, and delays could have a material adverse effect on our business, financial condition, or results of operations. 24 Table of Contents Guaranteed Loans Risks Small Business Administration lending and other government guaranteed lending is an important part of our business.
Depending on the condition of any institution or assets or liabilities that we may acquire, that acquisition may, at least in the near term, adversely affect our capital and earnings and, if not successfully integrated with our organization, may continue to have such effects over a longer period.
Depending on the condition of any 28 Table of Contents institution or assets or liabilities that we may acquire, that acquisition may, at least in the near term, adversely affect our capital and earnings and, if not successfully integrated with our organization, may continue to have such effects over a longer period.
From time to time, we may implement new lines of business or offer new products and product enhancements as well as new services within our existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances in which the markets are not fully developed.
From time to time, we may implement new lines of business or offer new products and product enhancements as well as new services within our existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in 22 Table of Contents instances in which the markets are not fully developed.
Although most LIBOR tenors will continue to be published through June 30, 2023 to aid in the transition of legacy LIBOR contracts (e.g. maturity), as of January 1, 2021, we no longer originate loans indexed to LIBOR nor enter into modifications which create new LIBOR exposure.
Although most LIBOR tenors continued to be published through June 30, 2023 to aid in the transition of legacy LIBOR contracts (e.g., maturity), as of January 1, 2021, we no longer originate loans indexed to LIBOR nor enter into modifications which create new LIBOR exposure.
In addition, further increases in market interest rates may continue to affect the market value of our securities portfolio, potentially further reducing accumulated other comprehensive income and/or earnings. Funding Risks A lack of liquidity could affect operations and jeopardize our business, financial condition, and results of operations.
In addition, further increases in market interest rates may continue to affect the market value of our securities portfolio, potentially further reducing accumulated other comprehensive income and/or earnings. 21 Table of Contents Funding Risks A lack of liquidity could affect operations and jeopardize our business, financial condition, and results of operations.
Our failure to effectively mitigate these risks could have a material adverse effect on our business, financial condition, or results of operations. Technology Risks We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions, or data breaches involving these systems could adversely affect our operations and financial condition.
Our failure to effectively mitigate these risks could have a material adverse effect on our business, financial condition, or results of operations. 23 Table of Contents Technology Risks We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions, or data breaches involving these systems could adversely affect our operations and financial condition.
Sales or distributions of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of our common stock to decline. Item 1B. Unresolved Staff Comments . None
Sales or distributions of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of our common stock to decline. 29 Table of Contents Item 1B. Unresolved Staff Comments . None
Currently, our principal stockholder, MBG Investors I, L.P., owns approximately 30.8% of the outstanding shares of our common stock and its general partner is one of our directors. As a result, MBG Investors I, L.P. is able to influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions.
Currently, our principal stockholder, MBG Investors I, L.P., owns approximately 27.0% of the outstanding shares of our common stock and its general partner is one of our directors. As a result, MBG Investors I, L.P. is able to influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions.
As an approved participant in the SBA Preferred Lender’s Program (an “SBA Preferred Lender”), we enable our customers to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
As an approved participant in the SBA Preferred Lender’s Program (an "SBA Preferred Lender"), we enable our customers to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
See Note 1 of the notes to our audited consolidated financial statements contained in Item 8 of this report for further information.
Refer to Note 1 of the notes to our audited consolidated financial statements contained in Item 8 of this report for further information.
The value of the financial instruments we own may decline in the future. As of December 31, 2022, we owned $1.2 billion of investment securities, which consisted primarily of our positions in U.S. government and government-sponsored enterprises and federal agency obligations, mortgage and asset-backed securities and municipal securities.
The value of the financial instruments we own may decline in the future. As of December 31, 2023, we owned $1.4 billion of investment securities, which consisted primarily of our positions in U.S. government and government-sponsored enterprises and federal agency obligations, mortgage and asset-backed securities and municipal securities.
Any of these could have a material adverse effect on our business, financial condition or results of operations. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Any of these could have a material adverse effect on our business, financial condition or results of operations. See Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations".
As of December 31, 2022, Byline Bank had the capacity to pay us dividends of up to $126.9 million without the need to obtain prior regulatory approval. Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
As of December 31, 2023, Byline Bank had the capacity to pay us dividends of up to $206.7 million without the need to obtain prior regulatory approval. Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
Uncertainty as to the nature of other alternative reference rates (i.e. the Bloomberg Short-Term Bank Yield Index, Ameribor) and their broader acceptance by the market may also adversely affect SOFR rates and the value of SOFR-based loans, and to a lesser extent securities in our portfolio, and may impact the availability and cost of hedging instruments and borrowings, including the rates we pay on our subordinated debentures and trust preferred securities.
Uncertainty as to the nature of other alternative reference rates and their broader acceptance by the market may also adversely affect SOFR rates and the value of SOFR-based loans, and to a lesser extent securities in our portfolio, and may impact the availability and cost of hedging instruments and borrowings, including the rates we pay on our subordinated debentures and trust preferred securities.
As a result, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses in the consolidated statements of operations. Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.
As a result, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses in the consolidated statements of operations.
In addition, while the arbitration provisions in certain of our customer agreements historically have limited our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing our arbitration clause in the future. Further, we have in the past and may in the future be subject to consent orders with our regulators.
In addition, while the arbitration provisions in certain of our customer agreements historically have limited our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing our arbitration clause in the future.
In the event Byline Bank is unable to pay dividends to us, we may not be able to service our existing debt or any debt we may incur, pay obligations or pay dividends on our common and preferred stock, which could have a material adverse effect on our business, financial condition or results of operations. 23 We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
In the event Byline Bank is unable to pay dividends to us, we may not be able to service our existing debt or any debt we may incur, pay obligations or pay dividends on our common and preferred stock, which could have a material adverse effect on our business, financial condition or results of operations.
These critical accounting policies and estimates include (i) the carrying value of loans and leases, (ii) determining the provision and allowance for credit losses, (iii) the valuation of intangible assets such as goodwill, servicing assets, core deposit intangibles, and customer relationship intangible (iv) the determination of fair value for financial instruments, and (v) the valuation of or recognition of deferred tax assets and liabilities.
These critical accounting policies and estimates include (i) determining the provision and allowance for credit losses, (ii) the valuation of intangible assets such as goodwill, servicing assets, core deposit intangibles, and customer relationship intangible, and (iii) the determination of fair value for financial instruments.
In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in our reporting materially different results than would have been reported under a different alternative.
In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in our reporting materially different results than would have been reported under a different alternative. 25 Table of Contents Certain accounting policies and estimates are critical to presenting our financial condition and results of operations.
An impairment of goodwill could have a material adverse effect on our business, financial condition and results of operations. 27 The accounting for loans acquired in connection with our recapitalization and acquisitions is based on numerous subjective determinations that may prove to be inaccurate and have a negative impact on our results of operations.
The accounting for loans acquired in connection with our recapitalization and acquisitions is based on numerous subjective determinations that may prove to be inaccurate and have a negative impact on our results of operations.
Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income. We recognize the expected future tax benefit from deferred tax assets when it is more likely than not that the tax benefit will be realized. Otherwise, a valuation allowance is applied against deferred tax assets, reducing the value of such assets.
We recognize the expected future tax benefit from deferred tax assets when it is more likely than not that the tax benefit will be realized. Otherwise, a valuation allowance is applied against deferred tax assets, reducing the value of such assets.
We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current and/or prior business activities.
Further, we have in the past and may in the future be subject to consent orders with our regulators. 27 Table of Contents We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current and/or prior business activities.
We continue to expect that gains on the sale of U.S. government guaranteed loans will continue to comprise a significant component of our revenue. The gain on such sales recognized for year ended December 31, 2022 was $31.9 million.
The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions. We continue to expect that gains on the sale of U.S. government guaranteed loans will continue to comprise a significant component of our revenue. The gain on such sales recognized for year ended December 31, 2023 was $22.8 million.
Fluctuations in interest rates may negatively affect our business and may weaken demand for some of our products.
Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings. Fluctuations in interest rates may negatively affect our business and may weaken demand for some of our products.
Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to government guaranteed loans could adversely affect our ability to operate profitably. 26 The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions.
We cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to government guaranteed loans could adversely affect our ability to operate profitably.
As of December 31, 2022, our real estate loans held for investment include $436.6 million of construction and development loans, $304.2 million of multifamily loans, $736.7 million of non-owner occupied CRE loans and $187.0 million of residential mortgage loans, with the majority of these real estate loans concentrated in the City of Chicago and the State of Illinois.
As of December 31, 2023, our real estate loans held for investment include $525.7 million of construction and development loans, $399.3 million of multifamily loans, $1.0 billion of non-owner occupied CRE loans and $320.2 million of residential mortgage loans, with the majority of these real estate loans concentrated in the Chicago metropolitan area and the State of Illinois.
Certain accounting policies and estimates are critical to presenting our financial condition and results of operations. They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates.
They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates.
Furthermore, if we fail to offer interest rates at a sufficient level to keep these demand deposits, our core deposits may be reduced, which would require us to obtain funding in other ways or risk slowing our future asset growth. We may be adversely impacted by the transition from the London Interbank Offered Rate (“LIBOR”) as a reference rate.
Furthermore, if we fail to offer interest rates at a sufficient level to keep these demand 20 Table of Contents deposits, our core deposits may be reduced, which would require us to obtain funding in other ways or risk slowing our future asset growth.
As of December 31, 2022, we had goodwill of $148.4 million, or 19.4% of our total stockholders’ equity.
As of December 31, 2023, we had goodwill of $181.7 million, or 18.4% of our total stockholders’ equity.
On March 5, 2021, the United Kingdom’s Financial Conduct Authority and the Intercontinental Exchange Benchmark Administration announced that the one-week and two-month U.S. dollar LIBOR (“USD LIBOR”) settings would cease to be published immediately after December 31, 2021.
We may be adversely impacted by the continuing transition from the London Interbank Offered Rate ("LIBOR") as a reference rate. On March 5, 2021, the United Kingdom’s Financial Conduct Authority and the Intercontinental Exchange Benchmark Administration announced that the one-week and two-month U.S. dollar LIBOR ("USD LIBOR") settings would cease to be published immediately after December 31, 2021.
The loss of customer deposits for any reason could increase our funding costs. We operate in a highly competitive and changing industry and market area and compete with both banks and non-banks. We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets.
The loss of customer deposits for any reason could increase our funding costs, and negatively affect our liquidity. We operate in a highly competitive and changing industry and market area and compete with both banks and non-banks.
Variability in market conditions or in key assumptions could result in impairment of goodwill, which is recorded as a non-cash adjustment to income.
Variability in market conditions or in key assumptions could result in impairment of goodwill, which is recorded as a non-cash adjustment to income. An impairment of goodwill could have a material adverse effect on our business, financial condition and results of operations.
General Risk Factors Loss of deposits could increase our funding costs. We rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base. We accept deposits directly from consumer and commercial customers and, as of December 31, 2022, we had $5.7 billion in deposits.
General Risk Factors Loss of deposits could increase our funding costs and negatively affect our liquidity. We rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base.
As the Federal Reserve raised its overnight target from nearly zero at the beginning of the year to a range of 4.25% to 4.50% at December 31, 2022, we have cautiously managed our deposit repricing strategies to seek to expand our net interest margin by keeping deposit rates at relatively low levels.
As of December 31, 2023, we had $1.9 billion of non-interest-bearing demand deposits and $577.6 million of interest-bearing checking accounts. As the Federal Reserve raised its overnight target rate, we have cautiously managed our deposit repricing strategies to seek to expand our net interest margin by keeping deposit rates at relatively low levels.
Removed
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016‑13, Financial Instruments - Credit Losses (Topic 326) on the recognition of credit losses, otherwise known as the current expected credit loss model or "CECL", which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses.
Added
We may need to raise additional capital in the future, and such capital may not be available when needed or at all.
Removed
As an emerging growth company, we elected to delay the adoption of the standard in accordance with ASU No. 2019-10, Effective Dates, which delayed the effective date of the ASU for entities not classified as Public Business Entities.
Added
Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses. 26 Table of Contents Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income.
Removed
The Company’s EGC status expired on December 31, 2022, requiring CECL adoption be reflected in our December 31, 2022 financial statements and Form 10-K. The Company adopted CECL on December 31, 2022, and has applied it retroactively to the period beginning January 1, 2022 using the modified retrospective method of accounting.
Added
We accept deposits directly from consumer and commercial customers and, as of December 31, 2023, we had $7.2 billion in deposits.
Removed
Cumulative adjustments related to adoption were made to capital and are disclosed in Note 2 of the audited consolidated financial statements contained in Item 8 of this report. 21 Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings.
Added
We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets.
Removed
As of December 31, 2022, we had $2.1 billion of non-interest-bearing demand deposits and $592.1 million of interest-bearing checking accounts.
Removed
Such uncertainty may result in pricing volatility and increased capital requirements, accounting impacts, compliance, basis risk, legal and operational costs and risks associated with customer disclosures, discretionary actions taken or negotiation of loan modifications to move from LIBOR to Term SOFR prior to the June 30, 2023 cessation, reduced loan balances if borrowers do not accept the substitute indices we are able provide, systems disruption, business continuity, or model disruption.
Removed
We cannot predict the effects of these changes on our business and profitability.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeItem 2. Pr operties . Our corporate headquarters is located at 180 North LaSalle Street, Suite 300, Chicago, IL 60601. In addition to our corporate headquarters, we operate 37 branch offices located in the Chicago metropolitan area and one branch office in Brookfield, Wisconsin.
Biggest changeItem 2. Pr operties . Our corporate headquarters is located at 180 North LaSalle Street, Suite 300, Chicago, IL 60601. In addition to our corporate headquarters, we operate 47 branch offices located in the Chicago metropolitan area and one branch office in Wauwatosa, Wisconsin.
We lease nine of our branch offices and our headquarters and own the remainder of our branch offices.
We lease 17 of our branch offices and our headquarters and own the remainder of our branch offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeWe are not presently a party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, liquidity, results of operation, cash flows or capital levels. Item 4. Mine Safe ty Disclosures. Not applicable. 31 PART II
Biggest changeWe are not presently a party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, liquidity, results of operation, cash flows or capital levels. Item 4. Mine Safe ty Disclosures. Not applicable. 31 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+1 added−3 removed5 unchanged
Biggest changeOn December 10, 2020, 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, and on July 27, 2021, our Board of Directors authorized an expansion of the stock repurchase program.
Biggest changeWe did not purchase any shares of our common stock under the stock repurchase program during 2023. 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 will be in effect from January 1, 2023 until December 31, 2023 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 program will be 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.
Total return assumes the reinvestment of all dividends. * The information assumes that $100 was invested at the closing price on December 31, 2017 in our stock and each index, and that all dividends are reinvested.
Total return assumes the reinvestment of all dividends. * The information assumes that $100 was invested at the closing price on December 31, 2018 in our stock and each index, and that all dividends are reinvested.
We have an internal policy that prohibits the Board of Byline Bank from declaring and paying dividends that would cause the minimum capital amounts required for Byline Bank to be considered less than “well capitalized” for regulatory purposes. See Item 1.
We have an internal policy that prohibits the Board of Byline Bank from declaring and paying dividends that would cause the minimum capital amounts required for Byline Bank to be considered less than "well capitalized" for regulatory purposes. See Item 1.
Under the terms of compensation plan, we can accept previously owned shares of common stock to be surrendered to satisfy the exercise price of stock options, the settlements of restricted stock awards and tax withholding obligations upon vesting and/or exercise. Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities. None. 32 Stock Performance Graph.
Under the terms of this 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. Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities. None. 32 Table of Contents Stock Performance Graph.
The following graph compares the cumulative total stockholder return on our common stock from December 31, 2017 through December 31, 2022, with the cumulative total return of: (1) the Russell 2000 (U.S. Stock) Index, (2) a peer group of the S&P U.S. SmallCap Banks Index and, (3) the KBW NASDAQ Regional Bank Index (“KRX”).
The following graph compares the cumulative total stockholder return on our common stock from December 31, 2018 through December 31, 2023, with the cumulative total return of: (1) the Russell 2000 (U.S. Stock) Index, (2) a peer group of the S&P U.S. SmallCap Banks Index and, (3) the KBW NASDAQ Regional Bank Index ("KRX").
The shares authorized to be repurchased represent approximately 3.3% of our outstanding common stock at December 31, 2022. The table below includes information regarding purchases of our common stock during the quarter ended December 31, 2022. We did not purchase any shares of our common stock during the fourth quarter of 2022 under our stock repurchase program.
The shares authorized to be repurchased represent approximately 2.9% of the Company’s outstanding common stock at December 31, 2023. The table below includes information regarding purchases of our common stock during the quarter ended December 31, 2023. We did not purchase any shares of our common stock during the fourth quarter of 2023 under our stock repurchase program.
“Business – Supervision and Regulations – Dividends” above and Note 20 of notes to consolidated financial statements contained in Item 8 of this report. We paid a cash dividend of $0.09 per share for each quarter of 2022.
"Business – Supervision and Regulations – Dividends" above and Note 20 of notes to consolidated financial statements contained in Item 8 of this report. We paid a cash dividend of $0.09 per share for each quarter of 2022 and 2023. Issuer Purchases of Equity Securities.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “BY”. There were approximately 953 holders of record of our common stock as of March 1, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the NYSE under the symbol "BY". There were approximately 1,132 holders of record of our common stock as of March 1, 2024.
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 October 1 - October 31, 2022 34,371 $ 23.36 — 479,224 November 1 - November 30, 2022 726 21.09 — 479,224 December 1 - December 31, 2022 1,292 22.76 — — Total 36,389 $ 23.30 — (1) These shares were acquired pursuant to our 2017 Omnibus Incentive Compensation Plan.
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 October 1 - October 31, 2023 3,206 $ 19.62 — 1,250,000 November 1 - November 30, 2023 — — — 1,250,000 December 1 - December 31, 2023 15,228 23.56 — 1,250,000 Total 18,434 $ 22.88 — (1) These shares were acquired pursuant to our 2017 Omnibus Incentive Compensation Plan.
We purchased 1,331,708 shares at a cost of $28.9 million under this program during the year ended December 31, 2021. On December 12, 2022, 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.
On December 12, 2022, 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 was in effect from January 1, 2023 until December 31, 2023.
Removed
We paid a cash dividend of $0.06 per share for the first and second quarters of 2021 and a $0.09 per share cash dividend for the third and fourth quarter of 2021. Issuer Purchases of Equity Securities.
Added
Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Byline Bancorp, Inc. $ 100.00 $ 117.65 $ 93.85 $ 168.27 $ 143.47 $ 149.67 Russel 2000 100.00 125.52 150.58 172.90 137.56 160.85 S&P U.S. Small Cap Bank 100.00 125.46 113.94 158.62 139.85 140.55 KRX 100.00 120.38 105.82 140.94 127.62 122.51
Removed
Under the extended program, the Company was authorized to repurchase an additional 1,250,000 shares of the Company's outstanding common stock. The program was in effect until December 31, 2022. We purchased 689,068 shares at a cost of $17.3 million under the stock repurchase program during the year ended December 31, 2022.
Removed
Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Byline Bancorp, Inc. $ 100.00 $ 72.53 $ 85.33 $ 68.07 $ 122.05 $ 104.05 Russel 2000 100.00 88.99 111.70 134.00 153.85 122.41 S&P U.S. Small Cap Bank 100.00 83.44 104.69 95.08 132.36 116.69 KRX 100.00 80.63 97.07 85.33 113.65 102.90

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

162 edited+31 added−58 removed38 unchanged
Biggest changeAs of December 31, 2022, approximately $37.1 million of the ACL was allocated to unguaranteed loans. 53 The following table presents an analysis of the allowance for credit losses - loans and leases for the periods presented (dollars in thousands): 54 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, 2021 $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Impact of Adopting CECL - PCD (303 ) 353 120 (207 ) — — $ (37 ) Impact of Adopting CECL - Non-credit-deteriorated 1,909 124 — (279 ) 1 39 1,794 Impact of Adopting CECL - Originated 4,761 570 1,071 1,739 8 2,262 10,411 Total impact Day 1 CECL adoption $ 6,367 $ 1,047 $ 1,191 $ 1,253 $ 9 $ 2,301 $ 12,168 Provision for PCD loans (753 ) (495 ) (56 ) (281 ) (18 ) — (1,603 ) Provision for acquired non-credit-deteriorated loans (1,517 ) 321 1 (1,243 ) (1 ) (282 ) (2,721 ) Provision for originated loans 7,522 1,082 1,530 13,526 10 3,328 26,998 Total provision $ 5,252 $ 908 $ 1,475 $ 12,002 $ (9 ) $ 3,046 $ 22,674 Charge-offs for PCD loans (195 ) (945 ) (94 ) (7 ) (4 ) — (1,245 ) Charge-offs for acquired non-credit deteriorated loans (6 ) (174 ) — (72 ) — (28 ) (280 ) Charge-offs for originated loans (3,634 ) (90 ) — (5,299 ) (3 ) (1,444 ) (10,470 ) Total charge-offs $ (3,835 ) $ (1,209 ) $ (94 ) $ (5,378 ) $ (7 ) $ (1,472 ) $ (11,995 ) Recoveries for PCD loans 592 755 40 177 22 — 1,586 Recoveries for acquired non-credit deteriorated loans — — — — — 257 257 Recoveries for originated loans 768 11 — 705 — 738 2,222 Total recoveries $ 1,360 $ 766 $ 40 $ 882 $ 22 $ 995 $ 4,065 Net charge-offs (recoveries) (2,475 ) (443 ) (54 ) (4,496 ) 15 (477 ) (7,930 ) PCD loans 1,151 674 13 46 2 0 1,886 Acquired non-credit-deteriorated loans 3,736 296 1 1,229 1 34 5,297 Originated loans 21,175 2,170 3,120 40,613 21 7,642 74,741 Balance at December 31, 2022 $ 26,062 $ 3,140 $ 3,134 $ 41,888 $ 24 $ 7,676 $ 81,924 Ending ACL balance Loans individually evaluated for impairment 6,101 — 265 8,972 — — 15,338 Loans collectively evaluated for impairment 19,960 3,140 2,869 32,917 24 7,676 66,586 Loans and leases ending balance Loans individually evaluated for impairment 37,959 879 5,541 47,846 — — 92,225 Loans collectively evaluated for impairment 1,871,529 489,083 433,448 2,009,228 1,759 523,986 5,329,033 Total loans at December 31, 2022, gross $ 1,909,488 $ 489,962 $ 438,989 $ 2,057,074 $ 1,759 $ 523,986 $ 5,421,258 Ratio of net charge-offs to average loans outstanding during the year PCD loans (0.01 )% 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % (0.01 )% Acquired non-credit-deteriorated loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Originated loans 0.06 % 0.00 % 0.00 % 0.09 % 0.00 % 0.01 % 0.16 % Loans ending balance as a percentage of total loans, gross 55 Loans individually evaluated for impairment 0.70 % 0.02 % 0.10 % 0.88 % 0.00 % 0.00 % 1.70 % Loans collectively evaluated for impairment 34.52 % 9.01 % 8.00 % 37.06 % 0.03 % 9.67 % 98.30 % 56 57 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial (1) Installment and Other Lease Financing Receivables Total Balance at December 31, 2020 $ 19,584 $ 2,400 $ 1,352 $ 41,183 $ 15 $ 1,813 $ 66,347 Provision/(Recapture) for acquired impaired loans (31 ) 573 (36 ) (366 ) 2 — 142 Provision/(Recapture) for acquired non-impaired loans and leases 14 (83 ) — 803 (2 ) (149 ) 583 Provision/(Recapture) for originated loans 1,280 (1,153 ) (468 ) (656 ) (6 ) 1,735 732 Total provision $ 1,263 $ (663 ) $ (504 ) $ (219 ) $ (6 ) $ 1,586 $ 1,457 Charge-offs for acquired impaired loans (2,112 ) (59 ) (326 ) (1,043 ) — — (3,540 ) Charge-offs for acquired non-impaired loans and leases (234 ) — — (1,891 ) — (83 ) (2,208 ) Charge-offs for originated loans and leases (2,352 ) (65 ) — (6,081 ) — (1,418 ) (9,916 ) Total charge-offs $ (4,698 ) $ (124 ) $ (326 ) $ (9,015 ) $ — $ (1,501 ) $ (15,664 ) Recoveries for acquired impaired loans 79 6 — 36 — — 121 Recoveries for acquired non-impaired loans and leases 182 5 — 511 — 180 878 Recoveries for originated loans and leases 508 4 — 633 — 728 1,873 Total recoveries $ 769 $ 15 $ — $ 1,180 $ — $ 908 $ 2,872 Less: Net charge-offs 3,929 109 326 7,835 — 593 12,792 Acquired impaired loans 1,810 1,006 3 364 2 — 3,185 Acquired non-impaired loans and leases 3,350 25 - 2,823 1 48 6,247 Originated loans and leases 11,758 597 519 29,942 6 2,758 45,580 Balance at December 31, 2021 $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Ending ALLL balance Acquired impaired loans $ 1,810 $ 1,006 $ 3 $ 364 $ 2 $ — $ 3,185 Acquired non-impaired loans and leases and originated loans individually evaluated for impairment 6,538 — — 14,500 — — 21,038 Acquired non-impaired loans and leases and originated loans and leases collectively evaluated for impairment 8,570 622 519 18,265 7 2,806 30,789 Balance at December 31, 2021 $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Loans and leases ending balance Acquired impaired loans $ 72,160 $ 49,401 $ 1,312 $ 4,014 $ 164 $ — $ 127,051 Acquired non-impaired loans and leases and originated loans individually evaluated for impairment 35,051 1,802 — 36,070 — — 72,923 Acquired non-impaired loans and leases and originated loans and leases collectively evaluated for impairment 1,558,537 429,311 324,087 1,665,589 1,204 358,426 4,337,154 Total loans and leases at December 31, 2021, gross $ 1,665,748 $ 480,514 $ 325,399 $ 1,705,673 $ 1,368 $ 358,426 $ 4,537,128 Ratio of net charge-offs to average loans and leases outstanding during the period Acquired impaired loans 0.05 % 0.00 % 0.01 % 0.02 % 0.00 % 0.00 % 0.08 % Acquired non-impaired loans and leases 0.00 % 0.00 % 0.00 % 0.03 % 0.00 % 0.00 % 0.03 % Originated loans and leases 0.04 % 0.00 % 0.00 % 0.12 % 0.00 % 0.00 % 0.16 % Total net charge-offs to average loans and leases 0.09 % 0.00 % 0.01 % 0.17 % 0.00 % 0.00 % 0.27 % 58 Loans and leases ending balance as a percentage of total loans and leases, gross Acquired impaired loans 1.59 % 1.09 % 0.03 % 0.09 % 0.00 % 0.00 % 2.80 % Acquired non-impaired loans and leases and originated loans individually evaluated for impairment 0.77 % 0.04 % 0.00 % 0.80 % 0.00 % 0.00 % 1.61 % Acquired non-impaired loans and leases and originated loans and leases collectively evaluated for impairment 34.35 % 9.46 % 7.14 % 36.71 % 0.03 % 7.90 % 95.59 % (1) PPP loans are included in Commercial and Industrial loans and leases.
Biggest changeAs of December 31, 2023, approximately $34.4 million of the ACL was allocated to unguaranteed loans in our government lending portfolio. 52 Table of Contents The following table presents 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 at December 31, 2022 $ 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 for PCD loans (1,319 ) (432 ) 101 414 (1 ) — (1,237 ) Provision for acquired non-credit-deteriorated loans (1,666 ) 340 606 181 1 (31 ) (569 ) Provision for originated loans 10,222 (310 ) (1,032 ) 22,807 11 2,328 34,026 Total provision $ 7,237 $ (402 ) $ (325 ) $ 23,402 $ 11 $ 2,297 $ 32,220 Charge-offs for PCD loans (1,229 ) — — — — — (1,229 ) Charge-offs for acquired non-credit deteriorated loans — — — — — — — Charge-offs for originated loans (8,500 ) (21 ) — (15,411 ) (3 ) (2,437 ) (26,372 ) Total charge-offs $ (9,729 ) $ (21 ) $ — $ (15,411 ) $ (3 ) $ (2,437 ) $ (27,601 ) Recoveries for PCD loans — — — — — — — Recoveries for acquired non-credit deteriorated loans — — — — — — — Recoveries for originated loans 1,438 118 — 2,293 4 694 4,547 Total recoveries $ 1,438 $ 118 $ — $ 2,293 $ 4 $ 694 $ 4,547 Net charge-offs (recoveries) (8,291 ) 97 — (13,118 ) 1 (1,743 ) (23,054 ) Balance at December 31, 2023 $ 33,237 $ 3,495 $ 2,906 $ 53,782 $ 36 $ 8,230 $ 101,686 Ending ACL balances PCD loans $ 6,833 $ 902 $ 211 $ 2,069 $ 1 $ — $ 10,016 Acquired non-credit-deteriorated loans 2,070 636 607 1,410 2 3 4,728 Originated loans 24,334 1,957 2,088 50,303 33 8,227 86,942 Balance at December 31, 2023 $ 33,237 $ 3,495 $ 2,906 $ 53,782 $ 36 $ 8,230 $ 101,686 Loans individually evaluated for impairment $ 12,361 $ — $ — $ 14,880 $ — $ — $ 27,241 Loans collectively evaluated for impairment 20,876 3,495 2,906 38,902 36 8,230 74,445 Balance at December 31, 2023 $ 33,237 $ 3,495 $ 2,906 $ 53,782 $ 36 $ 8,230 $ 101,686 Loans and leases ending balances Loans individually evaluated for impairment $ 64,339 $ 3,593.00 $ 813.00 $ 44,749 $ — $ — $ 113,494 Loans collectively evaluated for impairment 2,255,973 715,937 526,024 2,403,812 3,200 665,866 6,570,812 Total loans at December 31, 2023, gross $ 2,320,312 $ 719,530 $ 526,837 $ 2,448,561 $ 3,200 $ 665,866 $ 6,684,306 Ratio of net charge-offs to average loans outstanding during the year PCD loans 0.02 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.02 % Acquired non-credit-deteriorated loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Originated loans 0.12 % 0.00 % 0.00 % 0.22 % 0.00 % 0.02 % 0.36 % Loans ending balance as a percentage of total loans, gross Loans individually evaluated for impairment 0.96 % 0.05 % 0.01 % 0.67 % 0.00 % 0.00 % 1.70 % Loans collectively evaluated for impairment 33.75 % 10.70 % 7.87 % 35.96 % 0.05 % 9.96 % 98.30 % Total 34.71 % 10.75 % 7.88 % 36.63 % 0.05 % 9.96 % 100.00 % 53 Table of Contents 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, 2021 $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Impact of Adopting CECL - PCD (303 ) 353 120 (207 ) — — (37 ) Impact of Adopting CECL - Non-credit-deteriorated 1,909 124 — (279 ) 1 39 1,794 Impact of Adopting CECL - Originated 4,761 570 1,071 1,739 8 2,262 10,411 Total impact Day 1 CECL adoption $ 6,367 $ 1,047 $ 1,191 $ 1,253 $ 9 $ 2,301 $ 12,168 Provision for PCD loans (753 ) (495 ) (56 ) (281 ) (18 ) — (1,603 ) Provision for acquired non-credit-deteriorated loans (1,517 ) 321 1 (1,243 ) (1 ) (282 ) (2,721 ) Provision for originated loans 7,522 1,082 1,530 13,526 10 3,328 26,998 Total provision $ 5,252 $ 908 $ 1,475 $ 12,002 $ (9 ) $ 3,046 $ 22,674 Charge-offs for PCD loans (195 ) (945 ) (94 ) (7 ) (4 ) — (1,245 ) Charge-offs for acquired non-credit deteriorated loans (6 ) (174 ) — (72 ) — (28 ) (280 ) Charge-offs for originated loans (3,634 ) (90 ) — (5,299 ) (3 ) (1,444 ) (10,470 ) Total charge-offs $ (3,835 ) $ (1,209 ) $ (94 ) $ (5,378 ) $ (7 ) $ (1,472 ) $ (11,995 ) Recoveries for PCD loans 592 755 40 177 22 — 1,586 Recoveries for acquired non-credit deteriorated loans — — — — — 257 257 Recoveries for originated loans 768 11 — 705 — 738 2,222 Total recoveries $ 1,360 $ 766 $ 40 $ 882 $ 22 $ 995 $ 4,065 Net charge-offs (recoveries) (2,475 ) (443 ) (54 ) (4,496 ) 15 (477 ) (7,930 ) Balance at December 31, 2022 $ 26,062 $ 3,140 $ 3,134 $ 41,888 $ 24 $ 7,676 $ 81,924 Ending ACL Balances PCD loans $ 1,151 $ 674 $ 13 $ 46 $ 2 $ — $ 1,886 Acquired non-credit-deteriorated loans 3,736 296 1 1,229 1 34 5,297 Originated loans 21,175 2,170 3,120 40,613 21 7,642 74,741 Balance at December 31, 2022 $ 26,062 $ 3,140 $ 3,134 $ 41,888 $ 24 $ 7,676 $ 81,924 Loans individually evaluated for impairment $ 6,102 $ — $ 265 $ 8,971 $ — $ — $ 15,338 Loans collectively evaluated for impairment 19,960 3,140 2,869 32,917 24 7,676 66,586 Balance at December 31, 2022 $ 26,062 $ 3,140 $ 3,134 $ 41,888 $ 24 $ 7,676 $ 81,924 Loans and leases ending balances Loans individually evaluated for impairment $ 37,959 $ 879 $ 5,541 $ 47,846 $ — $ — $ 92,225 Loans collectively evaluated for impairment 1,871,529 489,083 433,448 2,009,228 1,759 523,986 5,329,033 Total loans at December 31, 2022, gross $ 1,909,488 $ 489,962 $ 438,989 $ 2,057,074 $ 1,759 $ 523,986 $ 5,421,258 Ratio of net charge-offs to average loans outstanding during the year PCD loans (0.01 )% 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % (0.01 )% Acquired non-credit-deteriorated loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Originated loans 0.06 % 0.00 % 0.00 % 0.09 % 0.00 % 0.01 % 0.16 % Loans ending balance as a percentage of total loans, gross Loans individually evaluated for impairment 0.70 % 0.02 % 0.10 % 0.88 % 0.00 % 0.00 % 1.70 % Loans collectively evaluated for impairment 34.52 % 9.01 % 8.00 % 37.06 % 0.03 % 9.67 % 98.30 % Total 35.22 % 9.03 % 8.10 % 37.94 % 0.03 % 9.67 % 100.00 % 54 Table of Contents 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.
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.
We have selected November 30 as the date to perform the annual goodwill impairment test. 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.
After a one-year forecast period, a one-year reversion period adjusts loss experience to the historical average on a straight-line basis. 35 Management also considers qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history.
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 portfolio and is monitored quarterly.
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.
See “GAAP Reconciliation and Management Explanation of non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure. (2) Calculation excludes impairment charges and merger-related expenses (3) Calculation excludes incremental income tax expense or benefit related to changes in corporate income tax rates and reversal of valuation allowance on net deferred tax assets.
See "GAAP Reconciliation and Management Explanation of non-GAAP Financial Measures" for a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure. (2) Calculation excludes impairment charges and merger-related expenses. (3) Calculation excludes incremental income tax expense or benefit related to changes in corporate income tax rates and reversal of valuation allowance on net deferred tax assets.
The following table summarizes certain selected historical consolidated financial data of Byline as of or for the fiscal years ended December 31, 2022, 2021, and 2020, and is derived from our audited financial statements. You should read this information in conjunction with our consolidated financial statements and related notes included in Item 8 of this report.
The following table summarizes certain selected historical consolidated financial data of Byline as of or for the fiscal years ended December 31, 2023, 2022, and 2021, and is derived from our audited financial statements. You should read this information in conjunction with our consolidated financial statements and related notes included in Item 8 of this report.
We did not utilize the discount window during 2022 and there were no borrowings outstanding under the FRB discount window line as of December 31, 2022. We pledge loans as collateral for any borrowings under the FRB discount window. During 2020, we issued $75.0 million in fixed-to-floating subordinated notes that mature on July 1, 2030.
We did not utilize the discount window during 2023 and there were no borrowings outstanding under the FRB discount window line as of December 31, 2023. We pledge loans as collateral for any borrowings under the FRB discount window. During 2020, we issued $75.0 million in fixed-to-floating subordinated notes that mature on July 1, 2030.
There were no securities classified as trading in our investment portfolio as of or for the years ended December 31, 2022 and 2021. 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.
There were no securities classified as trading in our investment portfolio as of or for the years ended December 31, 2023 and 2022. 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.
The revolving line of credit bears interest at either SOFR plus 195 basis points or the 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.
The revolving line of credit bears interest at either SOFR plus 205 basis points or the 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.
The amended revolving line of credit bears interest at either the SOFR Rate plus 195 basis points or the Prime Rate minus 75 basis points, based on our election, which is required to be communicate to the lender at least three business days prior to the commencement of an interest period.
The amended revolving line of credit bears interest at either the SOFR Rate plus 205 basis points or the Prime Rate minus 75 basis points, based on our election, which is required to be communicate to the lender at least three business days prior to the commencement of an interest period.
Item 6. [ R e served ] 33 I tem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following is a discussion and analysis of our financial condition and results of operations and should be read in conjunction with our financial statements and notes thereto included in Item 8 of this report.
Item 6. [ R e served ] 33 Table of Contents I tem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following is a discussion and analysis of our financial condition and results of operations and should be read in conjunction with our financial statements and notes thereto included in Item 8 of this report.
See Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.
Refer to Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.
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 December 31, 2022 and 2021.
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 December 31, 2023 and 2022.
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 December 31, 2022 and 2021.
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 December 31, 2023 and 2022.
We record derivative assets and derivative liabilities on the Consolidated Statements of Financial Condition within other assets and other liabilities, respectively. See Note 21 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information.
We record derivative assets and derivative liabilities on the Consolidated Statements of Financial Condition within other assets and other liabilities, respectively. Refer to Note 21 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information.
The metric demonstrates income excluding the tax provision or benefit and the provision for credit losses, and enables investors and others to assess our 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 ROU asset and merger-related expenses.
The metric demonstrates income excluding the tax provision or benefit and the provision for credit losses and enables investors and others to assess our 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 ROU asset and merger-related expenses.
Management believes the metric is an important measure of our 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 our operating performance on an ongoing basis.
Management believes the metric is an important measure of our 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 our operating performance on an ongoing basis.
Management believes the metric is an important measure of our 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 the metric is an important measure of our 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.
Maturity as of December 31, 2022 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.
Maturity as of December 31, 2023 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.
In addition, our interest income includes the accretion of the discounts on our purchased credit deteriorated and acquired non-credit-deteriorated loans, which will also affect our net interest spread, net interest margin and net interest income. 43 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.
In addition, our interest income includes the accretion of the discounts on our purchased credit deteriorated and acquired non-credit-deteriorated loans, which will also affect our net interest spread, net interest margin and net interest income. 42 Table of Contents 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.
Management believes the significant items are not indicative of or useful to measure our 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 significant items are not indicative of or useful to measure our 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 is an important measure of our 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 our 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 our 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 our 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 our 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.
Management believes the metric is an important measure of our 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.
Management believes the metric is an important measure of our 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 our operating performance on an ongoing basis. • "Adjusted return on average assets" is adjusted net income divided by average assets.
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 asset ("ROU") and merger-related expenses adjusted for applicable income tax.
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 asset ("ROU") and merger-related expenses adjusted for applicable income tax.
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.
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.
If the recoverable amount of the core deposit intangibles 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.
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.
Management’s discussion focuses on 2022 results compared to 2021. For a discussion of 2021 results compared to 2020, refer to Part I, Item 7 of our 2021 Annual Report filed on Form 10-K , which was filed with the SEC on March 7, 2022.
Management’s discussion focuses on 2023 results compared to 2022. For a discussion of 2022 results compared to 2021, refer to Part I, Item 7 of our 2022 Annual Report filed on Form 10-K , which was filed with the SEC on March 6, 2023.
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 Tier 1 capital to average consolidated assets, (referred to as the “leverage ratio”), as defined under these capital requirements. For further information, see Item 1.
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 Tier 1 capital to average consolidated assets, (referred to as the "leverage ratio"), as defined under these capital requirements. For further information, see Item 1.
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 Consolidated Statements of Financial Condition.
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 59 Table of Contents Consolidated Statements of Financial Condition.
Management believes the metric is an important measure of our 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 our 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.
The 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 ROU asset and merger-related expenses. • “Tangible common equity” is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets.
The 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 ROU asset 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 assets" is defined as total assets reduced by goodwill and other intangible assets.
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.
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.
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 this metric is important to investors 38 Table of Contents 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.
Provision and allowance for credit losses The provision for credit losses reflects the amount required to maintain the allowance for credit losses (“ACL”) at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loss reserves.
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.
As of December 31, 2022, Byline Bank had open advances from the FHLB of $625.0 million and open letters of credit of $13.5 million, providing available aggregate borrowing capacity of $1.0 billion. In addition, Byline Bank had an uncommitted federal funds line available of $135.0 million and $804.6 million available under the FRB discount window line at December 31, 2022.
As of December 31, 2022, Byline Bank had open advances from the FHLB of $625.0 million and open letters of credit of $13.5 million, providing available aggregate borrowing capacity of $1.0 billion. In addition, Byline Bank had an uncommitted federal funds line available of $135.0 million at December 31, 2022.
At December 31, 2022, we evaluated the securities which had an unrealized loss for credit losses and determined there were none. There were 280 investment securities with unrealized losses at December 31, 2022. 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.
At December 31, 2023, we evaluated the securities in an unrealized loss position for credit losses and determined there were none. There were 285 investment securities with unrealized losses at December 31, 2023. 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.
If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. At December 31, 2022 and December 31, 2021, the line of credit had no outstanding balance. There are regulatory limitations that affect the ability of Byline Bank to pay dividends to the Company.
If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. At December 31, 2023, the outstanding balance was $11.3 million. At December 31, 2022 the line of credit had no outstanding balance. There are regulatory limitations that affect the ability of Byline Bank to pay dividends to the Company.
As of December 31, 2022, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 1.4% of our total loan portfolio, compared to 2.8 % at December 31, 2021.
As of December 31, 2023, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 3.4% of our total loan portfolio, compared to 1.4% at December 31, 2022.
Total ACL to total loans and leases held for investment, net before ACL was 1.51% and 1.21% of total loans and leases at December 31, 2022 and 2021, respectively.
Total ACL to total loans and leases held for investment, net before ACL was 1.52% and 1.51% of total loans and leases at December 31, 2023 and 2022, respectively.
Please refer to the “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” included in Item 6 of this report, for more information on how our adjusted efficiency ratio is calculated. Income Taxes Income tax expense was $26.7 million for the year ended December 31, 2022, compared to $31.4 million for the year ended December 31, 2021.
Please refer to the "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" included in Item 7 of this report, for more information on how our adjusted efficiency ratio is calculated. Income Taxes Income tax expense was $37.8 million for the year ended December 31, 2023, compared to $26.7 million for the year ended December 31, 2022.
Our results of operations for the years ended December 31, 2022 and 2021, produced an annual return on average assets of 1.25% and 1.40% and a return on average stockholders’ equity of 11.33% and 11.31%, respectively. Since our recapitalization in June 2013, our branch network has been reduced from 88 to 38, including 13 branches added through acquisition.
Our results of operations for the years ended December 31, 2023 and 2022, produced an annual return on average assets of 1.34% and 1.25% and a return on average stockholders’ equity of 12.50% and 11.33%, respectively. Since our recapitalization in June 2013, our branch network has been reduced from 88 to 48, including 23 branches added through acquisition.
In addition, Byline Bank owns stock of Bankers’ Bank, which is redeemable at par and carried at cost. As of December 31, 2022 and 2021, we held $28.2 million and $22.0 million, respectively, in FHLB and Bankers’ Bank stock.
In addition, Byline Bank owns stock of Bankers’ Bank, which is redeemable at par and carried at cost. As of December 31, 2023 and 2022, we held $16.3 million and $28.2 million, respectively, in FHLB and Bankers’ Bank stock.
Total deposits at December 31, 2022 were $5.7 billion, representing an increase of $540.1 million, or 10.5%, compared to $5.2 billion at December 31, 2021. Non-interest-bearing deposits were $2.1 billion, or 37.6% of total deposits, at December 31, 2022, a decrease of $19.8 million, or 0.9%, compared to $2.2 billion at December 31, 2021, or 41.9% of total deposits.
Total deposits at December 31, 2023 were $7.2 billion, representing an increase of $1.5 billion, or 26.0%, compared to $5.7 billion at December 31, 2022. Non-interest-bearing deposits were $1.9 billion, or 26.6% of total deposits, at December 31, 2023, a decrease of $232.8 million, or 10.9%, compared to $2.1 billion at December 31, 2022, or 37.6% of total deposits.
The construction, land development and other land loan portfolio comprised 15.5% and 13.2% of real estate loans as of December 31, 2022 and 2021, respectively, and 8.1% and 7.2% of the total loan and lease portfolio as of December 31, 2022 and 2021, respectively.
The construction, land development and other land loan portfolio comprised 14.8% and 15.5% of real estate loans as of December 31, 2023 and 2022, respectively, and 7.9% and 8.1% of the total loan and lease portfolio as of December 31, 2023 and 2022, respectively.
(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%. Net interest income for the year ended December 31, 2022 was $265.3 million, an increase of $28.9 million, or 12.2% compared to 2021.
(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%. Net interest income for the year ended December 31, 2023 was $330.6 million, an increase of $65.3 million, or 24.6% compared to 2022.
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 December 31, 2022 and 2021 were $5.4 billion and $4.5 billion, respectively, an increase of $884.1 million or 19.5%.
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 December 31, 2023 and 2022 were $6.7 billion and $5.4 billion, respectively, an increase of $1.3 billion or 23.3%.
The following tables summarize the fair value of the available-for-sale and held-to-maturity securities portfolio as of the dates presented (dollars in thousands): December 31, 2022 December 31, 2021 Amortized Cost Fair Value Amortized Cost Fair Value Available-for-sale U.S. Treasury Notes $ 42,430 $ 40,723 $ 18,447 $ 18,476 U.S.
The following tables summarize the fair value of the available-for-sale and held-to-maturity securities portfolio as of the dates presented (dollars in thousands): December 31, 2023 December 31, 2022 Amortized Cost Fair Value Amortized Cost Fair Value Available-for-sale U.S. Treasury Notes $ 116,398 $ 115,434 $ 42,430 $ 40,723 U.S.
The average balance of interest-earning assets was $6.6 billion for the year ended December 31, 2022, an increase of $481.6 million, or 7.8%, compared to 2021, primarily due to growth in our loan and lease portfolios.
The average balance of interest-earning assets was $7.7 billion for the year ended December 31, 2023, an increase of $1.0 billion, or 15.8%, compared to 2022, primarily due to growth in our loan and lease portfolios.
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 18.00% and maturities up to 2050. Variable rate loan commitments have interest rates ranging from 1.75% to 11.50% and maturities up to 2048.
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 2053. Variable rate loan commitments have interest rates ranging from 4.00% to 18.50% and maturities up to 2049.
(5) Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. 38 GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial measures included in the “Selected Financial Data” are not measures of financial performance in accordance with GAAP.
(5) Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. 37 Table of Contents GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial measures included in the "Selected Financial Data" are not measures of financial performance in accordance with GAAP.
The decrease in income tax expense was primarily due to decreased income before provision for income taxes during 2022. Our effective tax rate was 23.3% for the year ended December 31, 2022 and 25.3% for the year ended December 31, 2021.
The increase in income tax expense was primarily due to increased income before provision for income taxes during 2023. Our effective tax rate was 25.9% for the year ended December 31, 2023 and 23.3% for the year ended December 31, 2022.
As of December 31, 2022, the loan portfolio included $420.8 million of unguaranteed SBA 7(a) and USDA loans with exposure to the following top three industries: 16.5% retail trade, 14.1% accommodation and food services and 12.0% manufacturing.
As of December 31, 2023, the loan portfolio included $422.8 million of unguaranteed SBA 7(a) and USDA loans with exposure to the following top three industries: 16.8% retail trade, 14.0% accommodation and food services and 11.6% manufacturing.
“Business—Supervision and Regulation—Regulatory Capital Requirements”, “Business—Supervision and Regulation—Prompt Corrective Action Framework” and Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information. As of December 31, 2022, Byline Bank exceeded all applicable regulatory capital requirements and was considered “well-capitalized”.
"Business—Supervision and Regulation—Regulatory Capital Requirements", "Business—Supervision and Regulation—Prompt Corrective Action Framework" and Note 20 of the notes to our audited consolidated financial statements contained in Item 8 of this report for additional information. As of December 31, 2023, Byline Bank exceeded all applicable regulatory capital requirements and was considered "well-capitalized".
See Note 5 of the notes to our audited consolidated financial statements contained in Item 8 of this report for further information. 60 Deposits We gather deposits primarily through each of our 37 branch locations in the Chicago metropolitan area and one branch in Brookfield, Wisconsin.
Refer to Note 5 of the notes to our audited consolidated financial statements contained in Item 8 of this report for further information. 55 Table of Contents Deposits We gather deposits primarily through each of our 47 branch locations in the Chicago metropolitan area and one branch in Wauwatosa, Wisconsin.
Our exposure to certain industries as of December 31, 2022 represents the following percentages of the portfolio: 35.9% real estate, 14.3% manufacturing, 7.4% wholesale trade, 6.8% finance and insurance, 6.1% retail trade, and all other industries represent less than 5% of the portfolio or 29.4% of the total loan and lease portfolio.
Our exposure to certain industries as of December 31, 2023 represents the following percentages of the portfolio: 36.5% real estate, 12.5% manufacturing, 7.7% finance and insurance, 6.4% wholesale trade, 5.0% retail trade, and all other industries represent less than 5% of the portfolio or 31.9% of the total loan and lease portfolio.
We carry these securities at amortized cost. Securities held-to-maturity were $2.7 million and $3.9 million at December 31, 2022 and 2021, respectively. The fair value of our equity and other securities portfolio was $8.0 million at December 31, 2022, and $10.6 million at December 31, 2021.
Our held-to-maturity securities portfolio consists of municipal securities. We carry these securities at amortized cost. Securities held-to-maturity were $1.2 million and $2.7 million at December 31, 2023 and 2022, respectively. The fair value of our equity and other securities portfolio was $8.7 million at December 31, 2023, and $8.0 million at December 31, 2022.
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.
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.
Management uses the non-GAAP financial measures set forth herein in its analysis of our performance and believes that these non-GAAP financial measures provide useful information to management and investors; however, you should not view these disclosures as a substitute for results determined in accordance with GAAP financial measures. 37 As of or for the years ended December 31, (Dollars in thousands except share and per share data) 2022 2021 2020 Income Statement Data Net interest income $ 265,330 $ 236,387 $ 214,978 Provision for credit losses 23,879 973 56,677 Non-interest income 57,314 74,253 62,060 Non-interest expense 184,082 185,455 168,694 Income before income taxes 114,683 124,212 51,667 Provision for income taxes 26,729 31,427 14,200 Net income 87,954 92,785 37,467 Dividends on preferred shares 196 783 783 Income available to common stockholders $ 87,758 $ 92,002 $ 36,684 Earnings per Common Share Basic earnings per common share $ 2.37 $ 2.45 $ 0.96 Diluted earnings per common share $ 2.34 $ 2.40 $ 0.96 Adjusted diluted earnings per share (1)(2)(3) $ 2.36 $ 2.71 $ 1.05 Weighted-average common shares outstanding (basic) 36,972,972 37,609,723 38,031,250 Weighted-average common shares outstanding (diluted) 37,476,120 38,369,067 38,312,608 Common shares outstanding 37,492,775 37,713,903 38,618,054 Balance Sheet Data Loans and leases held for investment, before allowance for credit losses - loans and leases (4) $ 5,421,258 $ 4,537,128 $ 4,340,535 Loans and leases held for sale 47,823 64,460 7,924 Allowance for credit losses - loans and leases (ACL) 81,924 55,012 66,347 Interest-bearing deposits in other banks 117,079 122,684 41,988 Investment securities 1,185,125 1,469,005 1,460,389 Assets held for sale 8,673 9,153 13,023 Other real estate owned, net 4,717 2,112 6,350 Goodwill and other intangibles 158,887 165,558 172,631 Servicing assets 19,172 23,744 22,042 Total assets 7,362,941 6,696,172 6,390,652 Total deposits 5,695,121 5,155,047 4,752,031 Total liabilities 6,597,125 5,859,790 5,585,188 Total stockholders’ equity 765,816 836,382 805,464 Deposits per branch 149,872 117,160 103,305 Book value per common share 20.43 21.90 20.59 Tangible book value per common share (1) 16.19 17.51 16.12 Performance Ratios Net interest margin 4.00 % 3.84 % 3.80 % Cost of deposits 0.36 0.09 0.35 Efficiency ratio (5) 54.99 57.42 58.14 Adjusted efficiency ratio (1)(2)(5) 54.70 52.14 56.42 Non-interest expense to average assets 2.62 2.79 2.76 Adjusted non-interest expense to average assets (1)(2) 2.61 2.54 2.67 Return on average stockholders’ equity 11.33 11.31 4.78 Adjusted return on average stockholders' equity (1)(2)(3) 11.43 12.77 5.21 Return on average assets 1.25 1.40 0.61 Adjusted return on average assets (1)(2)(3) 1.26 1.58 0.67 Non-interest income to total revenues (1) 17.76 23.90 22.40 Pre-tax pre-provision return on average assets (1) 1.97 1.88 1.76 Adjusted pre-tax pre-provision return on average assets (1)(2) 1.99 2.13 1.84 Return on average tangible common stockholders' equity (1) 15.15 15.17 7.06 Adjusted return on average tangible common stockholders' equity (1)(2)(3) 15.28 17.04 7.63 Non-interest-bearing deposits to total deposits 37.55 41.87 37.09 Loans and leases held for sale and loans and leases held for investment to total deposits 96.03 89.26 91.51 Deposits to total liabilities 86.33 87.97 85.08 Asset Quality Ratios Non-performing loans and leases / total loans and leases held for investment, net before ACL 0.66 % 0.51 % 0.95 % ACL / total loans and leases held for investment, net before ACL 1.51 1.21 1.53 Net charge-offs / average total loans and leases held for investment, net before ACL 0.16 0.28 0.51 Capital Ratios Common equity to assets 10.40 % 12.33 % 12.44 % Tangible common equity to tangible assets(1) 8.42 10.11 10.01 Leverage ratio 10.29 10.89 11.12 Common equity tier 1 capital ratio 10.20 11.39 12.20 Tier 1 capital ratio 10.85 12.37 13.36 Total capital ratio 13.00 14.70 16.18 (1) Represents a non-GAAP financial measure.
Management uses the non-GAAP financial measures set forth herein in its analysis of our performance and believes that these non-GAAP financial measures provide useful information to management and investors; however, you should not view these disclosures as a substitute for results determined in accordance with GAAP financial measures. 36 Table of Contents As of or for the years ended December 31, (Dollars in thousands except share and per share data) 2023 2022 2021 Income Statement Data Net interest income $ 330,621 $ 265,330 $ 236,387 Provision for credit losses 31,653 23,879 973 Non-interest income 56,315 57,314 74,253 Non-interest expense 209,603 184,082 185,455 Income before income taxes 145,680 114,683 124,212 Provision for income taxes 37,802 26,729 31,427 Net income 107,878 87,954 92,785 Dividends on preferred shares — 196 783 Income available to common stockholders $ 107,878 $ 87,758 $ 92,002 Earnings per Common Share Basic earnings per common share $ 2.69 $ 2.37 $ 2.45 Diluted earnings per common share $ 2.67 $ 2.34 $ 2.40 Adjusted diluted earnings per share (1)(2)(3) $ 2.89 $ 2.36 $ 2.71 Weighted-average common shares outstanding (basic) 40,045,208 36,972,972 37,609,723 Weighted-average common shares outstanding (diluted) 40,445,553 37,476,120 38,369,067 Common shares outstanding 43,764,056 37,492,775 37,713,903 Balance Sheet Data Loans and leases held for investment, before allowance for credit losses - loans and leases (4) $ 6,684,306 $ 5,421,258 $ 4,537,128 Loans and leases held for sale 18,005 47,823 64,460 Allowance for credit losses - loans and leases (ACL) 101,686 81,924 55,012 Acquisition accounting adjustments (5) — 4,769 13,389 Interest-bearing deposits in other banks 165,705 117,079 122,684 Investment securities 1,352,380 1,185,125 1,469,005 Assets held for sale 4,484 8,673 9,153 Other real estate owned, net 1,200 4,717 2,112 Goodwill and other intangibles 203,478 158,887 165,558 Servicing assets 19,844 19,172 23,744 Total assets 8,881,967 7,362,941 6,696,172 Total deposits 7,176,999 5,695,121 5,155,047 Total liabilities 7,891,816 6,597,125 5,859,790 Total stockholders’ equity 990,151 765,816 836,382 Deposits per branch 149,521 149,872 117,160 Book value per common share 22.62 20.43 21.90 Tangible book value per common share (1) 17.98 16.19 17.51 Performance Ratios Net interest margin 4.31 % 4.00 % 3.84 % Net interest margin, fully taxable equivalent (1)(4) 4.32 4.01 3.86 Average cost of deposits 1.90 0.36 0.09 Efficiency ratio (5) 52.62 54.99 57.42 Adjusted efficiency ratio (1)(2)(5) 49.61 54.70 52.14 Non-interest expense to average assets 2.60 2.62 2.79 Adjusted non-interest expense to average assets (1)(2) 2.46 2.61 2.54 Return on average stockholders’ equity 12.50 11.33 11.31 Adjusted return on average stockholders' equity (1)(2)(3) 13.53 11.43 12.77 Return on average assets 1.34 1.25 1.40 Adjusted return on average assets (1)(2)(3) 1.45 1.26 1.58 Non-interest income to total revenues (1) 14.55 17.76 23.90 Pre-tax pre-provision return on average assets (1) 2.20 1.97 1.88 Adjusted pre-tax pre-provision return on average assets (1)(2) 2.35 1.99 2.13 Return on average tangible common stockholders' equity (1) 16.46 15.15 15.17 Adjusted return on average tangible common stockholders' equity (1)(2)(3) 17.76 15.28 17.04 Non-interest-bearing deposits to total deposits 26.56 37.55 41.87 Loans and leases held for sale and loans and leases held for investment to total deposits 93.39 96.03 89.26 Deposits to total liabilities 90.94 86.33 87.97 Asset Quality Ratios Non-performing loans and leases / total loans and leases held for investment, net before ACL 0.96 % 0.66 % 0.51 % ACL / total loans and leases held for investment, net before ACL 1.52 1.51 1.21 Net charge-offs / average total loans and leases held for investment, net before ACL 0.38 0.16 0.28 Capital Ratios Common equity to assets 11.15 % 10.40 % 12.33 % Tangible common equity to tangible assets(1) 9.06 8.42 10.11 Leverage ratio 10.86 10.29 10.89 Common equity tier 1 capital ratio 10.35 10.20 11.39 Tier 1 capital ratio 11.39 10.85 12.37 Total capital ratio 13.38 13.00 14.70 (1) Represents a non-GAAP financial measure.
Loan servicing asset revaluation had a downward adjustment of $11.7 million for the year ended December 31, 2022, compared to a downward adjustment of $6.7 million for the year ended December 31, 2021, an increase of $5.1 million, or 76.4%.
Loan servicing asset revaluation had a downward adjustment of $5.1 million for the year ended December 31, 2023, compared to a downward adjustment of $11.7 million for the year ended December 31, 2022.
Financial Condition Balance sheet analysis Our total assets increased by $666.8 million, or 10.0%, to $7.4 billion at December 31, 2022, compared to $6.7 billion at December 31, 2021. The increase in total assets includes an increase of $884.1 million, or 19.5%, in loans and leases from $4.5 billion at December 31, 2021 to $5.4 billion at December 31, 2022.
Financial Condition Balance sheet analysis Our total assets increased by $1.5 billion, or 20.6%, to $8.9 billion at December 31, 2023, compared to $7.4 billion at December 31, 2022. The increase in total assets includes an increase of $1.3 billion, or 23.3%, in loans and leases from $5.4 billion at December 31, 2022 to $6.7 billion at December 31, 2023.
At December 31, 2022 and 2021, commercial real estate loans, including both owner-occupied and non-owner occupied, as a percentage of total capital were 313.4% and 302.5%, respectively. Non-owner occupied commercial real estate loans were $736.7 million and $637.1 million, or 86.6% and 84.6% of total capital, at December 31, 2022 and 2021, respectively.
At December 31, 2023 and 2022, commercial real estate loans, including both owner-occupied and non-owner occupied, as a percentage of total capital were 299.6% and 313.4%, respectively. Non-owner occupied commercial real estate loans were $1.0 billion and $736.7 million, or 95.9% and 86.6% of total capital, at December 31, 2023 and 2022, respectively.
Provision for credit losses 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 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.
For the years ended December 31, 2022 and 2021, net income available to common stockholders was $87.8 million, or $2.37 per basic and $2.34 per diluted common share, and $92.0 million, or $2.45 per basic and $2.40 per diluted common share, respectively.
For the years ended December 31, 2023 and 2022, net income available to common stockholders was $107.9 million, or $2.69 per basic and $2.67 per diluted common share, and $87.8 million, or $2.37 per basic and $2.34 per diluted common share, respectively.
For the years ended December 31, 2022 and 2021 , our efficiency ratio was 54.99% and 57.27%, respectively. The improvement in our efficiency ratio was primarily attributable to increased net interest income. For the years ended December 31, 2022 and 2021, our adjusted efficiency ratio was 54.70% and 51.98%, respectively.
For the years ended December 31, 2023 and 2022, our efficiency ratio was 52.62% and 54.99%, respectively. The improvement in our efficiency ratio was primarily attributable to increased net interest income. For the years ended December 31, 2023 and 2022, our adjusted efficiency ratio was 49.61% and 54.70%, respectively.
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.
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.
Commercial real estate loans comprised the largest portion of the real estate loan portfolio as of December 31, 2022 and 2021, and totaled $1.9 billion, or 67.3%, of real estate loans and 35.2% of the total loan and lease portfolio at December 31, 2022.
Commercial real estate loans comprised the largest portion of the real estate loan portfolio as of December 31, 2023 and 2022, and totaled $2.3 billion, or 65.0%, of real estate loans and 34.7% of the total loan and lease portfolio at December 31, 2023.
Residential real estate loans totaled $490.0 million at December 31, 2022 compared to $480.5 million at December 31, 2021, an increase of $9.4 million or 2.0%.
Residential real estate loans totaled $719.5 million at December 31, 2023 compared to $490.0 million at December 31, 2022, an increase of $229.6 million or 46.9%.
The residential real estate loan portfolio comprised 17.3% and 19.4% of real estate loans as of December 31, 2022 and 2021, respectively, and 9.0% and 10.7% of total loans and leases at December 31, 2022 and 2021, respectively.
The residential real estate loan portfolio comprised 20.2% and 17.3% of real estate loans as of December 31, 2023 and 2022, respectively, and 10.8% and 9.1% of total loans and leases at December 31, 2023 and 2022, respectively.
The following reconciliation tables provide a more detailed analysis of the non‑GAAP financial measures discussed herein: As of or for the years ended December 31, (dollars in thousands, except per share data) 2022 2021 2020 Net income and earnings per share excluding significant items Reported Net Income $ 87,954 $ 92,785 $ 37,467 Significant items: Impairment charges on assets held for sale and ROU asset 372 16,430 4,769 Merger-related expense 538 — — Tax benefit on impairment charges and merger-related expenses (118 ) (4,462 ) (1,328 ) Adjusted Net Income $ 88,746 $ 104,753 $ 40,908 Reported Diluted Earnings per Share $ 2.34 $ 2.40 $ 0.96 Significant items: Impairment charges on assets held for sale and ROU asset 0.01 0.43 0.12 Merger-related expense 0.01 — — Tax benefit on impairment charges and merger-related expenses — (0.12 ) (0.03 ) Adjusted Diluted Earnings per Share $ 2.36 $ 2.71 $ 1.05 40 As of or for the years ended December 31, (dollars in thousands, except per share data) 2022 2021 2020 Adjusted non-interest expense: Non-interest expense $ 184,082 $ 185,455 $ 168,694 Less: significant items Impairment charges on assets held for sale and ROU asset 372 16,430 4,769 Merger-related expense 538 — — Adjusted non-interest expense $ 183,172 $ 169,025 $ 163,925 Adjusted non-interest expense excluding amortization of intangible assets: Adjusted non-interest expense $ 183,172 $ 169,025 $ 163,925 Less: Amortization of intangible assets 6,671 7,073 7,624 Adjusted non-interest expense excluding amortization of intangible assets $ 176,501 $ 161,952 $ 156,301 Pre-tax pre-provision net income: Pre-tax income $ 114,683 $ 124,212 $ 51,667 Add: Provision for credit losses 23,879 973 56,677 Pre-tax pre-provision net income $ 138,562 $ 125,185 $ 108,344 Adjusted pre-tax pre-provision net income: Pre-tax pre-provision net income $ 138,562 $ 125,185 $ 108,344 Impairment charges on assets held for sale and ROU asset 372 16,430 4,769 Merger-related expense 538 — — Adjusted pre-tax pre-provision net income $ 139,472 $ 141,615 $ 113,113 Tax equivalent net interest income Net interest income $ 265,330 $ 236,387 $ 214,978 Add: Tax-equivalent adjustment 915 1,039 792 Net interest income, fully taxable equivalent $ 266,245 $ 237,426 $ 215,770 Total revenues: Net interest income $ 265,330 $ 236,387 $ 214,978 Add: non-interest income 57,314 74,253 62,060 Total revenues $ 322,644 $ 310,640 $ 277,038 Tangible common stockholders' equity: Total stockholders' equity $ 765,816 $ 836,382 $ 805,464 Less: Preferred stock — 10,438 10,438 Less: Goodwill 148,353 148,353 148,353 Less: Core deposit intangibles and other intangibles 10,534 17,205 24,278 Tangible common stockholders' equity $ 606,929 $ 660,386 $ 622,395 Tangible assets: Total assets $ 7,362,941 $ 6,696,172 $ 6,390,652 Less: Goodwill 148,353 148,353 148,353 Less: Core deposit intangibles and other intangibles 10,534 17,205 24,278 Tangible assets $ 7,204,054 $ 6,530,614 $ 6,218,021 Average tangible common stockholders' equity: Average total stockholders' equity $ 776,225 $ 820,017 $ 784,578 Less: Average preferred stock 2,459 10,438 10,438 Less: Average goodwill 148,353 148,353 148,353 Less: Average core deposit intangibles and other intangibles 13,850 20,689 28,095 Average tangible common stockholders' equity $ 611,563 $ 640,537 $ 597,692 Average tangible assets: Average total assets $ 7,018,779 $ 6,642,131 $ 6,140,143 Less: Average goodwill 148,353 148,353 148,353 Less: Average core deposit intangibles and other intangibles 13,850 20,689 28,095 Average tangible assets $ 6,856,576 $ 6,473,089 $ 5,963,695 Tangible net income available to common stockholders: Net income available to common stockholders $ 87,758 $ 92,002 $ 36,684 Add: After-tax intangible asset amortization 4,890 5,147 5,501 Tangible net income available to common stockholders $ 92,648 $ 97,149 $ 42,185 Adjusted Tangible net income available to common stockholders: Tangible net income available to common stockholders $ 92,648 $ 97,149 $ 42,185 Impairment charges on assets held for sale and ROU asset 372 16,430 4,769 Merger-related expense 538 — — Tax benefit on significant items (118 ) (4,462 ) (1,328 ) Adjusted tangible net income available to common stockholders $ 93,440 $ 109,117 $ 45,626 41 As of or for the years ended December 31, (dollars in thousands, except share and per share data) 2022 2021 2020 Pre-tax pre-provision return on average assets: Pre-tax pre-provision net income $ 138,562 $ 125,185 $ 108,344 Total average assets 7,018,779 6,642,131 6,140,143 Pre-tax pre-provision return on average assets 1.97 % 1.88 % 1.76 % Adjusted Pre-tax pre-provision return on average assets: Adjusted pre-tax pre-provision net income $ 139,472 $ 141,615 $ 113,113 Total average assets 7,018,779 6,642,131 6,140,143 Adjusted pre-tax pre-provision return on average assets: 1.99 % 2.13 % 1.84 % Net interest margin, fully taxable equivalent Net interest income, fully taxable equivalent $ 266,245 $ 237,426 $ 215,770 Total average interest-earning assets 6,630,464 6,148,841 5,659,360 Net interest margin, fully taxable equivalent 4.01 % 3.86 % 3.81 % Non-interest income to total revenues: Non-interest income $ 57,314 $ 74,253 $ 62,060 Total revenues 322,644 310,640 277,038 Non-interest income to total revenues 17.76 % 23.90 % 22.40 % Adjusted non-interest expense to average assets: Adjusted non-interest expense $ 183,172 $ 169,025 $ 163,925 Total average assets 7,018,779 6,642,131 6,140,143 Adjusted non-interest expense to average assets 2.61 % 2.54 % 2.67 % Adjusted efficiency ratio: Adjusted non-interest expense excluding amortization of intangible assets $ 176,501 $ 161,952 $ 156,301 Total revenues 322,644 310,640 277,038 Adjusted efficiency ratio 54.70 % 52.14 % 56.42 % Adjusted return on average assets: Adjusted net income $ 88,746 $ 104,753 $ 40,908 Total average assets 7,018,779 6,642,131 6,140,143 Adjusted return on average assets 1.26 % 1.58 % 0.67 % Adjusted return on average stockholders' equity: Adjusted net income $ 88,746 $ 104,753 $ 40,908 Average stockholders' equity 776,225 820,017 784,578 Adjusted return on average stockholders' equity 11.43 % 12.77 % 5.21 % Tangible common equity to tangible assets: Tangible common equity $ 606,929 $ 660,386 $ 622,395 Tangible assets 7,204,054 6,530,614 6,218,021 Tangible common equity to tangible assets 8.42 % 10.11 % 10.01 % Return on average tangible common stockholders' equity: Tangible net income available to common stockholders $ 92,648 $ 97,149 $ 42,185 Average tangible common stockholders' equity 611,563 640,537 597,692 Return on average tangible common stockholders' equity: 15.15 % 15.17 % 7.06 % Adjusted return on average tangible common stockholders' equity: Adjusted tangible net income available to common stockholders $ 93,440 $ 109,117 $ 45,626 Average tangible common stockholders' equity 611,563 640,537 597,692 Adjusted return on average tangible common stockholders' equity 15.28 % 17.04 % 7.63 % Tangible book value per share: Tangible common equity $ 606,929 $ 660,386 $ 622,395 Common shares outstanding 37,492,775 37,713,903 38,618,054 Tangible book value per share $ 16.19 $ 17.51 $ 16.12 42 Results of Operations Net interest income Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings.
The following reconciliation tables provide a more detailed analysis of the non‑GAAP financial measures discussed herein: As of or for the years ended December 31, (dollars in thousands, except per share data) 2023 2022 2021 Net income and earnings per share excluding significant items Reported Net Income $ 107,878 $ 87,954 $ 92,785 Significant items: Impairment charges on assets held for sale and ROU asset 2,395 372 16,430 Merger-related expense 9,222 538 — Tax benefit on impairment charges and merger-related expenses (2,696 ) (118 ) (4,462 ) Adjusted Net Income $ 116,799 $ 88,746 $ 104,753 Reported Diluted Earnings per Share $ 2.67 $ 2.34 $ 2.40 Significant items: Impairment charges on assets held for sale and ROU asset 0.06 0.01 0.43 Merger-related expense 0.23 0.01 — Tax benefit on impairment charges and merger-related expenses (0.07 ) — (0.12 ) Adjusted Diluted Earnings per Share $ 2.89 $ 2.36 $ 2.71 39 Table of Contents As of or for the years ended December 31, (dollars in thousands, except per share data) 2023 2022 2021 Adjusted non-interest expense: Non-interest expense $ 209,603 $ 184,082 $ 185,455 Less: significant items Impairment charges on assets held for sale and ROU asset 2,395 372 16,430 Merger-related expense 9,222 538 — Adjusted non-interest expense $ 197,986 $ 183,172 $ 169,025 Adjusted non-interest expense excluding amortization of intangible assets: Adjusted non-interest expense $ 197,986 $ 183,172 $ 169,025 Less: Amortization of intangible assets 6,011 6,671 7,073 Adjusted non-interest expense excluding amortization of intangible assets $ 191,975 $ 176,501 $ 161,952 Pre-tax pre-provision net income: Pre-tax income $ 145,680 $ 114,683 $ 124,212 Add: Provision for credit losses 31,653 23,879 973 Pre-tax pre-provision net income $ 177,333 $ 138,562 $ 125,185 Adjusted pre-tax pre-provision net income: Pre-tax pre-provision net income $ 177,333 $ 138,562 $ 125,185 Impairment charges on assets held for sale and ROU asset 2,395 372 16,430 Merger-related expense 9,222 538 — Adjusted pre-tax pre-provision net income $ 188,950 $ 139,472 $ 141,615 Tax equivalent net interest income: Net interest income $ 330,621 $ 265,330 $ 236,387 Add: Tax-equivalent adjustment 903 915 1,039 Net interest income, fully taxable equivalent $ 331,524 $ 266,245 $ 237,426 Total revenues: Net interest income $ 330,621 $ 265,330 $ 236,387 Add: non-interest income 56,315 57,314 74,253 Total revenues $ 386,936 $ 322,644 $ 310,640 Tangible common stockholders' equity: Total stockholders' equity $ 990,151 $ 765,816 $ 836,382 Less: Preferred stock — — 10,438 Less: Goodwill 181,705 148,353 148,353 Less: Core deposit intangibles and other intangibles 21,773 10,534 17,205 Tangible common stockholders' equity $ 786,673 $ 606,929 $ 660,386 Tangible assets: Total assets $ 8,881,967 $ 7,362,941 $ 6,696,172 Less: Goodwill 181,705 148,353 148,353 Less: Core deposit intangibles and other intangibles 21,773 10,534 17,205 Tangible assets $ 8,678,489 $ 7,204,054 $ 6,530,614 Average tangible common stockholders' equity: Average total stockholders' equity $ 863,092 $ 776,225 $ 820,017 Less: Average preferred stock — 2,459 10,438 Less: Average goodwill 164,487 148,353 148,353 Less: Average core deposit intangibles and other intangibles 16,230 13,850 20,689 Average tangible common stockholders' equity $ 682,375 $ 611,563 $ 640,537 Average tangible assets: Average total assets $ 8,048,331 $ 7,018,779 $ 6,642,131 Less: Average goodwill 164,487 148,353 148,353 Less: Average core deposit intangibles and other intangibles 16,230 13,850 20,689 Average tangible assets $ 7,867,614 $ 6,856,576 $ 6,473,089 Tangible net income available to common stockholders: Net income available to common stockholders $ 107,878 $ 87,758 $ 92,002 Add: After-tax intangible asset amortization 4,408 4,890 5,147 Tangible net income available to common stockholders $ 112,286 $ 92,648 $ 97,149 Adjusted Tangible net income available to common stockholders: Tangible net income available to common stockholders $ 112,286 $ 92,648 $ 97,149 Impairment charges on assets held for sale and ROU asset 2,395 372 16,430 Merger-related expense 9,222 538 — Tax benefit on significant items (2,696 ) (118 ) (4,462 ) Adjusted tangible net income available to common stockholders $ 121,207 $ 93,440 $ 109,117 40 Table of Contents As of or for the years ended December 31, (dollars in thousands, except share and per share data) 2023 2022 2021 Pre-tax pre-provision return on average assets: Pre-tax pre-provision net income $ 177,333 $ 138,562 $ 125,185 Total average assets 8,048,331 7,018,779 6,642,131 Pre-tax pre-provision return on average assets 2.20 % 1.97 % 1.88 % Adjusted Pre-tax pre-provision return on average assets: Adjusted pre-tax pre-provision net income $ 188,950 $ 139,472 $ 141,615 Total average assets 8,048,331 7,018,779 6,642,131 Adjusted pre-tax pre-provision return on average assets 2.35 % 1.99 % 2.13 % Net interest margin, fully taxable equivalent: Net interest income, fully taxable equivalent $ 331,524 $ 266,245 $ 237,426 Total average interest-earning assets 7,677,848 6,630,464 6,148,841 Net interest margin, fully taxable equivalent 4.32 % 4.01 % 3.86 % Non-interest income to total revenues: Non-interest income $ 56,315 $ 57,314 $ 74,253 Total revenues 386,936 322,644 310,640 Non-interest income to total revenues 14.55 % 17.76 % 23.90 % Adjusted non-interest expense to average assets: Adjusted non-interest expense $ 197,986 $ 183,172 $ 169,025 Total average assets 8,048,331 7,018,779 6,642,131 Adjusted non-interest expense to average assets 2.46 % 2.61 % 2.54 % Adjusted efficiency ratio: Adjusted non-interest expense excluding amortization of intangible assets $ 191,975 $ 176,501 $ 161,952 Total revenues 386,936 322,644 310,640 Adjusted efficiency ratio 49.61 % 54.70 % 52.14 % Adjusted return on average assets: Adjusted net income $ 116,799 $ 88,746 $ 104,753 Total average assets 8,048,331 7,018,779 6,642,131 Adjusted return on average assets 1.45 % 1.26 % 1.58 % Adjusted return on average stockholders' equity: Adjusted net income $ 116,799 $ 88,746 $ 104,753 Average stockholders' equity 863,092 776,225 820,017 Adjusted return on average stockholders' equity 13.53 % 11.43 % 12.77 % Tangible common equity to tangible assets: Tangible common equity $ 786,673 $ 606,929 $ 660,386 Tangible assets 8,678,489 7,204,054 6,530,614 Tangible common equity to tangible assets 9.06 % 8.42 % 10.11 % Return on average tangible common stockholders' equity: Tangible net income available to common stockholders $ 112,286 $ 92,648 $ 97,149 Average tangible common stockholders' equity 682,375 611,563 640,537 Return on average tangible common stockholders' equity: 16.46 % 15.15 % 15.17 % Adjusted return on average tangible common stockholders' equity: Adjusted tangible net income available to common stockholders $ 121,207 $ 93,440 $ 109,117 Average tangible common stockholders' equity 682,375 611,563 640,537 Adjusted return on average tangible common stockholders' equity 17.76 % 15.28 % 17.04 % Tangible book value per share: Tangible common equity $ 786,673 $ 606,929 $ 660,386 Common shares outstanding 43,764,056 37,492,775 37,713,903 Tangible book value per share $ 17.98 $ 16.19 $ 17.51 41 Table of Contents Results of Operations Net interest income Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings.
Core deposits were 92.7% and 91.9% of total deposits at December 31, 2022 and 2021, respectively.
Core deposits were 87.0% and 92.7% of total deposits at December 31, 2023 and 2022, respectively.
As of December 31, 2021, Byline Bank had maximum borrowing capacity from the FHLB of $2.3 billion and $603.0 million from the FRB. As of December 31, 2020, Byline Bank had open advances from the FHLB of $490.0 million and open letters of credit of $19.7 million, providing available aggregate borrowing capacity of $715.4 million.
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 advances from the FHLB of $325.0 million and open letters of credit of $19.7 million, providing available aggregate borrowing capacity of $1.6 billion.
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.
These include the Company’s available-for-sale debt securities, equity securities, derivatives, and servicing assets. 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 increase was primarily driven by an increase in total loans serviced due to additional U.S. government guaranteed loans sold with retained servicing rights. At December 31, 2022 and 2021, the outstanding balances of U.S. government guaranteed loans serviced, was $1.7 billion. Loan servicing asset revaluation represents net changes in the fair value of our servicing assets.
At December 31, 2023 and 2022, the outstanding balances of U.S. government guaranteed loans serviced, was $1.7 billion. Loan servicing asset revaluation represents net changes in the fair value of our servicing assets.
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): December 31, 2022 December 31, 2021 Non-performing assets: Non-accrual loans and leases (1)(2)(3) $ 36,027 $ 23,130 Past due loans and leases 90 days or more and still accruing interest — — Total non-performing loans and leases 36,027 23,130 Other real estate owned 4,717 2,112 Total non-performing assets $ 40,744 $ 25,242 Accruing troubled debt restructured loans $ 719 $ 1,927 Total non-performing loans and leases as a percentage of total loans and leases 0.66 % 0.51 % Total non-accrual loans and leases as a percentage of total loans and leases 0.66 % 0.51 % Total non-performing assets as a percentage of total assets 0.55 % 0.38 % Allowance for credit losses - loans and leases, as a percentage of non-performing loans and leases 227.40 % 237.84 % Allowance for credit losses - loans and leases, as a percentage of non-accrual loans and leases 227.40 % 237.84 % Non-performing loans guaranteed by U.S. government: Non-accrual loans guaranteed $ 2,225 $ 3,270 Past due loans 90 days or more and still accruing interest guaranteed — — Total non-performing loans guaranteed $ 2,225 $ 3,270 Accruing troubled debt restructured loans guaranteed $ — $ — Total non-performing loans and leases not guaranteed as a percentage of total loans and leases 0.62 % 0.44 % Total non-accrual loans and leases not guaranteed as a percentage of total loans and leases 0.62 % 0.44 % Total non-performing assets not guaranteed as a percentage of total assets 0.52 % 0.33 % (1) Includes $1.6 million and $1.5 million of non-accrual restructured loans at December 31, 2022 and 2021.
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): December 31, 2023 December 31, 2022 Non-performing assets: Non-accrual loans and leases (1)(2) $ 64,107 $ 36,027 Past due loans and leases 90 days or more and still accruing interest — — Total non-performing loans and leases 64,107 36,027 Other real estate owned 1,200 4,717 Total non-performing assets $ 65,307 $ 40,744 Total non-performing loans and leases as a percentage of total loans and leases 0.96 % 0.66 % Total non-accrual loans and leases as a percentage of total loans and leases 0.96 % 0.66 % Total non-performing assets as a percentage of total assets 0.74 % 0.55 % Allowance for credit losses - loans and leases, as a percentage of non-performing loans and leases 158.62 % 227.40 % Allowance for credit losses - loans and leases, as a percentage of non-accrual loans and leases 158.62 % 227.40 % Non-performing loans guaranteed by U.S. government: Non-accrual loans guaranteed $ 4,154 $ 2,225 Past due loans 90 days or more and still accruing interest guaranteed — — Total non-performing loans guaranteed $ 4,154 $ 2,225 Total non-performing loans and leases not guaranteed as a percentage of total loans and leases 0.90 % 0.62 % Total non-accrual loans and leases not guaranteed as a percentage of total loans and leases 0.62 % 0.62 % Total non-performing assets not guaranteed as a percentage of total assets 0.69 % 0.52 % (1) Includes $406,000 of non-accrual loan modifications as of December 31, 2023 and $1.6 million of non-accrual restructured loans at December 31, 2022.
Yields have been calculated on a pre-tax basis (dollars in thousands): Year Ended December 31, 2022 2021 2020 Average Balance (5) Interest Inc / Exp Average Yield / Rate Average Balance (5) Interest Inc / Exp Average Yield / Rate Average Balance (5) Interest Inc / Exp Average Yield / Rate ASSETS Cash and cash equivalents $ 76,978 $ 547 0.71 % $ 69,338 $ 117 0.17 % $ 46,508 $ 228 0.49 % Loans and leases (1) 5,073,288 273,412 5.39 % 4,518,836 222,993 4.93 % 4,196,708 208,788 4.98 % Taxable securities 1,316,147 24,156 1.84 % 1,376,045 21,909 1.59 % 1,287,480 27,233 2.12 % Tax-exempt securities (2) 164,051 4,359 2.66 % 184,622 4,946 2.68 % 128,664 3,773 2.93 % Total interest-earning assets $ 6,630,464 $ 302,474 4.56 % $ 6,148,841 $ 249,965 4.07 % $ 5,659,360 $ 240,022 4.24 % Allowance for credit losses - loans and leases (74,233 ) (63,351 ) (48,688 ) All other assets 462,548 556,641 529,471 TOTAL ASSETS $ 7,018,779 $ 6,642,131 $ 6,140,143 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Interest checking $ 593,903 $ 3,572 0.60 % $ 622,147 $ 883 0.14 % $ 469,418 $ 938 0.20 % Money market accounts 1,357,371 10,484 0.77 % 1,073,970 1,285 0.12 % 1,132,978 4,238 0.37 % Savings 658,968 649 0.10 % 610,953 289 0.05 % 520,472 252 0.05 % Time deposits 691,650 5,091 0.74 % 722,974 2,045 0.28 % 940,165 11,196 1.19 % Total interest-bearing deposits 3,301,892 19,796 0.60 % 3,030,044 4,502 0.15 % 3,063,033 16,624 0.54 % Other borrowings 478,374 9,308 1.95 % 525,078 1,663 0.32 % 542,459 3,314 0.61 % Federal funds purchased 630 14 2.32 % — — 0.00 % 478 4 0.93 % Subordinated notes and debentures 110,723 7,111 6.42 % 110,108 6,374 5.79 % 72,188 4,310 5.97 % Total borrowings 589,727 16,433 2.79 % 635,186 8,037 1.27 % 615,125 7,628 1.24 % Total interest-bearing liabilities $ 3,891,619 $ 36,229 0.93 % $ 3,665,230 $ 12,539 0.34 % $ 3,678,158 $ 24,252 0.66 % Non-interest bearing demand deposits 2,236,615 2,085,454 1,624,754 Other liabilities 114,320 71,430 52,653 Total stockholders’ equity 776,225 820,017 784,578 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,018,779 $ 6,642,131 $ 6,140,143 Net interest spread (3) 3.63 % 3.73 % 3.58 % Net interest income, fully taxable equivalent $ 266,245 $ 237,426 $ 215,770 Net interest margin, fully taxable equivalent (2)(4) 4.01 % 3.86 % 3.81 % Tax-equivalent adjustment 915 0.01 % 1,039 0.02 % 792 0.01 % Net interest income $ 265,330 $ 236,387 $ 214,978 Net interest margin (4) 4.00 % 3.84 % 3.80 % Net loan accretion impact on margin $ 4,555 0.07 % $ 6,451 0.10 % $ 13,058 0.23 % (1) Loan and lease balances are net of deferred origination fees and costs and initial direct costs.
Yields have been calculated on a pre-tax basis (dollars in thousands): Year Ended December 31, 2023 2022 2021 Average Balance (5) Interest Inc / Exp Avg Yield / Rate Average Balance (5) Interest Inc / Exp Avg Yield / Rate Average Balance (5) Interest Inc / Exp Avg Yield / Rate ASSETS Cash and cash equivalents $ 157,754 $ 5,029 3.19 % $ 76,978 $ 547 0.71 % $ 69,338 $ 117 0.17 % Loans and leases (1) 6,038,797 440,984 7.30 % 5,073,288 273,412 5.39 % 4,518,836 222,993 4.93 % Taxable securities 1,322,379 30,068 2.27 % 1,316,147 24,156 1.84 % 1,376,045 21,909 1.59 % Tax-exempt securities (2) 158,918 4,300 2.71 % 164,051 4,359 2.66 % 184,622 4,946 2.68 % Total interest-earning assets $ 7,677,848 $ 480,381 6.26 % $ 6,630,464 $ 302,474 4.56 % $ 6,148,841 $ 249,965 4.07 % Allowance for credit losses - loans and leases (98,067 ) (74,233 ) (63,351 ) All other assets 468,550 462,548 556,641 TOTAL ASSETS $ 8,048,331 $ 7,018,779 $ 6,642,131 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Interest checking $ 574,335 $ 9,212 1.60 % $ 593,903 $ 3,572 0.60 % $ 622,147 $ 883 0.14 % Money market accounts 1,802,675 53,933 2.99 % 1,357,371 10,484 0.77 % 1,073,970 1,285 0.12 % Savings 585,820 883 0.15 % 658,968 649 0.10 % 610,953 289 0.05 % Time deposits 1,468,836 57,408 3.91 % 691,650 5,091 0.74 % 722,974 2,045 0.28 % Total interest-bearing deposits 4,431,666 121,436 2.74 % 3,301,892 19,796 0.60 % 3,030,044 4,502 0.15 % Other borrowings 484,984 17,125 3.53 % 478,374 9,308 1.95 % 525,078 1,663 0.32 % Federal funds purchased 685 36 5.30 % 630 14 2.32 % — — 0.00 % Subordinated notes and debentures 127,825 10,260 8.03 % 110,723 7,111 6.42 % 110,108 6,374 5.79 % Total borrowings 613,494 27,421 4.47 % 589,727 16,433 2.79 % 635,186 8,037 1.27 % Total interest-bearing liabilities $ 5,045,160 $ 148,857 2.95 % $ 3,891,619 $ 36,229 0.93 % $ 3,665,230 $ 12,539 0.34 % Non-interest bearing demand deposits 1,965,663 2,236,615 2,085,454 Other liabilities 174,416 114,320 71,430 Total stockholders’ equity 863,092 776,225 820,017 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 8,048,331 $ 7,018,779 $ 6,642,131 Net interest spread (3) 3.31 % 3.63 % 3.73 % Net interest income, fully taxable equivalent $ 331,524 $ 266,245 $ 237,426 Net interest margin, fully taxable equivalent (2)(4) 4.32 % 4.01 % 3.86 % Tax-equivalent adjustment 903 0.01 % 915 0.01 % 1,039 0.02 % Net interest income $ 330,621 $ 265,330 $ 236,387 Net interest margin (4) 4.31 % 4.00 % 3.84 % Net loan accretion impact on margin $ 16,726 0.22 % $ 4,555 0.07 % $ 6,451 0.10 % (1) Loan and lease balances are net of deferred origination fees and costs and initial direct costs.
Our originated loan and lease portfolio increased by $1.0 billion and our purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio decreased by $152.3 million. The increase in our originated portfolio was mostly attributed to organic loan and lease growth.
Our originated loan and lease portfolio increased by $636.3 million, and our purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio increased by $626.7 million. The increases in our originated portfolio was mostly attributed to organic loan and lease growth and the increase in our acquired portfolio was due to the Inland acquisition.
In addition, $2.1 billion, or 37.7%, of the loan and lease portfolio had interest rate floors. 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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTerm loans amortized cost by origination year Revolving Total 2022 2021 2020 2019 2018 Prior Loans Loans (1) Commercial Real Estate Pass $ 471,009 $ 510,529 $ 207,765 $ 111,792 $ 84,382 $ 324,271 $ 28,343 $ 1,738,091 Watch 6,422 12,723 20,583 11,004 17,269 44,462 — 112,463 Special Mention — — 121 1,075 1,232 10,075 — 12,503 Substandard — 1,910 915 13,042 12,685 22,915 — 51,467 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Residential Real Estate Pass $ 68,752 $ 59,075 $ 41,768 $ 31,726 $ 48,432 $ 170,279 $ 49,622 $ 469,654 Watch — — 1,137 682 4,098 9,026 2,586 17,529 Special Mention — — 323 32 420 876 — 1,651 Substandard — — 234 381 296 2,185 660 3,756 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Construction, Land Development, & Land Pass $ 62,310 $ 203,672 $ 61,895 $ 27,189 $ 26,489 $ 38,186 $ 185 $ 419,926 Watch — — — 4,409 — 3,064 — 7,473 Special Mention — — 1,845 — 4,199 — — 6,044 Substandard — — — 1,530 4,012 4 — 5,546 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Commercial & Industrial Pass $ 508,664 $ 305,056 $ 137,335 $ 72,486 $ 96,304 $ 113,965 $ 549,431 $ 1,783,241 Watch 16,657 20,856 15,857 32,282 19,362 9,809 47,119 161,942 Special Mention — 13,056 697 1,162 2,958 7,831 22,320 48,024 Substandard 1,156 3,415 6,671 11,949 5,434 25,275 10,738 64,638 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Installment and Other Pass $ 332 $ 146 $ 65 $ 79 $ 15 $ 584 $ 429 $ 1,650 Watch 34 — — — 2 73 — 109 Special Mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Lease Financing Receivables Pass $ 296,395 $ 148,588 $ 53,642 $ 14,478 $ 7,245 $ 934 $ — $ 521,282 Watch 93 1,560 26 — — — — 1,679 Special Mention — — 290 182 250 23 — 745 Substandard 35 82 80 77 6 — 280 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Total Loans and Leases Pass $ 1,407,462 $ 1,227,066 $ 502,470 $ 257,750 $ 262,867 $ 648,219 $ 628,010 $ 4,933,844 Watch 23,206 35,139 37,603 48,377 40,731 66,434 49,705 301,195 Special Mention — 13,056 3,276 2,451 9,059 18,805 22,320 68,967 Substandard 1,191 5,407 7,900 26,979 22,433 50,379 11,398 125,687 Doubtful — — — — — — — — Loss — — — — — — — — Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 1- Includes $ 8.4 million of substandard loans classified as held for sale. 98 BYLINE BANCORP, INC.
Biggest changeAND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 5—Loans and Lease Receivables and Allowance for Credit Losses (continued) December 31, 2022 Term loans amortized cost by origination year Revolving Total 2022 2021 2020 2019 2018 Prior Loans Loans (1) Commercial Real Estate Pass $ 471,009 $ 510,529 $ 207,765 $ 111,792 $ 84,382 $ 324,271 $ 28,343 $ 1,738,091 Watch 6,422 12,723 20,583 11,004 17,269 44,462 — 112,463 Special Mention — — 121 1,075 1,232 10,075 — 12,503 Substandard — 1,910 915 13,042 12,685 22,915 — 51,467 Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Gross charge-offs, year ended December 31, 2022 $ — $ 186 $ 101 $ 1,766 $ 35 $ 1,749 $ — $ 3,837 Residential Real Estate Pass $ 68,752 $ 59,075 $ 41,768 $ 31,726 $ 48,432 $ 170,279 $ 49,622 $ 469,654 Watch — — 1,137 682 4,098 9,026 2,586 17,529 Special Mention — — 323 32 420 876 — 1,651 Substandard — — 234 381 296 2,185 660 3,756 Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Gross charge-offs, year ended December 31, 2022 $ — $ — $ — $ 33 $ 35 $ 1,140 $ — $ 1,208 Construction, Land Development, & Land Pass $ 62,310 $ 203,672 $ 61,895 $ 27,189 $ 26,489 $ 38,186 $ 185 $ 419,926 Watch — — — 4,409 — 3,064 — 7,473 Special Mention — — 1,845 — 4,199 — — 6,044 Substandard — — — 1,530 4,012 4 — 5,546 Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Gross charge-offs, year ended December 31, 2022 $ — $ — $ — $ — $ — $ 94 $ — $ 94 Commercial & Industrial Pass $ 508,664 $ 305,056 $ 137,335 $ 72,486 $ 96,304 $ 113,965 $ 549,431 $ 1,783,241 Watch 16,657 20,856 15,857 32,282 19,362 9,809 47,119 161,942 Special Mention — 13,056 697 1,162 2,958 7,831 22,320 48,024 Substandard 1,156 3,415 6,671 11,949 5,434 25,275 10,738 64,638 Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Gross charge-offs, year ended December 31, 2022 $ 223 $ 111 $ 824 $ 2,412 $ 643 $ 1,164 $ — $ 5,377 Installment and Other Pass $ 332 $ 146 $ 65 $ 79 $ 15 $ 584 $ 429 $ 1,650 Watch 34 — — — 2 73 — 109 Special Mention — — — — — — — — Substandard — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Gross charge-offs, year ended December 31, 2022 $ — $ — $ — $ — $ — $ 7 $ — $ 7 Lease Financing Receivables Pass $ 296,395 $ 148,588 $ 53,642 $ 14,478 $ 7,245 $ 934 $ — $ 521,282 Watch 93 1,560 26 — — — — 1,679 Special Mention — — 290 182 250 23 — 745 Substandard 35 82 80 77 6 — 280 Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Gross charge-offs, year ended December 31, 2022 $ 84 $ 645 $ 503 $ — $ 96 $ 144 $ — $ 1,472 Total Loans and Leases Pass $ 1,407,462 $ 1,227,066 $ 502,470 $ 257,750 $ 262,867 $ 648,219 $ 628,010 $ 4,933,844 Watch 23,206 35,139 37,603 48,377 40,731 66,434 49,705 301,195 Special Mention — 13,056 3,276 2,451 9,059 18,805 22,320 68,967 Substandard 1,191 5,407 7,900 26,979 22,433 50,379 11,398 125,687 Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 Gross charge-offs, year ended December 31, 2022 $ 307 $ 942 $ 1,428 $ 4,211 $ 809 $ 4,298 $ — $ 11,995 (1) Includes $8.4 million of substandard loans classified as held for sale.
Securities are classified as available‑for‑sale if the instrument may be sold in response to such factors including changes in market interest rates and related changes in prepayment risk, needs for liquidity, changes in the availability of and the yield on alternative instruments, and changes in funding sources and terms.
Securities —Securities are classified as available‑for‑sale if the instrument may be sold in response to such factors including changes in market interest rates and related changes in prepayment risk, needs for liquidity, changes in the availability of and the yield on alternative instruments, and changes in funding sources and terms.
In accordance with the 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 .
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 .
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 15—Employee Benefit Plans The Company’s defined contribution 401(k) savings plan (the “Plan”) covers substantially all employees that have completed certain service requirements. The Board of Directors determines the amount of any discretionary profit sharing contribution made to the Plan.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 15—Employee Benefit Plans The Company’s defined contribution 401(k) savings plan (the "Plan") covers substantially all employees that have completed certain service requirements. The Board of Directors determines the amount of any discretionary profit sharing contribution made to the Plan.
For the year ended December 31, 2022 First Quarter Second Quarter Third Quarter Fourth Quarter As Reported Adjustment Recast As Reported Adjustment Recast As Reported Adjustment Recast As Reported Interest and dividend income $ 61,818 $ ( 405 ) $ 61,413 $ 66,546 $ 133 $ 66,679 $ 79,903 $ ( 240 ) $ 79,663 $ 93,804 Interest expense 3,082 — 3,082 4,919 — 4,919 11,028 — 11,028 17,200 Net interest income 58,736 ( 405 ) 58,331 61,627 133 61,760 68,875 ( 240 ) 68,635 76,604 Provision/(recapture) for credit losses 4,995 1,564 6,559 5,908 ( 1,622 ) 4,286 4,176 3,032 7,208 5,826 Net interest income after provision/(recapture) for credit losses 53,741 ( 1,969 ) 51,772 55,719 1,755 57,474 64,699 ( 3,272 ) 61,427 70,778 Non-interest income 19,426 117 19,543 14,161 112 14,273 11,992 51 12,043 11,455 Non-interest expense 44,555 ( 599 ) 43,956 43,773 ( 188 ) 43,585 46,178 ( 137 ) 46,041 50,500 Income before provision for income taxes 28,612 ( 1,253 ) 27,359 26,107 2,055 28,162 30,513 ( 3,084 ) 27,429 31,733 Provision for income taxes 6,301 ( 340 ) 5,961 5,824 558 6,382 7,857 ( 837 ) 7,020 7,366 Net income 22,311 ( 913 ) 21,398 20,283 1,497 21,780 22,656 ( 2,247 ) 20,409 24,367 Dividends on preferred shares 196 — 196 — — — — — — — Income available to common stockholders $ 22,115 $ ( 913 ) $ 21,202 $ 20,283 $ 1,497 $ 21,780 $ 22,656 $ ( 2,247 ) $ 20,409 $ 24,367 Basic earnings per common share $ 0.60 $ ( 0.03 ) $ 0.57 $ 0.55 $ 0.04 $ 0.59 $ 0.61 $ ( 0.06 ) $ 0.55 $ 0.66 Diluted earnings per common share $ 0.58 $ ( 0.02 ) $ 0.56 $ 0.54 $ 0.04 $ 0.58 $ 0.61 $ ( 0.06 ) $ 0.55 $ 0.65 130 Item 9.
For the year ended December 31, 2022 First Quarter Second Quarter Third Quarter Fourth Quarter As Reported Adjustment Recast As Reported Adjustment Recast As Reported Adjustment Recast As Reported Interest and dividend income $ 61,818 $ ( 405 ) $ 61,413 $ 66,546 $ 133 $ 66,679 $ 79,903 $ ( 240 ) $ 79,663 $ 93,804 Interest expense 3,082 — 3,082 4,919 — 4,919 11,028 — 11,028 17,200 Net interest income 58,736 ( 405 ) 58,331 61,627 133 61,760 68,875 ( 240 ) 68,635 76,604 Provision/(recapture) for credit losses 4,995 1,564 6,559 5,908 ( 1,622 ) 4,286 4,176 3,032 7,208 5,826 Net interest income after provision/(recapture) for credit losses 53,741 ( 1,969 ) 51,772 55,719 1,755 57,474 64,699 ( 3,272 ) 61,427 70,778 Non-interest income 19,426 117 19,543 14,161 112 14,273 11,992 51 12,043 11,455 Non-interest expense 44,555 ( 599 ) 43,956 43,773 ( 188 ) 43,585 46,178 ( 137 ) 46,041 50,500 Income before provision for income taxes 28,612 ( 1,253 ) 27,359 26,107 2,055 28,162 30,513 ( 3,084 ) 27,429 31,733 Provision for income taxes 6,301 ( 340 ) 5,961 5,824 558 6,382 7,857 ( 837 ) 7,020 7,366 Net income 22,311 ( 913 ) 21,398 20,283 1,497 21,780 22,656 ( 2,247 ) 20,409 24,367 Dividends on preferred shares 196 — 196 — — — — — — — Income available to common stockholders $ 22,115 $ ( 913 ) $ 21,202 $ 20,283 $ 1,497 $ 21,780 $ 22,656 $ ( 2,247 ) $ 20,409 $ 24,367 Basic earnings per common share $ 0.60 $ ( 0.03 ) $ 0.57 $ 0.55 $ 0.04 $ 0.59 $ 0.61 $ ( 0.06 ) $ 0.55 $ 0.66 Diluted earnings per common share $ 0.58 $ ( 0.02 ) $ 0.56 $ 0.54 $ 0.04 $ 0.58 $ 0.61 $ ( 0.06 ) $ 0.55 $ 0.65 Table of Contents Item 9.
Refer to Note 18—Share-Based Compensation for additional information. Earnings per share — Earnings per common share (“EPS”) is computed under the two-class method. Pursuant to the two-class method, non-vested stock-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS.
Refer to Note 18—Share-Based Compensation for additional information. Earnings per share —Earnings per common share ("EPS") is computed under the two-class method. Pursuant to the two-class method, non-vested stock-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS.
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.
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 money market deposits is the amount payable on demand at the reporting date.
The Company defers and amortizes certain initial direct costs over the contractual term of the lease as an adjustment to the yield. The unamortized direct costs are recorded as a reduction of unearned lease income. Purchased Credit Deteriorated ("PCD") Loans —The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.
The Company defers and amortizes certain initial direct costs over the contractual term of the lease as an adjustment to the yield. The unamortized direct costs are recorded as a reduction of unearned lease income. Purchased Credit Deteriorated Loans —The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral, adjusted for undiscounted selling costs as appropriate.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral, adjusted for undiscounted selling costs as appropriate.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.
Long‑lived depreciable assets are evaluated periodically for impairment when events or changes in circumstances indicate the carrying amounts may be not recoverable. Impairment exists when the undiscounted expected future cash flows of a long‑lived asset are less than its carrying value.
Long‑lived assets are evaluated periodically for impairment when events or changes in circumstances indicate the carrying amounts may be not recoverable. Impairment exists when the undiscounted expected future cash flows of a long‑lived asset are less than its carrying value.
Employee Stock Purchase Plan (the “ESPP”) within the meaning of Section 423 of the Internal Revenue Code, as amended. The ESPP allows employees to purchase shares of the Company’s common stock at a discount to the market price of the stock through automatic payroll deductions.
Employee Stock Purchase Plan (the "ESPP") within the meaning of Section 423 of the Internal Revenue Code, as amended. The ESPP allows employees to purchase shares of the Company’s common stock at a discount to the market price of the stock through automatic payroll deductions.
Government agencies 17 44,508 ( 4,782 ) 70,609 ( 15,494 ) 115,117 ( 20,276 ) Obligations of states, municipalities and political subdivisions 58 50,216 ( 3,858 ) 7,185 ( 2,294 ) 57,401 ( 6,152 ) Residential mortgage-backed securities Agency 101 117,598 ( 11,045 ) 478,198 ( 100,316 ) 595,796 ( 111,361 ) Non-agency 19 35,486 ( 7,569 ) 70,763 ( 16,836 ) 106,249 ( 24,405 ) Commercial mortgage-backed securities Agency 47 76,193 ( 11,840 ) 74,315 ( 22,302 ) 150,508 ( 34,142 ) Corporate securities 24 37,130 ( 3,128 ) 4,306 ( 738 ) 41,436 ( 3,866 ) Asset-backed securities 8 25,455 ( 503 ) 15,502 ( 1,625 ) 40,957 ( 2,128 ) Total 280 $ 408,306 $ ( 43,803 ) $ 730,217 $ ( 160,236 ) $ 1,138,523 $ ( 204,039 ) Held to Maturity Obligations of states, municipalities and political subdivisions 4 $ 2,672 $ ( 33 ) $ — $ — $ 2,672 $ ( 33 ) Total 4 $ 2,672 $ ( 33 ) $ — $ — $ 2,672 $ ( 33 ) 89 BYLINE BANCORP, INC.
Government agencies 17 44,508 ( 4,782 ) 70,609 ( 15,494 ) 115,117 ( 20,276 ) Obligations of states, municipalities and political subdivisions 58 50,216 ( 3,858 ) 7,185 ( 2,294 ) 57,401 ( 6,152 ) Residential mortgage-backed securities Agency 101 117,598 ( 11,045 ) 478,198 ( 100,316 ) 595,796 ( 111,361 ) Non-agency 19 35,486 ( 7,569 ) 70,763 ( 16,836 ) 106,249 ( 24,405 ) Commercial mortgage-backed securities Agency 47 76,193 ( 11,840 ) 74,315 ( 22,302 ) 150,508 ( 34,142 ) Corporate securities 24 37,130 ( 3,128 ) 4,306 ( 738 ) 41,436 ( 3,866 ) Asset-backed securities 8 25,455 ( 503 ) 15,502 ( 1,625 ) 40,957 ( 2,128 ) Total 280 $ 408,306 $ ( 43,803 ) $ 730,217 $ ( 160,236 ) $ 1,138,523 $ ( 204,039 ) Held to Maturity Obligations of states, municipalities and political subdivisions 4 $ 2,672 $ ( 33 ) $ — $ — $ 2,672 $ ( 33 ) Total 4 $ 2,672 $ ( 33 ) $ — $ — $ 2,672 $ ( 33 ) 87 Table of Contents BYLINE BANCORP, INC.
The Company considers loan-specific risk characteristics for each loan and lease segment, identifies loans to be individually evaluated, and estimates losses for each loan and lease cohort based upon their nature, historical experience, and risk profile.
The Company considers loan-specific risk characteristics for each loan and lease segment, identifies loans to be individually evaluated, and estimates losses for each loan and lease segment based upon their nature, historical experience, and risk profile.
Additionally, once an acquired non-credit-deteriorated loan or PCD loan is performing and reaches its contractual maturity date, it is re-underwritten, and if renewed, it is classified as an originated loan.
Additionally, once an acquired non-credit-deteriorated loan or purchases credit deteriorated ("PCD") loan is performing and reaches its contractual maturity date, it is re-underwritten, and if renewed, it is classified as an originated loan.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 17—Fair Value Measurement (continued) The following tables summarize the Company’s financial assets and liabilities that were measured at fair value on a recurring basis at December 31, 2022 and 2021: Fair Value Measurements Using 2022 Fair Value Level 1 Level 2 Level 3 Financial assets Securities available-for-sale U.S.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 17—Fair Value Measurement (continued) The following tables summarize the Company’s financial assets and liabilities that were measured at fair value on a recurring basis at December 31, 2023 and 2022: Fair Value Measurements Using 2023 Fair Value Level 1 Level 2 Level 3 Financial assets Securities available-for-sale U.S.
This process requires significant management 69 judgment in the review of the loan and lease portfolio and identification of individually evaluated loans based upon the characteristics of loans and leases.
This process requires significant management judgment in the review of the loan and lease portfolio and identification of individually evaluated loans based upon the characteristics of loans and leases.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Such financial instruments are recorded in the consolidated financial statements when they are funded or when the related fees are incurred or received. Segment reporting —The Company has one reportable segment. The Company’s chief operating decision maker evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. Therefore, segment disclosures are not required.
Such financial instruments are recorded in the consolidated financial statements when they are funded or when the related fees are incurred or received. Segment reporting —The Company has one reportable segment. The Company’s chief operating decision makers evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. Therefore, segment disclosures are not required.
The Company acquired single‑issuer trust preferred securities which are categorized as Level 3 of the fair value hierarchy. These securities are classified as equity securities consistent with accounting guidance. The Company did no t have any transfers to or from Level 1 and Level 2 of the fair value hierarchy during the years ended December 31, 2022 and 2021.
The Company acquired single‑issuer trust preferred securities which are categorized as Level 3 of the fair value hierarchy. These securities are classified as equity securities consistent with accounting guidance. The Company did no t have any transfers to or from Level 1 and Level 2 of the fair value hierarchy during the years ended December 31, 2023 and 2022.
Acquired non‑credit-deteriorated loans and leases —Acquired non‑credit-deteriorated loans and leases are accounted for under ASC Subtopic 310‑20, Receivables Nonrefundable Fees and Other Costs (“ASC 310‑20”). The difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan.
Acquired non‑credit-deteriorated loans and leases —Acquired non‑credit-deteriorated loans and leases are accounted for under ASC Subtopic 310‑20, Receivables Nonrefundable Fees and Other Costs ("ASC 310‑20"). The difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan.
Share‑based compensation —The Company accounts for share‑based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), which requires compensation cost relating to share‑based compensation transactions be recognized in the Consolidated Statements of Operations, based generally upon the grant‑date fair value of the share‑based compensation granted by the Company. Share‑based awards may have service, market or performance conditions.
Share‑based compensation —The Company accounts for share‑based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation ("ASC 718"), which requires compensation cost relating to share‑based compensation transactions be recognized in the Consolidated Statements of Operations, based generally upon the grant‑date fair value of the share‑based compensation granted by the Company. Share‑based awards may have service, market or performance conditions.
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 condition existing and the assumptions used as of a particular point in time, and those assumptions may change over time.
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.
The amended revolving line of credit bears interest at either SOFR plus 195 basis points or the 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.
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 the Company’s election, which is required to be communicated at least three business days prior to the commencement of an interest period.
However, once an acquired non-credit-deteriorated loan reaches its maturity date, and is re-underwritten and renewed, it is internally classified as an originated loan. PCD loans are loans acquired from a business combination with evidence of more than insignificant credit deterioration and are accounted for under ASC Topic 326.
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 loans acquired from a business combination with evidence of more than insignificant credit deterioration and are accounted for under ASC Topic 326.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 10—Goodwill, Core Deposit Intangible and Other Intangible Assets The Company’s annual goodwill test was performed as of November 30, 2022. The Company determined that no impairment existed as of that date.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 10—Goodwill, Core Deposit Intangible and Other Intangible Assets The Company’s annual goodwill test was performed as of November 30, 2023. The Company determined that no impairment existed as of that date.
A deferred tax valuation allowance is established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not that all or some of the deferred tax asset will not be realized. At December 31, 2022 and 2021, the Company did not record a deferred tax valuation allowance.
A deferred tax valuation allowance is established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not that all or some of the deferred tax asset will not be realized. At December 31, 2023 and 2022, the Company did not record a deferred tax valuation allowance.
At December 31, 2022 , and 2021 there were no securities pledged for advances from the Federal Home Loan Bank. Other securities were pledged for derivative positions, letters of credit and for purposes required or permitted by law. At December 31, 2022 and 2021 , there were no holdings of securities of any one issuer, other than the U.S.
At December 31, 2023, and 2022 there were no securities pledged for advances from the Federal Home Loan Bank. Other securities were pledged for derivative positions, letters of credit and for purposes required or permitted by law. At December 31, 2023 and 2022 , there were no holdings of securities of any one issuer, other than the U.S.
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 for 2022 and 2021 values.
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 for 2023 and 2022 values.
Allowance for credit losses —The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes uncollectibility of loan is confirmed.
Allowance for credit losses - loans and leases —The allowance for credit losses - loans and leases is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes uncollectibility of loan is confirmed.
Goodwill —The excess of the cost of our recapitalization and acquisitions over the fair value of the net assets acquired, including core deposit intangible, consists of goodwill. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”).
Goodwill —The excess of the cost of our recapitalization and acquisitions over the fair value of the net assets acquired, including core deposit intangible, consists of goodwill. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC Topic 350, Intangibles—Goodwill and Other ("ASC 350").
ASC Topic 815, Derivatives and Hedging (“ASC 815”), establishes accounting and reporting standards requiring that every derivative instrument be recorded in the Consolidated Statements of Financial Condition as either an asset or liability measured at its fair value.
ASC Topic 815, Derivatives and Hedging ("ASC 815"), establishes accounting and reporting standards requiring that every derivative instrument be recorded in the Consolidated Statements of Financial Condition as either an asset or liability measured at its fair value.
The following tables summarize the balance and activity within the allowance for credit losses, the components of the allowance for credit losses in terms of loans and leases individually and collectively evaluated for expected credit losses, and corresponding loan and lease balances by type for the years ended December 31, 2022, 2021 and 2020 .
The following tables summarize the balance and activity within the allowance for credit losses, the components of the allowance for credit losses in terms of loans and leases individually and collectively evaluated for expected credit losses, and corresponding loan and lease balances by type for the years ended December 31, 2023, 2022 and 2021 .
Based on an annual analysis completed as of November 30, 2022, 2021 and 2020 , the Company did no t recognize impairment losses during the years ended December 31, 2022, 2021, and 2020 . Other intangible assets —Other intangible assets primarily consist of core deposit intangible assets.
Based on an annual analysis completed as of November 30, 2023, 2022 and 2021 , the Company did no t recognize impairment losses during the years ended December 31, 2023, 2022, and 2021 . Other intangible assets —Other intangible assets primarily consist of core deposit intangible assets.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 18— 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”).
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 18— 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").
We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
The Company’s operating leases have varying maturity dates through year end 2042 , 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’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.
All accrued and unpaid interest on such debt security is then reversed. Accrued interest receivable is excluded from the estimate of expected credit losses. Fair values of securities are generally based on quoted market prices for the same or similar instruments. See Note 17—Fair Value Measurement for additional discussion on the determination of fair values.
All accrued and unpaid interest on such debt security is then reversed. Accrued interest receivable is excluded from the estimate of expected credit losses. Fair values of securities are generally based on quoted market prices for the same or similar instruments. Refer to Note 17—Fair Value Measurement for additional discussion on the determination of fair values.
Management does not believe there are any such matters that will have a material effect on the Consolidated Financial Statements for the years ended December 31, 2022, 2021, and 2020 .
Management does not believe there are any such matters that will have a material effect on the Consolidated Financial Statements for the years ended December 31, 2023, 2022, and 2021 .
Management considers various economic scenarios in its forecast when evaluating economic indicators and weights the various scenarios 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 considers various economic scenarios in its forecast when evaluating economic indicators and weights the various scenario calculation results 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.
As of December 31, 2022 and 2021 , the Company had no material uncertain tax positions. The Company elects to treat interest and penalties recognized for the underpayment of income taxes as income tax expense.
As of December 31, 2023 and 2022 , the Company had no material uncertain tax positions. The Company elects to treat interest and penalties recognized for the underpayment of income taxes as income tax expense.
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 outlines reporting and measurement requirements.
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.
In addition, estimation of the lifetime expected credit losses for loans and leases requires significant management judgment, particularly as it relates to forward-looking information through the use of qualitative risk factors and peer data applied over the forecasted life of the loans and leases.
In addition, estimation of the lifetime expected credit losses for loans and leases requires significant management judgment, particularly as it relates to forward-looking information through the use of qualitative risk factors 65 Table of Contents and peer data applied over the forecasted life of the loans and leases.
Reclassifications had no effect on prior years’ net income or stockholders’ equity. 85 BYLINE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 2—Accounting Pronouncements Recently Issued The following reflect recent accounting pronouncements that were adopted and are pending adoption by the Company.
Reclassifications had no effect on prior years’ net income or stockholders’ equity. 81 Table of Contents BYLINE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 2—Accounting Pronouncements Recently Issued The following reflect recent accounting pronouncements that were adopted and are pending adoption by the Company.
As a result, at December 31, 2022 and 2021, there was no reserve balance required to be maintained at the FRB. Equity and other securities —Equity and other securities have no stated maturities and may be sold in response to the same environmental factors as securities available for sale.
As a result, a t December 31, 2023 and 2022, there was no reserve balance required to be maintained at the FRB. Equity and other securities —Equity and other securities have no stated maturities and may be sold in response to the same environmental factors as securities available for sale.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 16—Commitments and Contingent Liabilities (continued) 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 18.00 % and maturities up to 2050 .
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 16—Commitments and Contingent Liabilities (continued) 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 2053 .
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 other assets and other liabilities in the Consolidated Statements of Financial Condition. 115 BYLINE BANCORP, INC.
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 other assets and other liabilities in the Consolidated Statements of Financial Condition. 110 Table of Contents BYLINE BANCORP, INC.
Auditing these complex judgments and assumptions involves especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
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. 125 BYLINE BANCORP, INC.
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 amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the consolidated financial statements. 87 BYLINE BANCORP, INC.
The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the consolidated financial statements.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 24—Stockholders’ Equity (continued) Total cash dividends declared and paid on the Company’s common stock during the years ended December 31, 2022, 2021 and 2020 were: $ 13.5 million, or $ 0.36 per share, $ 11.4 million, or $ 0.30 per share, and $ 4.6 million, or $ 0.12 per share, respectively.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 24—Stockholders’ Equity (continued) Total cash dividends declared and paid on the Company’s common stock during the years ended December 31, 2023, 2022 and 2021 were: $ 14.6 million declared and paid, or $ 0.36 per share, $ 13.5 million declared and $ 13.4 million paid, or $ 0.36 per share, and $ 11.4 million declared and $ 11.3 million paid, or $ 0.30 per share, respectively.
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission (“SEC”). In accordance with applicable accounting standards, the Company does not consolidate statutory trusts established for the sole purposes of issuing trust preferred securities and related trust common securities.
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP") and rules and regulations of the Securities and Exchange Commission ("SEC"). In accordance with applicable accounting standards, the Company does not consolidate statutory trusts established for the sole purposes of issuing trust preferred securities and related trust common securities.
Business combinations —The Company accounts for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations (“ASC 805”).
Business combinations —The Company accounts for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805").
The Company’s allowance for credit losses for loans and leases is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net carrying value at the amount expected to be collected on such loans and leases and is a material and complex estimate requiring significant management judgment in the estimation of expected lifetime losses within the loan and lease portfolio at both the date of adoption and the balance sheet date.
The Company’s allowance for credit losses for loans and leases is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net carrying value expected to be collected on such loans and leases and is a material and complex estimate requiring significant management judgment in the estimation of expected lifetime losses within the loan and lease portfolio as of the balance sheet date.
The properties are being actively marketed and transferred to assets held for sale based at the lower of its carrying value or its fair value, less estimated costs to sell. Assets held for sale are evaluated periodically for impairment, with any impairment losses recorded in non-interest expense. 82 BYLINE BANCORP, INC.
The properties are being actively marketed and transferred to assets held for sale based at the lower of its carrying value or its fair value, less estimated costs to sell. Assets held for sale are evaluated periodically for impairment, with any impairment losses recorded in non-interest expense.
The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. 84 BYLINE BANCORP, INC.
The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. 80 Table of Contents BYLINE BANCORP, INC.
Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, totaled downward valuations of $ 11.7 million, $ 6.7 million, and $ 5.0 million for the years ended December 31, 2022, 2021, and 2020, respectively. Changes in the fair value of the loan servicing asset are reported on the Consolidated Statement of Operations.
Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, totaled downward valuations of $ 5.1 million, $ 11.7 million, and $ 6.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. Changes in the fair value of the loan servicing asset are reported on the Consolidated Statement of Operations.
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. 112 BYLINE BANCORP, INC.
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. 108 Table of Contents BYLINE BANCORP, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 5—Allowance for Credit Losses (continued) The following tables summarize contractual delinquency information for loans and leases by category as of December 31, 2022 and 2021: 2022 2021 2020 2019 2018 Prior Revolving Loans Total Loans (1) Commercial Real Estate Current $ 477,334 $ 525,048 $ 229,260 $ 132,067 $ 112,126 $ 387,349 $ 28,343 $ 1,891,527 30-59 Days Past Due 97 54 — — 471 2,060 — 2,682 60-89 Days Past Due — — — — — 1,016 — 1,016 Greater than 90 Accruing — — — — — — — — Non-accrual — 60 124 4,846 2,971 11,298 — 19,299 Total Past Due 97 114 124 4,846 3,442 14,374 — 22,997 Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Residential Real Estate Current $ 68,752 $ 59,075 $ 40,731 $ 32,440 $ 52,950 $ 180,128 $ 52,146 $ 486,222 30-59 Days Past Due — — 2,497 — — 108 122 2,727 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — 234 381 296 2,130 600 3,641 Total Past Due — — 2,731 381 296 2,238 722 6,368 Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Construction, Land Development, & Land Current $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,250 $ 185 $ 438,985 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — 4 — 4 Total Past Due — — — — — 4 — 4 Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Commercial & Industrial Current $ 524,341 $ 339,915 $ 156,713 $ 113,350 $ 122,523 $ 153,039 $ 628,747 $ 2,038,628 30-59 Days Past Due 980 1,371 391 1,717 368 922 — 5,749 60-89 Days Past Due — 8 80 87 — 472 — 647 Greater than 90 Accruing — — — — — — — — Non-accrual 1,156 1,089 3,376 2,725 1,167 2,447 861 12,821 Total Past Due 2,136 2,468 3,847 4,529 1,535 3,841 861 19,217 Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Installment and Other Current $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — — — — Total Past Due — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Lease Financing Receivables Current $ 294,948 $ 149,642 $ 53,680 $ 14,557 $ 7,411 $ 955 $ — $ 521,193 30-59 Days Past Due 1,461 467 295 104 77 2 — 2,406 60-89 Days Past Due 79 39 — — 9 — — 127 Greater than 90 Accruing — — — — — — — — Non-accrual 35 82 63 76 4 — — 260 Total Past Due 1,575 588 358 180 90 2 — 2,793 Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Total Loans and Leases Current $ 1,428,051 $ 1,277,498 $ 544,189 $ 325,621 $ 329,727 $ 763,378 $ 709,850 $ 5,378,314 30-59 Days Past Due 2,538 1,892 3,183 1,821 916 3,092 122 13,564 60-89 Days Past Due 79 47 80 87 9 1,488 — 1,790 Greater than 90 Accruing — — — — — — — — Non-accrual 1,191 1,231 3,797 8,028 4,438 15,879 1,461 36,025 Total Past Due 3,808 3,170 7,060 9,936 5,363 20,459 1,583 51,379 Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 1 - Includes $ 8.4 million of non-accrual loans classified as loans held for sale.
December 31, 2022 2022 2021 2020 2019 2018 Prior Revolving Loans Total Loans (1) Commercial Real Estate Current $ 477,334 $ 525,048 $ 229,260 $ 132,067 $ 112,126 $ 387,349 $ 28,343 $ 1,891,527 30-59 Days Past Due 97 54 — — 471 2,060 — 2,682 60-89 Days Past Due — — — — — 1,016 — 1,016 Greater than 90 Accruing — — — — — — — — Non-accrual — 60 124 4,846 2,971 11,298 — 19,299 Total Past Due 97 114 124 4,846 3,442 14,374 — 22,997 Total $ 477,431 $ 525,162 $ 229,384 $ 136,913 $ 115,568 $ 401,723 $ 28,343 $ 1,914,524 Residential Real Estate Current $ 68,752 $ 59,075 $ 40,731 $ 32,440 $ 52,950 $ 180,128 $ 52,146 $ 486,222 30-59 Days Past Due — — 2,497 — — 108 122 2,727 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — 234 381 296 2,130 600 3,641 Total Past Due — — 2,731 381 296 2,238 722 6,368 Total $ 68,752 $ 59,075 $ 43,462 $ 32,821 $ 53,246 $ 182,366 $ 52,868 $ 492,590 Construction, Land Development, & Land Current $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,250 $ 185 $ 438,985 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — 4 — 4 Total Past Due — — — — — 4 — 4 Total $ 62,310 $ 203,672 $ 63,740 $ 33,128 $ 34,700 $ 41,254 $ 185 $ 438,989 Commercial & Industrial Current $ 524,341 $ 339,915 $ 156,713 $ 113,350 $ 122,523 $ 153,039 $ 628,747 $ 2,038,628 30-59 Days Past Due 980 1,371 391 1,717 368 922 — 5,749 60-89 Days Past Due — 8 80 87 — 472 — 647 Greater than 90 Accruing — — — — — — — — Non-accrual 1,156 1,089 3,376 2,725 1,167 2,447 861 12,821 Total Past Due 2,136 2,468 3,847 4,529 1,535 3,841 861 19,217 Total $ 526,477 $ 342,383 $ 160,560 $ 117,879 $ 124,058 $ 156,880 $ 629,608 $ 2,057,845 Installment and Other Current $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 30-59 Days Past Due — — — — — — — — 60-89 Days Past Due — — — — — — — — Greater than 90 Accruing — — — — — — — — Non-accrual — — — — — — — — Total Past Due — — — — — — — — Total $ 366 $ 146 $ 65 $ 79 $ 17 $ 657 $ 429 $ 1,759 Lease Financing Receivables Current $ 294,948 $ 149,642 $ 53,680 $ 14,557 $ 7,411 $ 955 $ — $ 521,193 30-59 Days Past Due 1,461 467 295 104 77 2 — 2,406 60-89 Days Past Due 79 39 — — 9 — — 127 Greater than 90 Accruing — — — — — — — — Non-accrual 35 82 63 76 4 — — 260 Total Past Due 1,575 588 358 180 90 2 — 2,793 Total $ 296,523 $ 150,230 $ 54,038 $ 14,737 $ 7,501 $ 957 $ — $ 523,986 Total Loans and Leases Current $ 1,428,051 $ 1,277,498 $ 544,189 $ 325,621 $ 329,727 $ 763,378 $ 709,850 $ 5,378,314 30-59 Days Past Due 2,538 1,892 3,183 1,821 916 3,092 122 13,564 60-89 Days Past Due 79 47 80 87 9 1,488 — 1,790 Greater than 90 Accruing — — — — — — — — Non-accrual 1,191 1,231 3,797 8,028 4,438 15,879 1,461 36,025 Total Past Due 3,808 3,170 7,060 9,936 5,363 20,459 1,583 51,379 Total $ 1,431,859 $ 1,280,668 $ 551,249 $ 335,557 $ 335,090 $ 783,837 $ 711,433 $ 5,429,693 (1) Includes $ 8.4 million of substandard loans classified as held for sale . 95 Table of Contents BYLINE BANCORP, INC.
The transaction resulted in debt issuance costs of approximately $ 1.7 million that are being amortized over 10 years . As of December 31, 2022 and 2021, the liability outstanding relating to the subordinated notes, net of unamortized debt issuance costs, was $ 73.7 million and $ 73.5 million, respectively.
The transaction resulted in debt issuance costs of approximately $ 1.7 million that are being amortized over 10 years . As of December 31, 2023 and 2022 , the liability outstanding relating to the subordinated notes, net of unamortized debt issuance costs, was $ 73.9 million and $ 73.7 million, respectively.
As of December 31, 2022, we had a notional amount of $1.1 billion of interest rate derivatives outstanding that includes customer swaps and those on Byline Bank’s balance sheet.
As of December 31, 2023, we had a notional amount of $1.4 billion of interest rate derivatives outstanding that includes customer swaps and those on Byline Bank’s balance sheet.
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 1,550,000 shares of our common stock have been reserved for issuance under 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.
In connection with the Company’s acquisition of Oak Park River Forest, the Company acquired $ 4.3 million of additional Federal net operating losses that are subject to an annual Section 382 limitation of approximately $ 781,000 . These Federal net operating losses acquired in connection with the Oak Park River Forest acquisition have no expiration.
In connection with the Company’s acquisition of Oak Park River Forest, the Company acquired $ 4.3 million of additional Federal net operating losses that are subject to an annual Section 382 limitation of approximately $ 781,000 .
Proceeds from the exercise of stock options were $ 470,000 , $ 751,000 and $ 253,000 with a related tax benefit of $ 2.3 million, $ 121,000 and $ 39,000 , for the years ended December 31, 2022, 2021 and 2020, respectively. No stock options vested during the year ended December 31, 2022.
Proceeds from the exercise of stock options were $ 470,000 and $ 751,000 with a related tax benefit of $ 2.3 million and $ 121,000 , for the years ended December 31, 2022 and 2021 , respectively. No stock options vested during the year ended December 31, 2023.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 5—Allowance for Credit Losses (continued) 2022 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Paycheck Protection Program Installment and Other Lease Financing Receivables Total Allowance for credit losses Beginning balance pre-CECL adoption $ 16,918 $ 1,628 $ 522 $ 33,129 $ — $ 9 $ 2,806 $ 55,012 Impact of CECL adoption 6,367 1,047 1,191 1,253 — 9 2,301 12,168 Provision/(recapture) 5,252 907 1,476 12,002 — ( 9 ) 3,046 22,674 Charge-offs ( 3,837 ) ( 1,208 ) ( 94 ) ( 5,377 ) — ( 7 ) ( 1,472 ) ( 11,995 ) Recoveries 1,361 766 39 882 — 22 995 4,065 Ending balance $ 26,061 $ 3,140 $ 3,134 $ 41,889 $ — $ 24 $ 7,676 $ 81,924 Ending balance: Individually evaluated for impairment $ 6,101 $ — $ 265 $ 8,972 $ — $ — $ — $ 15,338 Collectively evaluated for impairment 19,960 3,140 2,869 32,917 — 24 7,676 66,586 Total allowance for credit losses - loans and leases $ 26,061 $ 3,140 $ 3,134 $ 41,889 $ — $ 24 $ 7,676 $ 81,924 2022 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Paycheck Protection Program Installment and Other Lease Financing Receivables Total Loans and leases ending balance: Individually evaluated for impairment $ 37,959 $ 879 $ 5,541 $ 47,846 $ — $ — $ — $ 92,225 Collectively evaluated for impairment 1,871,529 489,083 433,448 2,008,467 761 1,759 523,986 5,329,033 Total loans and leases $ 1,909,488 $ 489,962 $ 438,989 $ 2,056,313 $ 761 $ 1,759 $ 523,986 $ 5,421,258 2021 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Paycheck Protection Program Installment and Other Lease Financing Receivables Total Allowance for loan and lease losses Beginning balance $ 19,584 $ 2,400 $ 1,352 $ 41,183 $ — $ 15 $ 1,813 $ 66,347 Provision/(recapture) 1,263 ( 663 ) ( 504 ) ( 219 ) — ( 6 ) 1,586 1,457 Charge-offs ( 4,698 ) ( 124 ) ( 326 ) ( 9,015 ) — — ( 1,501 ) ( 15,664 ) Recoveries 769 15 — 1,180 — — 908 2,872 Ending balance $ 16,918 $ 1,628 $ 522 $ 33,129 $ — $ 9 $ 2,806 $ 55,012 Ending balance: Individually evaluated for impairment $ 6,538 $ — $ — $ 14,500 $ — $ — $ — $ 21,038 Collectively evaluated for impairment 8,570 622 519 18,265 — 7 2,806 30,789 Loans acquired with deteriorated credit quality 1,810 1,006 3 364 — 2 — 3,185 Total allowance for loan and lease losses $ 16,918 $ 1,628 $ 522 $ 33,129 $ — $ 9 $ 2,806 $ 55,012 2021 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Paycheck Protection Program Installment and Other Lease Financing Receivables Total Loans and leases ending balance: Individually evaluated for impairment $ 35,051 $ 1,802 $ — $ 36,070 $ — $ — $ — $ 72,923 Collectively evaluated for impairment 1,558,537 429,311 324,087 1,541,877 123,712 1,204 358,426 4,337,154 Loans acquired with deteriorated credit quality 72,160 49,401 1,312 4,014 - 164 — 127,051 Total loans and leases $ 1,665,748 $ 480,514 $ 325,399 $ 1,581,961 $ 123,712 $ 1,368 $ 358,426 $ 4,537,128 94 BYLINE BANCORP, INC.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table dollars in thousands, except share and per share data) Note 5—Loans and Lease Receivables and Allowance for Credit Losses (continued) 2022 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 Beginning balance pre-CECL adoption $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Impact of CECL adoption 6,367 1,047 1,191 1,253 9 2,301 12,168 Provision/(recapture) 5,252 907 1,476 12,002 ( 9 ) 3,046 22,674 Charge-offs ( 3,837 ) ( 1,208 ) ( 94 ) ( 5,377 ) ( 7 ) ( 1,472 ) ( 11,995 ) Recoveries 1,361 766 39 882 22 995 4,065 Ending balance $ 26,061 $ 3,140 $ 3,134 $ 41,889 $ 24 $ 7,676 $ 81,924 Ending balance: Individually evaluated for impairment $ 6,101 $ — $ 265 $ 8,972 $ — $ — $ 15,338 Collectively evaluated for impairment 19,960 3,140 2,869 32,917 24 7,676 66,586 Total allowance for credit losses - loans and leases $ 26,061 $ 3,140 $ 3,134 $ 41,889 $ 24 $ 7,676 $ 81,924 2022 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Installment and Other Lease Financing Receivables Total Loans and leases ending balance: Individually evaluated for impairment $ 37,959 $ 879 $ 5,541 $ 47,846 $ — $ — $ 92,225 Collectively evaluated for impairment 1,871,529 489,083 433,448 2,009,228 1,759 523,986 5,329,033 Total loans and leases $ 1,909,488 $ 489,962 $ 438,989 $ 2,057,074 $ 1,759 $ 523,986 $ 5,421,258 2021 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Installment and Other Lease Financing Receivables Total Allowance for loan and lease losses Beginning balance $ 19,584 $ 2,400 $ 1,352 $ 41,183 $ 15 $ 1,813 $ 66,347 Provision/(recapture) 1,263 ( 663 ) ( 504 ) ( 219 ) ( 6 ) 1,586 1,457 Charge-offs ( 4,698 ) ( 124 ) ( 326 ) ( 9,015 ) — ( 1,501 ) ( 15,664 ) Recoveries 769 15 — 1,180 — 908 2,872 Ending balance $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 Ending balance: Individually evaluated for impairment $ 6,538 $ — $ — $ 14,500 $ — $ — $ 21,038 Collectively evaluated for impairment 8,570 622 519 18,265 7 2,806 30,789 Loans acquired with deteriorated credit quality 1,810 1,006 3 364 2 — 3,185 Total allowance for loan and lease losses $ 16,918 $ 1,628 $ 522 $ 33,129 $ 9 $ 2,806 $ 55,012 2021 Commercial Real Estate Residential Real Estate Construction, Land Development, and Other Land Commercial and Industrial Paycheck Protection Program Installment and Other Lease Financing Receivables Total Loans and leases ending balance: Individually evaluated for impairment $ 35,051 $ 1,802 $ — $ 36,070 $ — $ — $ — $ 72,923 Collectively evaluated for impairment 1,558,537 429,311 324,087 1,541,877 123,712 1,204 358,426 4,337,154 Loans acquired with deteriorated credit quality 72,160 49,401 1,312 4,014 — 164 — 127,051 Total loans and leases $ 1,665,748 $ 480,514 $ 325,399 $ 1,581,961 $ 123,712 $ 1,368 $ 358,426 $ 4,537,128 The Company increased the allowance for credit losses - loans and leases by $ 19.8 million for the year ended December 31, 2023 , which included a $ 10.6 million adjustment for acquired purchased credit deteriorated loans.
The following table presents certain information related to the lease costs for operating leases included as a component of occupancy expense on the Consolidated Statement of Operations for the years ended December 31, 2022 and 2021: 2022 2021 Operating lease cost $ 2,760 $ 3,461 Short-term lease cost 214 160 Variable lease cost 1,585 1,819 Less: Sublease income ( 572 ) ( 653 ) Total lease cost, net $ 3,987 $ 4,787 Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $ 4.1 million and $ 5.1 million for the years ended December 31, 2022 and 2021, respectively.
The following table presents certain information related to the lease costs for operating leases included as a component of occupancy expense on the Consolidated Statement of Operations for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Operating lease cost $ 2,738 $ 2,760 $ 3,461 Short-term lease cost 434 214 160 Variable lease cost 1,675 1,585 1,819 Less: Sublease income ( 630 ) ( 572 ) ( 653 ) Total lease cost, net $ 4,217 $ 3,987 $ 4,787 Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $ 4.1 million for each of the years ended December 31, 2023 and 2022 , respectively.
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. 117 BYLINE BANCORP, INC.
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. 112 Table of Contents BYLINE BANCORP, INC.
The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2022 and 2021 are also presented.
The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2023 and 2022 are also presented.
Refer to Note 1—Summary of Significant Accounting Policies for the accounting policy for TDRs. 2022 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Charge-offs Individually Evaluated Accruing: Commercial real estate 2 $ 551 $ 551 $ — $ 109 Commercial and industrial 1 24 24 — 34 Residential real estate 2 144 144 — — Total accruing 5 719 719 — 143 Non-accruing: Commercial real estate 3 830 623 207 73 Commercial and industrial 6 2,017 982 1,035 38 Total non-accruing 9 2,847 1,605 1,242 111 Total troubled debt restructurings 14 $ 3,566 $ 2,324 $ 1,242 $ 254 2021 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Charge-offs Specific Reserves Accruing: Commercial real estate 5 $ 1,703 $ 1,703 $ — $ 215 Commercial and industrial 1 56 56 — 131 Residential real estate 2 168 168 — — Total accruing 8 1,927 1,927 — 346 Non-accruing: Commercial real estate 4 1,034 918 116 111 Commercial and industrial 3 1,745 588 1,157 — Total non-accruing 7 2,779 1,506 1,273 111 Total troubled debt restructurings 15 $ 4,706 $ 3,433 $ 1,273 $ 457 101 BYLINE BANCORP, INC.
Refer to Note 1—Summary of Significant Accounting Policies for the accounting policy for TDRs. 2022 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Charge-offs Individually Evaluated Accruing: Commercial real estate 2 $ 551 $ 551 $ — $ 109 Commercial and industrial 1 24 24 — 34 Residential real estate 2 144 144 — — Total accruing 5 719 719 — 143 Non-accruing: Commercial real estate 3 830 623 207 73 Commercial and industrial 6 2,017 982 1,035 38 Total non-accruing 9 2,847 1,605 1,242 111 Total troubled debt restructurings 14 $ 3,566 $ 2,324 $ 1,242 $ 254 2021 Number of Loans Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Charge-offs Specific Reserves Accruing: Commercial real estate 5 $ 1,703 $ 1,703 $ — $ 215 Commercial and industrial 1 56 56 — 131 Residential real estate 2 168 168 — — Total accruing 8 1,927 1,927 — 346 Non-accruing: Commercial real estate 4 1,034 918 116 111 Commercial and industrial 3 1,745 588 1,157 — Total non-accruing 7 2,779 1,506 1,273 111 Total troubled debt restructurings 15 $ 4,706 $ 3,433 $ 1,273 $ 457 There was no commitment outstanding on troubled debt restructurings at December 31, 2022. 99 Table of Contents BYLINE BANCORP, INC.
Government and its agencies, in an amount greater than 10 % of stockholders’ equity. At December 31, 2022, 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. 90 BYLINE BANCORP, INC.
Government and its agencies, in an amount greater than 10 % of stockholders’ equity. At December 31, 2023, 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.
We identified management’s adoption of Topic 326, risk rating of loans, identifying loans to be individually evaluated, and the reasonable and supportable forecasts, including the estimate of qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history, and the selection of the methodology and economic variables and forecast scenarios utilized, as a critical audit matter.
We identified management’s risk rating of loans, identification of loans to be individually evaluated, the reasonable and supportable forecasts, and the estimate of qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history, and the selection of the methodology and economic variables and forecast scenarios utilized, as a critical audit matter.
If the Company had breached any of these provisions at December 31, 2022, it could have been required to settle its obligations under the agreements at their termination value less offsetting positions of $ 43,000 .
If the Company had breached any of these provisions at December 31, 2023 , it could have been required to settle its obligations under the agreements at their termination value less offsetting positions of $ 925,000 .
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.
Subordinated notes —The fair value is based on available market prices. 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.
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.
The fair values of the interest rate d erivative agreements are reflected in other assets and other liabilities with corresponding gains or losses reflected in non-interest income.
There were no profit sharing contributions to the Plan for the years ended December 31, 2022, 2021, and 2020. The net assets of the Plan are not included in the Consolidated Statements of Financial Condition.
There were no profit sharing contributions to the Plan for the years ended December 31, 2023, 2022, or 2021. The net assets of the Plan are not included in the Consolidated Statements of Financial Condition.
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. 118 BYLINE BANCORP, INC.
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. 113 Table of Contents BYLINE BANCORP, INC.
On February 15, 2022, the Company gave notice of its intention to redeem all of its outstanding shares of the Series B Preferred Stock (the “Preferred Stock Redemption”). The Preferred Stock Redemption was in accordance with the terms of the Certificate of Designations of the Series B Preferred Stock dated as of June 16, 2017 (the “Certificate of Designation”).
On February 15, 2022, the Company gave notice of its intention to redeem all of its outstanding shares of the Series B Preferred Stock (the "Preferred Stock Redemption"). The Preferred Stock Redemption was in accordance with the terms of the Certificate of Designations of the Series B Preferred Stock dated as of June 16, 2017 (the "Certificate of Designation").
For the years ended December 31, 2022, and 2021 the Company declared and paid dividends on the Series B Preferred Stock of $ 196,000 and $ 783,000 , respectively. 128 BYLINE BANCORP, INC.
For the years ended December 31, 2022 and 2021 the Company declared and paid dividends on the Series B Preferred Stock of $ 196,000 and $ 783,000 , respectively. 124 Table of Contents BYLINE BANCORP, INC.
Prior to the adoption of ASC 326, originated loans are classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement.
Prior to the adoption of ASC 326, originated loans were classified as impaired when, based on current information and events, it was probable that the Company would be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement.

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