Byline Bancorp, Inc. · NYSE:BY
Byline Bancorp — Debt Investor Presentation (June 2020)
43 slides from Byline Bancorp's debt investor presentation, Jun 22, 2020
Slide 1: Fixed Income Investor Presentation – June 2020
Fixed Income Investor Presentation – June 2020
Slide 2: Forward-Looking Statements
Forward - Looking Statements This communication contains forward - looking statements within the meaning of the U.S. federal securities laws. Forward - looking s tatements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the
Slide 3: Non-GAAP Financial Measures and Additional Information
Non - GAAP Financial Measures This presentation contains supplemental financial information determined by methods other than in accordance with accounting pri nciples generally accepted in the United States of America ("U.S. GAAP") that management uses in its analysis of the Company's performance. M
Slide 4: Issuer Terms of Proposed Subordinated Notes Offering
Issuer Terms of Proposed Subordinated Notes Offering Byline Bancorp, Inc. (NYSE: BY) Holding Company Subordinated Debt Due 2030 BBB - by Kroll Bond Rating Agency Non - call for 5 Years; Callable on any interest payment date at par thereafter General corporate purposes (2) 10 years Keefe, Bruyette &
Slide 5: Our Executive Leadership Team
Our Executive Leadership Team Alberto Paracchini CEO, President ▪ Director of Byline Bancorp and Byline Bank ▪ Served as Principal for BXM Holdings, Inc. ▪ Served as President and CFO at Popular Financial Holdings ▪ Former CFO and COO at Banco Popular North America Lindsay Corby Chief Financial Offi
Slide 6: The Byline Difference
Non Interest Bearing 30% NOW 8% MMDA & Savings 38% Time < $100k 10% Time > $100k 14% ▪ Management team has extensive in - market experience with a track record of building shareholder value ▪ Highly accomplished and experienced Board ▪ Demonstrated acquisition ability, having closed and integrated 3
Slide 7: A Leading Chicago Commercial Banking Franchise
Total Assets $5,735 Total Loans & Leases $3,860 Total Deposits $4,239 Total Equity $763 Tangible Common Equity (1) $574 Loans & Leases / Deposits Ratio 91.38% Commercial Loans / Total Loans (2) 62.75% Non - interest Bearing Deposits / Total Deposits 30.45% Adjusted Return on Average Assets (1) 0.25%
Slide 8: Illinois Deposit Market Share
All Banks in Market Illinois Banks Illinois Banks < $20 bn Institution (ST) Branches Deposits ($Bn) Market Share (%) 1 JPMorgan Chase & Co. (NY) 329 $87.8 21.2% 2 Bank of Montreal 208 63.4 15.3% 3 Bank of America Corporation (NC) 139 35.6 8.6% 4 1 Wintrust Financial Corp. (IL) 154 27.0 6.5% 5 Fifth
Slide 9: Hand-Picked Management Team with Deep Market Experience
Hand - Picked Management Team with Deep Market Experience Name Title Years in Banking Years in Market Prior Experience Alberto Paracchini CEO & President 26 26 Served as Principal for BXM Holdings, Inc. Served as President and CFO of Popular Financial Holdings Former CFO and COO at Banco Popular Nor
Slide 10: The Byline Franchise
The Byline Franchise Commercial Banking Small Business Capital Size Customer and Market Focus ▪ $4.2 billion in total deposits ▪ 57 branch locations ▪ Serves small businesses and consumers within branch footprint ▪ Offers traditional retail deposit products through branch network and online and mobi
Slide 11: The Byline Franchise (continued)
The Byline Franchise (continued) Sponsor Finance Wealth Management Size Customer and Market Focus ▪ $173.2 million lease portfolio ▪ Nationwide coverage ▪ Provides financing solutions for equipment vendors and their end - users ▪ Industries served: healthcare, manufacturing, technology, specialty ve
Slide 12: Progress Report on Strategic Priorities
Drive Organic Loan Growth Deliver Improved Profitability Strengthen Franchise through Acquisitions ▪ Continue to bring in top tier talent with teams attracted to culture and local decision making ▪ Capitalize on market opportunities due to recent consolidation and the CRE concentration limitations o
Slide 13: Impact and Response to COVID-19
Impact and Response to COVID - 19 Colleagues ▪ Initiated COVID - 19 incident response action teams at the end of February ▪ Enabled and trained over 640 colleagues (100% non - retail) to support work from home environment ▪ Provided an additional 160 hours of paid time - off implemented for issues r
Slide 14: Providing COVID-Relief and Support for our Customers
Providing COVID - 19 Relief and Support for our Customers Paycheck Protection Program (PPP) Loan Modifications to Borrowers ▪ Began receiving PPP applications on April 3 ▪ Fund PPP loans by drawing from the Federal Reserve PPP Lending Facility ▪ Estimated processing fees of 3.5% of funded PPP loans
Slide 15: First Quarter 2020 Highlights
▪ Total revenue of $62.0 million, a decrease of 9.4% from 4Q19 and unchanged from 1Q19 ▪ Net interest income decreased 2.0% from 4Q19 primarily due to a decline in accretion income ▪ Non - interest income was lower than 4Q19 principally due to lower net gain on sales of loans ▪ Recorded $3.1 million
Slide 16: Net Interest Margin Overview
Net Interest Margin Overview ▪ Average cost of deposits down to 62 bps for the month of March compared to 75 bps for the quarter ▪ $810.2 million CDs maturing in 2020 at an average rate of 1.66% ▪ As of May 27, 2020, funded PPP loans to add estimated loan fee income of 3.5% deferred over the life of
Slide 17: Net Interest Income and Net Interest Margin Trends
0.46% 0.40% 0.62% 0.43% 0.29% 4.43% 4.51% 4.62% 4.32% 4.17% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 NIM Accretion Income Impact Net Interest Income and Net Interest Margin Trends ($ in millions) ▪ Net Interest Income in 1Q20 decreased $1.1 million to $52.8 million, primarily due to lower accretion i
Slide 18: Interest Rate Risk Management and Sensitivity
Interest Rate Risk Management and Sensitivity ▪ We use a net interest income simulation model to measure and evaluate potential changes in our net interest income. We run va rio us hypothetical interest rate scenarios at least monthly and compare these results against a scenario with no changes in i
Slide 19: Prudent Expense Management
Prudent Expense Management ($ in millions) ▪ Non - interest expenses, excluding significant adjustment items (1) , was $42.8 million, down from $43.4 million in 4Q19 ▪ Higher salaries and employee benefits due to higher payroll taxes and increased employer costs related to benefits, partially offset
Slide 20: Non-Interest Income Trends
$12.0 $14.2 $14.8 $14.5 $9.2 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 $6.2 $7.5 $9.4 $8.7 $4.8 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 18% 13% 52% 7% 9% Fees and service charges on deposits ATM and interchange fees Net gains on sales of loans Wealth management and trust income Other including Net Ser
Slide 21: Loan Portfolio Overview
Loan Portfolio Overview $1,213 $1,330 $853 $786 $2,067 $2,116 59% 63% 40% 50% 60% 70% 80% 90% 100% $0 $500 $1,000 $1,500 $2,000 $2,500 Q4 2019 Q1 2020 Outstanding Unfunded % of Line Utilization Commercial LOC Exposure ($ in millions) Loans by Rate Type Loans by Industry Type ▪ Implemented credit foc
Slide 22: Loan and Lease Trends
$2,488 $2,585 $2,771 $2,836 $2,985 $1,080 $1,278 $1,060 $950 $876 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Total Originated Loans and Leases Total acquired Loans and Leases $131 $182 $97 $179 $110 $82 $136 $150 $190 $83 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Loan & Lease Originations Loan & Lease Pa
Slide 23: We are a Top Government-Guaranteed Lender
We are a Top Government - Guaranteed Lender ($ in millions) Managed SBA 7A and USDA Loans ▪ Top 5 SBA lender nationally; #1 lender in Illinois and Wisconsin ▪ Leveraged SBA platform to originate approximately 3,500 PPP loans (1) ▪ As part of coronavirus debt relief efforts, the SBA will pay 6 months
Slide 24: Early Impact Industries Sensitive to COVID-19
$125.2 $57.4 $54.6 $47.9 $41.4 $42.9 $10.0 $2.0 Restaurants Hotels Amusement Nursing Homes Truck Transportation Religious & Non-Profit Performing Arts & Sports Air Transportation Loan Balance Guaranteed Balance Early Impact Industries Sensitive to COVID - 19 ($ in millions) ▪ Total loan portfolio st
Slide 25: Early Impact Industries: Hotels, Restaurants, Amusement
Hotels Portfolio Characteristics ▪ Balance: $57 million ▪ Conventional: $41.6 million ▪ SBA: $15.7 million ▪ Guaranteed: $0.9 million ▪ Average loan: $831k ▪ Largest loan: $9.9 million Exposure: Deferral, PPP, and SBA Subsidy $ of portfolio / % of portfolio ▪ Deferrals: $18.5 million / 32% ▪ PPP: $1
Slide 26: Early Impact Industries: Religious, Nursing, Truck
Religious Portfolio Characteristics ▪ Balance: $43 million ▪ Conventional: $42.6 million ▪ SBA: $0.4 million ▪ Guaranteed: $0.3 million ▪ Average loan: $0.3 million ▪ Largest loan: $8.2 million Exposure: Deferral, PPP, and SBA Subsidy $ of portfolio / % of portfolio ▪ Deferrals: $2.9 million / 7% ▪
Slide 27: Asset Quality Trends
0.71% 0.82% 0.98% 0.89% 1.18% 0.14% 0.13% 0.11% 0.11% 0.13% 0.85% 0.95% 1.09% 1.00% 1.31% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 NPLs Exclud. Government Guaranteed Government Guaranteed NPLs Asset Quality Trends ($ in millions) ▪ Non - performing assets to total assets increased to 1.05% in 1Q20 fr
Slide 28: Deposit Trends
30.5% 30.5% 29.9% 30.9% 30.5% 8.0% 8.5% 9.1% 8.2% 8.4% 28.4% 29.8% 29.8% 32.7% 37.5% 25.4% 24.1% 23.7% 22.1% 18.9% 7.7% 7.0% 7.4% 6.2% 4.7% $3,809 $4,060 $4,080 $4,148 $4,239 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Non Interest Checking Interest Checking MMDA & Savings Time <$250K Time >$250K $1,186
Slide 29: Liquidity Profile and Securities Portfolio Overview
Liquidity Profile and Securities Portfolio Overview Strong Liquidity Position Securities Portfolio Overview ▪ Loan growth funded through core deposits ▪ Access to $2.0 billion of liquidity available from FHLB Chicago, Fed Funds lines, unencumbered securities and the Discount Window ▪ Loan / Deposit
Slide 30: Maintaining a Well-Capitalized Position vs. Peers
13.5% 12.6% Byline Tier 1 Ratio MW Peers Tier 1 Ratio Maintaining a Well - Capitalized Position vs. Peers Tier 1 Ratio TCE / TA (1) 30 Total Risk Based Capital Ratio 10.3% 9.8% Byline TCE / TA MW Peers TCE / TA 14.5% 13.7% Byline Total Capital Ratio MW Peers Total Capital Ratio Source: S&P Global Ma
Slide 31: Appendix
Appendix @ Byline Bancorp, Inc:
Slide 32: Strengthening the Byline Franchise through Accretive Transactions
Key Transaction Highlights Announced Pro Forma Financial Impact ▪ Expanded to Evanston market with #2 deposit market share in the city ▪ Provided low - cost core deposit base with 36% DDA ▪ Added strong commercial banking team ▪ Further diversified revenue with addition of Trust & Wealth Management
Slide 33: Double Leverage and Debt Coverage Analysis
Description 2018Y 2019Y Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Bank-level equity $667,236 $769,797 $683,330 $744,491 $760,218 $769,797 $781,138 Consolidated equity 650,672 750,115 668,749 717,675 735,866 750,115 762,667 Double leverage ratio 103% 103% 102% 104% 103% 103% 102% Q1 2020 PF (2) Earning
Slide 34: Credit Ratings Profile
Credit Ratings Profile 34 Rating Outlook Byline Bancorp, Inc. Senior Unsecured Debt BBB Stable Subordinated Debt BBB- Stable Short-Term Debt K3 N/A Byline Bank Deposit BBB+ Stable Senior Unsecured Debt BBB+ Stable Subordinated Debt BBB Stable Short-Term Deposit K2 N/A Short-Term Debt K2 N/A Source:
Slide 35: Five Quarter Financial Summary
Five Quarter Financial Summary ($ in millions, except per share data) 35 (1) Represents a non - GAAP financial measure. See “Non - GAAP Reconciliation” in the appendix. (2) Includes loans held for sale and loans held for investment. March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 M
Slide 36: Non-GAAP Reconciliation
36 Non - GAAP Reconciliation March 31, December 31, September 30, June 30, March 31, (dollars in thousands, per share data) 2020 2019 2019 2019 2019 Net income and earnings per share excluding significant items Reported Net Income 2,966$ 15,852$ 15,342$ 13,211$ 12,597$ Significant items: Impairment
Slide 37: Non-GAAP Reconciliation (continued)
37 Non - GAAP Reconciliation (continued) (dollars in thousands, except per share data, ratios annualized, where applicable) Adjusted non-interest expense: Non-interest expense $ 43,527 $ 43,694 $ 45,448 $ 43,954 $ 40,679 Less: Significant items Impairment charges on assets held for sale 715 111 67 —
Slide 38: Non-GAAP Reconciliation (continued)
38 Non - GAAP Reconciliation (continued) (dollars in thousands, except per share data, ratios annualized, where applicable) March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Tangible assets: Total assets 5,734,754$ 5,521,809$ 5,438,278$ 5,391,236$ 5,009,925$ Less: Good
Slide 39: Non-GAAP Reconciliation (continued)
Non - GAAP Reconciliation (continued) 39 (dollars in thousands, except share and per share data, ratios annualized, where applicable) March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Pre-tax pre-provision return on average assets: Pre-tax pre-provision net income 18,4
Slide 40: Non-GAAP Reconciliation (continued)
Non - GAAP Reconciliation (continued) 40 (dollars in thousands, except share and per share data, ratios annualized, where applicable) March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Adjusted return on average assets: Adjusted net income 3,482$ 16,059$ 16,160$ 15,915$
Slide 41: Non-GAAP Reconciliation (continued)
41 Non - GAAP Reconciliation (continued) (dollars in thousands, except per share data, ratios annualized, where applicable) Adjusted non-interest expense: Non-interest expense $ 173,775 $ 154,896 $ 118,495 Less: Significant items Impairment charges on assets held for sale 570 628 951 Merger-related
Slide 42: Midwest Public Peers with Assets between $2-$7 billion
Midwest Public Peers with Assets between $2 - $7 billion Total Assets 1st Source Corporation (SRCE) $6,735 First Defiance Financial Corp. (FDEF) $6,541 Midland States Bancorp, Inc. (MSBI) $6,208 Republic Bancorp, Inc. (RBCA.A) $5,722 Horizon Bancorp, Inc. (HBNC) $5,351 QCR Holdings, Inc. (QCRH) $5,2
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