Select First Quarter 2023 Financial Highlights
- Net income of $23.9 million, or $0.64 per diluted share
- Pre-tax pre-provision return on average assets of 2.32%1
- Return on average assets of 1.32%; Return on average tangible common equity of 16.20%1
- Net interest margin of 4.38%; down one bp from the previous quarter
- Efficiency ratio of 52.10%
- Total loans and leases of $5.5 billion, quarterly increase of $74.6 million
- Total deposits of $5.8 billion, quarterly increase of $117.5 million
- Tangible Common Equity to Tangible Assets of 8.66%1
- Common Equity Tier 1 to Risk Weighted Assets of 10.27%
CHICAGO–(BUSINESS WIRE)–Byline Bancorp, Inc. (“Byline”, the “Company”, “we”, “our”, or “us”) (NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $23.9 million, or $0.64 per diluted share, for the first quarter of 2023 compared with net income of $24.4 million, or $0.65 per diluted share, for the fourth quarter of 2022, and net income of $21.4 million2, or $0.56 per diluted share, for the first quarter 2022.
Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “Our first quarter results reflect the resiliency of our diversified business model and prudent management, notwithstanding continued rate increases and a challenging operating environment. We remain focused on executing our strategy, supporting new and existing customers and growing the value of our franchise. I am proud of the way our bankers navigated the recent turmoil within our industry, with a focus on serving our customers and communities.”
Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “We delivered solid financial results for the first quarter as our performance was both balanced and strong during a period of heightened volatility and uncertainty. During the quarter, we increased our capital position and we believe we continue to maintain a high level of liquidity given the environment. At the same time, we grew revenue by 17% year-over-year, controlled non-interest expenses, achieved positive operating leverage, maintained credit quality and delivered strong profitability. Looking forward, we believe our diversified franchise, and strong capital and liquidity, position us well for the remainder of 2023.”
Board Declares Cash Dividend of $0.09 per Share
On April 25, 2023, the Company’s Board of Directors declared a cash dividend of $0.09 per share, payable on May 23, 2023, to stockholders of record of the Company’s common stock as of May 9, 2023.
|
(1) |
Represents non-GAAP financial measures. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. |
|
|
(2) |
Recast due to the adoption of ASU 2016-13 Financial Instruments – Credit Losses on December 31, 2022, which was applied retrospectively to January 1, 2022. Results for periods beginning after September 30, 2022 are presented under the new standard, while prior quarters previously reported are recast as if the new standard had been applied since January 1, 2022. Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the adoption of the standard. |
STATEMENTS OF OPERATIONS
Net Interest Income
The following table presents the average interest-earning assets and average interest-bearing liabilities for the periods indicated. Net interest income and margin are adjusted to reflect tax-exempt interest income on a tax-equivalent basis using tax rates effective as of the end of the period:
|
|
For the Three Months Ended |
||||||||||||||||||||||||||||
|
|
March 31, 2023 |
|
December 31, 2022 |
|
Recast March 31, 2022 |
||||||||||||||||||||||||
|
(dollars in thousands) |
Average |
|
Interest |
|
Avg. |
|
Average |
|
Interest |
|
Avg. |
|
Average |
|
Interest |
|
Avg. |
||||||||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cash and cash equivalents |
$ |
97,578 |
|
|
$ |
442 |
|
1.84 |
% |
|
$ |
89,367 |
|
|
$ |
234 |
|
1.04 |
% |
|
$ |
74,822 |
|
|
$ |
29 |
|
0.16 |
% |
|
Loans and leases(1) |
|
5,484,372 |
|
|
|
92,343 |
|
6.83 |
% |
|
|
5,389,210 |
|
|
$ |
85,720 |
|
6.31 |
% |
|
|
4,669,047 |
|
|
|
55,138 |
|
4.79 |
% |
|
Taxable securities |
|
1,275,377 |
|
|
|
6,431 |
|
2.04 |
% |
|
|
1,288,750 |
|
|
$ |
7,043 |
|
2.17 |
% |
|
|
1,339,345 |
|
|
|
5,358 |
|
1.62 |
% |
|
Tax-exempt securities(2) |
|
151,817 |
|
|
|
994 |
|
2.65 |
% |
|
|
155,562 |
|
|
$ |
1,021 |
|
2.60 |
% |
|
|
169,652 |
|
|
|
1,124 |
|
2.69 |
% |
|
Total interest-earning assets |
$ |
7,009,144 |
|
|
$ |
100,210 |
|
5.80 |
% |
|
$ |
6,922,889 |
|
|
$ |
94,018 |
|
5.39 |
% |
|
$ |
6,252,866 |
|
|
$ |
61,649 |
|
4.00 |
% |
|
Allowance for credit losses – |
|
(84,321 |
) |
|
|
|
|
|
|
(81,815 |
) |
|
|
|
|
|
|
(68,058 |
) |
|
|
|
|
||||||
|
All other assets |
|
420,328 |
|
|
|
|
|
|
|
424,979 |
|
|
|
|
|
|
|
512,668 |
|
|
|
|
|
||||||
|
TOTAL ASSETS |
$ |
7,345,151 |
|
|
|
|
|
|
$ |
7,266,053 |
|
|
|
|
|
|
$ |
6,697,476 |
|
|
|
|
|
||||||
|
LIABILITIES AND STOCKHOLDERS’ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest checking |
$ |
606,008 |
|
|
$ |
2,494 |
|
1.67 |
% |
|
$ |
596,627 |
|
|
$ |
1,902 |
|
1.27 |
% |
|
$ |
579,297 |
|
|
$ |
178 |
|
0.12 |
% |
|
Money market accounts |
|
1,465,677 |
|
|
|
7,728 |
|
2.14 |
% |
|
|
1,472,050 |
|
|
|
5,458 |
|
1.47 |
% |
|
|
1,255,431 |
|
|
|
474 |
|
0.15 |
% |
|
Savings |
|
613,590 |
|
|
|
227 |
|
0.15 |
% |
|
|
647,536 |
|
|
|
243 |
|
0.15 |
% |
|
|
649,269 |
|
|
|
76 |
|
0.05 |
% |
|
Time deposits |
|
966,409 |
|
|
|
5,849 |
|
2.45 |
% |
|
|
788,856 |
|
|
|
3,007 |
|
1.51 |
% |
|
|
662,080 |
|
|
|
359 |
|
0.22 |
% |
|
Total interest-bearing |
|
3,651,684 |
|
|
|
16,298 |
|
1.81 |
% |
|
|
3,505,069 |
|
|
|
10,610 |
|
1.20 |
% |
|
|
3,146,077 |
|
|
|
1,087 |
|
0.14 |
% |
|
Other borrowings |
|
573,433 |
|
|
|
5,852 |
|
4.14 |
% |
|
|
514,518 |
|
|
|
4,598 |
|
3.55 |
% |
|
|
290,545 |
|
|
|
395 |
|
0.55 |
% |
|
Federal funds purchased |
|
2,778 |
|
|
|
36 |
|
5.30 |
% |
|
|
— |
|
|
|
— |
|
0.00 |
% |
|
|
— |
|
|
|
— |
|
0.00 |
% |
|
Subordinated notes and |
|
111,101 |
|
|
|
2,098 |
|
7.66 |
% |
|
|
110,947 |
|
|
|
1,992 |
|
7.12 |
% |
|
|
110,490 |
|
|
|
1,600 |
|
5.87 |
% |
|
Total borrowings |
|
687,312 |
|
|
|
7,986 |
|
4.71 |
% |
|
|
625,465 |
|
|
|
6,590 |
|
4.18 |
% |
|
|
401,035 |
|
|
|
1,995 |
|
2.02 |
% |
|
Total interest-bearing liabilities |
$ |
4,338,996 |
|
|
$ |
24,284 |
|
2.27 |
% |
|
$ |
4,130,534 |
|
|
$ |
17,200 |
|
1.65 |
% |
|
$ |
3,547,112 |
|
|
$ |
3,082 |
|
0.35 |
% |
|
Non-interest-bearing |
|
2,076,613 |
|
|
|
|
|
|
|
2,235,464 |
|
|
|
|
|
|
|
2,248,035 |
|
|
|
|
|
||||||
|
Other liabilities |
|
145,253 |
|
|
|
|
|
|
|
151,763 |
|
|
|
|
|
|
|
80,276 |
|
|
|
|
|
||||||
|
Total stockholders’ equity |
|
784,289 |
|
|
|
|
|
|
|
748,292 |
|
|
|
|
|
|
|
822,053 |
|
|
|
|
|
||||||
|
TOTAL LIABILITIES AND |
$ |
7,345,151 |
|
|
|
|
|
|
$ |
7,266,053 |
|
|
|
|
|
|
$ |
6,697,476 |
|
|
|
|
|
||||||
|
Net interest spread(3) |
|
|
|
|
3.53 |
% |
|
|
|
|
|
3.74 |
% |
|
|
|
|
|
3.65 |
% |
|||||||||
|
Net interest income, fully |
|
|
$ |
75,926 |
|
|
|
|
|
$ |
76,818 |
|
|
|
|
|
$ |
58,567 |
|
|
|||||||||
|
Net interest margin, fully |
|
|
|
|
4.39 |
% |
|
|
|
|
|
4.40 |
% |
|
|
|
|
|
3.80 |
% |
|||||||||
|
Less: Tax-equivalent adjustment |
|
|
|
208 |
|
0.01 |
% |
|
|
|
|
214 |
|
0.01 |
% |
|
|
|
|
236 |
|
0.02 |
% |
||||||
|
Net interest income |
|
|
$ |
75,718 |
|
|
|
|
|
$ |
76,604 |
|
|
|
|
|
$ |
58,331 |
|
|
|||||||||
|
Net interest margin(4) |
|
|
|
|
4.38 |
% |
|
|
|
|
|
4.39 |
% |
|
|
|
|
|
3.78 |
% |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Net loan accretion impact |
|
|
$ |
729 |
|
0.04 |
% |
|
|
|
$ |
369 |
|
0.02 |
% |
|
|
|
$ |
1,187 |
|
0.08 |
% |
||||||
| ___________________ | ||
|
(1) |
Loan and lease balances are net of deferred origination fees and costs and initial indirect costs. Non-accrual loans and leases are included in total loan and lease balances. |
|
|
(2) |
Interest income and rates include the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%. |
|
|
(3) |
Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
|
|
(4) |
Represents net interest income (annualized) divided by total average earning assets. |
|
|
(5) |
Average balances are average daily balances. |
|
The following table presents net interest income for the periods indicated:
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|||||||||
|
|
|
Three Months Ended |
|
Change from |
|||||||||||||
|
|
|
|
|
|
|
Recast |
|
|
|
|
|||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|||||||
|
(dollars in thousands) |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|||||||
|
INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
|
|
|
|
|
|||||||
|
Interest and fees on loans and leases |
|
$ |
92,343 |
|
$ |
85,720 |
|
$ |
55,138 |
|
|
7.7 |
% |
|
|
67.5 |
% |
|
Interest on securities |
|
|
6,600 |
|
|
6,569 |
|
|
6,155 |
|
|
0.5 |
% |
|
|
7.2 |
% |
|
Other interest and dividend income |
|
|
1,059 |
|
|
1,515 |
|
|
120 |
|
|
(30.1 |
)% |
|
|
781.5 |
% |
|
Total interest and dividend income |
|
|
100,002 |
|
|
93,804 |
|
|
61,413 |
|
|
6.6 |
% |
|
|
62.8 |
% |
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|||||||
|
Deposits |
|
|
16,298 |
|
|
10,610 |
|
|
1,087 |
|
|
53.6 |
% |
|
|
1399.7 |
% |
|
Other borrowings |
|
|
5,888 |
|
|
4,598 |
|
|
395 |
|
|
28.1 |
% |
|
|
1391.2 |
% |
|
Subordinated notes and debentures |
|
|
2,098 |
|
|
1,992 |
|
|
1,600 |
|
|
5.3 |
% |
|
|
31.1 |
% |
|
Total interest expense |
|
|
24,284 |
|
|
17,200 |
|
|
3,082 |
|
|
41.2 |
% |
|
|
688.1 |
% |
|
Net interest income |
|
$ |
75,718 |
|
$ |
76,604 |
|
$ |
58,331 |
|
|
(1.2 |
)% |
|
|
29.8 |
% |
Net interest income for the first quarter of 2023 was $75.7 million, a decrease of $886,000, or 1.2%, from the fourth quarter of 2022. The decrease was driven by day count and rising interest rates.
The decrease in net interest income was primarily due to:
- An increase of $5.7 million in deposit interest expense mainly due to higher average balances and higher rates paid on time deposits and money market accounts; and
- An increase of $1.3 million in interest expense on other borrowings due to higher rates paid and average balances on borrowings.
Partially offset by:
- An increase of $6.6 million in interest income and fees on loans and leases due to higher yields on loans and leases.
Tax-equivalent net interest margin for the first quarter of 2023 was 4.39%, a decrease of one basis point compared to the fourth quarter of 2022. Total net loan accretion income impact on margin contributed four basis points to the net interest margin for the first quarter of 2023 compared to two basis points for the fourth quarter of 2022.
The average cost of total deposits was 1.15% for the first quarter of 2023, an increase of 42 basis points compared to the fourth quarter of 2022. Average non-interest-bearing demand deposits were 36.3% of average total deposits for the first quarter of 2023 compared to 38.9% during the fourth quarter of 2022.
Provision for Credit Losses
The provision for credit losses was $9.8 million for the first quarter of 2023, an increase of $4.0 million compared to $5.8 million for the fourth quarter of 2022. The provision for credit losses is comprised of a provision for loan and lease losses of $9.7 million and a provision for unfunded commitments of $113,000. The increase in provision during the first quarter of 2023 was primarily driven by increases in specific reserves on loans that were individually evaluated for impairment, changes in expected losses driven by macro-economic factors, and growth in the loan and lease portfolio.
Non-interest Income
The following table presents the components of non-interest income for the periods indicated:
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|||||||||||
|
|
|
Three Months Ended |
|
Change from |
|||||||||||||||
|
|
|
|
|
|
|
Recast |
|
|
|
|
|||||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|||||||||
|
(dollars in thousands) |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|||||||||
|
NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Fees and service charges on deposits |
|
$ |
2,120 |
|
$ |
2,081 |
|
|
$ |
1,884 |
|
|
|
1.9 |
% |
|
|
12.5 |
% |
|
Loan servicing revenue |
|
|
3,380 |
|
|
3,293 |
|
|
|
3,380 |
|
|
|
2.7 |
% |
|
|
0.0 |
% |
|
Loan servicing asset revaluation |
|
|
656 |
|
|
(3,534 |
) |
|
|
(1,231 |
) |
|
NM |
|
|
|
(153.3 |
)% |
|
|
ATM and interchange fees |
|
|
1,063 |
|
|
1,250 |
|
|
|
1,049 |
|
|
|
(14.9 |
)% |
|
|
1.3 |
% |
|
Change in fair value of equity securities, net |
|
|
350 |
|
|
710 |
|
|
|
(35 |
) |
|
|
(50.6 |
)% |
|
NM |
|
|
|
Net gains on sales of loans |
|
|
5,148 |
|
|
5,509 |
|
|
|
10,827 |
|
|
|
(6.6 |
)% |
|
|
(52.4 |
)% |
|
Wealth management and trust income |
|
|
924 |
|
|
864 |
|
|
|
1,048 |
|
|
|
7.0 |
% |
|
|
(11.9 |
)% |
|
Other non-interest income |
|
|
1,504 |
|
|
1,282 |
|
|
|
2,621 |
|
|
|
17.2 |
% |
|
|
(42.6 |
)% |
|
Total non-interest income |
|
$ |
15,145 |
|
$ |
11,455 |
|
|
$ |
19,543 |
|
|
|
32.2 |
% |
|
|
(22.5 |
)% |
Non-interest income for the first quarter of 2023 was $15.1 million, an increase of $3.7 million, or 32.2%, compared to $11.5 million for the fourth quarter of 2022.
The increase in total non-interest income was primarily due to:
- An increase of $4.2 million in the valuation of the loan servicing asset from favorable fair value adjustments due to improvements in market conditions.
Partially offset by:
- A decrease of $361,000 in the net gain on sales of loans, due to lower volume of loan sales.
During the first quarter of 2023, we sold $72.2 million of U.S. government guaranteed loans compared to $86.0 million during the fourth quarter of 2022.
Non-interest Expense
The following table presents the components of non-interest expense for the periods indicated:
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|||||||||||
|
|
|
Three Months Ended |
|
Change from |
|||||||||||||||
|
|
|
|
|
|
|
Recast |
|
|
|
|
|||||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|||||||||
|
(dollars in thousands) |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|||||||||
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Salaries and employee benefits |
|
$ |
30,394 |
|
|
$ |
31,808 |
|
$ |
28,959 |
|
|
|
(4.4 |
)% |
|
|
5.0 |
% |
|
Occupancy and equipment expense, net |
|
|
4,444 |
|
|
|
3,532 |
|
|
5,128 |
|
|
|
25.8 |
% |
|
|
(13.3 |
)% |
|
Impairment charge on assets held for sale |
|
|
20 |
|
|
|
372 |
|
|
— |
|
|
|
(94.8 |
)% |
|
NM |
|
|
|
Loan and lease related expenses |
|
|
963 |
|
|
|
1,126 |
|
|
(891 |
) |
|
|
(14.4 |
)% |
|
|
(208.1 |
)% |
|
Legal, audit and other professional fees |
|
|
3,114 |
|
|
|
3,204 |
|
|
2,600 |
|
|
|
(2.8 |
)% |
|
|
19.8 |
% |
|
Data processing |
|
|
3,783 |
|
|
|
3,406 |
|
|
3,186 |
|
|
|
11.1 |
% |
|
|
18.7 |
% |
|
Net (gain) loss recognized on other real estate |
|
|
(103 |
) |
|
|
221 |
|
|
54 |
|
|
NM |
|
|
NM |
|
||
|
Other intangible assets amortization expense |
|
|
1,455 |
|
|
|
1,596 |
|
|
1,596 |
|
|
|
(8.8 |
)% |
|
|
(8.8 |
)% |
|
Other non-interest expense |
|
|
4,730 |
|
|
|
5,235 |
|
|
3,324 |
|
|
|
(9.6 |
)% |
|
|
42.3 |
% |
|
Total non-interest expense |
|
$ |
48,800 |
|
|
$ |
50,500 |
|
$ |
43,956 |
|
|
|
(3.4 |
)% |
|
|
11.0 |
% |
Non-interest expense for the first quarter of 2023 was $48.8 million, a decrease of $1.7 million, or 3.4%, from $50.5 million for the fourth quarter of 2022.
The decrease in total non-interest expense was primarily due to:
- A decrease of $1.4 million in salaries and employee benefits mainly due to decreases in incentive compensation, offset by increases in payroll taxes; and
- A decrease of $505,000 in other non-interest expense, as the prior quarter included net losses of $480,000 in leasehold improvements.
Partially offset by:
- An increase of $912,000 in occupancy and equipment expense, net, primarily due to increases in real estate taxes and building maintenance; and
- An increase of $377,000 in data processing mainly due to merger related expenses.
Our efficiency ratio was 52.10% for the first quarter of 2023 compared to 55.53% for the fourth quarter of 2022.
INCOME TAXES
We recorded income tax expense of $8.3 million during the first quarter of 2023, compared to $7.4 million during the fourth quarter of 2022. The effective tax rate was 25.7% and 23.2% for the first quarter of 2023 and fourth quarter of 2022, respectively. The increase in the effective tax rate is primarily due to the effect of a prior quarter tax benefit related to share-based compensation.
STATEMENTS OF FINANCIAL CONDITION
Total assets were $7.5 billion at March 31, 2023, an increase of $167.4 million compared to $7.4 billion at December 31, 2022.
The current quarter increase was primarily due to:
- An increase in cash and cash equivalents of $104.9 million primarily to augment liquidity levels given the environment and support customer activities; and
- An increase in net loans and leases of $85.5 million primarily due to growth in the originated loan and lease portfolio.
Partially offset by:
- A decrease in loans held for sale of $19.4 million, driven mainly by lower volume of government guaranteed loans.
The following table shows our allocation of the originated, purchase credit deteriorated, and non-credit deteriorated loans and leases at the dates indicated:
|
|
|
|
|
|
|
|
|
Recast |
||||||||||||||||
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
||||||||||||||||||
|
(dollars in thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
||||||||||||
|
Originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial real estate |
|
$ |
1,749,808 |
|
|
|
31.7 |
% |
|
$ |
1,712,152 |
|
|
|
31.6 |
% |
|
$ |
1,530,703 |
|
|
|
32.0 |
% |
|
Residential real estate |
|
|
441,291 |
|
|
|
8.0 |
% |
|
|
426,226 |
|
|
|
7.9 |
% |
|
|
399,852 |
|
|
|
8.3 |
% |
|
Construction, land development, and |
|
|
446,763 |
|
|
|
8.1 |
% |
|
|
438,617 |
|
|
|
8.1 |
% |
|
|
351,518 |
|
|
|
7.3 |
% |
|
Commercial and industrial |
|
|
2,060,537 |
|
|
|
37.4 |
% |
|
|
2,029,855 |
|
|
|
37.5 |
% |
|
|
1,697,555 |
|
|
|
35.5 |
% |
|
Paycheck Protection Program |
|
|
730 |
|
|
|
0.0 |
% |
|
|
761 |
|
|
|
0.0 |
% |
|
|
36,260 |
|
|
|
0.8 |
% |
|
Installment and other |
|
|
1,603 |
|
|
|
0.0 |
% |
|
|
1,410 |
|
|
|
0.0 |
% |
|
|
946 |
|
|
|
0.0 |
% |
|
Leasing financing receivables |
|
|
552,174 |
|
|
|
10.0 |
% |
|
|
521,689 |
|
|
|
9.6 |
% |
|
|
379,527 |
|
|
|
7.9 |
% |
|
Total originated loans and leases |
|
$ |
5,252,906 |
|
|
|
95.2 |
% |
|
$ |
5,130,710 |
|
|
|
94.7 |
% |
|
$ |
4,396,361 |
|
|
|
91.8 |
% |
|
Purchased credit deteriorated loans |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial real estate |
|
$ |
39,000 |
|
|
|
0.7 |
% |
|
$ |
45,143 |
|
|
|
0.8 |
% |
|
$ |
62,480 |
|
|
|
1.3 |
% |
|
Residential real estate |
|
|
30,070 |
|
|
|
0.6 |
% |
|
|
32,228 |
|
|
|
0.6 |
% |
|
|
46,576 |
|
|
|
1.0 |
% |
|
Construction, land development, and |
|
|
345 |
|
|
|
0.0 |
% |
|
|
372 |
|
|
|
0.0 |
% |
|
|
1,383 |
|
|
|
0.0 |
% |
|
Commercial and industrial |
|
|
1,745 |
|
|
|
0.0 |
% |
|
|
2,192 |
|
|
|
0.0 |
% |
|
|
3,884 |
|
|
|
0.1 |
% |
|
Installment and other |
|
|
134 |
|
|
|
0.0 |
% |
|
|
140 |
|
|
|
0.0 |
% |
|
|
161 |
|
|
|
0.0 |
% |
|
Total purchased credit deteriorated loans |
|
$ |
71,294 |
|
|
|
1.3 |
% |
|
$ |
80,075 |
|
|
|
1.4 |
% |
|
$ |
114,484 |
|
|
|
2.4 |
% |
|
Acquired non-credit-deteriorated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial real estate |
|
$ |
140,576 |
|
|
|
2.6 |
% |
|
$ |
152,193 |
|
|
|
2.8 |
% |
|
$ |
185,107 |
|
|
|
3.9 |
% |
|
Residential real estate |
|
|
27,975 |
|
|
|
0.5 |
% |
|
|
31,508 |
|
|
|
0.6 |
% |
|
|
48,173 |
|
|
|
1.0 |
% |
|
Construction, land development, and |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
196 |
|
|
|
0.0 |
% |
|
Commercial and industrial |
|
|
20,793 |
|
|
|
0.4 |
% |
|
|
24,266 |
|
|
|
0.5 |
% |
|
|
37,882 |
|
|
|
0.8 |
% |
|
Installment and other |
|
|
85 |
|
|
|
0.0 |
% |
|
|
209 |
|
|
|
0.0 |
% |
|
|
247 |
|
|
|
0.0 |
% |
|
Leasing financing receivables |
|
|
1,703 |
|
|
|
0.0 |
% |
|
|
2,297 |
|
|
|
0.0 |
% |
|
|
5,157 |
|
|
|
0.1 |
% |
|
Total acquired non-credit-deteriorated |
|
$ |
191,132 |
|
|
|
3.5 |
% |
|
$ |
210,473 |
|
|
|
3.9 |
% |
|
$ |
276,762 |
|
|
|
5.8 |
% |
|
Total loans and leases |
|
$ |
5,515,332 |
|
|
|
100.0 |
% |
|
$ |
5,421,258 |
|
|
|
100.0 |
% |
|
$ |
4,787,607 |
|
|
|
100.0 |
% |
|
Allowance for credit losses – loans and leases |
|
|
(90,465 |
) |
|
|
|
|
(81,924 |
) |
|
|
|
|
(72,107 |
) |
|
|
||||||
|
Total loans and leases, net of allowance for |
|
$ |
5,424,867 |
|
|
|
|
$ |
5,339,334 |
|
|
|
|
$ |
4,715,500 |
|
|
|
||||||
ASSET QUALITY
Non-Performing Assets
The following table sets forth the amounts of non-performing loans and leases and other real estate owned at the dates indicated:
|
|
|
|
|
|
|
|
|
March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
Recast |
|
Change from |
||||||||||||
|
(dollars in thousands) |
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
|
December 31, 2022 |
|
March 31, 2022 |
||||||||||
|
Non-performing assets: |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Non-accrual loans and leases |
|
$ |
46,536 |
|
|
$ |
36,027 |
|
|
$ |
33,236 |
|
|
|
29.2 |
% |
|
|
40.0 |
% |
|
Past due loans and leases 90 days or more |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
|
— |
% |
||
|
Total non-performing loans and leases |
|
$ |
46,536 |
|
|
$ |
36,027 |
|
|
$ |
33,236 |
|
|
|
29.2 |
% |
|
|
40.0 |
% |
|
Other real estate owned |
|
|
3,712 |
|
|
|
4,717 |
|
|
|
2,221 |
|
|
|
(21.3 |
)% |
|
|
67.1 |
% |
|
Total non-performing assets |
|
$ |
50,248 |
|
|
$ |
40,744 |
|
|
$ |
35,457 |
|
|
|
23.3 |
% |
|
|
41.7 |
% |
|
Total non-performing loans and leases as a |
|
|
0.84 |
% |
|
|
0.66 |
% |
|
|
0.69 |
% |
|
|
|
|
||||
|
Total non-performing assets as a percentage |
|
|
0.67 |
% |
|
|
0.55 |
% |
|
|
0.52 |
% |
|
|
|
|
||||
|
Allowance for credit losses – loans and lease |
|
|
194.40 |
% |
|
|
227.40 |
% |
|
|
216.96 |
% |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Non-performing assets guaranteed by |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Non-accrual loans guaranteed |
|
$ |
2,335 |
|
|
$ |
2,225 |
|
|
$ |
1,832 |
|
|
|
5.0 |
% |
|
|
27.5 |
% |
|
Past due loans 90 days or more and still |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
% |
|
— |
% |
||
|
Total non-performing loans guaranteed |
|
$ |
2,335 |
|
|
$ |
2,225 |
|
|
$ |
1,832 |
|
|
|
5.0 |
% |
|
|
27.5 |
% |
|
Total non-performing loans and leases |
|
|
0.80 |
% |
|
|
0.62 |
% |
|
|
0.66 |
% |
|
|
|
|
||||
|
Total non-performing assets not guaranteed |
|
|
0.64 |
% |
|
|
0.52 |
% |
|
|
0.49 |
% |
|
|
|
|
||||
Variances in non-performing assets were:
- Non-performing loans and leases were $46.5 million at March 31, 2023, an increase of $10.5 million from $36.0 million at December 31, 2022, primarily due to an increase in impaired loans.
- Other real estate owned was $3.7 million at March 31, 2023, a decrease of $1.0 million from $4.7 million at December 31, 2022, primarily due to sales of properties.
Allowance for Credit Losses (“ACL”) – Loans and Leases
The following table presents the balance and activity within the allowance for credit losses – loans and leases for the periods indicated:
|
|
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
|
Recast |
||||||
|
|
|
March 31, |
|
December 31, |
|
March 31, |
||||||
|
(dollars in thousands) |
|
2023 |
|
2022 |
|
2022 |
||||||
|
ACL – loans and leases, beginning of period |
|
$ |
81,924 |
|
|
$ |
79,704 |
|
|
$ |
55,012 |
|
|
Cumulative effect adjustment (ASU 2016-13) |
|
|
— |
|
|
|
— |
|
|
|
12,168 |
|
|
Provision for credit losses – loans and leases |
|
|
9,712 |
|
|
|
5,399 |
|
|
|
5,723 |
|
|
Net charge-offs – loans and leases |
|
|
(1,171 |
) |
|
|
(3,179 |
) |
|
|
(796 |
) |
|
ACL – loans and leases, end of period |
|
$ |
90,465 |
|
|
$ |
81,924 |
|
|
$ |
72,107 |
|
|
Net charge-offs – loans and leases to average total |
|
|
0.09 |
% |
|
|
0.24 |
% |
|
|
0.07 |
% |
|
Provision for credit losses – loans and leases |
|
|
8.29x |
|
|
1.70x |
|
|
7.19x |
|||
Net charge-offs of loans and leases during the first quarter of 2023 were $1.2 million, or 0.09% of average loans and leases, on an annualized basis, a decrease of $2.0 million compared to $3.2 million, or 0.24% of average loans and leases, during the fourth quarter of 2022, and an increase of $375,000 from $796,000 or 0.07% of average loans and leases from the comparable period a year ago.
Net charge-offs for the first quarter of 2023 included $1.1 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the fourth quarter of 2022 and first quarter of 2022 included $645,000 and $362,000, respectively, in the unguaranteed portion of U.S. government guaranteed loans.
Deposits and Other Liabilities
The following table presents the composition of deposits at the dates indicated:
|
|
|
|
|
|
|
|
March 31, 2023 |
|||||||||
|
|
|
|
|
|
|
|
Change from |
|||||||||
|
(dollars in thousands) |
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
|
December 31, 2022 |
|
March 31, 2022 |
|||||||
|
Non-interest-bearing demand deposits |
$ |
1,952,045 |
|
$ |
2,138,645 |
|
$ |
2,281,612 |
|
|
(8.7 |
)% |
|
|
(14.4 |
)% |
|
Interest-bearing checking accounts |
|
560,837 |
|
|
592,098 |
|
|
596,497 |
|
|
(5.3 |
)% |
|
|
(6.0 |
)% |
|
Money market demand accounts |
|
1,453,688 |
|
|
1,415,653 |
|
|
1,357,679 |
|
|
2.7 |
% |
|
|
7.1 |
% |
|
Other savings |
|
590,231 |
|
|
625,798 |
|
|
659,218 |
|
|
(5.7 |
)% |
|
|
(10.5 |
)% |
|
Time deposits (below $250,000) |
|
1,089,785 |
|
|
762,250 |
|
|
505,141 |
|
|
43.0 |
% |
|
|
115.7 |
% |
|
Time deposits ($250,000 and above) |
|
166,066 |
|
|
160,677 |
|
|
129,955 |
|
|
3.4 |
% |
|
|
27.8 |
% |
|
Total deposits |
$ |
5,812,652 |
|
$ |
5,695,121 |
|
$ |
5,530,102 |
|
|
2.1 |
% |
|
|
5.1 |
% |
Total deposits increased to $5.8 billion at March 31, 2023 compared to $5.7 billion at December 31, 2022. Non-interest-bearing deposits were 33.6% and 37.6% of total deposits at March 31, 2023 and December 31, 2022, respectively. Estimated total uninsured deposits were $1.6 billion as of March 31, 2023 and December 31, 2022, and represented 27.9% and 28.2% of total deposits, respectively.
The increase in deposits in the current quarter was due to:
- An increase in time deposits of $332.9 million, principally due to deposit mix changes, including migration of deposits from other core deposit accounts to time deposits; and
- An increase in money market demand accounts of $38.0 million, mainly due to inflows of public funds.
Partially offset by:
- A decrease in non-interest-bearing demand deposits of $186.6 million, primarily due to seasonal fluctuations in balances and a competitive interest rate environment.
Total borrowings and other liabilities were $922.0 million at March 31, 2023, an increase of $20.0 million from $902.0 million at December 31, 2022, primarily driven by increases to securities sold under agreements to repurchase due to prevailing market conditions.
Stockholders’ Equity
Total stockholders’ equity was $795.7 million at March 31, 2023, an increase of $29.8 million from $765.8 million at December 31, 2022. The increase was primarily due to increased retained earnings due to net income and decreased accumulated other comprehensive loss due to decreased unrealized losses on AFS securities.
The following table presents actual regulatory capital dollar amounts and ratios of the Company and the Bank as of March 31, 2023:
|
|
|
Actual |
|
Minimum Capital |
|
Required to be |
|||||||||||||||
|
March 31, 2023 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|||||||||
|
Total capital to risk weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Company |
|
$ |
931,827 |
|
|
13.19 |
% |
|
$ |
565,374 |
|
|
8.00 |
% |
|
N/A |
|
N/A |
|
||
|
Bank |
|
|
884,077 |
|
|
12.55 |
% |
|
|
563,335 |
|
|
8.00 |
% |
|
$ |
704,168 |
|
|
10.00 |
% |
|
Tier 1 capital to risk weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Company |
|
$ |
770,494 |
|
|
10.90 |
% |
|
$ |
424,031 |
|
|
6.00 |
% |
|
N/A |
|
N/A |
|
||
|
Bank |
|
|
797,744 |
|
|
11.33 |
% |
|
|
422,501 |
|
|
6.00 |
% |
|
$ |
563,335 |
|
|
8.00 |
% |
|
Common Equity Tier 1 (CET1) to |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Company |
|
$ |
725,494 |
|
|
10.27 |
% |
|
$ |
318,023 |
|
|
4.50 |
% |
|
N/A |
|
N/A |
|
||
|
Bank |
|
|
797,744 |
|
|
11.33 |
% |
|
|
316,876 |
|
|
4.50 |
% |
|
$ |
457,709 |
|
|
6.50 |
% |
|
Tier 1 capital to average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Company |
|
$ |
770,494 |
|
|
10.46 |
% |
|
$ |
294,524 |
|
|
4.00 |
% |
|
N/A |
|
N/A |
|
||
|
Bank |
|
|
797,744 |
|
|
10.85 |
% |
|
$ |
293,994 |
|
|
4.00 |
% |
|
$ |
367,492 |
|
|
5.00 |
% |
Contacts
Investors:
Brooks Rennie
Investor Relations Director
312-660-5805
[email protected]
Media:
Erin O’Neill
Marketing Director
773-475-2901
[email protected]
