Third Quarter 2019 Highlights
-
Net income of $15.3 million, or $0.39 per diluted share
- Adjusted net income1 of $16.2 million, or $0.41 per adjusted diluted share1
- Net interest margin of 4.62% for the third quarter of 2019, compared to 4.51% for the second quarter of 2019, and 4.73% for the third quarter of 2018
- Originated loans and leases of $2.8 billion at September 30, 2019, an increase of $183.9 million, or 7.1%, from June 30, 2019
-
Efficiency ratio of 59.81% for the third quarter of 2019, compared to 61.19% for the second quarter of 2019, and 56.41% for the third quarter of 2018
- Adjusted efficiency ratio1 of 58.17% for the third quarter of 2019, compared to 56.02% for the second quarter of 2019, and 55.62% for the third quarter of 2018
- Return on average assets of 1.12% for the third quarter of 2019, compared to 1.00% for the second quarter of 2019, and 1.20% for the third quarter of 2018
- Return on average stockholders’ equity of 8.34% for the third quarter of 2019, compared to 7.60% for the second quarter of 2019, and 9.22% for the third quarter of 2018
- Successfully completed the core system conversion of Oak Park River Forest Bankshares, Inc. in September 2019
CHICAGO–(BUSINESS WIRE)–Byline Bancorp, Inc. (the “Company” or “Byline”) (NYSE: BY), the parent company of Byline Bank (the “Bank”), today reported net income of $15.3 million, or $0.39 per diluted share, for the third quarter of 2019, compared with net income of $13.2 million, or $0.34 per diluted share, for the second quarter of 2019, and net income of $14.5 million, or $0.39 per diluted share, for the third quarter of 2018. The Company’s financial results include certain costs associated with its integration of First Evanston Bancorp, Inc. and its bank subsidiary First Bank & Trust, and its acquisition and integration of Oak Park River Forest Bankshares, Inc. (“Oak Park River Forest”) and its bank subsidiary Community Bank of Oak Park River Forest. Excluding these merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, adjusted net income1 was $16.2 million, or $0.41 per adjusted diluted share1, for the third quarter of 2019, compared with $15.9 million, or $0.41 per adjusted diluted share, for the second quarter of 2019, and $14.9 million, or $0.40 per adjusted diluted share, for the third quarter of 2018. A reconciliation of adjusted net income and adjusted diluted earnings per share to net income and diluted earnings per share, respectively, according to accounting principles generally accepted in the United States of America (“GAAP”) is provided in the financial tables at the end of this release.
Alberto J. Paracchini, President and Chief Executive Officer of Byline, commented, “We executed well and had a strong quarter of revenue generation while successfully completing the system conversion and integration of our recent acquisition of Oak Park River Forest. We are seeing the initial benefits from this acquisition in helping to more effectively manage our deposit costs and expect to see additional synergies over the remainder of 2019. We continue to be optimistic about our opportunities to execute on our strategy in the coming years and further enhance the value of our franchise,” said Mr. Paracchini.
|
(1) |
Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. |
STATEMENTS OF OPERATIONS
Net Interest Income
The following table presents net interest income for the periods indicated:
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|||||||
|
(dollars in thousands) |
|
2019 |
|
|
2019 |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|||||||
|
INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans and leases |
|
$ |
63,391 |
|
|
$ |
59,524 |
|
|
$ |
54,383 |
|
|
$ |
56,646 |
|
|
$ |
55,045 |
|
|
$ |
177,298 |
|
|
$ |
128,326 |
|
|
Interest on taxable securities |
|
|
6,554 |
|
|
|
6,237 |
|
|
|
5,759 |
|
|
|
5,334 |
|
|
|
5,076 |
|
|
|
18,550 |
|
|
|
13,703 |
|
|
Interest on tax-exempt securities |
|
|
486 |
|
|
|
428 |
|
|
|
343 |
|
|
|
355 |
|
|
|
337 |
|
|
|
1,257 |
|
|
|
740 |
|
|
Other interest and dividend income |
|
|
598 |
|
|
|
571 |
|
|
|
625 |
|
|
|
560 |
|
|
|
615 |
|
|
|
1,794 |
|
|
|
1,287 |
|
|
Total interest and dividend income |
|
|
71,029 |
|
|
|
66,760 |
|
|
|
61,110 |
|
|
|
62,895 |
|
|
|
61,073 |
|
|
|
198,899 |
|
|
|
144,056 |
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
9,618 |
|
|
|
9,306 |
|
|
|
8,076 |
|
|
|
7,115 |
|
|
|
5,971 |
|
|
|
27,000 |
|
|
|
12,214 |
|
|
Federal Home Loan Bank advances |
|
|
2,771 |
|
|
|
2,174 |
|
|
|
2,099 |
|
|
|
1,719 |
|
|
|
1,723 |
|
|
|
7,044 |
|
|
|
4,441 |
|
|
Subordinated debentures and other borrowings |
|
|
802 |
|
|
|
832 |
|
|
|
850 |
|
|
|
800 |
|
|
|
786 |
|
|
|
2,484 |
|
|
|
2,057 |
|
|
Total interest expense |
|
|
13,191 |
|
|
|
12,312 |
|
|
|
11,025 |
|
|
|
9,634 |
|
|
|
8,480 |
|
|
|
36,528 |
|
|
|
18,712 |
|
|
Net interest income |
|
$ |
57,838 |
|
|
$ |
54,448 |
|
|
$ |
50,085 |
|
|
$ |
53,261 |
|
|
$ |
52,593 |
|
|
$ |
162,371 |
|
|
$ |
125,344 |
|
The following table presents the quarter-to-date schedule of average interest-earning assets and average interest-bearing liabilities for the periods indicated:
|
|
|
For the Three Months Ended |
|
|||||||||||||||||||||
|
|
|
September 30, 2019 |
|
|
June 30, 2019 |
|
||||||||||||||||||
|
(dollars in thousands) |
|
Average Balance(5) |
|
|
Interest Inc / Exp |
|
|
Average Yield / Rate |
|
|
Average Balance(5) |
|
|
Interest Inc / Exp |
|
|
Average Yield / Rate |
|
||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
34,225 |
|
|
$ |
253 |
|
|
|
2.93 |
% |
|
$ |
35,346 |
|
|
$ |
245 |
|
|
|
2.78 |
% |
|
Loans and leases(1) |
|
|
3,860,770 |
|
|
|
63,391 |
|
|
|
6.51 |
% |
|
|
3,759,634 |
|
|
|
59,524 |
|
|
|
6.35 |
% |
|
Taxable securities |
|
|
996,750 |
|
|
|
6,899 |
|
|
|
2.75 |
% |
|
|
975,693 |
|
|
|
6,563 |
|
|
|
2.70 |
% |
|
Tax-exempt securities(2) |
|
|
76,161 |
|
|
|
486 |
|
|
|
2.53 |
% |
|
|
68,314 |
|
|
|
428 |
|
|
|
2.52 |
% |
|
Total interest-earning assets |
|
$ |
4,967,906 |
|
|
$ |
71,029 |
|
|
|
5.67 |
% |
|
$ |
4,838,987 |
|
|
$ |
66,760 |
|
|
|
5.53 |
% |
|
Allowance for loan and lease losses |
|
|
(32,246 |
) |
|
|
|
|
|
|
|
|
|
|
(28,203 |
) |
|
|
|
|
|
|
|
|
|
All other assets |
|
|
500,102 |
|
|
|
|
|
|
|
|
|
|
|
464,036 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
5,435,762 |
|
|
|
|
|
|
|
|
|
|
$ |
5,274,820 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking |
|
$ |
358,185 |
|
|
$ |
524 |
|
|
|
0.58 |
% |
|
$ |
333,725 |
|
|
$ |
452 |
|
|
|
0.54 |
% |
|
Money market accounts |
|
|
735,724 |
|
|
|
1,917 |
|
|
|
1.03 |
% |
|
|
695,986 |
|
|
|
1,790 |
|
|
|
1.03 |
% |
|
Savings |
|
|
475,417 |
|
|
|
114 |
|
|
|
0.10 |
% |
|
|
477,775 |
|
|
|
118 |
|
|
|
0.10 |
% |
|
Time deposits |
|
|
1,270,050 |
|
|
|
7,063 |
|
|
|
2.21 |
% |
|
|
1,278,488 |
|
|
|
6,946 |
|
|
|
2.18 |
% |
|
Total interest-bearing deposits |
|
|
2,839,376 |
|
|
|
9,618 |
|
|
|
1.34 |
% |
|
|
2,785,974 |
|
|
|
9,306 |
|
|
|
1.34 |
% |
|
Federal Home Loan Bank advances |
|
|
530,055 |
|
|
|
2,771 |
|
|
|
2.07 |
% |
|
|
426,446 |
|
|
|
2,174 |
|
|
|
2.04 |
% |
|
Other borrowed funds |
|
|
70,080 |
|
|
|
802 |
|
|
|
4.54 |
% |
|
|
73,358 |
|
|
|
832 |
|
|
|
4.55 |
% |
|
Total borrowings |
|
|
600,135 |
|
|
|
3,573 |
|
|
|
2.36 |
% |
|
|
499,804 |
|
|
|
3,006 |
|
|
|
2.41 |
% |
|
Total interest-bearing liabilities |
|
$ |
3,439,511 |
|
|
$ |
13,191 |
|
|
|
1.52 |
% |
|
$ |
3,285,778 |
|
|
$ |
12,312 |
|
|
|
1.50 |
% |
|
Non-interest-bearing demand deposits |
|
|
1,223,556 |
|
|
|
|
|
|
|
|
|
|
|
1,254,173 |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
42,914 |
|
|
|
|
|
|
|
|
|
|
|
37,941 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
729,781 |
|
|
|
|
|
|
|
|
|
|
|
696,928 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
5,435,762 |
|
|
|
|
|
|
|
|
|
|
$ |
5,274,820 |
|
|
|
|
|
|
|
|
|
|
Net interest spread(3) |
|
|
|
|
|
|
|
|
|
|
4.15 |
% |
|
|
|
|
|
|
|
|
|
|
4.03 |
% |
|
Net interest income |
|
|
|
|
|
$ |
57,838 |
|
|
|
|
|
|
|
|
|
|
$ |
54,448 |
|
|
|
|
|
|
Net interest margin(4) |
|
|
|
|
|
|
|
|
|
|
4.62 |
% |
|
|
|
|
|
|
|
|
|
|
4.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan accretion impact on margin |
|
|
|
|
|
$ |
7,703 |
|
|
|
0.62 |
% |
|
|
|
|
|
$ |
4,868 |
|
|
|
0.40 |
% |
|
(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 exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality. |
|||
|
(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 Company completed its acquisition of Oak Park River Forest in the second quarter of 2019. All references to this transaction in the following narrative are referred to as “the acquisition” or “our recent acquisition.”
Net interest income for the third quarter of 2019 was $57.8 million, an increase of $3.4 million, or 6.2%, from $54.4 million for the second quarter of 2019.
The increase in net interest income was primarily due to:
- An increase of $3.9 million in interest and fees on loans and leases, primarily due to a $2.8 million increase in accretion income and loans added from the acquisition; and
- An increase of $375,000 in interest income on securities, mainly due to additional purchases during the quarter.
Partially offset by:
- An increase of $597,000 in interest expense on Federal Home Loan Bank advances, primarily due to an increase in average advances during the quarter; and
- An increase of $312,000 in interest expense on deposits, primarily due to deposits assumed as a result of the acquisition and an increase in money market and interest checking accounts.
Net interest margin for the third quarter of 2019 was 4.62%, an increase of 11 basis points compared to 4.51% for the second quarter of 2019. Total net accretion income on acquired loans contributed 62 basis points to the net interest margin for the third quarter of 2019 compared to 40 basis points for the second quarter of 2019, an increase of 22 basis points. The net interest margin increase was primarily driven by increased loan and lease yields largely resulting from increased loan accretion income and higher U.S. government guaranteed loan originations during the quarter.
The average cost of total deposits was 0.94% for the third quarter of 2019, an increase of two basis points compared to the second quarter of 2019, primarily due to decreased average non-interest-bearing demand deposits and slightly increased costs on time deposits. Additionally, there was growth in average money market accounts of $39.7 million and average interest-bearing checking accounts of $24.5 million, partially offset by decreases in average non-interest-bearing demand deposits of $30.6 million, average time deposits of $8.4 million, and average savings accounts of $2.4 million.
Provision for Loan and Lease Losses
The provision for loan and lease losses was $5.9 million for the third quarter of 2019, a decrease of $460,000 compared to $6.4 million for the second quarter of 2019. The third quarter included allocations of $10.0 million for originated loans and leases, and releases of $4.0 million for acquired non-impaired loans and $59,000 for acquired impaired loans. The provision during the third quarter of 2019 for originated loans reflects growth in the loan portfolio, particularly the unguaranteed portion of government guaranteed loans. The release to the provision for acquired non-impaired loans is the result of migration of acquired loans to originated loans as they come up for renewal.
Non-interest Income
The following table presents the components of non-interest income for the periods indicated:
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|||||||
|
(dollars in thousands) |
|
2019 |
|
|
2019 |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|||||||
|
NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and service charges on deposits |
|
$ |
1,612 |
|
|
$ |
1,441 |
|
|
$ |
1,770 |
|
|
$ |
1,852 |
|
|
$ |
1,825 |
|
|
$ |
4,823 |
|
|
$ |
4,593 |
|
|
Loan servicing revenue |
|
|
2,692 |
|
|
|
2,630 |
|
|
|
2,539 |
|
|
|
2,667 |
|
|
|
2,622 |
|
|
|
7,861 |
|
|
|
7,605 |
|
|
Loan servicing asset revaluation |
|
|
(1,610 |
) |
|
|
(1,223 |
) |
|
|
(1,261 |
) |
|
|
(2,862 |
) |
|
|
(2,446 |
) |
|
|
(4,094 |
) |
|
|
(6,407 |
) |
|
ATM and interchange fees |
|
|
973 |
|
|
|
945 |
|
|
|
717 |
|
|
|
1,010 |
|
|
|
1,540 |
|
|
|
2,635 |
|
|
|
3,303 |
|
|
Net gains on sales of securities available-for-sale |
|
|
178 |
|
|
|
973 |
|
|
|
— |
|
|
|
160 |
|
|
|
— |
|
|
|
1,151 |
|
|
|
4 |
|
|
Change in fair value of equity securities, net |
|
|
(15 |
) |
|
|
551 |
|
|
|
499 |
|
|
|
— |
|
|
|
— |
|
|
|
1,035 |
|
|
|
— |
|
|
Net gains on sales of loans |
|
|
9,405 |
|
|
|
7,472 |
|
|
|
6,233 |
|
|
|
9,337 |
|
|
|
5,015 |
|
|
|
23,110 |
|
|
|
22,214 |
|
|
Wealth management and trust income |
|
|
653 |
|
|
|
626 |
|
|
|
595 |
|
|
|
679 |
|
|
|
674 |
|
|
|
1,874 |
|
|
|
866 |
|
|
Other non-interest income |
|
|
918 |
|
|
|
768 |
|
|
|
896 |
|
|
|
1,447 |
|
|
|
1,672 |
|
|
|
2,582 |
|
|
|
4,058 |
|
|
Total non-interest income |
|
$ |
14,806 |
|
|
$ |
14,183 |
|
|
$ |
11,988 |
|
|
$ |
14,290 |
|
|
$ |
10,902 |
|
|
$ |
40,977 |
|
|
$ |
36,236 |
|
Non-interest income for the third quarter of 2019 was $14.8 million, an increase of $623,000, or 4.4%, compared to $14.2 million for the second quarter of 2019.
The increase in total non-interest income was primarily due to:
- An increase of $1.9 million in net gains on sales of loans, primarily due to an increase in government guaranteed loan sales and average premiums;
- An increase of $171,000 in fees and service charges on deposits, primarily due to higher fee income from transactional business accounts; and
- An increase of $150,000 in other non-interest income, primarily due to a gain on the sale of a former branch property from assets held for sale.
Partially offset by:
- A decrease in net gains on sales of securities available-for-sale of $795,000, primarily due to reduced sales volume compared to the prior quarter in which $973,000 of net gains were recorded;
- A decrease in the change in fair value of equity securities, net, of $566,000 due to a decrease in the fair value of the securities; and
- An additional $387,000 in loan servicing asset revaluation, primarily due to the change in fair value of the servicing asset as a result of increased prepayment rates.
During the third quarter of 2019, the Company sold $93.3 million of U.S. government guaranteed loans compared to $75.2 million during the second quarter of 2019, contributing to the increase in net gains on sale of loans for the quarter. The increase in sales is primarily due to the timing of loans closed becoming fully funded and mix of loans sold. The third quarter of 2019 included sales of $14.4 million of USDA loans while the second quarter of 2019 included sales of $10.4 million.
Non-interest Expense
The following table presents the components of non-interest expense for the periods indicated:
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|||||||
|
(dollars in thousands) |
|
2019 |
|
|
2019 |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|||||||
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
24,537 |
|
|
$ |
23,652 |
|
|
$ |
22,892 |
|
|
$ |
21,548 |
|
|
$ |
21,312 |
|
|
$ |
71,081 |
|
|
$ |
58,834 |
|
|
Occupancy expense, net |
|
|
3,745 |
|
|
|
4,337 |
|
|
|
4,280 |
|
|
|
4,027 |
|
|
|
3,548 |
|
|
|
12,362 |
|
|
|
11,802 |
|
|
Equipment expense |
|
|
767 |
|
|
|
732 |
|
|
|
669 |
|
|
|
641 |
|
|
|
617 |
|
|
|
2,168 |
|
|
|
1,778 |
|
|
Loan and lease related expenses |
|
|
1,949 |
|
|
|
1,841 |
|
|
|
1,577 |
|
|
|
2,223 |
|
|
|
1,015 |
|
|
|
5,367 |
|
|
|
3,886 |
|
|
Legal, audit and other professional fees |
|
|
4,066 |
|
|
|
2,981 |
|
|
|
2,066 |
|
|
|
2,746 |
|
|
|
2,358 |
|
|
|
9,113 |
|
|
|
8,627 |
|
|
Data processing |
|
|
4,062 |
|
|
|
3,849 |
|
|
|
3,144 |
|
|
|
2,846 |
|
|
|
2,724 |
|
|
|
11,055 |
|
|
|
15,396 |
|
|
Net loss (gain) recognized on other real estate owned and other related expenses |
|
|
95 |
|
|
|
252 |
|
|
|
196 |
|
|
|
48 |
|
|
|
(284 |
) |
|
|
543 |
|
|
|
187 |
|
|
Regulatory assessments |
|
|
228 |
|
|
|
371 |
|
|
|
(59 |
) |
|
|
462 |
|
|
|
675 |
|
|
|
540 |
|
|
|
1,282 |
|
|
Other intangible assets amortization expense |
|
|
2,003 |
|
|
|
1,959 |
|
|
|
1,773 |
|
|
|
1,834 |
|
|
|
1,898 |
|
|
|
5,735 |
|
|
|
3,795 |
|
|
Advertising and promotions |
|
|
843 |
|
|
|
732 |
|
|
|
709 |
|
|
|
590 |
|
|
|
537 |
|
|
|
2,284 |
|
|
|
1,133 |
|
|
Telecommunications |
|
|
474 |
|
|
|
537 |
|
|
|
464 |
|
|
|
391 |
|
|
|
435 |
|
|
|
1,475 |
|
|
|
1,319 |
|
|
Other non-interest expense |
|
|
2,679 |
|
|
|
2,711 |
|
|
|
2,968 |
|
|
|
2,732 |
|
|
|
2,880 |
|
|
|
8,358 |
|
|
|
6,769 |
|
|
Total non-interest expense |
|
$ |
45,448 |
|
|
$ |
43,954 |
|
|
$ |
40,679 |
|
|
$ |
40,088 |
|
|
$ |
37,715 |
|
|
$ |
130,081 |
|
|
$ |
114,808 |
|
Non-interest expense for the third quarter of 2019 was $45.4 million, an increase of $1.5 million, or 3.4%, from $44.0 million for the second quarter of 2019.
The increase in total non-interest expense was primarily due to:
- An increase of $1.1 million in legal, audit and other professional fees, primarily due to $1.5 million of non-recurring professional services costs;
- An increase of $885,000 in salaries and employee benefits, primarily due to acquisition related salary and employee benefit costs, including retention expenses, and an increase in stock-based compensation costs, partially offset by a decrease in payroll taxes; and
- An increase of $213,000 in data processing expense, primarily due to expenses associated with our successful Oak Park River Forest core system conversion.
Partially offset by:
- A decrease of $592,000 in occupancy expense, net, primarily due to property tax payments. Additionally, as part of our continual strategic review of our branch network, four of our existing branches will be consolidated or repurposed for our customers in the first quarter of 2020;
- A decrease of $157,000 in net loss (gain) recognized on other real estate owned and other related expenses, primarily due to decreased property write-downs and real estate tax accrual adjustments; and
- A decrease of $143,000 in regulatory assessments, primarily due to an accrual adjustment resulting from the quarterly FDIC assessment
The Company’s efficiency ratio was 59.81% for the third quarter of 2019, compared with 61.19% for the second quarter of 2019. Excluding merger-related expenses, core system conversion expenses, and impairment charges on assets held for sale, the Company’s adjusted efficiency ratio1 was 58.17% for the third quarter of 2019, compared with 56.02% for the second quarter of 2019.
|
(1) |
Represents a non-GAAP financial measure. See “Reconciliation of non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. |
INCOME TAXES
The Company recorded income tax expense of $5.9 million during the third quarter of 2019, an effective tax rate of 27.9%, compared to $5.1 million during the second quarter of 2019, an effective tax rate of 27.8%.
STATEMENTS OF FINANCIAL CONDITION
Total assets were $5.4 billion at September 30, 2019, an increase of $47.0 million compared to $5.4 billion at June 30, 2019, and an increase of $520.9 million compared to $4.9 billion at September 30, 2018.
The current quarter increase was primarily due to:
- An increase in securities of $62.9 million, primarily due to additional purchases of agency, mortgage-backed, municipal, and corporate securities during the quarter; and
- An increase in due from counterparty of $12.8 million due to the timing of the settlement of loans sold at September 30, 2019.
Partially offset by:
- A decrease in loans and leases of $32.1 million, primarily due to a decrease of $215.9 million in our acquired loan portfolio, partially offset by an increase of $183.9 million in our originated loan portfolio;
- A decrease in loans held for sale of $11.3 million, primarily due to the timing of loan sales at September 30, 2019; and
- A decrease in deferred tax assets, net of $2.3 million, primarily due to a decrease in deferred tax assets associated with unrealized losses on available-for-sale securities.
The following table shows our allocation of the originated, acquired impaired and acquired non-impaired loans and leases at the dates indicated:
|
|
|
September 30, 2019 |
|
|
June 30, 2019 |
|
|
September 30, 2018 |
|
|||||||||||||||
|
(dollars in thousands) |
|
Amount |
|
|
% of Total |
|
|
Amount |
|
|
% of Total |
|
|
Amount |
|
|
% of Total |
|
||||||
|
Originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
772,559 |
|
|
|
20.2 |
% |
|
$ |
721,230 |
|
|
|
18.7 |
% |
|
$ |
619,767 |
|
|
|
17.9 |
% |
|
Residential real estate |
|
|
497,839 |
|
|
|
13.0 |
% |
|
|
501,038 |
|
|
|
13.0 |
% |
|
|
445,717 |
|
|
|
12.9 |
% |
|
Construction, land development, and other land |
|
|
236,780 |
|
|
|
6.2 |
% |
|
|
196,656 |
|
|
|
5.1 |
% |
|
|
140,391 |
|
|
|
4.1 |
% |
|
Commercial and industrial |
|
|
1,096,400 |
|
|
|
28.6 |
% |
|
|
992,313 |
|
|
|
25.7 |
% |
|
|
696,750 |
|
|
|
20.2 |
% |
|
Installment and other |
|
|
7,818 |
|
|
|
0.2 |
% |
|
|
10,937 |
|
|
|
0.3 |
% |
|
|
7,729 |
|
|
|
0.2 |
% |
|
Leasing financing receivables |
|
|
156,758 |
|
|
|
4.1 |
% |
|
|
162,119 |
|
|
|
4.1 |
% |
|
|
155,825 |
|
|
|
4.5 |
% |
|
Total originated loans and leases |
|
$ |
2,768,154 |
|
|
|
72.3 |
% |
|
$ |
2,584,293 |
|
|
|
66.9 |
% |
|
$ |
2,066,179 |
|
|
|
59.8 |
% |
|
Acquired impaired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
142,435 |
|
|
|
3.7 |
% |
|
$ |
151,127 |
|
|
|
3.9 |
% |
|
$ |
154,108 |
|
|
|
4.5 |
% |
|
Residential real estate |
|
|
109,409 |
|
|
|
2.9 |
% |
|
|
118,534 |
|
|
|
3.1 |
% |
|
|
120,963 |
|
|
|
3.5 |
% |
|
Construction, land development, and other land |
|
|
4,562 |
|
|
|
0.1 |
% |
|
|
4,220 |
|
|
|
0.1 |
% |
|
|
4,203 |
|
|
|
0.1 |
% |
|
Commercial and industrial |
|
|
18,349 |
|
|
|
0.5 |
% |
|
|
20,370 |
|
|
|
0.5 |
% |
|
|
14,436 |
|
|
|
0.4 |
% |
|
Installment and other |
|
|
267 |
|
|
|
0.0 |
% |
|
|
300 |
|
|
|
0.0 |
% |
|
|
458 |
|
|
|
0.0 |
% |
|
Total acquired impaired loans |
|
$ |
275,022 |
|
|
|
7.2 |
% |
|
$ |
294,551 |
|
|
|
7.6 |
% |
|
$ |
294,168 |
|
|
|
8.5 |
% |
|
Acquired non-impaired loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
391,294 |
|
|
|
10.2 |
% |
|
$ |
439,182 |
|
|
|
11.4 |
% |
|
$ |
498,329 |
|
|
|
14.4 |
% |
|
Residential real estate |
|
|
141,855 |
|
|
|
3.7 |
% |
|
|
158,190 |
|
|
|
4.1 |
% |
|
|
138,516 |
|
|
|
4.0 |
% |
|
Construction, land development, and other land |
|
|
39,657 |
|
|
|
1.0 |
% |
|
|
51,072 |
|
|
|
1.3 |
% |
|
|
37,111 |
|
|
|
1.1 |
% |
|
Commercial and industrial |
|
|
187,413 |
|
|
|
4.9 |
% |
|
|
307,887 |
|
|
|
8.0 |
% |
|
|
384,260 |
|
|
|
11.1 |
% |
|
Installment and other |
|
|
1,269 |
|
|
|
0.0 |
% |
|
|
1,672 |
|
|
|
0.0 |
% |
|
|
4,007 |
|
|
|
0.1 |
% |
|
Leasing financing receivables |
|
|
26,426 |
|
|
|
0.7 |
% |
|
|
26,301 |
|
|
|
0.7 |
% |
|
|
33,232 |
|
|
|
1.0 |
% |
|
Total acquired non-impaired loans and leases |
|
$ |
787,914 |
|
|
|
20.5 |
% |
|
$ |
984,304 |
|
|
|
25.5 |
% |
|
$ |
1,095,455 |
|
|
|
31.7 |
% |
|
Total loans and leases |
|
$ |
3,831,090 |
|
|
|
100.0 |
% |
|
$ |
3,863,148 |
|
|
|
100.0 |
% |
|
$ |
3,455,802 |
|
|
|
100.0 |
% |
|
Allowance for loan and lease losses |
|
|
(31,585 |
) |
|
|
|
|
|
|
(31,132 |
) |
|
|
|
|
|
|
(23,424 |
) |
|
|
|
|
|
Total loans and leases, net of allowance for loan and lease losses |
|
$ |
3,799,505 |
|
|
|
|
|
|
$ |
3,832,016 |
|
|
|
|
|
|
$ |
3,432,378 |
|
|
|
|
|
ASSET QUALITY
Non-Performing Assets
The following table sets forth the amounts of non-performing loans and leases (excluding acquired impaired), non-performing assets, and other real estate owned at the dates indicated:
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|||||
|
(dollars in thousands) |
|
2019 |
|
|
2019 |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
|||||
|
Non-performing assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans and leases |
|
$ |
39,529 |
|
|
$ |
34,027 |
|
|
$ |
28,539 |
|
|
$ |
25,834 |
|
|
$ |
28,643 |
|
|
Past due loans and leases 90 days or more and still accruing interest |
|
|
— |
|
|
|
996 |
|
|
|
— |
|
|
|
— |
|
|
|
291 |
|
|
Accruing troubled debt restructured loans |
|
|
2,204 |
|
|
|
1,529 |
|
|
|
1,921 |
|
|
|
1,813 |
|
|
|
1,230 |
|
|
Total non-performing loans and leases |
|
|
41,733 |
|
|
|
36,552 |
|
|
|
30,460 |
|
|
|
27,647 |
|
|
|
30,164 |
|
|
Other real estate owned |
|
|
8,531 |
|
|
|
8,070 |
|
|
|
4,799 |
|
|
|
5,314 |
|
|
|
4,891 |
|
|
Total non-performing assets |
|
$ |
50,264 |
|
|
$ |
44,622 |
|
|
$ |
35,259 |
|
|
$ |
32,961 |
|
|
$ |
35,055 |
|
|
Total non-performing loans and leases as a percentage of total loans and leases |
|
|
1.09 |
% |
|
|
0.95 |
% |
|
|
0.85 |
% |
|
|
0.79 |
% |
|
|
0.87 |
% |
|
Total non-performing assets as a percentage of total assets |
|
|
0.92 |
% |
|
|
0.83 |
% |
|
|
0.70 |
% |
|
|
0.67 |
% |
|
|
0.71 |
% |
|
Allowance for loan and lease losses as a percentage of non-performing loans and leases |
|
|
75.68 |
% |
|
|
85.17 |
% |
|
|
88.99 |
% |
|
|
91.15 |
% |
|
|
77.65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets guaranteed by U.S. government: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans guaranteed |
|
$ |
4,167 |
|
|
$ |
4,723 |
|
|
$ |
5,070 |
|
|
$ |
4,245 |
|
|
$ |
6,830 |
|
|
Past due loans 90 days or more and still accruing interest guaranteed |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Accruing troubled debt restructured loans guaranteed |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
381 |
|
|
|
431 |
|
|
Total non-performing loans guaranteed |
|
|
4,167 |
|
|
|
4,723 |
|
|
|
5,070 |
|
|
|
4,626 |
|
|
|
7,261 |
|
|
Other real estate owned guaranteed |
|
|
2,029 |
|
|
|
1,539 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total non-performing assets guaranteed |
|
$ |
6,196 |
|
|
$ |
6,262 |
|
|
$ |
5,070 |
|
|
$ |
4,626 |
|
|
$ |
7,261 |
|
|
Total non-performing loans and leases not guaranteed as a percentage of total loans and leases |
|
|
0.98 |
% |
|
|
0.82 |
% |
|
|
0.71 |
% |
|
|
0.66 |
% |
|
|
0.66 |
% |
|
Total non-performing assets not guaranteed as a percentage of total assets |
|
|
0.81 |
% |
|
|
0.71 |
% |
|
|
0.60 |
% |
|
|
0.57 |
% |
|
|
0.57 |
% |
Variances in non-performing assets:
- Non-performing loans and leases were $41.
Contacts
Investors:
Tony Rossi
Financial Profiles, Inc.
310-622-8221
[email protected]
Media:
Erin O’Neill
Director of Marketing
Byline Bank
773-475-2901
[email protected]
