Byline Bancorp, Inc. Reports First Quarter 2023 Financial Results

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

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

$

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 –

loans and leases

 

(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’

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

deposits

 

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

debentures

 

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

demand deposits

 

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

STOCKHOLDERS’ EQUITY

$

7,345,151

 

 

 

 

 

 

$

7,266,053

 

 

 

 

 

 

$

6,697,476

 

 

 

 

 

Net interest spread(3)

 

 

 

 

3.53

%

 

 

 

 

 

3.74

%

 

 

 

 

 

3.65

%

Net interest income, fully

taxable equivalent

 

 

$

75,926

 

 

 

 

 

$

76,818

 

 

 

 

 

$

58,567

 

 

Net interest margin, fully

taxable equivalent(2)(4)

 

 

 

 

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

on margin

 

 

$

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

owned and other related expenses

 

 

(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

other land

 

 

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

other land

 

 

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

other land

 

 

 

 

 

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

loans and leases

 

$

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

credit losses – loans and leases

 

$

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

and still accruing interest

 

 

 

 

 

 

 

 

 

 

%

 

%

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

percentage of total loans and leases

 

 

0.84

%

 

 

0.66

%

 

 

0.69

%

 

 

 

 

Total non-performing assets as a percentage

of total assets

 

 

0.67

%

 

 

0.55

%

 

 

0.52

%

 

 

 

 

Allowance for credit losses – loans and lease

as a percentage of non-performing

loans and leases

 

 

194.40

%

 

 

227.40

%

 

 

216.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets guaranteed by

U.S. government:

 

 

 

 

 

 

 

 

 

 

Non-accrual loans guaranteed

 

$

2,335

 

 

$

2,225

 

 

$

1,832

 

 

 

5.0

%

 

 

27.5

%

Past due loans 90 days or more and still

accruing interest guaranteed

 

 

 

 

 

 

 

 

 

 

%

 

%

Total non-performing loans guaranteed

 

$

2,335

 

 

$

2,225

 

 

$

1,832

 

 

 

5.0

%

 

 

27.5

%

Total non-performing loans and leases

not guaranteed as a percentage of total

loans and leases

 

 

0.80

%

 

 

0.62

%

 

 

0.66

%

 

 

 

 

Total non-performing assets not guaranteed

as a percentage of total assets

 

 

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

loans and leases held for investment, net before ACL

 

 

0.09

%

 

 

0.24

%

 

 

0.07

%

Provision for credit losses – loans and leases

to net charge-offs – loans and leases during the period

 

 

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

 

Required to be

Considered

Well Capitalized

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

risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

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]

Read full story here

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