Select Second Quarter 2023 Financial Highlights
- Net income of $26.1 million, or $0.70 per diluted share
- Pre-tax pre-provision return on average assets of 2.23%1
- Return on average assets of 1.41%; Return on average tangible common equity of 16.78%1
- Net interest margin of 4.32%
- Efficiency ratio of 52.92%
- Total loans and leases of $5.6 billion, quarterly increase of $55.2 million
- Total deposits of $5.9 billion, quarterly increase of $104.4 million
- Tangible Common Equity to Tangible Assets of 8.87%1
- Common Equity Tier 1 to Risk Weighted Assets of 10.58%
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 $26.1 million, or $0.70 per diluted share, for the second quarter of 2023 compared with net income of $23.9 million, or $0.64 per diluted share, for the first quarter of 2023, and net income of $21.8 million2, or $0.58 per diluted share, for the second quarter 2022.
Roberto R. Herencia, Executive Chairman and Chief Executive Officer of Byline Bancorp, Inc., commented, “We reported solid results for the second quarter and continued to execute our time tested strategy well. Notwithstanding the challenging operating environment, our business units continued to perform well and we have good momentum heading into the second half of the year.”
Alberto J. Paracchini, President of Byline Bancorp, Inc. added, “We delivered record earnings, strong profitability, balanced deposit and loan growth and solid credit quality. Our strong capital and liquidity levels position us well to continue to prudently grow our franchise.”
Board Declares Cash Dividend of $0.09 per Share
On July 25, 2023, the Company’s Board of Directors declared a cash dividend of $0.09 per share, payable on August 22, 2023, to stockholders of record of the Company’s common stock as of August 8, 2023.
Inland Acquisition
On July 1, 2023, Byline completed its acquisition of Inland Bancorp, Inc. (“Inland Bancorp”) to solidify Byline’s position as Chicago’s largest community bank. The transaction brings Byline’s combined total assets to approximately $8.8 billion, $6.4 billion in loans and $6.9 billion in deposits, with 47 branches across the greater Chicago metropolitan area, based on information as of June 30, 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 |
|
|||||||||||||||||||||||||||||||||
|
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
Recast June 30, 2022 |
|
|||||||||||||||||||||||||||
|
(dollars in thousands) |
Average |
|
|
Interest |
|
|
Avg. |
|
|
Average |
|
|
Interest |
|
|
Avg. |
|
|
Average |
|
|
Interest |
|
|
Avg. |
|
|||||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Cash and cash equivalents |
$ |
135,003 |
|
|
$ |
1,041 |
|
|
|
3.09 |
% |
|
$ |
97,578 |
|
|
$ |
442 |
|
|
|
1.84 |
% |
|
$ |
66,034 |
|
|
$ |
74 |
|
|
|
0.45 |
% |
|
Loans and leases(1) |
|
5,535,593 |
|
|
|
99,134 |
|
|
|
7.18 |
% |
|
|
5,484,372 |
|
|
|
92,343 |
|
|
|
6.83 |
% |
|
|
5,007,615 |
|
|
|
59,919 |
|
|
|
4.80 |
% |
|
Taxable securities |
|
1,250,780 |
|
|
|
6,324 |
|
|
|
2.03 |
% |
|
|
1,275,377 |
|
|
|
6,431 |
|
|
|
2.04 |
% |
|
|
1,331,136 |
|
|
|
5,792 |
|
|
|
1.75 |
% |
|
Tax-exempt securities(2) |
|
151,205 |
|
|
|
980 |
|
|
|
2.60 |
% |
|
|
151,817 |
|
|
|
994 |
|
|
|
2.65 |
% |
|
|
168,567 |
|
|
|
1,131 |
|
|
|
2.69 |
% |
|
Total interest-earning assets |
$ |
7,072,581 |
|
|
$ |
107,479 |
|
|
|
6.10 |
% |
|
$ |
7,009,144 |
|
|
$ |
100,210 |
|
|
|
5.80 |
% |
|
$ |
6,573,352 |
|
|
$ |
66,916 |
|
|
|
4.08 |
% |
|
Allowance for credit losses – loans and leases |
|
(92,804 |
) |
|
|
|
|
|
|
|
|
(84,321 |
) |
|
|
|
|
|
|
|
|
(72,521 |
) |
|
|
|
|
|
|
||||||
|
All other assets |
|
424,122 |
|
|
|
|
|
|
|
|
|
420,328 |
|
|
|
|
|
|
|
|
|
465,733 |
|
|
|
|
|
|
|
||||||
|
TOTAL ASSETS |
$ |
7,403,899 |
|
|
|
|
|
|
|
|
$ |
7,345,151 |
|
|
|
|
|
|
|
|
$ |
6,966,564 |
|
|
|
|
|
|
|
||||||
|
LIABILITIES AND STOCKHOLDERS’ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Interest checking |
$ |
541,036 |
|
|
$ |
2,175 |
|
|
|
1.61 |
% |
|
$ |
606,008 |
|
|
$ |
2,494 |
|
|
|
1.67 |
% |
|
$ |
615,831 |
|
|
$ |
415 |
|
|
|
0.27 |
% |
|
Money market accounts |
|
1,534,463 |
|
|
|
10,799 |
|
|
|
2.82 |
% |
|
|
1,465,677 |
|
|
|
7,728 |
|
|
|
2.14 |
% |
|
|
1,307,320 |
|
|
|
1,194 |
|
|
|
0.37 |
% |
|
Savings |
|
575,254 |
|
|
|
220 |
|
|
|
0.15 |
% |
|
|
613,590 |
|
|
|
227 |
|
|
|
0.15 |
% |
|
|
664,954 |
|
|
|
83 |
|
|
|
0.05 |
% |
|
Time deposits |
|
1,328,679 |
|
|
|
11,529 |
|
|
|
3.48 |
% |
|
|
966,409 |
|
|
|
5,849 |
|
|
|
2.45 |
% |
|
|
627,199 |
|
|
|
436 |
|
|
|
0.28 |
% |
|
Total interest-bearing deposits |
|
3,979,432 |
|
|
|
24,723 |
|
|
|
2.49 |
% |
|
|
3,651,684 |
|
|
|
16,298 |
|
|
|
1.81 |
% |
|
|
3,215,304 |
|
|
|
2,128 |
|
|
|
0.27 |
% |
|
Other borrowings |
|
509,419 |
|
|
|
4,241 |
|
|
|
3.34 |
% |
|
|
573,433 |
|
|
|
5,852 |
|
|
|
4.14 |
% |
|
|
497,082 |
|
|
|
1,083 |
|
|
|
0.87 |
% |
|
Federal funds purchased |
|
— |
|
|
|
— |
|
|
|
0.00 |
% |
|
|
2,778 |
|
|
|
36 |
|
|
|
5.30 |
% |
|
|
2,527 |
|
|
|
14 |
|
|
|
2.32 |
% |
|
Subordinated notes and debentures |
|
111,255 |
|
|
|
2,142 |
|
|
|
7.72 |
% |
|
|
111,101 |
|
|
|
2,098 |
|
|
|
7.66 |
% |
|
|
110,649 |
|
|
|
1,694 |
|
|
|
6.14 |
% |
|
Total borrowings |
|
620,674 |
|
|
|
6,383 |
|
|
|
4.12 |
% |
|
|
687,312 |
|
|
|
7,986 |
|
|
|
4.71 |
% |
|
|
610,258 |
|
|
|
2,791 |
|
|
|
1.83 |
% |
|
Total interest-bearing liabilities |
$ |
4,600,106 |
|
|
$ |
31,106 |
|
|
|
2.71 |
% |
|
$ |
4,338,996 |
|
|
$ |
24,284 |
|
|
|
2.27 |
% |
|
$ |
3,825,562 |
|
|
$ |
4,919 |
|
|
|
0.52 |
% |
|
Non-interest-bearing demand deposits |
|
1,848,538 |
|
|
|
|
|
|
|
|
|
2,076,613 |
|
|
|
|
|
|
|
|
|
2,265,426 |
|
|
|
|
|
|
|
||||||
|
Other liabilities |
|
148,983 |
|
|
|
|
|
|
|
|
|
145,253 |
|
|
|
|
|
|
|
|
|
105,918 |
|
|
|
|
|
|
|
||||||
|
Total stockholders’ equity |
|
806,272 |
|
|
|
|
|
|
|
|
|
784,289 |
|
|
|
|
|
|
|
|
|
769,658 |
|
|
|
|
|
|
|
||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
7,403,899 |
|
|
|
|
|
|
|
|
$ |
7,345,151 |
|
|
|
|
|
|
|
|
$ |
6,966,564 |
|
|
|
|
|
|
|
||||||
|
Net interest spread(3) |
|
|
|
|
|
|
|
3.39 |
% |
|
|
|
|
|
|
|
|
3.53 |
% |
|
|
|
|
|
|
|
|
3.56 |
% |
||||||
|
Net interest income, fully taxable equivalent |
|
|
|
$ |
76,373 |
|
|
|
|
|
|
|
|
$ |
75,926 |
|
|
|
|
|
|
|
|
$ |
61,997 |
|
|
|
|
||||||
|
Net interest margin, fully taxable equivalent(2)(4) |
|
|
|
|
|
|
|
4.33 |
% |
|
|
|
|
|
|
|
|
4.39 |
% |
|
|
|
|
|
|
|
|
3.78 |
% |
||||||
|
Less: Tax-equivalent adjustment |
|
|
|
|
207 |
|
|
|
0.01 |
% |
|
|
|
|
|
208 |
|
|
|
0.01 |
% |
|
|
|
|
|
237 |
|
|
|
0.01 |
% |
|||
|
Net interest income |
|
|
|
$ |
76,166 |
|
|
|
|
|
|
|
|
$ |
75,718 |
|
|
|
|
|
|
|
|
$ |
61,760 |
|
|
|
|
||||||
|
Net interest margin(4) |
|
|
|
|
|
|
|
4.32 |
% |
|
|
|
|
|
|
|
|
4.38 |
% |
|
|
|
|
|
|
|
|
3.77 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net loan accretion impact on margin |
|
|
|
$ |
611 |
|
|
|
0.03 |
% |
|
|
|
|
$ |
729 |
|
|
|
0.04 |
% |
|
|
|
|
$ |
1,628 |
|
|
|
0.10 |
% |
|||
|
(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, using 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:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
||||||||
|
|
|
Three Months Ended |
|
|
Change from |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
Recast |
|
|
|
|
|
|
|
|||||
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
March 31, |
|
June 30, |
|||||||
|
(dollars in thousands) |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|||||||
|
INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Interest and fees on loans and leases |
|
$ |
99,134 |
|
|
$ |
92,343 |
|
|
$ |
59,919 |
|
|
|
7.4 |
% |
|
|
65.4 |
% |
|
Interest on securities |
|
|
6,559 |
|
|
|
6,600 |
|
|
|
6,264 |
|
|
|
(0.6 |
)% |
|
|
4.7 |
% |
|
Other interest and dividend income |
|
|
1,579 |
|
|
|
1,059 |
|
|
|
496 |
|
|
|
49.1 |
% |
|
|
218.7 |
% |
|
Total interest and dividend income |
|
|
107,272 |
|
|
|
100,002 |
|
|
|
66,679 |
|
|
|
7.3 |
% |
|
|
60.9 |
% |
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Deposits |
|
|
24,723 |
|
|
|
16,298 |
|
|
|
2,128 |
|
|
|
51.7 |
% |
|
NM |
|
|
|
Other borrowings |
|
|
4,241 |
|
|
|
5,888 |
|
|
|
1,097 |
|
|
|
(28.0 |
)% |
|
|
286.4 |
% |
|
Subordinated notes and debentures |
|
|
2,142 |
|
|
|
2,098 |
|
|
|
1,694 |
|
|
|
2.1 |
% |
|
|
26.4 |
% |
|
Total interest expense |
|
|
31,106 |
|
|
|
24,284 |
|
|
|
4,919 |
|
|
|
28.1 |
% |
|
|
532.3 |
% |
|
Net interest income |
|
$ |
76,166 |
|
|
$ |
75,718 |
|
|
$ |
61,760 |
|
|
|
0.6 |
% |
|
|
23.3 |
% |
Net interest income for the second quarter of 2023 was $76.2 million, an increase of $448,000, or 0.6%, from the first quarter of 2023.
The increase in net interest income was primarily due to:
- An increase of $6.8 million in interest income and fees on loans and leases due to higher yields and growth in the loan and lease portfolio; and
- A decrease of $1.6 million in other borrowings interest expense mainly due to lower average balances of FHLB borrowings.
Partially offset by:
- An increase of $8.4 million in deposit interest expense mainly due to growth in time deposits and higher rates paid on money market accounts and time deposits.
Tax-equivalent net interest margin for the second quarter of 2023 was 4.33%, a decrease of six basis points compared to the first quarter of 2023. Total net loan accretion income impact on margin contributed three basis points to the net interest margin for the second quarter of 2023 compared to four basis points for the first quarter of 2023.
The average cost of total deposits was 1.70% for the second quarter of 2023, an increase of 55 basis points compared to the first quarter of 2023, as a result of increased cost of interest-bearing deposits and a decrease in average non-interest bearing deposits. Average non-interest-bearing demand deposits were 31.7% of average total deposits for the second quarter of 2023 compared to 36.3% during the first quarter of 2023.
Provision for Credit Losses
The provision for credit losses was $5.8 million for the second quarter of 2023, a decrease of $4.0 million compared to $9.8 million for the first quarter of 2023, which was mainly attributable to lower impairments for individually assessed loans and lower non-performing loans. The provision for credit losses during the quarter is comprised of a provision for loan and lease losses of $6.5 million driven by individually assessed loan impairments and lease growth, partially offset by a recapture for unfunded commitments of $677,000.
Non-interest Income
The following table presents the components of non-interest income for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
||||||||
|
|
|
Three Months Ended |
|
|
Change from |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
Recast |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
||||||||||
|
(dollars in thousands) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
|
NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Fees and service charges on deposits |
|
$ |
2,233 |
|
|
$ |
2,120 |
|
|
$ |
2,059 |
|
|
|
5.3 |
% |
|
|
8.5 |
% |
|
Loan servicing revenue |
|
|
3,377 |
|
|
|
3,380 |
|
|
|
3,384 |
|
|
|
(0.1 |
)% |
|
|
(0.2 |
)% |
|
Loan servicing asset revaluation |
|
|
(865 |
) |
|
|
656 |
|
|
|
(4,636 |
) |
|
NM |
|
|
|
(81.3 |
)% |
|
|
ATM and interchange fees |
|
|
1,112 |
|
|
|
1,063 |
|
|
|
1,131 |
|
|
|
4.6 |
% |
|
|
(1.7 |
)% |
|
Net realized gains (losses) on securities available-for-sale |
|
|
— |
|
|
|
— |
|
|
|
52 |
|
|
|
0.0 |
% |
|
|
(100.0 |
)% |
|
Change in fair value of equity securities, net |
|
|
193 |
|
|
|
350 |
|
|
|
(697 |
) |
|
|
(45.0 |
)% |
|
NM |
|
|
|
Net gains on sales of loans |
|
|
5,704 |
|
|
|
5,148 |
|
|
|
9,983 |
|
|
|
10.8 |
% |
|
|
(42.9 |
)% |
|
Wealth management and trust income |
|
|
1,039 |
|
|
|
924 |
|
|
|
900 |
|
|
|
12.5 |
% |
|
|
15.5 |
% |
|
Other non-interest income |
|
|
1,498 |
|
|
|
1,504 |
|
|
|
2,097 |
|
|
|
(0.3 |
)% |
|
|
(28.5 |
)% |
|
Total non-interest income |
|
$ |
14,291 |
|
|
$ |
15,145 |
|
|
$ |
14,273 |
|
|
|
(5.6 |
)% |
|
|
0.1 |
% |
Non-interest income for the second quarter of 2023 was $14.3 million, a decrease of $854,000, or 5.6%, compared to $15.1 million for the first quarter of 2023.
The decrease in total non-interest income was primarily due to:
- A decrease of $1.5 million in the valuation of the loan servicing asset reflecting increased prepayments in the second quarter while the prior quarter reflected an improvement in market conditions.
Partially offset by:
- An increase of $556,000 in the net gain on sales of loans, due to higher volume and net premiums on sale.
During the second quarter of 2023, we sold $85.9 million of U.S. government guaranteed loans compared to $72.2 million during the first quarter of 2023.
Non-interest Expense
The following table presents the components of non-interest expense for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
||||||||
|
|
|
Three Months Ended |
|
|
Change from |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
Recast |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
March 31, |
|
June 30, |
||||||||||
|
(dollars in thousands) |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
|
NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Salaries and employee benefits |
|
$ |
29,642 |
|
|
$ |
30,394 |
|
|
$ |
27,697 |
|
|
|
(2.5 |
)% |
|
|
7.0 |
% |
|
Occupancy and equipment expense, net |
|
|
4,404 |
|
|
|
4,444 |
|
|
|
4,409 |
|
|
|
(0.9 |
)% |
|
|
(0.1 |
)% |
|
Impairment charge on assets held for sale |
|
|
— |
|
|
|
20 |
|
|
|
— |
|
|
|
(100.0 |
)% |
|
|
0.0 |
% |
|
Loan and lease related expenses |
|
|
488 |
|
|
|
963 |
|
|
|
942 |
|
|
|
(49.3 |
)% |
|
|
(48.1 |
)% |
|
Legal, audit and other professional fees |
|
|
3,675 |
|
|
|
3,114 |
|
|
|
1,820 |
|
|
|
18.0 |
% |
|
|
101.9 |
% |
|
Data processing |
|
|
4,272 |
|
|
|
3,783 |
|
|
|
3,396 |
|
|
|
12.9 |
% |
|
|
25.8 |
% |
|
Net (gain) loss recognized on other real estate |
|
|
288 |
|
|
|
(103 |
) |
|
|
158 |
|
|
NM |
|
|
|
82.4 |
% |
|
|
Other intangible assets amortization expense |
|
|
1,455 |
|
|
|
1,455 |
|
|
|
1,868 |
|
|
|
0.0 |
% |
|
|
(22.1 |
)% |
|
Other non-interest expense |
|
|
5,104 |
|
|
|
4,730 |
|
|
|
3,295 |
|
|
|
7.9 |
% |
|
|
54.8 |
% |
|
Total non-interest expense |
|
$ |
49,328 |
|
|
$ |
48,800 |
|
|
$ |
43,585 |
|
|
|
1.1 |
% |
|
|
13.2 |
% |
Non-interest expense for the second quarter of 2023 was $49.3 million, an increase of $528,000, or 1.1%, from $48.8 million for the first quarter of 2023.
The increase in total non-interest expense was primarily due to merger-related expenses, resulting in:
- An increase of $561,000 in legal, audit and other professional fees; and
- An increase of $489,000 in data processing.
Partially offset by:
- A decrease of $752,000 in salaries and employee benefits mainly due to lower payroll taxes and higher deferred salary costs, offset by higher salaries and incentives; and
- A decrease of $475,000 in loan and lease related expense, due to lower expenses related to government guaranteed loans.
Our efficiency ratio was 52.92% for the second quarter of 2023 compared to 52.10% for the first quarter of 2023.
INCOME TAXES
We recorded income tax expense of $9.2 million during the second quarter of 2023, compared to $8.3 million during the first quarter of 2023. The effective tax rate was 26.1% and 25.7% for the second quarter of 2023 and first quarter of 2023, respectively.
STATEMENTS OF FINANCIAL CONDITION
Total assets were $7.6 billion at June 30, 2023, an increase of $45.3 million compared to $7.5 billion at March 31, 2023.
The current quarter increase was primarily due to:
- An increase in net loans and leases of $53.0 million primarily due to growth in the commercial loan portfolio and the lease financing portfolio; and
- An increase in cash and cash equivalents of $36.0 million primarily to support customer activity and complete the acquisition of Inland Bancorp.
Partially offset by:
- A decrease in securities available-for-sale of $38.7 million, driven mainly by principal payments and changes in market values.
The following table shows our allocation of the originated, purchase credit deteriorated, and non-credit deteriorated loans and leases at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Recast |
|
||||||||||||
|
|
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|||||||||||||||
|
(dollars in thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
||||||||||||
|
Originated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial real estate |
|
$ |
1,806,531 |
|
|
|
32.4 |
% |
|
$ |
1,749,808 |
|
|
|
31.7 |
% |
|
$ |
1,676,149 |
|
|
|
32.4 |
% |
|
Residential real estate |
|
|
453,880 |
|
|
|
8.1 |
% |
|
|
441,291 |
|
|
|
8.0 |
% |
|
|
401,773 |
|
|
|
7.8 |
% |
|
Construction, land development, and |
|
|
387,623 |
|
|
|
7.0 |
% |
|
|
446,763 |
|
|
|
8.1 |
% |
|
|
434,132 |
|
|
|
8.4 |
% |
|
Commercial and industrial |
|
|
2,086,274 |
|
|
|
37.4 |
% |
|
|
2,061,267 |
|
|
|
37.4 |
% |
|
|
1,873,128 |
|
|
|
36.2 |
% |
|
Installment and other |
|
|
3,582 |
|
|
|
0.1 |
% |
|
|
1,603 |
|
|
|
0.0 |
% |
|
|
927 |
|
|
|
0.0 |
% |
|
Leasing financing receivables |
|
|
604,437 |
|
|
|
10.9 |
% |
|
|
552,174 |
|
|
|
10.0 |
% |
|
|
438,379 |
|
|
|
8.5 |
% |
|
Total originated loans and leases |
|
$ |
5,342,327 |
|
|
|
95.9 |
% |
|
$ |
5,252,906 |
|
|
|
95.2 |
% |
|
$ |
4,824,488 |
|
|
|
93.3 |
% |
|
Purchased credit deteriorated loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial real estate |
|
$ |
30,724 |
|
|
|
0.6 |
% |
|
$ |
39,000 |
|
|
|
0.7 |
% |
|
$ |
54,739 |
|
|
|
1.1 |
% |
|
Residential real estate |
|
|
26,012 |
|
|
|
0.5 |
% |
|
|
30,070 |
|
|
|
0.6 |
% |
|
|
39,209 |
|
|
|
0.8 |
% |
|
Construction, land development, and |
|
|
320 |
|
|
|
0.0 |
% |
|
|
345 |
|
|
|
0.0 |
% |
|
|
1,181 |
|
|
|
0.0 |
% |
|
Commercial and industrial |
|
|
1,726 |
|
|
|
0.0 |
% |
|
|
1,745 |
|
|
|
0.0 |
% |
|
|
2,557 |
|
|
|
0.0 |
% |
|
Installment and other |
|
|
129 |
|
|
|
0.0 |
% |
|
|
134 |
|
|
|
0.0 |
% |
|
|
155 |
|
|
|
0.0 |
% |
|
Total purchased credit deteriorated loans |
|
$ |
58,911 |
|
|
|
1.1 |
% |
|
$ |
71,294 |
|
|
|
1.3 |
% |
|
$ |
97,841 |
|
|
|
1.9 |
% |
|
Acquired non-credit-deteriorated loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial real estate |
|
$ |
126,191 |
|
|
|
2.3 |
% |
|
$ |
140,576 |
|
|
|
2.6 |
% |
|
$ |
168,938 |
|
|
|
3.3 |
% |
|
Residential real estate |
|
|
25,055 |
|
|
|
0.4 |
% |
|
|
27,975 |
|
|
|
0.5 |
% |
|
|
40,257 |
|
|
|
0.8 |
% |
|
Construction, land development, and |
|
|
— |
|
|
|
0.0 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
191 |
|
|
|
0.0 |
% |
|
Commercial and industrial |
|
|
16,750 |
|
|
|
0.3 |
% |
|
|
20,793 |
|
|
|
0.4 |
% |
|
|
31,783 |
|
|
|
0.6 |
% |
|
Installment and other |
|
|
25 |
|
|
|
0.0 |
% |
|
|
85 |
|
|
|
0.0 |
% |
|
|
226 |
|
|
|
0.0 |
% |
|
Leasing financing receivables |
|
|
1,258 |
|
|
|
0.0 |
% |
|
|
1,703 |
|
|
|
0.0 |
% |
|
|
3,992 |
|
|
|
0.1 |
% |
|
Total acquired non-credit-deteriorated |
|
$ |
169,279 |
|
|
|
3.0 |
% |
|
$ |
191,132 |
|
|
|
3.5 |
% |
|
$ |
245,387 |
|
|
|
4.8 |
% |
|
Total loans and leases |
|
$ |
5,570,517 |
|
|
|
100.0 |
% |
|
$ |
5,515,332 |
|
|
|
100.0 |
% |
|
$ |
5,167,716 |
|
|
|
100.0 |
% |
|
Allowance for credit losses – loans and leases |
|
|
(92,665 |
) |
|
|
|
|
|
(90,465 |
) |
|
|
|
|
|
(74,048 |
) |
|
|
|
|||
|
Total loans and leases, net of allowance for |
|
$ |
5,477,852 |
|
|
|
|
|
$ |
5,424,867 |
|
|
|
|
|
$ |
5,093,668 |
|
|
|
|
|||
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:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|||||||||
|
|
|
|
|
|
|
|
|
Recast |
|
Change from |
||||||||||
|
(dollars in thousands) |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
March 31, 2023 |
|
June 30, 2022 |
||||||||||
|
Non-performing assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-accrual loans and leases |
|
$ |
38,273 |
|
|
$ |
46,536 |
|
|
$ |
42,979 |
|
|
|
(17.8 |
)% |
|
|
(10.9 |
)% |
|
Past due loans and leases 90 days or more |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
|
|
—% |
|
||
|
Total non-performing loans and leases |
|
$ |
38,273 |
|
|
$ |
46,536 |
|
|
$ |
42,979 |
|
|
|
(17.8 |
)% |
|
|
(10.9 |
)% |
|
Other real estate owned |
|
|
2,265 |
|
|
|
3,712 |
|
|
|
4,749 |
|
|
|
(39.0 |
)% |
|
|
(52.3 |
)% |
|
Total non-performing assets |
|
$ |
40,538 |
|
|
$ |
50,248 |
|
|
$ |
47,728 |
|
|
|
(19.3 |
)% |
|
|
(15.1 |
)% |
|
Total non-performing loans and leases as a |
|
|
0.69 |
% |
|
|
0.84 |
% |
|
|
0.83 |
% |
|
|
|
|
|
|
||
|
Total non-performing assets as a percentage |
|
|
0.54 |
% |
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
|
|
|
|
||
|
Allowance for credit losses – loans and lease |
|
|
242.12 |
% |
|
|
194.40 |
% |
|
|
172.29 |
% |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-performing assets guaranteed by |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Non-accrual loans guaranteed |
|
$ |
2,472 |
|
|
$ |
2,335 |
|
|
$ |
1,731 |
|
|
|
5.9 |
% |
|
|
42.8 |
% |
|
Past due loans 90 days or more and still |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
|
|
—% |
|
||
|
Total non-performing loans guaranteed |
|
$ |
2,472 |
|
|
$ |
2,335 |
|
|
$ |
1,731 |
|
|
|
5.9 |
% |
|
|
42.8 |
% |
|
Total non-performing loans and leases |
|
|
0.64 |
% |
|
|
0.80 |
% |
|
|
0.80 |
% |
|
|
|
|
|
|
||
|
Total non-performing assets not guaranteed |
|
|
0.50 |
% |
|
|
0.64 |
% |
|
|
0.65 |
% |
|
|
|
|
|
|
||
Variances in non-performing assets were:
- Non-performing loans and leases were $38.3 million at June 30, 2023, a decrease of $8.3 million from $46.5 million at March 31, 2023, primarily due to the resolution of impaired loans.
- Other real estate owned was $2.3 million at June 30, 2023, a decrease of $1.4 million from $3.7 million at March 31, 2023, 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 |
||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
||||||
|
(dollars in thousands) |
|
2023 |
|
2023 |
|
2022 |
||||||
|
ACL – loans and leases, beginning of period |
|
$ |
90,465 |
|
|
$ |
81,924 |
|
|
$ |
72,107 |
|
|
Provision for credit losses – loans and leases |
|
|
6,467 |
|
|
|
9,712 |
|
|
|
4,105 |
|
|
Net charge-offs – loans and leases |
|
|
(4,267 |
) |
|
|
(1,171 |
) |
|
|
(2,164 |
) |
|
ACL – loans and leases, end of period |
|
$ |
92,665 |
|
|
$ |
90,465 |
|
|
$ |
74,048 |
|
|
Net charge-offs – loans and leases to average total |
|
|
0.31 |
% |
|
|
0.09 |
% |
|
|
0.17 |
% |
|
Provision for credit losses – loans and leases |
|
|
1.52 |
x |
|
|
8.29 |
x |
|
|
1.90 |
x |
Net charge-offs of loans and leases during the second quarter of 2023 were $4.3 million, or 0.31% of average loans and leases, on an annualized basis, an increase of $3.1 million compared to $1.2 million, or 0.09% of average loans and leases, during the first quarter of 2023, and an increase of $2.1 million from $2.2 million or 0.17% of average loans and leases from the comparable period a year ago.
Net charge-offs for the second quarter of 2023 included $1.7 million in the unguaranteed portion of U.S. government guaranteed loans, while net charge-offs for the first quarter of 2023 and second quarter of 2022 included $1.1 million and $2.7 million, respectively.
Deposits and Other Liabilities
The following table presents the composition of deposits at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Change from |
|
||||||||
|
(dollars in thousands) |
June 30, 2023 |
|
|
March 31, 2023 |
|
|
June 30, 2022 |
|
|
March 31, 2023 |
|
June 30, 2022 |
|||||||
|
Non-interest-bearing demand deposits |
$ |
1,793,749 |
|
|
$ |
1,952,045 |
|
|
$ |
2,180,927 |
|
|
|
(8.1 |
)% |
|
|
(17.8 |
)% |
|
Interest-bearing checking accounts |
|
530,775 |
|
|
|
560,837 |
|
|
|
535,856 |
|
|
|
(5.4 |
)% |
|
|
(0.9 |
)% |
|
Money market demand accounts |
|
1,600,043 |
|
|
|
1,453,688 |
|
|
|
1,323,287 |
|
|
|
10.1 |
% |
|
|
20.9 |
% |
|
Other savings |
|
562,706 |
|
|
|
590,231 |
|
|
|
669,164 |
|
|
|
(4.7 |
)% |
|
|
(15.9 |
)% |
|
Time deposits (below $250,000) |
|
1,214,717 |
|
|
|
1,089,785 |
|
|
|
544,759 |
|
|
|
11.5 |
% |
|
|
123.0 |
% |
|
Time deposits ($250,000 and above) |
|
215,102 |
|
|
|
166,066 |
|
|
|
134,384 |
|
|
|
29.5 |
% |
|
|
60.1 |
% |
|
Total deposits |
$ |
5,917,092 |
|
|
$ |
5,812,652 |
|
|
$ |
5,388,377 |
|
|
|
1.8 |
% |
|
|
9.8 |
% |
Total deposits increased to $5.9 billion at June 30, 2023 compared to $5.8 billion at March 31, 2023. Non-interest-bearing deposits were 30.3% and 33.6% of total deposits at June 30, 2023 and March 31, 2023, respectively. Estimated total uninsured deposits were $1.5 billion and $1.6 billion as of June 30, 2023 and March 31, 2023, and represented 25.9% and 27.9% of total deposits, respectively.
The increase in deposits in the current quarter was due to:
- An increase in time deposits of $174.0 million, principally due to changes in deposit mix and higher rates offered; and
- An increase in money market demand accounts of $146.4 million, mainly due to increases in business accounts.
Partially offset by:
- A decrease in non-interest-bearing demand deposits of $158.3 million, due to higher alternative rates and seasonality.
Total borrowings and other liabilities were $844.7 million at June 30, 2023, a decrease of $77.4 million from $922.0 million at March 31, 2023, primarily driven by maturities of FHLB borrowings.
Stockholders’ Equity
Total stockholders’ equity was $813.9 million at June 30, 2023, an increase of $18.3 million from $795.7 million at March 31, 2023. The increase was primarily due to increased retained earnings due to net income.
The following table presents actual regulatory capital dollar amounts and ratios of the Company and the Bank as of June 30, 2023:
|
|
|
Actual |
|
Minimum Capital |
|
Required to be |
||||||||||||||||||
|
June 30, 2023 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
||||||||||||
|
Total capital to risk weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company |
|
$ |
959,688 |
|
|
|
13.52 |
% |
|
$ |
567,924 |
|
|
|
8.00 |
% |
|
N/A |
|
|
N/A |
|
||
|
Bank |
|
|
911,331 |
|
|
|
12.89 |
% |
|
|
565,528 |
|
|
|
8.00 |
% |
|
$ |
706,910 |
|
|
|
10.00 |
% |
|
Tier 1 capital to risk weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company |
|
$ |
796,359 |
|
|
|
11.22 |
% |
|
$ |
425,943 |
|
|
|
6.00 |
% |
|
N/A |
|
|
N/A |
|
||
|
Bank |
|
|
823,002 |
|
|
|
11.64 |
% |
|
|
424,146 |
|
|
|
6.00 |
% |
|
$ |
565,528 |
|
|
|
8.00 |
% |
|
Common Equity Tier 1 (CET1) to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company |
|
$ |
751,359 |
|
|
|
10.58 |
% |
|
$ |
319,457 |
|
|
|
4.50 |
% |
|
N/A |
|
|
N/A |
|
||
|
Bank |
|
|
823,002 |
|
|
|
11.64 |
% |
|
|
318,110 |
|
|
|
4.50 |
% |
|
$ |
459,492 |
|
|
|
6.50 |
% |
|
Tier 1 capital to average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company |
|
$ |
796,359 |
|
|
|
10.74 |
% |
|
$ |
296,702 |
|
|
|
4.00 |
% |
|
N/A |
|
|
N/A |
|
||
|
Bank |
|
|
823,002 |
|
|
|
11.12 |
% |
|
$ |
296,100 |
|
|
|
4.00 |
% |
|
$ |
370,125 |
|
|
|
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]
