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Byline Bancorp (BY)

Participants
Allyson Pooley IR, Financial Profiles, Inc.
Alberto Paracchini President, CEO
Lindsay Corby Executive VP & CFO
Timothy Hadro Executive VP & Chief Credit Officer
Michael Perito KBW
Ebrahim Poonawala Bank of America Merrill Lynch
Terry McEvoy Stephens
Nathan Race Piper Jaffray
Brian Martin Fig Partners
Call transcript
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Operator

Good morning, and welcome to the First Quarter 2018 Byline Bancorp, Inc. Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Allyson Pooley, Financial Profiles. Please go ahead.

Allyson Pooley

morning, the thank XXXX Byline Good us for earnings Debbie, for today Bancorp you, everyone, you and joining call. Thank first quarter

President and Lindsay from Chief Byline's and Chief us Byline's is team in is Alberto Joining also the Officer here management Tim Hadro Executive participate Chief Corby, Paracchini, Officer; Credit Financial will Officer; are: and Q&A.

be part of this morning. as a our presentation slide using We will discussion

Investor done not and Presentations so already, website the copy visit a and Byline's the Lindsay first Alberto have please page quarter then Events of of call the results you up for Relations discuss presentation. download to and If the open questions. we'll will

to future factors we'd to the Before factors financial call. such this The results remind and forward-looking available be by on call Bancorp disclaims expressed company's implied in the condition like of different during made that statements the respect filings, actual any involved are cause you materially SEC obligation any discussed from company's Various future to company are uncertainties. we risks any and Byline which performance contains begin, or These update website. to statements. conference results that could with the forward-looking the forward-looking statements

turn and non-GAAP Additionally, to I'd to but release the GAAP press available are which not quantitative refer directly with reconciliation well the measures. of management supplement, to GAAP may contains And that, as information today, measures. The as on over financial to intended substitute, the most to other non-GAAP to be like measures, the Alberto. website comparable for call discussed the the

Alberto Paracchini

call. on to morning good and Allyson, everyone the you, Thank

on the the I'll financial the providing our you and highlights detail results. Lindsay to As we pass start for by more normally for do, call over quarter with

Now the to turning three slide deck. over on

This the a relationship at net merger single expense commercial is related effects quarter, in diluted higher charges commercial income I for isolated the in XXX pre-provision quarter in lower to basis income. mentioned. provision that to offset $X.X points interest related during the ROA and approximately Pre-tax quarter which both, share. credit, nicely, bit credit costs activity $X.XX income excluding This in related QX, lower is net at but the than and Loan both in into the a the million solid with basis. first higher or $XX.X during interest just per of Our part nonperforming the last quarter. year-over-year primarily Overall, experience including our originations and levels reflect growth we status is year. which the results includes quarter, million, a on with accretion early of consistent flat than were expanding figure margin by $XXX,XXX typically software went lease but came came

at $X.X C&I Our or originated million primarily of end $XX our the construction of represents in the due billion at XX.X% was strong portfolios growth quarter, increase to which stood portfolios. and an and

assets. a We sale of government-guaranteed both outright borrowers business be book was from conventional particularly Within teams. payoffs, reflects refinancing quarter. simply $XX half originated declined coming portfolio, lower by which growth sponsor the just and activity offset quarter finance advantage which our of portfolio, we and government-guaranteed in lending acquired had the approximately C&I portfolio, during payoffs take The our strong saw as financing, from of our a million the or from by rate

sensitive to to XX in quarter that and their continue stable, Deposit deposits for become and increase Competition levels a margin, by manage revenues, and from increased for spread basis remain the net learning on funding points we rate overall, both in of rising basis higher level more interest-bearing costs yields stemming banks driven interest quarter. Moving our quarter ratio. anticipate point funding for check higher targeted XX last by nicely to as and increased assets. to revenue remains from the loan-to-deposit a customers

with levels We generally income overall margins origination to loans down rising quarter, by showing of quarter, sold. of government-guaranteed strong the with expect short-term the to consistent said, with see mix in gain impacted lower a rate. during and growth course in quarter. basis. deposit reflecting activity the year, sale volume lower was betas during business solid move prior increases was sales higher product, from and the year-over-year That tracking margins the fluctuate the levels depending Noninterest loans for production primarily, loans a the loans double-digit cost on deposit our sold on due sold on of along Loan

we these required NPLs the to collect. As quarter last of down needed developments, fall. to provision loan we value the to the Notwithstanding the and expense that The expect largely to we actively during make as informed impacted Due increase was we status. given we that and million the felt this raise identified loan. savings had $X remaining back single in we will the by the credit Based of and stated were commercial the saw and in overall sales. on our nonperforming facilities customers, to annual asset about decisions loans amount expected approximately charge-offs consumer Consolidation our locations encouraged in in did to redeploy improvement been nonperforming business cost the both earlier, one-time consolidations, by could and behavior to by Based performance anticipate continue and government-guaranteed where branches was be time, and And performance substantially we our those in business minimal to first driven two growth be company's you spend off respect on drive-up to footprint. order in over loan XXXX is consolidation into the we service our in and charged to levels, closely branch financial major of consolidated one changing order million write capital deteriorated an may we infrastructure a recall, for to quality a increase preferences, and accordingly one with of branch to restructured. downgraded quarter. evaluate since primarily We determined level on analysis, credit, in impact convenience. initiatives. point back provision that to charges, monitoring XXXX. the With ability XXXX, six time, for and quarter We result $X.X the the that

a an part the the in To for important that, for close all would end, the majority previously. of and like XXXX. that priority customers the quarter. received shortly. us, expect the occur the and smooth And Strategically, transition I Lindsay that to have of more to of stockholder and a top we remains regulatory this to the May. to completing and a ensuring detail. our acquisition charges second call We required we benefits end very Evanston much Completing the we're for First pass expect the to approvals in colleagues With to transaction on shared first is with looking financials by forward transaction cover

Lindsay Corby

portfolio. a four on loan start review lease and slide our I'll of with Alberto. Thanks,

from at Our the total an March XX, million were leases loans $X.X of billion $X.X prior end quarter. and of the increase

portfolio. C&I $XX million portfolio strongest originated for approximately $XXX On $XX by This portfolio in million originated our XX%. Our million, originated decline increased our basis, increased in coming a CRE a our the or portfolios. construction was loan year-over-year by offset partially

had elevated discussed, quarter. $XX million $XXX Alberto from growth As the in by up loan overall last was portfolio the quarter we million, payoff in the impacted Total payout. were approximately

the the to was and prior on balances our the Moving we deposits deposits. million which The relationships, - slide variability increase with at end the last quarter, us most of market it time $XX deposits. On due our coming to with market public increased in the rebuilt end primarily money five, a in quarter. of money total increase from of deposit and

deposit Our deposits points increase and increase from the an basis to of promotional driven by higher in due interest-bearing and increased overall core prior of This was basis point overall an quarter. rate. CDs, deposit our cost cost eight rate in six

net discuss margin. and interest an six, of I'll slide expansion to Moving income our our

largely yield. higher Our net $X.X increased $XX.X increase loan million income by balances, interest loan was driven The million. average and average by to higher

Our net or the XX X.XX% accretion point XX increased you basis exclude income. when to points basis interest margin

Although, our we the and impact average and yields drove an repricing higher and deposit portfolio in cost, expansion increase loans loan saw in of the in leases our margin. our

interest of and Assuming slight the raise [ph] in lease to see loan to rates site we continues yields. the would expect expansion continuation

our seeing anticipate we pressure mentioned, previously continued upward funding cost. on as Although,

loan interchange of to Turning income. was our had noninterest $X.X quarter-over-quarter. quarter, volume Compared to $XXX,XXX decreased our loan lower sold. decrease million, a however, on primarily seven, sales, decrease had noninterest to We a a our of changes in assessment [ph]. in a to $X.X relatively held the We the due million of sales loans on to factors. number gains ATM premium due income fees, average decrease net steady prior The due and fee by slide the of in our in

fees decreases of servicing in change of result on These a due had gains prepayment the other loan. were quarter-to-quarter. fair also due $XXX,XXX in of servicing net assets in increase in variations sales primarily to government-guaranteed decrease on the and We offset an primarily from the fees, by of increases partially to a asset, value income, as

eight. slide to Moving

at look Let's our noninterest expense.

down and the $XXX,XXX from for significant levels the $X.X noninterest serve million last quarter Outside comfort expenses higher Evanston expense first merger-related variations quarter. the items quarter. Our of First transaction, a from expenses three other these included during

quarter. payroll to due noninterest sales sales costs, other had merits for seasonal And in and an $XXX,XXX, and primarily a increased Our increases, OREO related increase unfunded salaries $X.X to benefits the due of expenses decline during employee the other and commitment. the result number gains in growth. benefit $XXX,XXX higher million, decrease of our a our and taxes, expense to increased provision due a $XXX,XXX as of organizational of in by We

quarter. will second. As during first locations report approximately recorded expenses We Alberto related we $XXX,XXX the consolidating expenses during we $X.X are and consolidations eight these the during million of approximately second quarter, to the mentioned, the of

to impact Our expense. quarter, lower of the SBA revenue on of efficiency higher ratio and benefits salaries seasonal XX% sale this the primarily to loans from due gain bumped our up and

synergies believe transaction. in particularly, improvement to efficiency the we after the longer term, First see an will continue we the our Over we Evanston realize from ratio

look asset a take will at we nine, quality. slide to Turning

Our to into end credit problem the the the In increased portion problem quarter, NPLs exceed portfolio. commercial the remaining risk-adjusted at been rate And million. and the to They times $X.X primarily inflow has X.XX% where resolved. the guaranteed we is cause loans, workout generally of guaranteed rates outflow primarily due for yield, general, inflows carry government-guaranteed which government-guaranteed portion of of as not the which are loss loan, total loans leases the government-guaranteed rest will to higher approximately where The elongated, discussed and one represent also quarter, the this while the earlier. be higher sold on will be nonperforming to loan our first attractive not NPLs loans one loans on them the to makes a at related process can loans basis. the than sold

leases of million first impaired of loans. of were provision, earlier. for million for reserves XX the commercial loans offs and originated non-impaired originated quarter the net SBA loans allocation leases Our the the were basis $X $X.X the the offs leases, unguaranteed quarter commercial specific The primarily allocations the to for $X.X was first acquired or addition held against Charge expense million, component $XXX,XXX the loans and million for acquired largest discussed and to Provision for included relationship of portion charge relationships for in points and $X.X one related average was quarter. loan. loans

loans at Our XX losses to allowance points March for XX. and loan lease basis total increased to

in In Alberto for adjustment accounting allowance that, of analyzed pass a adjustment metrics, loan of like allowance acquisition acquired back represented accounting the I plus lease call At With a loans to also for addition the total closing allowance points would over traditional remarks. and loan the conjunction with we as leases. XXX March the basis impacting the the losses, XX, to and and percent the to acquisition lease portfolio.

Alberto Paracchini

fits environment Thank and new a solid, to up without from remain you, strategy. busy M&A, the like completing Five forward and market, operator, points quarter, transaction. to clients on remain but during and on Lindsay. be we're our transaction In looking for start open on floor and respect that call the colleagues the we continue interested we Evanston summary, With to the welcoming First positive the that, remain for in With questions. criteria. constructive or a our the I'd

Operator

question comes first The from Michael [Operator Perito Instructions] with KBW.

Michael Perito

Hey, everybody. good morning,

Alberto Paracchini

morning, Mike. Good

Michael Perito

while expense I have discussed the we two questions, on side.

this like in your about sounded you I fair? Evanston, heavier if we kind guys just excluding it is guess shuffle, we that will I million but expenses Or are think prepared that's guess, was maybe three fair, or it's I First just add, XXX,XXX and than the normal rate Lindsay, is just, $XX.X run now which quarter, so XXX,XXX I like of expenses, that everything seasonally So just - in there million obviously, where or [indiscernible] or remarks normalized? out, of but maybe is it really that encompassing it mean, $XXX

Lindsay Corby

pretty think I fair. that's

first we talked the I had think that that think occupancy was the area that Chicago quarter. seasonality given over on the salaries here the in Mike you line, them seasonality. - fall I the in and benefits was in snow also different

the have you're fair. I there, pretty variability are two that some other than clients assessments that, in those So biggest think

Michael Perito

Okay.

flows brings that over question. and helpful. comes Any guess reinvested just timing to give and the rate, the what's of $XXX.X you the - years. the kind secondly, timing, And longer - run time cost out quarterly than? then of branch away timing down is help perhaps of were being part million, initial then of Or slowly there on of you what's that two one of something it be next the closures? then though this will what's kind So and two over kind XXX,XXX One, can the is drips I sales

Alberto Paracchini

can Lindsay that I I is will you're this sure I it's absolutely, statically, in stuff I'm hard more little much But, specific. a and Mike, get think start the Yes, right. usually, sense think

And cost really because fall with acts have can ideal scenario, obviously, the on will sales. It's you, First rest bottom the on the okay, little the basis, obviously, utilize going So to we really, and you hard focused annual the a we then going charge we're year, have and you on, an that. in be and the Evanston may line. into this are tell

over to reinvest we'd see the may the into So probably of that going do we'd is pull time, then we with the it, rate. don't we question, more And like the you that a pull things see time over spend be it are as and into we we thinking then have immediately But it what to benefit to business. kind don't here like able on that, flow, benefits business. on. time, so to it's I'm not, will utilize benefit for And you back know I run will want over it to if to add. back

Lindsay Corby

Mike, a immediately again, an start infrastructure. say bit of and the little And lag, to given through. so continue a flow quarter, about I'd close it's in then you the is at we quarter, you from going bit, then will a a lags our we reinvest are so it seeing not, to will So like not of little there as it's July, seeing it start right? end

savings seeing And back through the money to start you'll fourth in some come quarter. from the But work. of

Michael Perito

or Thanks, Helpful. guess strong. just what were first pipeline quick then a saw year, in maybe the And you you in paydown's with first get we you what's in the little loan in should could paydown still what sounds The activity the Or Okay. quarter that expecting. thinking this pipeline? like side. on given guys. is quarter fairly the it's line I accelerated the there, perhaps what see one be

Alberto Paracchini

were last I year, lower were, trying than think the period last at they I'm to same they… So mean they

Lindsay Corby

the about a same, little right are They higher. bit

Alberto Paracchini

Okay. year? last From

decline continue is we're is we primarily decline. as it trying at have we Obviously, the you to think point, coming terms going to in that's a balances activity can and know terms portfolios. at we've that to than the seen of of higher particular, provide, paydown don't higher clear to to math - then higher look going be right dollar some And, activity largely simply I to But I visibility in to you than to time, two there know activity paydowns that - you think as we've portfolio down balances the get I where in see point point expecting call this what last that in first Obviously, paydown starting on year. see are the could seen I but higher and of by rest acquired of guys anything I think I I and don't see of just concentrated, would so in were things, us what are growing, year, That from in terms Mike I to two clarity, now. think that, terms, us those point would is portfolio. terms from it come paydown is anything than, can going know those in materially the mean. to lead that far. I If that to don't quarters

Michael Perito

commercial lastly, first, And on of what relationship wondering us can want size and provide overall relationship. I Okay. the guess maybe just some I to the just spend that is was industry then I time there? you

Alberto Paracchini

Mike, we it's One detail give have and Yes, level as to sensitive we reflects thing, a as and the written can. credit down one an much active thing restructuring you terms. the where to, that restructuring that are we'll we

loan we information our to terms want names single - sensitive be we you with share book. So on providing relationship or C&I the very, Chicago it's in in here on of credit. What very can specific a

was to in plan, to I company on concluded the the which to where able expand and if did needed that. that operation. company categorize business is was was the enough, to But be the think of as here a company the industry, we earlier in not to were the that going not of kind would loan, size expansion of situation to health restructured, be their plan I And for sense I want necessitated the that And is terms add looking raise was restructured. an fall the the we In the end know and on the encouraged last you year, it this how of certainly, or to was result therefore, think - early I the business wellness. Tim, successful, we XXXX, be don't fresh the capital. this company looking growth they to were segment capital,

Timothy Hadro

add is management and management we the are we as with restructure only team in implement working that to new plan I'd revised constructively try place, and program. a new team capital the

Michael Perito

All you give right. the Can size us credit? the of

Alberto Paracchini

The overall was size just of the million. $X.X credit,

Michael Perito

[indiscernible] What's or the size give take? average commercial loan

Timothy Hadro

varies the The the We The in $X the size talking portfolio approximately was million to smaller newly from was the That SBA in two business. look XXX,XXX to medium be of loan It is the general. loans legacy originated in loan range. $X since portfolio of loan we've much size medium commercial about our line it tend million business in at will ways. consisted loans I'm XXX,XXX business. XXXX, conventional done, smaller,

Alberto Paracchini

that's and loans added facilities Mike, multiple you what that same have not Tim right loan borrower. Yes, credit just for there. size the That's individual aggregate exposure have

Michael Perito

is your as Okay. your explained commercial average originated. And relationship on

Alberto Paracchini

very you you hear couldn't we sorry, well, I'm repeat? could

Michael Perito

on $X there to commercial book interpret multiple relationship originated but million, to is loans newly about that a and $X situation? each average your could way what commercial million have you actually disclosed is said, the depending total I include

Alberto Paracchini

That's correct.

Michael Perito

appreciate I the Thank all color, guys. Great. you very Okay. much.

Alberto Paracchini

Thank you.

Operator

from America comes question of next from The Lynch. Bank Ebrahim Merrill Poonawala

Ebrahim Poonawala

Good morning, guys.

Alberto Paracchini

Ebi. morning. Good Hi,

Ebrahim Poonawala

anomaly it guess - such thoughts wondering not perceive one-off implication that your loan? you this XXXX? this any question stuff you if versus you've and side? was have more from this. standards may like Alberto, XXXX, the your the other done how today risk around a this to handicap Or different that you on whether this something instances of relative Or underwriting to are I just credits a like C&I was just little mentioned the this underwrite I'm So on there love Would underwriting big made was standards you today was early loan early changed

Alberto Paracchini

standards don't EBI, or our know I think back remained are know I don't I consistent. have that that, don't I that I different, would the say our think, were loose standards then I or

is single factors, I of one very where this think company-specific it's impacting credit with things it. much a those

So unique some when on in every Obviously, way. the it's I is board. look C&I, across company-specific company

generalize generalize EB though, So their your would a that this is don't I would to that credit. that I know not comment I

and that the think would've was just wanted where case, projections just this a plans I the situation And to able we a growth could in not I execute credit business information this and and underwritten that based is that company successful not the based strategy on not, to made. was the the pursue. they think plan on just the

Ebrahim Poonawala

Understood.

single-digits to expect basis expected still the to do mid- now. in my to clarify notes to the such low terms on be payoffs, loan more seeing you expectation? of that terms I payoff an what on you on sort doesn't high for double-digit annual sound risk of that lower way thanks is of think, adjusting want to in double-digit like to are back kind side. the Or loan one-offs in happening, you that color of Just And the feel of if loan of terms given I growth mid go right growth that - the we

Lindsay Corby

stronger similarly year. So, EBI, the move we last we production comes expected throughout as to to year. The

focused there. think on in transaction don't the much terms changed close. I has First that we obviously So to that, But are guidance Evanston of

part that been do for, think stronger what in that a the would second half. that's the trends we So year seeing coming big are focus I last with the

Ebrahim Poonawala

move could about just expect in what we growth? conservatively trying loan Understood, but just XX% think that of should would mean in to I growth. terms you of know, understand XX% X% to does And for just XX%, around, how I'm loan net net it terms to

Alberto Paracchini

of low a is said you double-digit. expectation single-digit what to think EP. I reasonable Very kind high

that's I think fair.

Ebrahim Poonawala

growth competition can of banks in that deposit Understood. environment. larger talk foreign some some last question heard of And market. from like, one about We banks in or if the terms we just

ability tail XX for to to relative talk could organically deposits quarter? outlook grow you the margin if and So your for your the reported to duff the X

Alberto Paracchini

take the I'll part. part So the for jump Lindsay of and will question, then first second

deposits. I good ability pretty feel competing to we're about effectively, think and our I raise

in I past, circumstance a as To very, being that you as from and kind the had think more we know, the unique were and want very talked we have ratios. range within to at. we've we be you now loan-to-deposit as coming of having targeted that low

as or marketing, of from Chicago. all the the amount in well of seeing that seeing very started the market in in in terms that and the We of of very to on much continued local, as competing have So as I competing continue here what et see and be do to could that deposit now we say think as think relying obviously, Clearly, branches order and going to last see that forward. May promotions we I grow, our the very it ago. players, would today. we consistent say terms certainly, cetera I of why case. evident different in regional banks balance market growth are, no kind it Obviously, the today growth of has obviously, environment than to a early need I, deposit would not be was, in I the is it's sheet we're market deposits. competitive fact, changing, half And here well the product in a reason June dynamics some we're we're by, and year year,

margin the of and the see terms to. want Lindsay there, that in impact we So you

Lindsay Corby

the cost of Sure, by NIM. margin I going think with we see of increasing funds are on to the the that pressure

seen been the really the and in with really we getting benefit, with think rising been pickup asset yields happy of the we've I what So terms we've we've rate.

we pressure think think going and continue saw going to I some the put on it's' to forward. increase NIM I quarter this

Ebrahim Poonawala

be high-end flat expectation we fact? quantify margin hikes considering you from expect in is given do in had a what it all that assuming margin So to XQ XQ, to trends XXX be relative get would to here? couple the more your the lower the do rate Or you of if

Lindsay Corby

this anticipate good I got did quarter. next seeing don't what margin think, think, we I that we quarter. a very I was this this quarter,

we really up, remember think NIM basis, hard Evanston here. transaction a pick but on some First I had are its Ebi GAAP we closing nice the

So I terms the don't accretion. of yet, in have complete clarity

I accounting that but give can point, once better a say the core on standpoint, from sense the the So GAAP is then statement completed, I'd flat purchase models CM are fair.

Ebrahim Poonawala

taking questions. Understood. Thanks for my

Operator

The next with Terry question from Stephens. McEvoy comes

Terry McEvoy

once optically, we morning. could those Good you that, if down out the for or of gradually NPLs, and involved understand timing process wondering I the with I'm to and your NPLs, trying a getting help understand me process getting government-guaranteed just just but coming are as screen they banks the resolved? impacts for

Alberto Paracchini

well. the loans But, he carry unguaranteed nuances, majority answer been and loans are loans portion into as the has have the essentially there's - portion so secondary market. of that So, two, the so can guaranteed I our we here, into Tim would say, two answer generally. And, we we vast jump that and have sold

the say, are from balance is, of loan, the investor balance have let's workout we a we the has XX% the and sold in principle the unpaid situation, secondary market. XX% an to if obviously, So carrying that been

basically case, So essentially investor loan will wait workout guaranty, goes will the in that we the will of SBA liquidation bad, and paid, on till the to collateral loan. workout the get investor pay the effectively happens, in the

has been have sold, position and guaranteed, we the our loans, When on portion as as of we not that that guaranteed well piece. where portion. unguaranteed on loan the the the is own Given the unguaranteed

which claim the final resolution the with and the can then submit until collateral to liquidation We claim the the and then have borrower. we the pay. process to will eventually of wait the And SBA,

are portion or have So even carrying the of though, a it. loan we guaranteed we balance guaranteed

the and then and make guaranty on get repaid. claim the workout, essentially For we the of duration the

So then, NPLs. time, a the your portion of both guaranteed and the for showing you're as unguaranteed a period elevated NPLs the on of the having result

Timothy Hadro

that is carry, the loan that the is had just is reason we carry nonperforming therefore, that as would we a interest. I loan. to guaranteed, as a the not it loan government-guaranteed nonperforming add a And principle

Terry McEvoy

then deposit Okay. service impact just made when kind pro you And transition Thanks, Evanston any results announced the charges you forma Tim. of impacted fees, last you quarter the First that charges, expand could the as on shifting whether gears, were will of any mentioned changes that deal? of those and

Alberto Paracchini

Terry. the impacts don't not we very consumers we so, don't, it that the of These changes materially is ways anticipate between First changes for favorable But that in Don't fees Evanstons, that, and think assess ours are terms made. different. fee differences just that we

don't change we of a there. So anticipate much

Terry McEvoy

from question. Just side define as given coming on you offences the one cost kind of investments the them just more savings, defensive would related the areas last competitive the branch landscape? or of If reinvestment

Alberto Paracchini

I think, both. think I

would customer to marketing as think, whether that of upkeep in - generally, I our perhaps do we even functionality that particular with front. things as or well or to that on example, and for refreshed, in a existing just on segment new capabilities, be the products on that sure we're the the be want making making sure branches branch network that I say need - modernizing branches investing feature

both of So I Terry. a mix it's think

Terry McEvoy

everyone. you. Thank Have Great. nice a weekend,

Alberto Paracchini

much, you Thank very Terry.

Operator

from Nathan is Jaffray. The next Piper Race question with

Nathan Race

morning. Good everyone. Hey,

Alberto Paracchini

Nate. Morning,

Nathan Race

going soon, will Obviously, updated year. and year, active like on Evanston coming your absolute to thoughts back normal one just have And the appetite just you of production addition some It lenders to last earlier. here what discussion which curious Alberto your be guys forward. First the you added get looks to from capabilities. accretive Just the have an the on pipeline.

the at seeing point? get thoughts So are just overall your updated just on level where opportunities discussions curious to of you this and

Alberto Paracchini

on quarter a we think, Yes, Nate, touched last I I this think bit.

given adding really on obviously, Evanston were opportunistic commercial banking Evanston, First call are And were pursuing more as think particularly transaction. talent We that we fact of not on it, be active that an the anticipating I lenders the in it much to basis. so much we do First new with on fantastic going hiring the there, side. really the more

been seen I folks, interviewed for say not, have this but have so have we We quarter would has we far muted. folks, activity

company. the join for looking always to are We talented folks

of terms that relates a known customers appetite. the it the really, But on So are folks more talented But integrating which get talented of following still definitely do we've making the I in done be work customer just integration, and the But appetite to your legally focused as the always the step continue certainly, people been future job gives We're to a is there that first add hope to close. want end. and sure in lot is here of a getting that in We have marketplace. organization. integrating able to find some folks, color. we to to past, we lenders being for you and in questions, to good ways the that have

is as the far appetite appetite we that still concerned, certainly as So is there.

Nathan Race

drive prepayment some this about Or Understood. this production had? A helped, kind expansion fees core help there quarter? hike, change that guys payoff gears. quarter. given just had higher which And perhaps is changing the activity little December of but just the loan of curious, yield loan Obviously, the composition you when, kind core yield anything quarter, material the then maybe just in the that a rate the you included perhaps of there

Lindsay Corby

question great a Nate. That's

that As quarter my in by very through good call have there, yield it of a loan I it from points, comments some a one-time there probably standpoint noise basis be XX that I say did alluded would of normally and little the loan it, We in was muted was some there. would going accelerations there. given that bit onetime there just of in in terms yield that noise and

Alberto Paracchini

But mix, the consistent. was mix far the Nate, as pretty as

big no the terms the of in on So mix lines. changes

the saw conventional of earlier, certainly, the team. and teams, C&I in coming our book as one activity book that we think from from mentioned on good we government-guaranteed I from

So sensitive maybe in to terms financing. to the the maybe in are a now that much finally think long-term areas, is backed seasonality seen it's impacted for bit. of One more lock some those realizing a ways opportunity good hey, little other Rates areas up a are in bit. customers here, that, thing have and we are line that I

as of of of business, it interest the we But that. on as consistent. far an kind it's rates pretty I and sort, the that inquiries think seen to mix So swaps overall as been pertains uptick have things

Nathan Race

basis half obviously, make so obviously, the on could one absolute we portfolio, just and year, Got had be seasonality, bring flow. it. If to last I it Securities some helpful. through able down of That's last, back one. guys last you you had deposit

So Just are size of going Lindsay expectations and and your curious both forward? in relative of terms it the absolute

Lindsay Corby

a liquidity have a Yes, But little safe have room bit we sound we the there more. institution manner. down of and we I a in enough Nate, continue to bit obviously to to make think run want sure

XX% area, not about teens, are total of we XX the a percentage at assets, much look below we that. So as high but

Alberto Paracchini

ago, changed has to thing goes Nate, our raising One basis. to view ability earlier things, ability deposits changed short-term to just tied a very, transaction is it question deposit of say, our we a in the carry. about and attractive its I we I the are a little and of terms very that thing has dynamics think months were of you got because really the different. go-forward regard essentially, one it that on that XX in the let's and wasn't grow deposits, think that had growth

higher. rates bit a What that's Now, being a little different.

say think I can I in consistent willingness we of so anticipation to to too, continue in money deposits So securities, raising a we have and have would be park of that we growth. terms

certainly we flexibility. that of will advantage I take think

Nathan Race

Thank guys. color, you. the all appreciate I Understood.

Alberto Paracchini

you. Thank

Operator

next Our Instructions] Partners. Brian [Operator Martin from comes Fig with question

Brian Martin

Hey, good morning.

Alberto Paracchini

Morning, Brian.

Brian Martin

you're it costs [indiscernible] I comfortable the which sounds get deposit some going of maybe is to, think I I Maybe your, is with quarter. the one was but sounds kind were up. back felt question. kind like sounds it not just question, like core It Nate's my that it margin there. just I of guess There real with, of sustainable, expansion kind sustainable. guess then was It but levels like this timers

it's it's like basis XX to, point maybe you said more range. So than alluded

baseline to the how big that picture, not do levels the then, is you sustainable. keep at And that So be thinking it? about

Lindsay Corby

to number. continue it said very I happy some at, of of have we asset-sensitive noise predict terms We do recoveries at can't raising level, exact say, and I do and so, good but Perfectly, forward, in as things I and in see uptick would giving balance there, was out we It's flow level to were that have of we sheet. see always hard there. be an because a say, we rates. terms assuming our that the to in really fed going I would payoffs loan yields

balancing a act. it's So

is of my terms of modeling. a So outlook terms in comments I Brian pretty, think flat in

So in again, there is noise a little bit of there.

can number, and You it in your quarter, and so… terms assessment make ebbs a of throughout flows every

Brian Martin

about kind a there out the liars bit one if can the to The in and we out quarter, what question. were change it's just you think is to decision, are are impact volatility? going we a if we, this guess And just of, could I that kind of quarter. some, or liars biggest make better given worse need it a the

Lindsay Corby

I are in have would that - I right? not unknown now this accretion accretion, is don't something say time. we the right visibility we point impact is biggest would at say

Brian Martin

numbers. Right. I'm accretion. at taking I'm out the core just looking the

number where understand in could that core points. we up could XX just up, that that to be, that fair the XX if I'm was were number can the basis X let's I be was could amount. why trying the down, margin volatility a So say just be, talking say

kind so. So of mentioned the range number you earlier, whatever

Alberto Paracchini

have income, that interest that a things you basis, that And to fluctuates monthly flow Brian, causes in so from sort, that dependent fees through of that's on an right? activity. on acceleration refinances payoffs

So it's you kind I see. primarily what think of that's will

Brian Martin

things. of, of where right. anything that there changed the last or with stands affecting All recently Is just Okay. I then Alberto, today? kind got is that the has maybe SBA just that you. how two today? And kind pipeline, that still

Alberto Paracchini

in of the terms to if go you see, deck. Page on you As deck, X

bottom think loan like but at there chart, comparison. a this the at can really I kind you the close is I look where really is there know useful year-over-year useful, table the kind that of on commitments, the of

think pretty good. I that's

sometime remain, SBA I ago product a we tool lenders manage mean, during obviously, a in to their now calls, be there to pipelines business of we good. the a an of focused, banks there as lot what more we that have of number doing and feature we as are remain of the that business in And add-on general, used run or SBA mentioned have, quality But the or people. not that I have the released seems there think, part think So, like of a this dedicated I use, that on business, were ex are people other as we people basis. our some our some team can

and Remain that chances, compete can our we we there. and like regard. compete we well So positive in think

Brian Martin

Okay. And then last the two.

are the been has last I interested a been. front? not. of active has discussions you actually On at the and along, level dialogue know they have just What's the M&A been there that there come came like the the year, been last has change But at on couple can are bottom guess side, little less I been today, quarters, color you of on has any versus this the than provide discussions any line discussions certainly but seems how opportunity year today right bit level of

Alberto Paracchini

Brian, as of that in front. things terms constructive. I I that the and to comments far M&A, factor I goes on remarks during my think two as remaining think think the

I definitely, think present. the factors definitely are

sometimes You folks a and for are little on more to where kind are those have point, a the getting in institutions challenging basis. investments planning succession investments, of growth the then perhaps looking to looking more go-forward looking, and usual are factors, who of terms where factors involving potentially that made the and that ago are exit traditional

are very still much factors those remain, and I present. think So are

these an remain, to processes. to time, well. and we matter agreement I had sometimes I over levels just discussions, long, in can from think and discussions take had a able remains activity First and finally, process. mean, as it far talking cetera, you, I haven't question time. was a I you really are experience, the continuing sometimes Evanston, But would it's reach As remain, team it along and last discussions to we I Discussions there were tell are year. of and about tell those alive chatter, long with your a et I things those call We relationship began a think this proceed discussions activity. talk for longer, faster, long long, and and we seen to And in and certainly they

Brian Martin

I the color there. appreciate

thing, your about think is same, there Just the your quarter. this these a last payoffs when guess the numbers. of a loan some fairly outlook outlook to in payoffs in includes Alberto, the it's the of guess, talk you about I I year growth of lot kind

some far level if to there's expectations forecast of is I is about, growth number is I the of kind whatever talking you're So how regardless. payoffs but your when is mean less, it's in loan bit assuming to in outlook. your think XX, to you're whatever going to as be growth mean or the these to as guess a little about your the XX touch XX there more, some numbers. I X that element

Alberto Paracchini

course. Of

Brian Martin

the guys. I right, color, All okay. Thanks, Yes, appreciate

Alberto Paracchini

You Brian. bet,

Operator

This the remarks. any Byline's concludes our question-and-answer for closing to conference back to session. would over management turn I like

Alberto Paracchini

call interest you Thank in the for your look next thanks to again, to forward and you for operator, Byline. participating you, quarter. today. speaking Thank for everyone Thank you. we And Great. in

Operator

conference now attending The concluded. has you Thank for today's presentation.

disconnect. now may You