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Byline Bancorp (BY)

Participants
Tony Rossi Financial Profiles
Alberto Paracchini President and Chief Executive Officer
Lindsay Corby Chief Financial Officer
Roberto Herencia Chairman
Ebrahim Poonawala Bank of America
Terry McEvoy Stephens
Michael Perito KBW
Nathan Race Piper Sandler
Brian Martin Janney Montgomery
Call transcript
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Operator

Good morning, and welcome to the Byline Bancorp Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tony Rossi of Financial Profiles. Please go ahead.

Tony Rossi

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

using morning. Events be our for access Byline’s will a presentation. as website presentation We the part Investor discussion Relations this Presentations Please and the to visit page of slide of

update factors to are risks discussed Various the which made like refer to any the forward-looking for or substitute be different remind to of disclaims from that in statements. comparable available press on measures, could the respect release the may supplement, performance such which non-GAAP any the These to of be are intended GAAP discussed company filings, financial condition quantitative by SEC available this I’d measures. the expressed we pandemic. results on materially non-GAAP the to most And cause to call call. Alberto to not actual contains Management company’s that, The obligation statements financial other Before call are factors well future including Paracchini. to the begin, of conference Bancorp results the any company’s and that implied the forward-looking directly COVID-XX involve The Byline but I’d during as future GAAP impact over information turn website. with and you uncertainties, forward-looking measures. with the to Alberto? to like contains the as website reconciliation statements today and

Alberto Paracchini

this families healthy. well you for participating staying fourth doing everyone morning, welcome call our you earnings good and quarter call. morning and Tony the hope are Thank and and I you, and Thank Great. your on to

with follow presentation can You discussion our materials.

Investor the website. section in find our can of You Relations

Credit me and Herencia, morning Roberto Chairman. Officer; Chief Mark Corby, our Lindsay CFO; Joining our our Fucinato, this are

materials are of As reminder, you our Investor website. presentation in follow with section discussion the can that a our Relations

and invest last come this quickly of the reserves, once attention no All virus the our operating growth, built come. well-known collapsing rates strengthened year in to had you remember Wuhan a started to rest to customers reduced At an pay with will had business. Banks grips to no all, what outbreak results we doubt We position, interest a the pandemic. continue the of XXXX, rounds be economic to for adapted was the time foresight through happy we year, environment, and the the and of a work-from-home in of in had environment. province careers. resume We’re to a to crisis, not so expenses which in a effects century quarter to we in accomplished a multiple for supported PPP, challenging capital and lot to presenting our of

comment fortunate the Before been CEO of in served we Chairman get working of years has look Board have have directly one want the ahead. XX I and into to and with with for Roberto’s someone continuing does Byline of Chairman by appointment the non-Executive as our Roberto on since Board of presentation, as Executive Seldom who XXXX Bancorp. of the years extended caliber to an time. to work enough the period privilege for I Roberto with to work closely of Roberto forward Herencia

on Moving results. to our

quarter, share. to $X.XX charges and consolidation include a per our disposition impairments assets branches, end held or the decline net previous per when the sale. accelerate taken of but approximately net results income XX $X.XX these related For to December which the at for both was reduced of announced Collectively, diluted the compared of completed in this to diluted This $XX.X income the share. million quarter at previously came was by

was in came an which quarter quarter. and and X.X% the in quarter up solid pre-provision lower $XX.X for pretax was pre-provision was XXX strong third by non-interest was from at points. record a basis from million at our interest healthy driven $XX.X million the than adjusted for income, net adjusted Our last the the increase ROA levels revenue Revenue and pretax income, quarter albeit,

expanded across to Our the and also margin our board deposit lower from costs. benefited to continue ability

sheet. Moving onto quarter. the million PPP or $XX.X balance the Loans, increased excluding from linked by X.X%

quarter. $XXX Overall commercial Equipment over our to As another from real million saw benefit quarter $XXX our this our yet previously with across of lending that discussed increasing during million of rising Leasing we estate, including gradually from Group, year and the previous half saw which in million. originations production commercial, pipeline the productive areas, originations was strengthened sponsor broad-based specialty the the $XX second to quarter and up

fluctuations year-over-year deposits due deposits, Our outstanding we below public the fund Despite record seasonal government deposits. decreased level inflows $X.X DDA the a million bearing of with sold was had quarter guaranteed $XXX production Total quarter, strong third non-interest on ended $XX business was sale with strong up and year representing of topping million continued commercial on guaranteed balances million, also loans total lending in income, largely mix a gain and of of which but the by to basis. the and our balances. XX.X% set

quality. asset Moving on to

the both NPLs, from quality with expense Asset provision and quarter. improved declining prior NPAs, charge-offs

of the in targeted round XX% – February. reviews our in credit next across payments in subsidy during Cares Notwithstanding basis coming The perform our to the improvement on and basis reserves XXX million the borrowers for the We loans or representing outlook identifying vigilant allowance of we fourth continue the of for year granted $XX.X PPP PPP. that credit, excluding by business eligible total starting portfolio increased excluding the weaknesses approximately will in anticipate $XXX.X was deferral be deferrals portfolio XXX points, million representing continue loans of by X.X% balances. in to points increase SBA modifications payments ended add Act driven with to the different remain these off quarter. two borrowers and Loans to subsidy We lines.

deposit completed identified side, we December. we XX of of branches business meaningful any not runoff. date, the consolidation closing the the for seen at end On have To

efficiency of of As with end from the our branch excuse result topping September. at year, the per $XXX.X these continues to $XX.X of million, the million at deposits the of end a million improve up me, $XXX.X network consolidations,

Our capital X.X% remains position strong with capital the the of of ratio at quarter. CET a XX.X% total and end of

of position additional strong the the buyback share, COVID-XX from capital information $X.XX doubling shareholders, X program. the Given reinstatement organic quarterly financial program. us improving This and PPP and response the growth. provides on Slide the dividend of to ability detail strategic to to deliver Board our while the and with efforts per to provides continue returns performance, our our outlook, our and position authorized $X.XX capital manage our retaining and on flexibility stock

began $XXX in $XXX already the for the In XX, of quarter, over round Through January, the have million. had current quarter, our we totaling forgiveness in At of over million. the program. of focus totaling process. million applications approximately January the applications some through the the and end we During shifted we approved stage forgiveness of fourth $XXX loans just funded helping PPP accepting to $XXX clients received X,XXX applications, million have navigate with

than loan update and loan be our prior X, X% Within modifications Turning quarter on to deferrals. provided the an loans. to conventional we our of less continue total unchanged remain portfolio Slide total from relatively

payments These of SBA modifications of off reviewed earlier, the need provide analyze we exposures. our updated collectively additional payment. starting February. representing risk As from integrity granted these excluding I on exposures portfolio, these X to less Please our modifications financial Slide or and seeing our determine Cares provides remained subsidy These manageable mentioned have to industry, modification on Each with most than impact coming XX% industries round detail bridge to PPP. and appendix to request subsidy refer next exposure an update with ratings. borrowers a loans the after Act on the for to information with the confirm was these of COVID-XX.

the you our details Now Lindsay, provide with will Lindsay? to call who to turn I'd more over on results. like

Lindsay Corby

our portfolio everyone. some Slide Thanks, Alberto. with information on X. on loan start morning, Good additional I'll

quarter, total loans were PPP at loan. from the leases of and of end Our XX, to runoff the billion due December down prior $X.X the the

total by $XX Excluding approximately million. our loans increased the and leases loans, PPP

portfolio million We growth loan and PPP our equipment which leasing, million offset loans broad are in our residential $XXX by originated saw excluded. when or helped real runoff estate Our anticipated increased commercial $XX across portfolio. commercial,

loan Turning strong $XXX government another to our guaranteed production million Slide we'll with commitment. at lending X, had look of quarter We business. of very

level this down record quarter. the from we saw Although was last

guaranteed by million, $XXX disruption balance $XX XXXX, XX, $XXX $XX half the SBA. business At SBA sheet USDA approximately X(a) million The million, was for the was on guaranteed. exposure sheet million balance $XX the in During originated of including despite is December year. exposure first which the of million, the of the which on the business is

the work percentage the we pandemic, have as to the provided XX, we unguaranteed As a continue proactively At around balance portfolio. allowance loan uncertainty approximately this of our December X%. represents through for

program. and relief business The enhancements the our SBA new government We small other actively to customers support both traditional of round to through through continue second the PPP some bill program. made

from program example, loans time. our Alberto during as well discussed. this X(a) enhancements on as fee believe help these to subsidies the will increases on guarantee additional SBA XX% loans SBA We XX%, as For customers waivers

from the decreased end Moving over to of deposit, the deposits our quarter. million prior total $XX.X

public had we public seasonal bearing those $XX that of And funds needs. tax those by in by outflows quarter, utilize for continued their due deposits customers quarter, inflows receipts. outflows budgetary inflows from that we the of partially million. During our the payments seasonal saw third offset commercial to fourth increased deposits These non-interest were funds tax

deposits. to deposits basis deposits. franchise. helped The increased the our during cost Non-interest quarter, shift points mix deposits which activity of XX.X% included positive drive point the cost deposits, total strength continued our of at from our demonstrating basis decline bearing mix the deposit XX of our of positive quarter of shift in end a in core X of a in in bearing result the XX.X% a interest decline to prior Our to

funding income for net $XXX lower loan quarter, fee to quarter, the the as $XX million to This we of costs. nearly the recognize quarter. income during margin, PPP due our the net well to million and prior as on the Moving forgiveness interest was was X% income related than net higher interest primarily

was basis margin interest X.XX% for XX the the to from last point XX last margin basis quarter. loans acquired from income basis Accretion down fourth XX up the in on quarter, the quarter, points contributed points Our for quarter.

Excluding XX points. our of mix favorable our average new interest The to fee increase basis increase cost positively impacted was in margin decline production and income recognition. loan X.XX%, net was more asset PPP our income, The yields. due deposits of an accretion of earning that

in the versus X.XX% average quarter With loans cost on Excluding our points basis PPP yield fourth was deposits loans, previous quarter. XX the declining average of in in the X.XX% just to December.

and to year. deposit of ability the we're level costs see Our pricing our reducing same limited, we the not time will is this deposits benefit continue from

As balances the net higher from result we stemming PPP compression excluding loans. redeploy and expect we modest into interest see our some to margin, securities before

to PPP the of believe net as round able processing in provide of first Speaking the round first at about second effect to of PPP of process. The half out be And year. in the of the impact the guidance will in still the approximately the on quarter. one. impact the on is round the fees. of margin, XXXX XX% We originated we're of second mentioned, we additional end remaining We income of PPP million loans to is this hope what more by the round in concentrated of be first the Alberto $X

our million net decrease in factors. volume from on In quarter, income guaranteed a fourth loans, $X.X of due gain sales in in quarter. These $X.X in which million item, loan this $X.X decrease XX. factors had the by was in net million positive by Slide primarily sold. to had non-interest prior prior swing We We couple income a offset gains adjustment on government to The the the net attributed partially million the to decreased of Turning interest line $X.X the of the resulted of had sales a revaluation charge, asset loan quarter. a a following in on servicing fourth quarter. securities million in $X.X were we decline

from third loan the to lower had our a a from in guaranteed record year very contribution was the the levels still strong perspective. group saw Although than we quarter, we end historical the government

lower at inventory government During the for XX.X% we quarter a the of as quarter, of million investors strong fourth in The searching premium continued to in result was loans, net which guaranteed X.X% sold comparable very XXXX. and up average $XXX.X the be from market yield.

premiums level. more through to return expect a we normalized XXXX, As move would to we

Moving to prior million from quarter, in was $XX.X from $XX expense fourth non-interest expense the trends, non-interest the up quarter. our million

quarter to charges expenses We our accelerate for charges real non-operating Alberto impairment As held our of previously assets and related included on fourth mentioned, estate to branch took charges the sale. consolidations these disposition portfolio.

for will this to We square the reduce impact look opportunities footage, continue to overall of pandemic. given further

our impairment on in loans. due quarter, production legal from an due primarily prior quarter. pandemic. adjusted Excluding ratio from sales primarily our Loan to non-interest basis, lower lower the origination expense gain were year, $X.X a the the to the quarter, branch government workout and the and prior lower On throughout costs up guaranteed decrease loan million well-controlled due the this charges, net efficiency expense related the was loan and despite lease expenses consolidation to volume of and declined

efficiency from payroll expense quarter in of XX.X% However, year business We fourth million our year-over-year, expenses. and result to run the as be be $XX other Remember tends elevated in ago. our to lines quarter seasonality million more XXXX. XX.X% expect range rate the a to $XX improves the to first [ph] start would taxes to

continue throughout prudently lower our manage opportunities and costs to expenses organization. find We to the

quarter. Next, in trends asset a look the good We during quality. conventional we'll the portfolio take saw at

Our of leases. assets and decreased basis basis XX of non-performing our by and $X.X X to basis points XX X non-performing declined points points to loans total loans points OREO basis total assets. declined million

quarter points average basis of the to last basis XX also XX net Our points from loans declined in quarter. charge-off

assets loans, which end included the As million of non-performing comparable was the prior XX, government $X.X our December of guaranteed to of quarter.

the like call growth was originated primarily Our the which portfolio provision of guaranteed that, pass by in driven reserves to government the unguaranteed million, to the portion would our expense was a against Alberto. loans. With $XX.X held and in further our back increase I

Alberto Paracchini

Thank you, Lindsay.

a I'd to few outlook up wrap and Turning with today like over XXXX. priorities our to about for XX, Slide comments

pick as the far the to the we cautiously is That, the growth As up, the of of optimistic the continuing is pandemic. environment vaccine course particularly course, current remain on of and half in concerned, year. and expect second

growing on in opportunities for With the strategic call XXXX. our returns same drive with want high a let's organic the remain employees, up invest for and priorities in Our operator, business of profitably questions. business, and the to level higher, We engagement to continue that capitalize both our market. maintain open growth continue the

Operator

Instructions] with first Ebrahim question [Operator Our today from comes Poonawala Bank of America.

Ebrahim Poonawala

based just Good differently touch why to going just change, you could but experience, terms first, talk following just like morning, guys. – in change, I’d expect if you and what the the CEO no forward Alberto's us on the there's of obviously about for change. do to question

unusual color around this. Just because to give it's some like see fairly us that something

So help us.

Alberto Paracchini

it. Roberto, want Sure. you take to

Roberto Herencia

in And you. alignment role, Alberto. actions playing right? is role the happy have all in and of clearly, to the with aligning, part the the Ebi, to part my Happy Board first, world been of part, Ebi, an We good an have Year in think, have industry I is New inception title, the other right since right? been I the organization right? since changed, XXXX, for the The acceleration this is know you what trends. morning, so that how

planning compressed. have them Our cycles got

and have to I to we XX been we almost years. be different level. worked relationship that a I we and mystery is formalizing benefit Alberto closely And that the major have together over is that very a for all feel from it. marketplace premium a fortunate we there on that we here. taking feel can and so think behind execution is And from think in really benefit can enough that opportunity no going what next the disruption exists few this There an years. to It's

Ebrahim Poonawala

a Got the we were this the possible I'm more previously should a growth and lot back is of is roles, go I in changing shareholder, it. there get was Roberto, expect previously? the do of this And pursuing versus we change, to you're organic doing not because that roll-up which strategically so just to as differently becomes side title how possible anything to what this, terms in strategically anything split wondering, bank strategy. but

Roberto Herencia

priorities think that terrific changed. Alberto now strategic have No. in strategic our We have a mentioned place. we plan

aspirations be here market know to it's more area. are our You ever. there bank, best the Chicago middle commercial in the Those bank opportunities today than

strategy So our is and change no our to there approach.

accelerate accelerate on of no opportunities change this us through, change the of to execution We to try that through but and in our are are them, some front direction. going

Ebrahim Poonawala

to just I the do of one to talk moving PPP. on new on think comfort of quality, as these observed in your year? terms few credit you next about And losses it. terms outlook provisioning guess the base in credit, future quarters, level just the one, you just portfolios last the think quick us having Got over Lindsay, How in about reserve

Alberto Paracchini

I'll take Ebi, that. Yes.

question, a relevant very good question. So

this are look then standpoint. of an had month to of credit were point, the a we facing So to the obviously, a don't become at year, be aware we a last environment so anticipating we from were very an any or – pandemic in seen challenging about year that and think I year the starting

about hopefully in that all the mirror. the fair out case, think Obviously, to look the on but to absent that, rearview in a growth We to further and moderate second the had I anticipate the I've in the seeing outlook in pick expected. We optimistic. levels. in credit moderate we were as moderate. we the expense pandemic get our of put economic is, it's that at quarter, – think benign obviously. do we're as than pertains XXXX. bit the facilities That credit result contingent quarters the largely we growth the any year. of I picking previous more probation was stimulus essentially the setback particularly pandemic it's up comments, economic fourth here in said the the assuming the it we us cautiously that a big different think future, will Obviously, different that this that think And be as said, to environment programs, to place, was saw of see the that standpoint I from vaccine, we as half that's of we done, say turned in environment spoken the anticipate is, And elevated a caveat the up.

as far that think as since So we year, when we are look early we on we type are of what enhance have do we enhanced monitoring look, I last we began to really seen, further the – – do. our – portfolios,

terms trying of to of being constantly of constantly the top understand portfolio doing through what is In environment on clients, business. impact their the reviews,

And I very that. We very, think continue on the conventional well. the portfolio to do has up held side,

are So we constructive there. very

we last we fourth the On payments We spoke monitoring SBA and here coming call. at saw, we the that side, about subsidy that. would the quarter, mentioned in the I think we off borrowers be this saw

million are restaurants, You are saw deferrals. essentially about Those $XX we largely portfolios there, hospitality amusement. that there. surprises of modifications did which roughly No

of Good is, to lot a by going get the the have that result I industries the So be to pandemic. be obviously, round impacted anticipate those think very the eligible restrictions, of of large you to as a are good to borrowers fact able those of to be going opportunity modifications payments. What other through subsidy that we we're a those another a would lockdowns, businesses is plus to portfolio large, flexibility of receive that of providing the that to side is, news et with the portion would expect cetera.

now, those had was them a when to We to rated process go we with So the portfolios, financials. took the risk our we each accordingly. touch getting them through ratings updated opportunity It confirmed and one-by-one modifications. borrower

information. criticized was it it based classified that we that we on we was if classified we classified saw no, rated it saw something updated assets, asset, a as If a as criticized. So,

levels. going furthermore, an That did driven to So is in and in see that what our by uptick classified optic XXX% essentially you're portfolio. criticized we

we your exposure Ebi. monitoring pretty that So that answered accordingly. boxed pretty hope much And in question, I we'll well. continue obviously

Ebrahim Poonawala

it. my Thanks Got for taking questions.

Operator

from next Our Stephens. with McEvoy comes question Terry

Terry McEvoy

the half up to and quarter, maybe see portfolio. Good some morning, stability? provide the accelerate is XXXX. loan the that loan the fourth build to everyone. opportunity, the expecting growth Under second like Nice that Lindsay, reduce it what's core commercial kind take to is growth to to going it's NIM in in securities And of scenario that, sounds you're of

Lindsay Corby

spot It’s bet. on Terry. You

Terry McEvoy

with actually shareholder since as a Roberto, and And value was Okay. for of which – going you impact increase curious a someone Chicago, think press then more M&A? Thank there's to you mentioned been value. in the I'm time, Byline growth, in commercial the one. the you. as or just maybe plan having opportunities Or then in and were release, What day industry back banking been strategic of it's your an with little in to the about for call long in are shareholder who's middle-market there's philosophy maybe presence it Is it is both? it Byline? increasing

Roberto Herencia

within – I attributes We the per And see right. shared exactly opportunities you. organic with all side, you of and in other So would with well some past, think the Thanks, talk is please that the the franchise metrics really some we we smart, been, along area We Lindsay priced we that guidelines right. on one we've opportunities shared acquisitions we've And well in, it's the which chime we've we've interesting the as I time, that built execute about in think the done have we've and M&A only with you see all Terry. and optionality, the Terry. this shared of right? because Alberto strong both that as

on teams pretty sitting. we So should on clear everyone. the CRE side, very where we're We're to it's like C&I both. much But a be That's terrific commercial have side. And the we right. bank,

us powerful that niche some some very have We are opportunities. nice offer really that businesses

Nobody And a very we raised very We has in franchise. so still share talked in a the our built it's dividend. optionality increase about mentioned where buyback. the it's dividends, We had point low the low. but it to

So those us. are options for

is focus as still dividends. Our relatively low

you continue believe growth strategy and So our sticking know, sat in we've to we're that. we to as

Terry McEvoy

Thanks everyone. Appreciate that.

Operator

comes Perito question KBW. next with Michael from Our

Michael Perito

New Good Year. morning. Happy

Alberto Paracchini

New Year, Mike. Happy

Michael Perito

to I a – on sorry. wanted minute spend the me, excuse

this at also maybe fee pulling On do there, notice back outlook, waived. of to the of just work as the anything over the well, curious for time PPP could origination was you SBA there but next right? there's space guys like? quarters think least you fee, SBA think then, you be if And in I look forecast a with I'm kind feels larger and the that forces pretty little I That mean, platform about line we I'm And into term. like keep try wondering, should I guys kind we help, is of to period can revenue I changes and elevated look half the what the kind the as here, just borrowers to waived. an which could else are thinking I year, strength a it that couple agree alluded fees of with will that? update. bit. provide program, are maybe near SBA a you us temporary to at smaller wondering of being can't banks And be significant the there's if are back the of

Alberto Paracchini

Yes. Sure, Mike.

probably it round quickly. term the answer were very that part of The issues facilitate give things, it's – ability caution a to large time. of you is a things delays. most loans be caused trying to think period period good of size. want you of things a couple SBA anytime PPP, allow of getting mean, and us on the relatively the as They've modernize done of to short for you job in And forgiveness. I very to despite it for to I they a to a their a that this little you've to are lot lot some think a of delayed in a I so of only I bit a going forms, just is the always have process So – that's fact I there do a changes, think short But that things that. would some, the they're very, that yes. has number there new in And done PPP, read certain time have many it certain updating program pertained some short

So disruption that's – there'll be on some that. short-term

the take Look, we as that of the much – Clearly, programs new a guarantee, about. enhancements want talked to which far As certainly of existing some Lindsay the the in are advantage to from new that. increase positive. aside is there very –

you that the fees have You mentioned.

borrowers And that. we we extent – it so benefit want the to that sure that our we can, want to from make

borrower. some have a SBA we a week do fees when going close gives a going wait if borrower, higher the we're to in to later take going or the to or so incur loan to today hold, reduction fees an for you and have that's allows example, going those they're substantially money. save can we to to it if the a rush So We're for right borrower not just the week thing until

that being So little – think that place, as we there agency on so we the the is think it the resume we'll our look vaccine. see year capitalize demand can And off that's until for be the mirror. in the to mean, can the I we there see ground vaccine, caveat I put to in factors that accordingly. hopefully, outlook mean, that COVID, we But said, is respect that that the a will give disruption with can things a of bit fact able I I progress rearview these kind pent-up that hopefully, at some of there running and all of in to business There's we get and continue you. the

So you some that. construct of gives hopefully that

Michael Perito

million second $XX core I really expense XXXX, the that’s outside helpful. that been then between of Lindsay, has on and think Understood, $XX which side, number of quarter, million in the And kind some was that’s guys coming up. curious, just abnormally And know from I cost in some I’m is sounds you have like low. reinvested. picking closure, It being growth of savings branch the

little So, this I we year, in Or $XX stay room type fair maybe that mean, million, should be here? term you $XX it is there half million that there’s that the do of guess. your down as first I range that in of from enough a coming kind to look out to wiggle

Lindsay Corby

look always for we Mike, So room wiggle moving down. to continue

running make organization sure an we manner. efficient we’re in the to So want

push So to down. try to we it will continue

I think one course gave you, I and the a here the the range that is feel flows ebbs hinted year, still as to. I I are of there over solid

the the organization that We what to real are like square our estate looking and looks trying determine of post-pandemic. at footage throughout

again, to available. and look going levers So find opportunities to we’re wherever

Michael Perito

of for just then digital how And you kind Helpful. changing. I imagine environment technology the lastly of a me, whatnot. piece and is, rapidly that Roberto, is big about mobile commented adoption and and

and deck a will about going lot in is you to will split kind oversight responsibilities curious, of the forward. made – there’s help. incorporated of those and decision-making on just certainly that that kind terms Just I be comment guess, how right And more leadership hands or do, of general

Roberto Herencia

and Yes. our first, we I always I want our things, Alberto to sensitive – and Mike but obviously talked people about many these troops be haven’t to to and want talk first. we of have

Alberto them. change, I digital about Yes, of one we things have need and talked to that announced push. clearly, a banking is so the just we And

in that really clearly those have we that few So Alberto game. top minds opinion, is of and on bright one my is of

going forward talents that maximize So execution. we to our use the in way can a want

be smart around that’s progress. we’re going work closely our how to in bet we time working So that to together, really spend but you

Alberto Paracchini

I little and if Yes. Mike, could to Roberto what a just add bit said.

You provision online the experience interesting or we of is that there don’t services of look – with there mobile want what seems your that’s as terms the more actual out environment banks bet way what the definitely what an a ground services a opinion, There’s to is notion And like, application separated just deliberate services. different well our the to know be you banking that in like. entirely lot. fertile in today That’s in your provided from very or landscape, of banking the and user explore way. I are financial financial the app particularly look mean is

things So look to company. opportunities kind us. the to are see I what have we explore do that the able in to opportunities and are those a there think to want at there be to and exciting are that for we of things for of terms bank capacity like mean,

Michael Perito

you a Yes. taking my guys questions. No, It for it. sense. lot I thank appreciate totally And agree. I of makes

Lindsay Corby

Mike. Thanks,

Operator

Our comes with Nathan from next Race Sandler. question Piper

Nathan Race

morning. Good everyone. Hi Yes.

Alberto Paracchini

Nate. Hey,

Nathan Race

back round half quarter A SBA we in of latest again, the into think question that those about in maybe just driver that trending that here the on the government charge-offs level fourth XXXX charge-offs outlook. roll in SBA of with the guess the main into kind within payments appreciate I being the should are well. unit charge-off supported how of the of was kind stimulus, second second the quarter. guaranteed as the government as I off at quarter And

Alberto Paracchini

and hopefully more a kind up but we’ll stab question sorry, But a feel add – get take the I cetera. of the And free business et could were outlook you I’m is, of in think that because, to look, are of try breaking But be on going coming SBA in. their be We make full answer quite have borrowers kind to your was of and best it business possible bit able around light in gain charge-offs there. to timing to terms impacted certainly to the the to of opportunity side didn’t more just through. and the answer. the pandemic timing other so related please the after I try Nate, on question of navigate probably think payments, short we deferrals, be what’s to to I for the flexibility subsidy additional think

in liquidation. the applied So, are not payments one businesses thing of subsidy note, to that remember

for appropriate. loans those we’ll continue we are out are take And we charges the be the accordingly if and process to not subsidy work in those payments. when have that going the essentially of to loans loans liquidating, eligible So

the are delayed probably loans borrowers to from that. our because and So is think have going more, payments are you certainly a are inflows I receiving obviously be bit – that benefiting sense it’s

cover. that to we So hopefully didn’t else feel ask that but answered anything your question, free

Nathan Race

Yes. how to I reserve the X.X% with No, guess, guys I I’m a guess, guaranteed that’s the just trying on feel do point? you get helpful. portion. sense roughly conservative or at that this

Alberto Paracchini

it’s concerned this. reserves we for about we’re that Well, feel of I us level you think exposure. appropriate the know, And

the portfolios. we to think what’s risks that in appropriate relative have those So that’s we

Nathan Race

Got you.

at in generally charge-offs, about over liquid way of very think of few the to over remain contribution like portfolio just of XXXX. it right Is that the government the charge-offs And the given low so quarters guaranteed just speaking, pretty decline the course the next deferrals the least. just portion sounds the

Alberto Paracchini

Yes.

Just the accordingly. those degree we’ll to and that again, do handle workouts those progress, remember in Nate to have that, we continue

obviously be I out think, like that subsidy would as forbearance pushing would additional bit. additional saying, move those losses we of have out to quickly or little working to we’re are payments some think the kind that on overtime of we’ll of we or I deferral benefiting But a can. not sort there try form from actively continue ones any as that

Nathan Race

taking Thank guys helpful. the appreciate I That’s Understood. you you. questions.

Operator

Our [Operator Montgomery. Brian question Instructions] comes Janney next with from Martin

Brian Martin

Hey good morning.

Lindsay Corby

Brian. morning, Good

Alberto Paracchini

Hey Brian.

Brian Martin

the comments a talk I I about just deployment. Yes. – the bit obviously things little couple just, a can And to heard just the and touch capital if that. you saw wanted dividend about

And then how you landscape Wisconsin, point. guess, kind as Just in the of as of you the Chicago? are thoughts today are guys just on how far M&A I that or competitive discussions kind that thinking – activity this at and about buyback, just just and

Alberto Paracchini

a one Brian is started think dividend, certainly and get the back as the think mentioned ago, Obviously, we view Roberto saw Board word as something the bit I foremost by very instituted that obviously it a way with we I We – received dividend, to shareholders. took hopefully little So shareholders. our you just flexibility. was modest is well action it to first I that that’s think dividend, when doubling a and capital return

over evaluate So that that’s something to And continues thing hopefully there. time company the grow. as can that’s one periodically continue we to that

saw the market there authorizing million X.XX as reauthorized we you program are buyback repurchase board for – to two obviously is conditions we is And our as that that for is market in buyback, authorization far out warrant. and authorization us the shares go years. our shares As that look to

view to reasons. to that some our to looking market that So ask probably subject that obvious is certainly know you something to of that conditions. to what will are. not put us I to are do, have we accordingly, flexibility capital tool at will to return we capital and opportunity using shareholders provides And the growth the going But be going we Obviously, share you our targets there to of opportunities. which organic look the again, for support that strategically us, there. with back we’re – look look with that that obviously acquisition work banks to continue continue and

Brian Martin

it been lower pickup they – Okay. seemed in you’re And while, activity M&A activity I just discussions the this the guess sensing any had like you’re point. area that Alberto, been similar. the for discussions – at or Have had on been guess, they a pretty in Chicago commentary just I

Alberto Paracchini

mean, a I pickup. definitely

that saw not I being one ago. here announced, long think you transaction

of market thing would it’s conversations the to – for if and held say, we happened I let’s I certainly pace that folks case point. I have you’re those think over question, I last the more at institution compare conversations think happened – one always have process. will think I when the point I that privately relative So year. But Brian. really their And that’s And the tell I companies institutions. I that say, worth to would answer this say don’t there picked would’ve is think I is, value year, don’t think fair what the of is were, dealing bid-ask up. the is part would what parcel between that way think, I course last this gap of with particularly where at the what you, The which smaller activity the these again, think

Brian Martin

Got you.

just you quantify, Maybe helpful. one That’s on margin? or was Lindsay Lindsay. of quarter to the the talk about just PPP Can impact what here Okay. this the for margin, the

Lindsay Corby

So we that breakout, you million the through. impact about on was gave $X.X came the margin there of

we So concentrated it’ll from coming of believe materials, Brian. we we the in that given be that’ll the the I But all one. as And year. I million you provide still have half round think we’ve over, more left $X in first materials, my of about be in through

Brian Martin

I total, Got that. I I And see right. Okay. you. missed increase, for that, saw apologize All the the then Lindsay. so didn’t

Lindsay Corby

No problem.

Brian Martin

I’m so Just the little Is in sounds is half kind though the loan I you that a as bit pipeline, half, first expecting looks more maybe Is guess second of it today? guys that, how the the slower. what pipeline understanding? were

Alberto Paracchini

second remember place taking Just draws is so Brian, PPP are the right now.

clients usage them. little a it lines can is. people the is their discount that in of now. So of take liquidity certainly kind see the bit qualify Also can get and and it terms where fact That’s borrowers for that We are of of of the advantage focus can pretty don’t good right credit.

a I as a carrying tend liquidity to fact they’re be the kind need being more carrying, of immediately, their money that to borrow little mean, of So PPP. bit the is buffered result by they

we factoring our stand in. the building those therefore, we that kind when of being we progress I So pipelines to quarter. pipelines, that’s we back All gave look We but said, we drives there. Again, kind that’s No, are would see of where yet back continue. are commentary through what and at comments were last healthy, up continued levels by pre-COVID? and

Lindsay Corby

our some make historical rates business to at Brian, business, lighter real in quick, and be SBA We things on seasonality historical wanted the particular, like that, have quarter basis. you of in add. insight. the look I And sure, because line, and some that’ll trends tend the good I of kind just just level run our think do give does so to first

Brian Martin

Yes.

questions. Okay. guys I for you it, the appreciate Thank Lindsay. taking

Alberto Paracchini

You bet.

Operator

this At I no show time, questions. further

So back I’d like to for closing turn to remarks. any management call the

Alberto Paracchini

you Great. thank operator. And

thank quarter. in morning each would the you you So Operator? look again thank this we that like to With and concludes every interest you. and participating Thank for for you our call your forward that, in Byline. call talking next for one to today. I of to

Operator

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

may You now disconnect.