Byline Bancorp anticipates crossing $10B asset threshold in Q1 2026 while maintaining strong capital and loan growth

Earnings Call Insights: Byline Bancorp, Inc. (BY) Q3 2025

MANAGEMENT VIEW

* Roberto Herencia, Executive Chairman and CEO, stated the quarter marked "12 consecutive quarters of very strong financial performance for Byline and highlights the consistency of our execution, the resiliency of our business model and the optionality and flexibility we strive to maintain in our operating model." He emphasized the company's SBA team performed exceptionally, anticipating the government shutdown to close the quarter strongly.
* Herencia highlighted, "Profitability metrics for the quarter were once again top quartile... Credit quality continues to be stable to improving in some segments, which against the backdrop of macroeconomic uncertainty, heightened geopolitical tensions and more recently, the federal government shutdown has been surprising to the positive."
* Herencia reiterated the company's capital flexibility and unchanged stance on the $10 billion asset threshold and M&A: "We are open to disciplined deals that make sense like the ones you have seen in the past. We have the capital to be opportunistic and believe we can deliver strong financial results on our own without the need to force a deal."
* Alberto Paracchini, President & Director, reported net income of $37 million or $0.82 per diluted share on revenue of $116 million, with revenue and EPS growing both quarter-on-quarter and year-on-year. Paracchini noted, "The margin expanded 9 basis points from last quarter to 4.27%, supported by an improved deposit mix and higher asset yields."
* Paracchini added, "Loans grew 6% linked quarter and 11% on a year-to-date basis, ending at $7.5 billion. Deposits totaled $7.8 billion at quarter end and were up 1% linked quarter and 7% on a year-to-date basis."
* Paracchini highlighted a decrease in provision for credit losses to $5.3 million and improvements in all asset quality metrics.
* Thomas J. Bell, CFO, stated, "We had record net interest income of $99.9 million in Q3, up 4.1% from the prior quarter, primarily due to organic loan growth and lower rates paid on deposits."
* Bell also noted, "Noninterest income totaled $15.9 million in the third quarter, up 9.5% from the last quarter, primarily due to $7 million gain in sale on loans sold driven by higher volumes."

OUTLOOK

* Bell guided for Q4 net interest income of $97 million to $99 million, noting, "With the market expectations of 2 Fed cuts in the fourth quarter, we expect net interest income of $97 million to $99 million."
* Paracchini stated, "We're also getting closer to the $10 billion asset mark. We anticipate crossing the threshold during the first quarter of next year, which means we will not see the effect of Durbin and higher insurance assessments until 2027."
* Management declined to provide gain on sale guidance for the fourth quarter due to the government shutdown's impact on SBA loan sales.

FINANCIAL RESULTS

* Net income for the quarter was $37 million or $0.82 per diluted share on revenue of $116 million. Pre-Tax Pre-Provision income reached $55 million, with ROAA at 1.5% and ROTCE at 15.1%.
* The net interest margin rose to 4.27%, with record net interest income of $99.9 million. Noninterest income reached $15.9 million, driven by a $7 million gain on loan sales.
* Loans ended at $7.5 billion, deposits at $7.8 billion, and tangible book value per share grew by 5% linked quarter.
* The provision for credit losses was $5.3 million, a decrease from $11.9 million in Q2. Allowance for credit losses fell to $105.7 million, representing 1.42% of total loans.
* Noninterest expense was $60.5 million, up 1.5% from the prior quarter. The efficiency ratio improved to 51%.

Q&A

* David Long, Raymond James: Asked about assumptions impacting net interest income sensitivity to rate cuts. Bell responded, "We have been beating the model assumptions...we continue to look at the competition and look at where we can adjust rates."
* Adam Kroll, Piper Sandler: Inquired about M&A appetite and capital deployment. Paracchini replied, "We're certainly open and actively looking at opportunities that may present themselves in the marketplace here...We want to fund the growth of the bank...have capital that we can use opportunistically for M&A."
* Kroll also asked about the impact of crossing $10 billion assets. Paracchini estimated the Durbin impact would be "somewhere between $4.5 million to $5 million...and that would...not really go into effect until July 1 of the following year."
* Kroll asked about government shutdown impact on SBA. Paracchini explained, "During a shutdown, we cannot sell and settle loans...if the shutdown is still in effect, then we are effectively holding those loans until the government is back to work."
* Brian Martin, Janney: Queried seasonality and sustainability of deposit mix. Bell confirmed, "It's seasonality, there are outflows in DDA."
* Martin also asked about the commercial payments team. Paracchini described it as focused on "businesses that originate a lot of ACH transactions, process payroll...we'll start seeing the impact of that in 2026 and beyond."
* Brandon Rud, Stephens: Sought details on fixed rate loan maturities. Bell answered, "For 2026, it's roughly like $750 million."
* Ynyra Bohan, Hovde Group: Asked about repurchase program activity. Paracchini reiterated capital priorities focus on growth, M&A, dividends, and opportunistic repurchase.

SENTIMENT ANALYSIS

* Analysts raised detailed, forward-looking questions about net interest income sensitivity, SBA loan sales, deposit mix, M&A priorities, and regulatory impacts, with a generally positive but probing tone.
* Management maintained a confident and disciplined tone in both prepared remarks and Q&A, using phrases such as "we are open to disciplined deals," "we will not see the effect of Durbin...until 2027," and "we feel good where the team is."
* Compared to the previous quarter, analysts remained positive but increasingly focused on the impacts of government actions, M&A, and new business lines. Management's confidence and consistency in strategic direction remained evident.

QUARTER-OVER-QUARTER COMPARISON

* Current quarter guidance for net interest income of $97 million to $99 million reflects an explicit expectation for two Fed rate cuts, compared to the prior quarter's guidance of $95 million to $97 million with the Fed on hold.
* Loan growth remained solid but moderated, with current quarter originations at $264 million compared to $359 million in Q2. Provision for credit losses declined to $5.3 million from $11.9 million, and noninterest income increased from $14.5 million to $15.9 million.
* Management continued to emphasize capital flexibility, M&A discipline, and strategic investment in new business lines, including commercial payments. Analysts shifted questions from integration and cost saves in Q2 to SBA shutdown impacts and regulatory thresholds in Q3.
* Sentiment from both management and analysts remained positive, with management continuing to project confidence in execution and strategy.

RISKS AND CONCERNS

* Management cited macroeconomic uncertainty, geopolitical tensions, and the ongoing federal government shutdown as external risks.
* The government shutdown's impact on SBA loan sales may delay gain on sale income; management will hold loans on balance sheet until the government reopens.
* Durbin Amendment and higher insurance assessments are expected post-$10 billion asset threshold, with an estimated $4.5 million to $5 million impact not commencing until 2027.
* Analysts raised concerns about seasonality in deposits, sustainability of margin improvements, and competitive pressures, but management reported stable to improving credit quality and disciplined cost management.

FINAL TAKEAWAY

Byline Bancorp management highlighted another quarter of strong financial performance, with record net interest income, improved asset quality, and robust capital levels. The company anticipates crossing the $10 billion asset mark in early 2026, with clear plans to address associated regulatory impacts. Management remains confident in its disciplined approach to M&A, capital deployment, and execution of strategic initiatives, while maintaining a focus on operational efficiency and risk vigilance amid external uncertainties.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/by/earnings/transcripts]

MORE ON BYLINE BANCORP

* Byline Bancorp, Inc. (BY) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4833159-byline-bancorp-inc-by-q3-2025-earnings-call-transcript]
* Byline Bancorp, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4833129-byline-bancorp-inc-2025-q3-results-earnings-call-presentation]
* Byline Bancorp Benefits From High Loan Yields And Net Interest Margin [https://seekingalpha.com/article/4820651-byline-bancorp-benefits-from-high-loan-yields-and-net-interest-margin]
* Seeking Alpha’s Quant Rating on Byline Bancorp [https://seekingalpha.com/symbol/BY/ratings/quant-ratings]
* Historical earnings data for Byline Bancorp [https://seekingalpha.com/symbol/BY/earnings]