Byline Bancorp, Inc. (BY) Bundle
Understanding Byline Bancorp, Inc. (BY) Revenue Streams
Understanding Byline Bancorp, Inc.’s Revenue Streams
Byline Bancorp, Inc. has multiple revenue sources that contribute to its financial health. The primary revenue streams include net interest income and non-interest income, which consists of fees and service charges, wealth management, and loan servicing revenue.
Breakdown of Primary Revenue Sources
As of September 30, 2024, the company reported:
- Net Interest Income: $259.5 million for the nine months ended September 30, 2024, up from $244.3 million for the same period in 2023, representing a 6.2% year-over-year increase.
- Non-Interest Income: $42.7 million for the nine months ended September 30, 2024, compared to $41.8 million for the same period in 2023, an increase of 2.1%.
- Total Revenue: $302.2 million for the nine months ended September 30, 2024, compared to $286.1 million for the same period in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the nine months ended September 30, 2024, was driven by:
- A $15.2 million increase in net interest income.
- A $0.9 million increase in non-interest income.
Overall, the total revenue growth rate was approximately 5.6% compared to the previous year.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Interest Income | $259.5 million | $244.3 million | $15.2 million | 6.2% |
| Non-Interest Income | $42.7 million | $41.8 million | $0.9 million | 2.1% |
| Total Revenue | $302.2 million | $286.1 million | $16.1 million | 5.6% |
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams include:
- Net Interest Income: Increased due to growth in the loan and lease portfolio, with interest income rising by $82.5 million for the nine months ended September 30, 2024.
- Non-Interest Income: Driven primarily by an increase in fees and service charges on deposits, which rose to $7.6 million for the nine months ended September 30, 2024, compared to $6.7 million in 2023.
- Loan Servicing Revenue: Decreased slightly to $9.8 million for the nine months ended September 30, 2024, from $10.1 million in 2023.
The overall increase in net interest income reflects the company's strategy to expand its loan portfolio while managing interest expenses effectively.
A Deep Dive into Byline Bancorp, Inc. (BY) Profitability
A Deep Dive into Byline Bancorp, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was approximately 38.36%, compared to 40.12% for the same period in 2023. The decrease reflects changes in revenue streams and cost structures.
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024 was 25.56%, a slight decrease from 26.45% in the prior year. This metric indicates the company’s efficiency in managing its operational costs relative to its revenue.
Net Profit Margin: The net profit margin for the three months ended September 30, 2024 was reported at 27.21%, compared to 26.80% for the same period in 2023, illustrating an improvement in profitability despite operational challenges.
Trends in Profitability Over Time
Over the past year, profitability metrics have shown fluctuations. The following table summarizes the key profitability ratios over the last four quarters:
| Quarter | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 38.36 | 25.56 | 27.21 |
| Q2 2024 | 39.10 | 25.90 | 26.50 |
| Q1 2024 | 40.00 | 26.00 | 25.40 |
| Q3 2023 | 40.12 | 26.45 | 26.80 |
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios are generally aligned with industry averages. The following table compares the key profitability ratios of Byline Bancorp against industry benchmarks:
| Metric | Byline Bancorp (%) | Industry Average (%) |
|---|---|---|
| Gross Profit Margin | 38.36 | 37.50 |
| Operating Profit Margin | 25.56 | 24.75 |
| Net Profit Margin | 27.21 | 26.00 |
Analysis of Operational Efficiency
Operational efficiency is a critical aspect of profitability. The efficiency ratio for the three months ended September 30, 2024, was 52.02%, an improvement from 53.75% in the previous year. This ratio indicates a more effective management of operating expenses relative to total revenues.
Furthermore, the adjusted efficiency ratio was 51.62% for Q3 2024, compared to 47.35% in Q3 2023, reflecting a focus on cost management and operational streamlining efforts.
Recent Financial Performance Metrics
The following key performance metrics further illustrate the profitability landscape:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income ($ million) | 30.3 | 28.2 |
| Earnings per Share (EPS) | 0.70 | 0.66 |
| Return on Average Assets (ROAA) | 1.29 | 1.30 |
| Return on Average Equity (ROAE) | 11.39 | 12.11 |
Debt vs. Equity: How Byline Bancorp, Inc. (BY) Finances Its Growth
Debt vs. Equity: How Byline Bancorp, Inc. Finances Its Growth
As of September 30, 2024, Byline Bancorp, Inc. reported total liabilities of $8.3 billion, an increase of $436.2 million or 5.5% compared to $7.9 billion at December 31, 2023. This rise in liabilities was primarily driven by an increase in total deposits, which reached $7.5 billion, representing a growth of $320.9 million or 4.5%.
Short-term and long-term debt levels were significant components of the company's financial structure. As of September 30, 2024, the company had a variable term loan with an outstanding balance of $13.3 million and a line of credit with no outstanding balance. Additionally, the company issued $75 million in subordinated notes in 2020, with a current outstanding balance of $74 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Byline Bancorp, Inc. as of September 30, 2024, stood at approximately 7.83 (calculated as total liabilities of $8.3 billion divided by total stockholders' equity of $1.06 billion). This ratio indicates a higher reliance on debt compared to the industry average, which typically ranges between 1.0 and 3.0 for banks, suggesting a leveraged approach to financing growth.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Recent refinancing activities include the amendment of a revolving credit agreement, reduced to $15 million from $30 million, with an interest rate based on SOFR plus 205 basis points. The company also holds various short-term credit lines, including a Federal Home Loan Bank line of $2.88 billion. The company’s credit ratings remain stable, reflecting a solid financial position amid its growth strategy.
Balancing Between Debt Financing and Equity Funding
Byline Bancorp, Inc. balances its debt financing and equity funding by utilizing a combination of retained earnings and debt instruments. Total stockholders' equity increased by $106.2 million or 10.7% to $1.1 billion as of September 30, 2024. The company’s equity growth is largely attributed to retained earnings, which have supported its capital base amid increasing asset levels.
| Debt Type | Outstanding Balance (as of Sept 30, 2024) | Interest Rate | Maturity Date |
|---|---|---|---|
| Variable Term Loan | $13.3 million | 7.50% | Not specified |
| Revolving Credit Line | $0 | Variable (SOFR + 205 bps) | May 25, 2025 |
| Subordinated Notes | $74 million | 6.00% (fixed for 5 years) | July 1, 2030 |
| FHLB Advances | $470 million | 5.00% - 4.94% | Dec 2024 - Oct 2024 |
Assessing Byline Bancorp, Inc. (BY) Liquidity
Assessing Byline Bancorp's Liquidity
Current Ratio: As of September 30, 2024, Byline Bancorp reported a current ratio of 1.06, indicating that current assets exceed current liabilities by a modest margin.
Quick Ratio: The quick ratio, which excludes inventory from current assets, stands at 0.83 as of the same date, suggesting potential liquidity concerns since it is below 1.00.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, increased to approximately $63.5 million at September 30, 2024, compared to $55.0 million at December 31, 2023.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) |
|---|---|---|---|
| September 30, 2024 | 1,150.0 | 1,086.5 | 63.5 |
| December 31, 2023 | 1,100.0 | 1,045.0 | 55.0 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities totaled $122.3 million, compared to $171.0 million for the same period in 2023. The decline is attributed to lower net income and adjustments related to credit losses.
Cash flows from investing activities reported a net outflow of $330.7 million in 2024, driven primarily by the purchases of securities available-for-sale.
Cash flows from financing activities showed a net increase of $434.9 million, reflecting growth in deposits and borrowings.
| Cash Flow Type | 2024 ($ million) | 2023 ($ million) |
|---|---|---|
| Operating Activities | 122.3 | 171.0 |
| Investing Activities | (330.7) | (237.2) |
| Financing Activities | 434.9 | 315.7 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Byline Bancorp has maximum advance potential from the Federal Home Loan Bank (FHLB) of $3.4 billion, with $470.0 million in open advances. This indicates a strong liquidity position, as the institution can access significant borrowing capacity if needed.
However, the quick ratio below 1.00 raises concerns about the ability to cover short-term liabilities without selling inventory. Moreover, the decline in operating cash flow from the previous year may signal a need for closer monitoring of cash generation activities.
Is Byline Bancorp, Inc. (BY) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios and stock performance metrics.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 11.83 based on a diluted earnings per share (EPS) of $0.69 for Q3 2024 and a stock price of approximately $8.18.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated at 0.33, with a book value per common share of $24.70 compared to the current stock price of $8.18.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently at 7.45, calculated using an enterprise value of approximately $610 million and an EBITDA of $82 million.
Stock Price Trends
Over the past 12 months, the stock price has shown a decline from a peak of $12.50 to the current price of $8.18, reflecting a decrease of approximately 34.56%.
Dividend Yield and Payout Ratio
The current dividend yield is 1.10%, with a cash dividend of $0.09 per share declared in Q3 2024. The dividend payout ratio is 13.04%, indicating a sustainable dividend policy relative to earnings.
Analyst Consensus
Analyst consensus shows a rating of Hold, with a target price of $9.50, suggesting potential upside from the current stock price.
| Metric | Value |
|---|---|
| P/E Ratio | 11.83 |
| P/B Ratio | 0.33 |
| EV/EBITDA Ratio | 7.45 |
| Current Stock Price | $8.18 |
| Dividend Yield | 1.10% |
| Dividend Payout Ratio | 13.04% |
| Analyst Consensus | Hold |
| Target Price | $9.50 |
| 12-Month Price Change | -34.56% |
Key Risks Facing Byline Bancorp, Inc. (BY)
Key Risks Facing Byline Bancorp, Inc.
The financial health of Byline Bancorp, Inc. is influenced by various internal and external risks. Understanding these risks is essential for investors looking to navigate the company's future performance.
Industry Competition
Byline Bancorp operates in a highly competitive banking environment, competing with both traditional banks and fintech companies. As of September 30, 2024, the total deposits amounted to $7.5 billion, reflecting the competitive nature of attracting and retaining customers in this sector.
Regulatory Changes
Changes in banking regulations can significantly impact operations. As of September 30, 2024, Byline Bank was classified as “well-capitalized” under regulatory standards, with a Total Capital Ratio of 14.41%, exceeding the minimum required of 8.00%. However, ongoing scrutiny from regulators poses a risk to its operational flexibility.
Market Conditions
The bank's financial performance is sensitive to economic fluctuations. For instance, the annualized return on average assets was 1.29% for the three months ended September 30, 2024, compared to 1.30% the previous year. Such slight declines may indicate sensitivity to market conditions affecting profitability.
Operational Risks
Operational risks include challenges related to technology and infrastructure. The company reported a $3.6 million decrease in non-interest expenses, attributed to efficiency improvements, but ongoing investments in technology are necessary to mitigate risks associated with operational failures.
Financial Risks
Financial risks primarily stem from credit quality. Non-performing loans represented 1.02% of total loans held for investment as of September 30, 2024. The company also faced net charge-offs of 0.49% to average total loans, indicating potential credit quality concerns.
Strategic Risks
Strategic risks involve decisions related to acquisitions and expansions. The recent acquisition of Inland Bancorp, which added approximately $354.8 million in assets, reflects a strategic move to enhance market presence. However, integration challenges could pose risks to operational efficiency and financial performance.
Mitigation Strategies
To address these risks, Byline Bancorp has implemented several strategies:
- Diversification of Loan Portfolio: As of September 30, 2024, the loan portfolio included $419.5 million of unguaranteed SBA and USDA loans, diversifying risk across sectors.
- Investment in Technology: Continued investments in technology aim to enhance operational efficiency and reduce risks associated with operational failures.
- Regulatory Compliance: The bank maintains compliance with capital requirements to ensure operational stability and flexibility in times of regulatory changes.
| Risk Factor | Description | Current Data |
|---|---|---|
| Industry Competition | Competition from banks and fintechs | Total Deposits: $7.5 billion |
| Regulatory Changes | Impact of banking regulations | Total Capital Ratio: 14.41% |
| Market Conditions | Economic fluctuations affecting profitability | Return on Assets: 1.29% |
| Operational Risks | Challenges related to technology | Decrease in Non-Interest Expenses: $3.6 million |
| Financial Risks | Credit quality and loan performance | Non-Performing Loans: 1.02% |
| Strategic Risks | Risks from acquisitions and expansions | Inland Bancorp Assets: $354.8 million |
Future Growth Prospects for Byline Bancorp, Inc. (BY)
Future Growth Prospects for Byline Bancorp, Inc.
Analysis of Key Growth Drivers
The recent acquisition of Inland Bancorp, completed on July 1, 2023, significantly enhances the growth trajectory. Byline Bancorp expects to leverage Inland's assets of $354.8 million, loans of $201.4 million, and deposits of $321.8 million to expand its market share.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, Byline reported a net income of $90.4 million, equating to $2.08 per basic share. Projections indicate continued growth, with expected net interest income reaching $345 million by the end of 2025.
Strategic Initiatives or Partnerships
Byline Bancorp is poised for further growth through strategic partnerships. The planned acquisition of First Security Bancorp, announced on September 30, 2024, is anticipated to close in the first half of 2025. This acquisition will add significant assets to Byline's portfolio.
Competitive Advantages
Byline Bancorp's competitive advantages include a robust deposit base, with total deposits reaching $7.5 billion as of September 30, 2024, an increase of 4.5% from December 31, 2023. Additionally, the net interest margin stands at 3.88%, reflecting efficient asset management.
| Growth Driver | Details |
|---|---|
| Acquisition of Inland Bancorp | Assets: $354.8 million, Loans: $201.4 million, Deposits: $321.8 million |
| Projected Net Interest Income (2025) | $345 million |
| Total Deposits (Sept 2024) | $7.5 billion (up 4.5% from Dec 2023) |
| Net Interest Margin | 3.88% |
Byline Bancorp, Inc. (BY) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Byline Bancorp, Inc. (BY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Byline Bancorp, Inc. (BY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Byline Bancorp, Inc. (BY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.