Last evening, Byline Bancorp (BY) priced its 5.7 million share IPO at $19.00 per share, which was on the low end of the expected pricing range of $19.00-$21.00. The stock is set to begin trading at the NYSE today.
Byline Bancorp is a Chicago-based bank holding company that conducts all its operations through Byline Bank, which is a full service commercial bank. The company has more than 100 years of history behind it, and with 56 branches in operation, it is the fifth largest network in Chicago.
The company offers a range of banking products and services to small and medium sized businesses, commercial real estate and financial sponsors, and consumers who work or live in close proximity to branches of the bank. During the year ended September 30, 2016, Byline Bank was the sixth most active Small Business Administration lender in the U.S., according to the Small Business Administration.
In addition to offering banking services, the company engages in small ticket equipment leasing.
By operating in one geographical area, Byline Bank hopes to maintain strong relationships with its clients, who may prefer doing business with a local bank at a time when community banks capable of serving small and medium businesses are becoming scarcer.
Byline Bank's predecessor—Metropolitan Bank Group—faced large credit and financial losses in 2013, resulting from the collapse of real estate prices during the Great Recession. Byline Bank's management team led an investment group in a $207 million recapitalization of Metropolitan Bank. The bank improved its asset quality over the next four years and added $1.30 billion in net originated loans and leases to diversify its loan and lease portfolio.
Nonperforming assets as a percentage of loans and real estate owned fell to 1.0% on March 31, 2017 from 28.2% on March 31, 2013. During the same four-year period, the bank reduced its branch count to 57 from 88.
The bank offers comprehensive commercial loan products and services, including term loans, revolving lines of credit, construction loans, and treasury management products. Loans originated or managed by commercial lending represented 73% or $1.60 billion of the bank's total gross loans outstanding as of March 31, 2017. The company has a team of 20 commercial bankers, who have an average of more than 17 years of industry experience.
Byline Bank acquired Ridgestone Financial Services in October 2016. Ridgestone was the most active Small Business Administration lender during the year ended September 30, 2016. Ridgestone Financial Services originated $472 million in loans for the fiscal year ended September 30, 2016 while generating significant fee income from sales of government guaranteed portions of loans and servicing.
Byline Bancorp intends to use the net proceeds from the offering to repay $16.20 million currently outstanding under the company's line of credit. In addition, the company plans to repurchase all outstanding shares of its Series A preferred stock for $26.80 million. Remaining proceeds will be used for general corporate purposes.
At the end of the first calendar quarter of 2017, the bank had consolidated total assets of $3.30 billion, total gross loans and leases outstanding of $2.10 billion, total deposits of $2.60 billion, and total stockholders' equity of $389.70 million.
For the quarter ended March 31, 2017, the bank reported net interest income after provisions for loan and lease losses of $27.65 million, up from $18.61 million one year ago. Net interest margin improved to 4.04% from 3.60% one year ago. For the year ended December 31, 2016, the bank's net interest income after provisions for loan and lease losses totaled $80.27 million, up from $69.67 million in 2015. Net interest margin hit 3.59% in 2016, up from 3.44% in 2015.
Looking at Byline Bank's deposit mix during the first quarter of 2017, Money Market Deposit Accounts and Savings made up 33% of the total. Non-interest bearing deposits accounted for 28% while time deposits of more than $100,000 made up 16% of the total. Time deposits of under $100,000 also made up 16% of the total, while Negotiable Order of Withdrawal deposits made up the remaining 7%. Byline's cost of deposit during the first quarter was 0.24%, better than all Chicago banks in aggregate (0.36%) and better than the cost recorded by public U.S. banks with assets between $1 billion and $10 billion.
The bank does not intend to pay a dividend in the near term, but the Board of Directors reserves the right to change its dividend policy in the future.