Byline Bancorp, Inc.

Good morning and welcome to Byline Bancorp, fourth quarter 2021 earnings call. My name is Melissa and I'll be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question, simply press the star followed by the number one on the telephone keypad. If you would like to withdraw your question, press star and two. If you are listening via speakerphone, please lift your headset prior to asking your question. If you require operator assistance, please press star then zero. Please note the conference call is being recorded. At this time, I would like to introduce Brooks Rennie, Head of Investor Relations, to begin the conference call.

Thank you, Melissa. Good morning, everyone, and thank you for joining us today for the Byline Bancorp Fourth Quarter 2021 Earnings Call. In accordance with Regulation FD, this call is being recorded and is available via webcast on our Investor Relations website, along with our earnings release and the corresponding presentation slides. Management would like to remind everyone that certain statements made on today's call involve projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are subject to certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed. The company's risk factors are disclosed and discussed and its SEC filings. In addition, certain slides contain, and we may refer to, non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. Reconciliation for these numbers can be found within the appendix of the earnings release. For GAAP additional about risks and uncertainties, please see the forward-looking statement and non-GAAP financial measure disclosures in our earnings release. I would now like to turn the conference call over to Alberto Paracini, President of Byline Bancorp.

Alberto Paracini Thank you, Brooks. Good morning, everyone, and thank you for joining us on the call today to review our fourth quarter and year-end results. As always, joining me on the call this morning are our Chairman and CEO, Roberto Perencia, our CFO, Lindsey Corby, and Mark Fusinato, our Chief Credit Officer. For our practice, I will walk you through the highlights for the quarter. and then pass the call over to Lindsey, who will provide you with the detail on our results. But first, I want to start by making some brief comments about our full year 2021 results. Turning to slide three of the deck, the last two years have certainly been unprecedented. On the one hand, we experienced the fastest and deepest contraction in economic activity in recent memory, followed by the quickest and fastest snapback in economic activity in the backdrop of ultra low interest rates and massive stimulus from both the federal reserve and the federal government. In the context of this backdrop, the value of our diversified business model was evident. And we saw that in our full year results, which reflected record performance for the company and delivered strong results for our shareholders. Net income for the year was $92.8 million or $2.40 per diluted share. Revenue grew 12%. The loan portfolio, inclusive of PPP loans, grew 6% and average deposits 9%, while bottom line results and EPS were very strong for the year. Our profitability continued to improve with ROA, ROE, and ROTCE increasing over 2021 and our efficiency ratio also improved on a year-over-year basis. Credit quality improved consistent with the recovery and robust economic growth, and we took advantage of ample capital availability in the market to exit certain relationships. Overall credit costs declined with net charges going from 51 basis points in 2020 to 28 basis points in 2021. and credit metrics showed improvement across the board, which allowed our allowance to decline by $11.3 million on a year-over-year basis. Capital return was also an important part of the story in 2021, as we returned a significant amount of capital to our shareholders. Dividends paid to shareholders increased by 150% over the prior year, and we expanded our share repurchase program. In summary, we repurchased $28.9 million of common stock predominantly in the first half of the year, which when coupled with our dividend resulted in us returning $40.3 million in capital to shareholders. Moving on to the fourth quarter results. Net income for the quarter came in at $17.2 million or $0.45 per diluted share. This was a decline when compared to the previous quarter. But these results include $13 million in aggregate charges related to the consolidation of six branches and an impairment charge taken in order to reduce our real estate footprint and cut operating expenses. Collectively, this cost us about $0.34 per diluted share. Adjusting for these charges, our pre-tax pre-provision revenue was at $34.2 million for the quarter which puts our pre-tax preparation ROA at a healthy 203 basis points. Revenue for the quarter was a record for the company coming in at 80.7 million and was driven by an increase in net interest income up by 3.1% from the prior quarter and strong non-interest income of 19 million. Moving on to the balance sheet, loans and leases excluding PPP increased by 72.3 million or 7% annualized, and stood at $4.5 billion as of the end of the quarter. This was the third consecutive quarter of solid loan growth, ex-PPP. Year over year, loans, again, excluding PPP, grew by $648 million, or 17%. We saw growth across our C&I, commercial real estate, and leasing businesses, which helped offset the run-up in our residential mortgage loan portfolio. Demand for credit remained solid for the quarter with loan production of 280 million, which helped offset the impact of an expected uptick in pay of activity from the prior quarter. An important goal for us this year was the replacement of PPP loans with traditional commercial loans. We're proud to say we've largely achieved that goal. Line utilization saw another increase in the quarter to 53.4%, up 1% from the prior quarter, which helped drive some additional growth in C&I balances. Our government-guaranteed lending business had strong production with $160 million in closed loans, up 36.8% on a year-over-year basis. We ended the fiscal year as the fifth-largest $7.8 lender in the United States. and for the first time became the number one third party lender for 504 loans in the state of Illinois. We're proud of our performance and remain committed to supporting small businesses by providing needed access to capital for them to succeed. Moving over to liabilities. Deposits came in at $5.2 billion as of quarter end and were essentially flat from the third quarter, with growth coming primarily from money market accounts. Last quarter, I mentioned that we had begun opening consumer deposit accounts online and that our early results were encouraging. We ended the year with approximately $50 million in core deposits from this activity, and we'll be rolling out the same capability for commercial accounts early in the second quarter. Our deposit mix remains strong with non-interest-bearing DDAs representing 42% of total deposits. Deposit costs overall were flat quarter over quarter and continue to be at a cycle low. With respect to profitability, our margin expanded by five basis points to 3.97% up from 3.92% last quarter, excluding accretion income, and reflect higher yields on loans. The margin also expanded if you exclude the seven basis point drag from PPP loans and we remain well positioned for expected increases in short-term rates. On the expense and efficiency front, we continue to make headway towards our objectives in this area and took action to reduce expenses in order to continue investing in the business. Our adjusted efficiency ratio was just about 55% and improved on a year-over-year basis by 31 basis points. Asset quality continued to show improvement and our overall results in this area were excellent. We saw declines in both NPLs and NPAs during the quarter in both dollar and percentage terms. We do not take these results for granted as they reflect a benign credit environment coupled with ample liquidity in the market. Despite having a positive outlook on credit, we remain vigilant with our portfolio and continue to actively monitor borrowers to identify potential issues as they continue to emerge from the pandemic environment. Our capital position remains strong with a CET ratio of 11.4% and total capital of 14.7% as of quarter end. We did not repurchase shares during the quarter but continue to have ample room to do so under our existing share repurchase authorization. Yesterday, we announced that our board had approved the redemption of the company's Series B preferred stock, which is expected to occur on March 31st. We believe our balance sheet strength positions as well to support organic growth, continue investing in our franchise, and pursue accretive opportunities while returning capital to shareholders. With that, I'd like to turn over the call to Lindsay, who will provide you more detail on our results.