Byline Bancorp, Inc.

Good morning and welcome to Byline Bancorp's fourth quarter 2022 earnings call. My name is Forum and I will 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 your telephone. 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 for Byline Bancorp, to begin the conference call.

Thank you, Forum. Good morning, everyone, and thank you for joining us today for the Byline Bancorp fourth quarter and full year 2022 earnings call. In accordance with Regulation FD, this call is being recorded and is available via webcast on our Best Relations website, along with the 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 a company. We caution that such statements are subject to certain risk uncertainties, and other forward factors that could cause actual results to differ materially from those discussed. The company's risk factors are disclosed and discussed in SEPC's slides. In addition, certain slides contain and we 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 an appendix of the earnings release. For additional information about risks and uncertainties, please see the forward-looking statement in non-GAAP financial metrics disclosure in the earnings release. Please note, the company adopted the current expected credit loss standard, also referred to as CETL, during the fourth quarter. Results for the reporting periods beginning after September 30, 2022, are presented under the new standard, while prior quarters previously reported have been recast, as if the new standard had been applied since January 1, 2022. Please refer to Appendix A in the earnings release for recast prior quarter financial information as a result of the adoption of the new standard. With that, I'd now like to turn the conference call over to Alberto Parchini, President of Vineland Bank Corp.

Thank you, Brooks. Good morning, everyone, and thank you for joining the call to review our fourth quarter and year-end results. You can find the presentation that we'll be referencing on our website. Please refer to the disclaimer at the front. Joining me on the call this morning are Chairman and CEO Roberto Varencia, our CFO and Treasurer Tom Bell, and our Chief Credit Officer Mark Fusinato. As usual, I'll walk you through the highlights for the full year and quarter and then pass the call over to Tom, who will provide you with more detail on our results. Following that, I'll come back with some comments on our merger with Inland Bancorp and provide some closing remarks before opening the call off for questions. Starting on page three of the deck, since becoming a public company in the summer of 2017, our focus has been centered on executing our commercial banking strategy, improving our efficiency, and investing in people and technology to grow customers and produce consistent results for our shareholders. This past quarter and year proved to be no exception as we delivered strong financial results. For the year, we reported net income of $88 million, or $2.34 per share, on revenue of $322.6 million. Profitability remained solid across the board, while our diversified model delivered consistently strong loan and deposit growth throughout the year. Our capital position remained strong, which allowed us to return $30.8 million in capital to shareholders in the form of dividends and buybacks. Turning to slide four. Results for the fourth quarter remained strong with net income of $24.4 million or $0.65 per share, which was up $0.10 from the prior quarter. This translated to strong pre-tax preparation income of $37.6 million, up 8% quarter over quarter, pre-tax preparation ROA of 205 basis points, ROA of 133 basis points, and ROTCE of 17.2%. We had one significant item this quarter, which was the adoption of CECL. Tom will cover the financial impact in a moment, but related to that, we added slides 13 and 14 on the deck to give you additional detail on the adoption and provide you with more disclosure on the allocation of the allowance. Moving on to the income statement. Total revenue came in at $88 million, a record for the company, and up 9% quarter over quarter. The increase in revenue was driven by higher net interest income which was up 12% link quarter reflective of growth in earning assets along with an expanding net interest margin, which was up 36 basis points to a strong 4.4%. Non-interest income was slightly softer than last quarter, driven by, as expected, flat gain on sale income. From a balance sheet perspective, we saw continued growth in both loans and deposits during the quarter. Loans increased by $160 million or 12% annualized and stood at $5.5 billion as of quarter end. This was the seventh consecutive quarter of solid growth, which contributed to loans growing by $867 million or 19% year-over-year. Net of loans sold, we had quarterly originations of $269 million, primarily from our C&I and leasing businesses. Notwithstanding, overall business activity was solid across all lending units. Our government-guaranteed lending business had solid production with $121 million in closed loans, which, as expected, was lower than the third quarter. Payoff activity moderated as anticipated, and line utilization remained flat quarter over quarter at 55.8%. Moving on to liabilities, we continued to actively manage our deposit base. The key is striking the right balance between doing right by the customer, deposit retention, growth, competitive pressures, and cost. For the quarter and the full year, we did a good job. Total deposits grew by $83 million, or 6% annualized, and stood at $5.7 billion as of quarter end. On a year-to-year basis, deposits grew by $540 million, or 10.5%, which was excellent considering the rapid rise in rates, changes in customer preferences, and lower liquidity in the system stemming from quantitative tightening. Regarding deposit costs, they came in at 73 basis points, an increase of 30 basis points from the prior quarter. Cycle-to-date betas for both total deposits and interest-bearing deposits at 15% and 25% respectively are heretofore slightly better than expectations. Going forward, an outlook for rates follows the forward curve. If we combine the hike in December, the hikes expected here at the start of the year, and cuts expected later in the year, it should present a favorable backdrop for us. Offsetting that is the impact of deposit repricing, which has our best estimate of where things go from here. At this juncture in the cycle, given our asset-sensitive position, we expect earning asset yields will continue to exceed the change in the cost of liabilities. On the expense side, the management of expenses remains an area of focus. Our efficiency ratio remained steady over the course of the year and ended flat for the quarter at 55%. That said, on an adjusted basis, our efficiency improved by about one percentage point on a year-over-year basis. Asset quality remained stable with both NPLs and NPAs declining from the third quarter, and net charges increased from very low levels last quarter to $3.2 million, or 23 basis points. Overall, credit costs for the quarter measured by the provision were $5.4 million and reflected charge-offs, reserve bills driven by growth in the portfolio, and changes to our macroeconomic outlook. The allowance for credit losses now under CECL stood at $81.9 million, or 151 basis points of loans as of December 31st. Capital levels remain strong with a CET one ratio of 10.2%, total capital 13% and TCE of 8.4% as of quarter end, consistent with our targeted TCE range of eight to 9%. Given our announced merger with Inland Bancorp, we did not repurchase shares during the fourth quarter. However, our board approved a new stock repurchase program that authorizes the company to repurchase up to one and a quarter million shares of the company's outstanding common stock. With that, I'd like to turn over the call to Tom, who will provide you with more detail on our results.