Byline Bancorp Inc (BY) 2025 Q3 法說會逐字稿

Good morning and welcome to the Byline Bancorp 3rd quarter 2025 earning school. My name is Carly and I'll be the conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question answer period. If you to ask a question during that period, simply press the start button followed by one on your telephone keypad. If you'd like to withdraw your question, please press start and 2. If you're listening via speakerphone, please ensure you lift the handset prior to asking a question. If you require operator assistance throughout the call by o.

Please note this conference call is being recorded at this time. I'd like to introduce Brooks Rennie, head of investor relations at Biland Bank.

Thank you, Carly. Good morning, everyone, and thank you for joining us today for the Byline Bancorp 3rd quarter 2025 earnings call. In accordance with regulation of the, this call is being recorded and is available via webcast on our our investor relations website, along with our earnings release and the corresponding presentation slides.

As part of today's call, management may make certain statements that constitute projections, beliefs, 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 in SEC filings.

In addition, our remarks and slides may reference or contain certain non-GAAP financial measures which are intended to supplement but not substitute for the most directly comparable GAAP measures. Reconciliation, each non-GAAP financial measures to the comparable GAAP financial measure can be found within the appendix of the earnings release. For additional information about risks and uncertainties, we see the forward-looking statement and non-GAAP financial measures disclosures in the earnings release.

As a reminder for investors this quarter, we plan on attending the Hubby Financial Services Conference in Naples, Florida and the Piper Sadler Financial Services Conference in Miami in November. With that, I would now like to turn the conference call holder to Alberto Parcini, President of Byline Corp.

Thank you, Brooks, and good morning, everyone, and thank you for joining the call this morning to go over our 3rd quarter results. With me today are Chairman and CEO Roberto Hencia, our CFO Tom Bell, and our Chief Credit Officer Mark Cussonado. This quarter we streamlined the format to focus on key highlights for the quarter and our financial results so we can move quickly to Q&A and allow ample time for discussion.

Before we get started, I'd like to pass the call over to our Chairman Roberto Horecia for his remarks. Roberto.

Alberto, thank you and good morning to all. I appreciate you spending some time with us here this morning. The quarter caps a string of 12 consecutive quarters of very strong financial performance.

For violent 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.

The team continues to run a very good bank, and for that we have to thank our team members and employees.

Results reflect each and every one of their contributions which we value dearly.

This quarter, our SDA team went above and beyond anticipating government shutdown and allowing us to end the quarter strong and prepare as well for the end of the shutdown.

Whenever that comes.

Profitability metrics for the quarter were once again top quartile, as Alberto and TAM who reviewed. Credit quality continues to be stable to improve in some segments.

Which against the backdrop of macro and certainty.

Heightened geopolitical tensions and more recently the federal government shut down.

It has been surprising to the positive. We continue to be vigilant over those risks.

Cap flexibility is a major differentiator.

Our capital ratios are strong and continue to build am strong profitability and solid revenue growth.

Our primary deployment options, which Alberta has covered clearly in the past, continue to be the same.

Our stance on $10 billion asset threshold and M&A remain unchanged.

We are open to discipline 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.

On the things that truly matter.

What our employees have tangibly achieved since we last spoke to you.

We were recognized by the SBA in early August with the 2024 SBA 7A 504, and export lender of the year awards.

The 2nd year in a row, the Chicago Sun Times was named Byline Bank one of Chicago's best workplaces.

We now rank as one of the TOP25 workplaces in the city and 5th among large companies.

These results are based on our workplace policies, practices, philosophy, in addition to employee survey results, measuring the employee experience.

Bland was also named once again to the 2026 America's best workplaces.

By Best Companies Group as a result of our high level of employee engagement scores on our annual survey.

We continue to be very focused on employee engagement, development, and attracting the best talent.

We continue to experience as a result, low levels of employee turnover.

With that, I'm happy to turn over the call to Alberto.

Great, and thank you, Roberto. In terms of the agenda for today, I'll kick us off with the highlights for the quarter followed by Tom, who'll cover the financials in more detail. I'll then return with closing comments before we open the call up for questions. So with that, let's turn to our results for the quarter, we delivered net income of $37 million or $0.82 per diluted share on revenue of $116 million a strong performance driven by solid execution. Revenue and EPS grew both quarter on quarter and 13.6% and 19% respectively on a year on year basis. Our performance continues to reflect excellent profitability with pre-tax preparation of $55 million pre-tax prever ROA of 2.25%. ROA of 1.5% and ROTC of 15.1%, which remains comfortably above our cost of capital, notwithstanding continued growth in our capital base. The margin expanded 9 basis points from last quarter to 4.27%, supported by an improved deposit mix and higher asset yields. Expenses remain well managed, and while our efficiency ratio is strong at 51%, we continue to actively look for ways to become more efficient and invest in the business at the same time.

Moving on to the balance sheet, loans grew 6% in quarter and 11% on a year-to-date basis, ending at 7.5 billion. Deposits totaled 7.8 billion a quarter and we're up 1% quarter and 7% on a year-to-date.

Demand for credit remains stable from last quarter, with originations coming in at $264 million driven by our commercial banking and equipment leasing teams. Moving to credit costs declined this quarter with the provision coming in at 5.3 million, a decrease of $6.6 million compared to last quarter. Asset quality metrics all improved with the NPAs, NPLs, and net charge ups all declining compared to the prior quarter. The allowance remains strong at 1.42% of total loans.

Turning to capital levels continue to grow and remain robust, with CET 1 surpassing 12%. Annual book value per share grew nicely this quarter, up 5% like quarter and 12% year on year.

This quarter we also refinanced $75 million in subordinated debt. We leveraged the upgrade to our credit rating earlier this year with strong market demand to issue debt at an attractive level that reflected a 266 basis point improvement in our credit spreads. With that said, we continue to build capital, support balance sheet growth, future M&A opportunities, and increased capital flexibility. With that, I'd like to turn over the call to Tom, who'll provide you with more detail on our results.

Thank you, Alberto, and good morning everyone.

Starting with our loans on slide 5, total loans increased $107 million or 6% annualized and was $7.5 billion at September 30th.

As Alberto mentioned, origination activity was solid for the quarter with $264 million in new loans, up 25% compared to a year ago.

Payoff activity decreased $41 million from Q2 and stood at $205 million.

Loan commitments grew and dry activity added to the loan growth for the quarter even as line utilization remained relatively flat at 59%.

As we look ahead for Q4, we expect loan growth to continue in the mid single-digits.

I would like to know that our loan growth could be impacted somewhat by higher.

A government loan.

Impact is somewhat higher by the government shutdown that goes into effect maybe in 2026. As a result, our government guarantee loan originations will remain on balance sheet until the government is reopened.

Turning to slide 6.

To deposits were $7.8 billion for the quarter, up slightly from the prior quarter.

The uptick in deposits was due to non-interest-bearing accounts increasing $160 million or 9% li quarter.

Which was driven by seasonality and deposits. This was offset by decreases in time deposits, driven by lower brokered CDs and CDs shifting into money market accounts. We saw a continued improvement in the mix which drove deposit costs lower by 11 basis points to 2.16%. Turning the slide 7.

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.

This was offset by higher interest expense related to refinancing of the $75 million of sub debt this quarter, which contributed a 7 basis point drag on NIM.

The net interest margin grew to 4.27%, up 9 basis points in quarter, and year over year NIM expanded 39 basis points.

Specifically, we saw lower interest expense on deposits and higher rates on earning assets.

As a reminder, our SBA loans reset on a quarterly lag.

As a result, the mid-September rate cut is effective October 1st.

With the market expectations of two Fed cuts in the fourth quarter, we expect net interest income of $97 to $99 million.

I would note that earning asset growth and discipline pricing has generated growing NII in this declining rate environment.

Turn to slide 8.

Non-interest 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.

The SBA loan pipeline is solid. However, due to the government shutdown, we are currently unable to sell and settle loans in the secondary market.

Timing will determine the impact of our gain on sale income for Q4. As a result, we will not be providing gain on sale guidance for the 4th quarter.

Turning slide 9.

Our no expense came in at $60.5 million up 1.5% from the prior quarter.

The increase reflects higher salary employee benefits, including a $2 million in higher incentive compensation approvals due to higher performance and a $1.5 million dollar increase in managed expense, which includes $843,000 of remaining expense associated with the cost of debt.

These were partially offset by merger related and secondary public offering expenses recorded in the second quarter.

Our efficiency ratio stood at 51% compared to 52.6% in the second quarter, an improvement of 161 basis points.

For Q4 we expect no expense in the same range as Q3 results.

Turn to slide 10.

In the third quarter we saw credit metrics improve. Our allowance for credit losses decreased slightly to $105.7 million representing 1.42% of total loans, down 5 basis points from the prior quarter.

The decline was primarily due to individual assessed loan resolutions in the quarter offset by loan growth and higher adjustments to economic factors.

We recorded a $5.3 million dollar provision for credit losses in Q3 compared to $11.9 million in Q2.

Net charge-offs decreased to $7.1 million compared to $7.7 million in the previous quarter.

NPLs to total loans and leases decreased to 85 basis points in Q3 from 92 basis points in Q2.

NPA's total assets decreased to 69 basis points in Q3 from 75 basis points in Q2.

Moving on to capital on slide 11. This quarter, our capital increased further with CET1 at 12.15%, and tangible common equity ratio was 10.78%. We increased our tangible book value per share by $1.02 up 5% lean quarter, and up 12% compared to last year.

For the quarter, our total capital was 15.81%, which grew meaningfully due to the sub debt issuance. If you exclude the sub debt that was called on October 1st, total capital is approximately 15.14%. So that Alberto back to you.

Thank you, Tom. So to wrap up on slide 12, we continue to execute well against our strategic priorities and our focus on building the preeminent commercial banking franchise in Chicago.

Earlier this year, we announced the expansion of our commercial payments business and the hiring of an experienced team to lead that effort. We've been focused on putting the infrastructure in place, establishing the requisite controls, and I'm happy to report that our pipelines are starting to build. Looking forward, we're focused on onboarding customers and scaling the business in 2026. 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 Durban and higher insurance assessments until 2027.

Looking ahead for the rest of this year, our pipeline remains healthy, and we're optimistic about our ability to continue to execute for customers and deliver results for our shareholders. I'd like to thank all of our employees for supporting our customers and for their contributions to our results this quarter. With that operator, we can open the call up for questions.

Thank you very much. We to open the lines for the Q&A. If you'd like to ask a question, please signal now by pressing staff by 1 on your telephone keypad. If you'd like to remove your line of questioning, you signal by staff by 2. As a reminder to raise a question, will be staff by 1. Our first question comes from David J. Long from Raymond James. David, your line is now open.

Good morning everyone.

Morning day David.

Let's talk about the margin here and net interest income. The banks screened as asset sensitive. You look at slide 7 and it indicates each 25-basis point cut in a ramp scenario hits your NII by about 2.5 million.

What are the assumptions that are built into that right now?

Hi Dave, good morning. It's Tom. I mean we have been be beating the model assumption. I think it's in part due to what the competition is offering us as far as rates resets on deposits, and I think again we talked a little bit about in the past some of the premiums that were maybe paid during the liquidity events of years past, and we continue to look at the competition and look at where we can adjust rates, and I think that's what we've been really disciplined.

To add to what Tom just said, I think also analytically we're better and we have gotten better. So in addition to just the competitive environment in Chicago overall improving over the years and becoming for those of us that have been in the market for a long time becoming certainly much more rational over the years. I think analytically we're getting, a bit better in being able to segment customers and being able to basically drive improvements in, costs related to accounts and different the different segments of our business which has contributed to what Tom just said. Which is essentially just outperforming our model a bit. So I think that's you're seeing the effect of that and and I would also just add you can look at the yields on loans and given the rate declines you are seeing loan yields come down just from the recess based on the mix between fixed and floating. We have benefited a little bit more too because rates have been higher, so any of the fixed rate refinancings that have been coming cash flowing out, we've improved nicely on including securities.

Got it. No, that's some very good color and then in the quarter, the obvious, obviously on the funding side, real nice change in the mix, your funding, your deposit cost in particular came down.

Wiggle room do you have on the funding side and the deposit side to to to to still lower those costs, giving you an opportunity to to to continue to beat this model.

I, again, I think we are asset sensitive and we do expect, I gave guidance on NII. We have obviously asset growth that's helped us nicely too, but we have some room on the CD book. It continues to reprice lower.

We've been very short on the CD book, and I think, there are certainly some rack rate, deposits that we're not going to be able to reprice. So it's kind of a mix, Dave.

I don't really thank you for any questions sorry.

Thank you very much. Our next question comes from Adam Kroll from Piper. Adam, your line is not open.

Hi, good morning. This is Adam Kroll on for Nathan Race, and thanks for taking my questions.

Yeah, good morning, Adam. Hi Adam.

Yeah, so I guess given the recent pick up in M&A activity, especially in the Midwest and with your capital continuing to build up pretty strong cliffs, I'd be curious just to hear your updated thoughts on M&A and how you're thinking about managing capital levels.

Yes, so I think, Roberto touched on it right at the beginning of the call, Adam, and I think we're certainly open for M&A, so we're, in terms of the usual discussion around how our conversations, I think we actively engage in conversations, so I think we that remains consistent, so we're certainly open. And actively looking at at opportunities that may present themselves in the in the marketplace here, so, but that's going to be, I think, consistent with the discipline around. Transactions that make sense for for us to do that we think deliver value for shareholders. So with that caveat, I think, we continue to look at opportunities and you know are hopeful that that we'll be able to continue to find situations that make sense as we have done in the past as far as capital priorities. I think those also remain consistent, we want to fund the growth of the banks. We want to have, capital that we can use opportunistically for M&A. We want to, have, a stable, and growing, dividend that we can, comfortably afford. And we have the safety valve, which is, we have a buyback authorization in place and when we have opportunities to acquire our stock at attractive levels, we have the flexibility to do that.

Got it. And then, I appreciate the comments about, crossing 10 billion organically next year, but I was just curious if you could size up the estimated impact from Durban.

I think I'm glad you asked the question because we get, we have not been asked that question directly on the call, so I think for Durwin today as we would look at the impact it would be somewhere between 4.5 to $5 million on the and that includes the FDIC effect as well.

And that would, as if we cross at any point in 2026, the Durban impact doesn't really go into effect until July 1st of the following year, so that would be 2027, whereas the effect of higher insurance costs comes after four consecutive quarters above $10 billion.

Got it.

Thank you for asking thank you.

For asking. Yeah, no, and thank you for asking the question because now we have that on the on the record.

Yeah, no problem. If I could squeeze in one more, just, I appreciate the comments on Byline anticipating and preparing for the government shutdown, but I was curious if you could just touch on how the government shutdown has impacted your SBA business so far, and is there an upcoming deadline where it will materially impact your gain on sale in the 4th quarter?

Very good question. And as we have been in the SBA business for some time, so you know we've had to navigate through shutdowns before, so our team is very experienced in terms of being able to navigate through usually the the short-term, impact of a shutdown, so.

I think the first thing I would say is from an origination standpoint we continue to be active in originating SBA loans so that, continue to market, continue to TRY to originate, new business. On things that are in the pipeline, what we do is we tend to, in anticipation of a shutdown, we pull POP numbers so that we can continue to fund and close those loans given that we have the highest designation in the program as a under the preferred lender program.

The thing that potentially gets impacted, and it typically is a timing issue is During a shutdown we cannot sell and settle loans, so to the degree that we have loans that are available for sale and ready to be sold and the shutdown is still in effect, then we are effectively holding those loans until you know the the, government is back to work and we can then sell the loans in the secondary market and that's typically a timing. Issue.

So I would say in the short run, unless we really get here into a protracted shutdown where we're here, let's say, mid November or so, and the government is still not back to work. That that may impact, the timing of, loans that we would otherwise would be selling in the 4th quarter. We may then, sell probably in the in the 1st quarter, so that would be the short-term impact and obviously that has a positive effect too, because we're essentially, even though we can't sell them, so yes, there might be a delay or a timing issue with gain on sale income, we actually earn the carry on the loan because we'll carry the loans on our on our balance sheet. So, but that's hopefully that answers your question and I think that's the that's in short the the summary on that.

Yeah, I really appreciate the color and thanks for taking my questions.

Thanks.

Thank you very much. Our next question comes from Brian Martin from Janie Montgomery Scott. Brian, your line's not open.

Hey, good morning, everyone. Congrats on the quarter.

Thank you, Brian. Thanks, Brian.

Tom, you mentioned in your remarks, I think on the on the deposit mix change it sounds as though maybe that may bounce back a little bit with the with the GDA just in terms of how to think about, kind of margin. Some of that was seasonal, the strong growth this quarter and the mix changes that you think it's kind of sustainable where that mix is at today.

No, that's correct. It's seasonality. There are outflows in GDA.

You know.

Yeah, gotcha. Okay, alright, and then, can you just talk a little bit about you guys talked about the competitive landscape I guess heard from several other banks recently just the competition has gotten stronger on the deposit side and even on the loan side in in the market. What you're seeing competitively is it sounds like it's gotten a little bit easier from your commentary, but that's over time rather than just kind of recently, but just the competitive landscape just a little commentary if you can on loans and deposits.

I, it's still competitive. I would just again remind everyone, right? We, we're still a relationship bank, we bring in core deposits with our commercial accounts and that helps support.

Our margin and our spread, so it's not all at the margin funding that's going on here so that we're benefiting from that and then I think just being short on the CD book has allowed us to reprice just given the expectations of more cuts to come here.

So it's still competitive, I think you can see where the market is trading or, offers are for new money, so to speak, but it's more about the relationship and the small business banking relationships and our commercial relationships.

Brian, just to add to one thing on the question on the, particularly on the asset side, I think I think Tom is spot on, in that, it's always competitive, but look, I, when you look at Markets in general, whether it's investment grade, whether it's high yield, spreads are at all times.

Tight levels so I I it's not inconsistent to think that you know some of that would spill in into kind of the market and from and yeah, do we see some of that yes, some businesses have gotten, a little bit more competitive or there's more competition people are willing to trade off a bit more in pricing in order to get, high-quality transactions but. It's always competitive and you know it's you just have to manage your business accordingly.

Gotcha. No, I appreciate that, Alberto, and, maybe just one back to the the margin, just one comment, Tom, I guess it sounds like, obviously good expansion in the quarter, but it sounds like even with that expansion you kind of went through the the benefit from, you had the impact on the sub debt and they're just trying to get a sense for maybe if you can talk or give a little thought on where the where the margin given. The seasonality that comes back on the DDA and then the impact of, that sub debt in the quarter kind of where did the margin kind of end the month or exit the quarter in September, just as kind of a starting point as we look forward.

You, Brian our NII guidance is still right in the same range. It's a little bit lower, on the low end just because we are expecting two cuts here in the 4th quarter. So we are still asset sensitive and we will have some slight decline in net interest income from that. So the margin would go down a little bit, I would say, to be determined based on the Fed cuts.

Okay.

Alright, and maybe just the last one.

Yeah, I hear you. A lot of pos it's.

You Know Related. It's about $1.5 million related to the interest expense on the sub debt that goes away, so that benefits us.

We have earning asset growth that benefits us, so you know we still think we're in the same range.

Yeah, okay, I appreciate that, Tom. And then the last one for me was, can you guys just give a little comment here and just talk a little bit about the the commercial payments team and kind of where that, kind of what that business is and where it's, what your expectations kind of high level are without just so we can watch that going forward and thank you for taking the questions.

Sure, you bet, so I think earlier in the year we we announced and there's there's some we we actually got some picked up and and press and that we had we had hired a team, some experienced bankers, some of our bankers here had worked with these individuals before. So we had an opportunity to really bring on board high-quality talented individuals and we were fortunate to do that.

But the gist of that business is really a commercial payments business. So think about high.

Trying to do business with businesses that are, originate a lot of ACH transactions, process payroll, for example, so you would have, payroll processors in that in that business, as well as, looking to be a sponsor bank for issuing and acquiring debit or prepaid cards. So that in summary, Brian, that's kind of the gist of the business, I like to use the term commercial payments because it's really more on the commercial banking side as opposed to this is not a retail product this is not something that's targeted at consumers. It's really trying to, do business with program sponsors that are high users of, payment products. And so far I think as I said on the comments.

Initially it's about building the infrastructure, having the proper controls, making sure that we have, the necessary hires to support the team, not just from a sales standpoint, but, operationally and from a risk management standpoint. So that's been completed.

We've been actively, calling and.

Trying to start building the business, the pipelines are, growing.

We have, customers that were in the process of onboarding. These are, as you could probably, imagine, these are not. These are there there's more to onboarding a high volume, type, commercial customer as opposed to a simple, a more simpler, kind of loan and the posit basic relationship so the the onboarding process is a little bit lengthier, but we feel good where the team is, the pipeline is building and we'll start seeing. The impact of that, in 2026 and beyond, so we're super excited about that, segment of our business.

Gotcha. And just to clarify, how those credits are typically are the smaller granular credits? Are they larger credits? What's kind of the typical, size range in those transactions?

Yeah, there's very little in credit, if any. It's really just a function more on the deposit side and on the treasury management side, right?

Gotcha. Okay, I appreciate that. Thanks guys.

Thanks Brian. Brian.

Thank you very much.

As a reminder, if you'd like to raise a question on today's call, please signal now by pressing start by one on your telephone keypad. Our next question comes from Steve Brandon Rudd from Stevens. Brandon, your line's not open.

Hi hey, Brian, most of my questions have been, asked and answered already, but maybe just one modeling.

Question here, do you have the amount of fixed rate loans that are maturing over the next 12 months and how those yields compare to your new or origination yields?

Yes, for 2026 it's roughly like $750 million.

A&I would say that, again, depending on what happens with the forward curves, rates are at or slightly higher than where we are today.

Okay, got it. So there's still a, there's still a lot that I, yes.

Got you okay.

And May be just one because it was the topic early in the earning season I should ask.

Can you remind us of your NDFI exposure and what clients fall into that.

Bucket for You.

Yeah, it is so a general comment. So, Brandon, we have a roughly around $221 million that we would categorize in the call report as NDFI so that represents, just under 3% of our total loan portfolio. The one thing I would tell you about that that consists of. Commercial related transactions and business that we have done for a long time so we are not that doesn't include anything we haven't started anything for example to have a business that's focused on financing you know private credit funds or. Financing structured asset backed structured transactions.

These are things like, we finance, for instance, the acquisition of practices where a registered investment adviser acquires another small registered investment advisor and we finance that that practice.

So there's a lot of granularity in that exposure and. It's not the, I would say it's an exposure that's materially different than, for example, the couple of cases that you guys saw this quarter related to NDFI lending by some other institutions.

Got it.

Okay. Thank you and then.

I think you're comment on expenses in the fourth quarter.

Similar to 32, so $59 million on a core basis. Is that also a good run rate to start off with for 2026 and then later on in in inflation and growth there?

We're not really giving guidance on 26, but I would just say that there's incentive comp that's built in this year that in theory, we reset for next year, so higher performance this year is warranting higher incentives. So we start over and I would expect those expense numbers to be lower.

Got it.

Okay, thank you for taking my question.

You back.

Thank you very much. Our next question comes in, excuse me, Matthew Wrent from KPW. Matthew, your line is not open.

Hey everybody, I hope everybody's doing well today. Just a follow-up to the expense question, I appreciate the guidance for next quarter. In the prepared remarks you mentioned that you believe you can get the efficiency ratio lower.

So I was wondering if there was any initiatives you were contemplating or.

If there's any new technologies you were investing in that could drive operational efficiency.

Yes, good question, Matt. I think maybe the right way to think about it is we're, this is something that we're constantly looking at. We're constantly looking for ways in which we can operate more efficiently.

As you have seen, if you look at the trend with our efficiency ratio, it tends to bounce up. I think we've been in that kind of 49%, 52% range, which, compared to others compared to peers, I think we fare very well with it. What I would highlight with that is, it's something that we always want to be focused on because it provides us with investment capital to reinvest back into the business. So I wouldn't view it as just we have a program that we're doing and we're trying to execute against that program. We're constantly looking for ways in which we can, TRY to drive that efficiency as low as we can, or at least we can maintain it in at the levels kind of where it's at today so that we can generate opportunities for reinvestment back into the business.

Got it, thank you. I appreciate the call. I'll step back.

Thank you very much.

Next question comes from when Yannara, Bohane from Hope Group.

Jara, your line is not open.

Hi, good morning. This is Aer on for Brandon from Happy Group.

First question is, just to do with capital. We noticed that the share repurchasing kind of went down this quarter. Any thoughts on creating a more active repurchase program again and how you're thinking of reinvesting capital?

Yeah, I think consistent with the priorities that we mentioned.

Earlier in the call, you, it's, I think capital priorities is, be able to support the growth of the company, support organic growth, have capital flexibility to pursue M&A consistent with, transactions that, like transactions we've done in the past, transactions that make sense that meet our criteria we certainly want to. Be able to execute on that and have the flexibility to do so, maintain a growing, comfortable, dividend over time and and the last thing is really the the safety valve, which is really, if we find ourselves having ex access capital and we have opportunities to acquire the stock at what we think are attractive levels for shareholders, then we would do that.

I was like thank you. And then my follow-up question is to do with new loan yields. So you guys originated 260 million of orig originations this quarter. Can you speak to where new paper price this quarter in relation to the portfolio yield of 7.14%?

Sure, this is Tom. I mean, again, depending on the asset class, you do have different yields, but I would still say that spreads are 250 over sulfur to 300 over and then obviously the SBA business is higher than that.

Thank you. That's all my questions.

Great, thank you.

Thank you.

Thank you very much. As a reminder, if you would like to raise a question on today's call, please signal now by pressing one on your telephone keypad.

Our question is a follow-up from David Long from Raymond James. David, your line is not open.

Hey guys, I just wanted to follow-up on credit. The two things one, the reserve level.

Looks like reserves were released in the quarter. Was that more a function of loan mix portfolio performance, or the economic outlook?

I think it was more around the resolution of loans with specific reserves, David, so we worked those assets out.

We took the charges against the Pacific reserves, and we don't have those reserves anymore.

Got it. And then with the SBA shutdown, how is that going to impact your reserving? I mean, if you're going to hold on to these loans potentially a little bit longer.

You just talk through that process and how you think about that.

I mean we would look we would kind of if we're holding, I think that it's a good question so thank you for asking so if we're holding the full loan, as opposed to the, call it just the the unguaranteed portion only.

We would have to be thinking about a a more protracted shutdown they would, we would still probably carry those loans as help for sale but to answer the the philosophical question as to how would we think if we were balance sheeting those loans, how would we think about setting reserves, I think we would look through the guaranteed portion and look at the at the unguaranteed exposure and then reserve accordingly.

Okay awesome thanks guys appreciate.

It You bet. Thanks, Dave.

Thank you very much. Our next question is a follow-up from Brian Martin from Jenny Montgomery Scott. Brian, your line is now open.

Yeah, thanks guys. Just one last one for me was on the going back to the M&A for just one moment. It's given this greater priority than the buyback.

Can you just remind us, Alberto, just in terms of what what you're looking for in a transaction, what's important on the M&A opportunities you're going to consider and does it matter larger or smaller today or if you think about doing multiple deals at once, just TRY and understand that dynamic.

Thank you.

Yeah, I think that still very consistent with what we think is the opportunity set here in Chicago. So, broadly, Brian, I think institutions between let's say $400 million and and up to maybe, a couple billion dollars, obviously we've grown a bit.

So we can, we have the ability to tackle something a little bit larger today than let's say what we did, 2 years ago or 3 years ago.

The geography is still consistent, the greater Chicago metropolitan area, that means, does that mean strictly just the The city limits of Chicago, no greater Chicago, the suburbs, maybe going all the way up to Milwaukee, maybe going down, a bit into into northwest Indiana. I think that's that those are markets consistent with that.

Financially attractive, strategically attractive, and we pay, as you, as we pay a lot of attention to deposits.

If we think about the last 3 transactions that we've done, those were essentially transactions for us to acquire deposits, and then, redeploy those funds over time into the different lending businesses that we have. So it would have to be consistent, with that, but each opportunity is different, each situation is different, and the good news is.

We built a team and we have a lot of experience with the team that's here that's done transactions here as opposed to just general experience that we may have from from just being, in the business and and having done M&A over the years. So we feel good about our team, our process, our playbook, and I think hopefully as as you guys can have seen the results, show that.

In our results, I should say.

Yeah, all right, thank you for the insight, Alberto. I appreciate it.

Thank you very much. We currently have no further questions, so I'd like to hand back to Mr. Paracchini for any further remarks.

Great. So, thank you, Carly, and thank you all for joining the call today and for your interest in Byline.

We want to wish you a happy Halloween, a happy Thanksgiving holiday, a happy holiday season, and we look forward to speaking to you again in the new year.

Thank you.

As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your lines.