Press release·08/07/2026 01:15:44

Overview

Byline Bancorp, Inc. is a bank holding company headquartered in Chicago, Illinois that conducts all its business activities through its subsidiary, Byline Bank. Byline Bank offers a range of banking products and services to small and medium-sized businesses, commercial real estate and financial sponsors, as well as consumers. The company also provides small ticket equipment leasing solutions and participates in U.S. government guaranteed lending programs.

Byline Bancorp reported strong financial results for the second quarter and first half of 2026. Net income for the three months ended June 30, 2026 was $40.2 million, or $0.90 per diluted share, up from $30.1 million, or $0.66 per diluted share, in the same period of 2025. For the six months ended June 30, 2026, net income was $77.8 million, or $1.73 per diluted share, compared to $58.3 million, or $1.30 per diluted share, in the first half of 2025.

The increases in net income were primarily driven by growth in net interest income and a decrease in the provision for credit losses, partially offset by higher income taxes. Byline Bancorp’s net interest margin expanded to 4.28% in Q2 2026 from 4.18% in Q2 2025, and to 4.30% in the first half of 2026 from 4.13% in the same period of 2025.

Revenue and Profit Trends

Net interest income, which accounts for the majority of Byline Bancorp’s revenue, increased by $4.9 million, or 5.1%, to $100.8 million in Q2 2026 compared to the prior year period. For the first six months of 2026, net interest income grew by $16.5 million, or 9.0%, to $200.7 million. The improvements were driven by higher yields on the loan and lease portfolio as well as lower funding costs, particularly on deposits.

Non-interest income also contributed to the company’s performance, rising 16.6% to $16.9 million in Q2 2026 and increasing 0.3% to $29.4 million in the first half of 2026. Key drivers included higher fees and service charges on deposits, growth in wealth management and trust income, and increased gains on sales of loans.

The provision for credit losses declined by $4.8 million to $7.2 million in Q2 2026 and decreased by $8.4 million to $12.7 million in the first six months of 2026 compared to the same periods in 2025. This reflected improvements in the credit quality of the loan portfolio.

Non-interest expense decreased by $3.1 million, or 5.2%, to $56.5 million in Q2 2026 and declined by $2.4 million, or 2.0%, to $113.7 million in the first half of 2026 versus the prior year periods. The decreases were primarily due to lower salaries and employee benefits, occupancy and equipment expenses, and legal and professional fees.

As a result of these trends, Byline Bancorp’s profitability metrics improved. The return on average assets increased to 1.63% in Q2 2026 from 1.25% in Q2 2025, and the return on average stockholders’ equity rose to 12.05% from 10.24% over the same period. For the first six months of 2026, the return on average assets was 1.59% compared to 1.25% in the prior year period, while the return on average stockholders’ equity was 11.74% versus 10.28%.

Strengths and Weaknesses

One of Byline Bancorp’s key strengths is its diversified loan portfolio, which helps mitigate risk. As of June 30, 2026, commercial real estate loans made up 33.4% of the total loan and lease portfolio, commercial and industrial loans accounted for 42.5%, and lease financing receivables comprised 9.6%. The company has also maintained a relatively stable mix of owner-occupied and non-owner occupied commercial real estate loans.

Another strength is Byline Bancorp’s position as a leading originator of SBA loans, particularly the SBA 7(a) program. This government-guaranteed lending business provides a stable source of revenue and helps manage credit risk. At the same time, the company’s reliance on this program exposes it to potential changes in SBA and USDA regulations and funding limits.

The company’s investment portfolio, consisting primarily of mortgage-backed securities and U.S. government agency bonds, provides additional liquidity and diversification. However, the portfolio’s sensitivity to interest rate movements could be a potential weakness if rates rise sharply.

Byline Bancorp’s efficiency ratio, which measures non-interest expense as a percentage of revenue, has improved from 52.61% in Q2 2025 to 46.93% in Q2 2026, indicating better cost management. The adjusted efficiency ratio, which excludes certain one-time items, also declined from 48.20% to 46.51% over the same period. This suggests the company is effectively controlling its operating expenses.

A potential weakness is the company’s exposure to the commercial real estate market, particularly non-owner occupied CRE loans, which represented 70.2% of Byline Bank’s total capital as of June 30, 2026. While the CRE portfolio appears well-diversified, a downturn in the commercial real estate sector could pose risks.

Outlook

Byline Bancorp’s management expects the company’s effective tax rate to be approximately 25-27% for the full year 2026. This is higher than the 23.7% and 25.0% effective tax rates reported in the first half of 2025 and 2026, respectively, due to lower discrete tax benefits.

The company’s loan portfolio is well-positioned, with 56.5% of loans and leases bearing floating interest rates as of June 30, 2026. This should help Byline Bancorp benefit from future interest rate hikes by the Federal Reserve. However, the potential for a economic slowdown or recession could lead to higher credit costs and pressure on profitability.

Byline Bancorp’s strong capital position, with a tangible common equity to tangible assets ratio of 11.36% as of June 30, 2026, provides a buffer against potential risks. The company’s regulatory capital ratios also exceed well-capitalized thresholds, giving it flexibility to continue growing its business.

Overall, Byline Bancorp appears to be well-managed, with a diversified business model, solid credit quality, and the ability to adapt to a changing interest rate environment. The company’s focus on small and medium-sized businesses, commercial real estate, and government-guaranteed lending should continue to drive growth, though it will need to closely monitor its CRE exposure and manage operating expenses to maintain its strong profitability.