Byline Bancorp, Inc. (NYSE:BY) Q2 2023 Earnings Call Transcript

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Brian Martin: Maybe just two last ones. Maybe for Mark, just on the trends in criticized and classifieds. Can you give any update on the quarterly numbers when we’ll see the 10-Q come out?

Mark Fucinato: Yes. We made some good progress, Brian, in those areas. We’re still seeing opportunities to resolve any criticized, classified loans that we have. As you know, there’s a lot of capital out there. And so people are looking at the opportunities, and we’re taking advantage of those. But we’re looking for business solutions on these deals with the customers. And we were able to execute on those very well in the second quarter in both our conventional and our SBC portfolios. So will that continue? The capital is out there, we have to make good judgments on strategies with these customers in an effort to manage those numbers. But even REO, which we don’t have a lot of, there’s a hunger for REO. If you want to buy anything that we have that’s real estate oriented. And we were able to advantage in some of that in the second quarter also.

Alberto Paracchini: Yes. If I could Brian, just to add to what Mark said. I think for each asset, our approach is we have – we go asset by asset. We have a strategy on each and every single asset. And then you look at alternatives relative to the value ultimate, the present value of what that strategy is likely to yield you. And to the degree that you can accelerate and you can be quicker by disposing assets vis-a-vis where your strategy was, then we opt to perhaps take advantage of that. But it’s really just a function of asset by asset, what’s the strategy, what maximizes here, the recovery on this particular situation and then comparing that against opportunities that the market kind of brings to you. So that’s just a bit of color on the philosophy and strategy.

Thomas Bell: Brian, just to follow-up on the net fee income. It’s roughly $337,000 for the quarter, Q2.

Brian Martin: And then just maybe the last one maybe for Alberto. As we think about the margin, I know there’s a lot of moving prior to the next couple of quarters. But just over time, as far as the margin, your model should be able to support. I mean, if you’re in the 4% range or you kind of drift down a little bit legacy and then adding the Inland transaction and you kind of get back to where you are today. Is the margin – can you talk about what level of margin sustainability is over time over the longer term for the operation based on kind of the business mix you guys have?

Thomas Bell: Yes, Brian, I’ll take that one, at least to start. Again, we’re asset sensitive. So we expect to make a little more money here given the Fed increase. But the market is now anticipating the Fed kind of on hold through the end of the year, I guess, data dependent, so we’ll have to see. And so if rates do decline as the market is expecting next year on the short end, we would stand to give up some income here because of our asset sensitivity. But as you know, we continue to work on balance sheet hedges to protect the rates down and primarily working on organic strategies on balance sheet to prepare for the rates down scenario.

Brian Martin: I guess maybe last one for me, just more big picture. You talked about the $10 billion level. I mean just trying to understand how you guys are viewing that as if it’s something just organically keep growing go over it? Or is there something you see having to do something from an M&A perspective to get over in a more significant way? You guys are all familiar with it, certainly as you’ve outlined. But just trying to understand how you’re thinking about it as you approach it?

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