10-K: Byline Bancorp Reports Strong 2025 Earnings Growth, Strategic Acquisition

Sentiment:

Annual Report 27 February 2026 5:18 PM

Byline Bancorp, Inc. reported a 7.7% increase in net income to $130.1 million for 2025, driven by loan growth and a strategic acquisition, despite rising credit loss provisions.

Delay expectedThe compliance date for the Small Business Lending Rule (amending Regulation B of the ECOA) was initially October 1, 2024, but was extended to July 1, 2026, by interim final rules.A proposed rulemaking in November 2025 further suggests extending the compliance date for all entities subject to the small business lending rule to January 1, 2028.

Capital raiseOn August 7, 2025, the Company issued $75.0 million in aggregate principal amount of 6.875% fixed-to-floating rate subordinated notes that mature on August 15, 2035. These notes qualify as Tier 2 capital for regulatory purposes.The Company repurchased 922,729 shares of its common stock for $23.7 million under a stock repurchase program during 2025.A new stock repurchase program authorizing the purchase of up to 2,250,000 shares of outstanding common stock was approved on December 11, 2025, effective January 1, 2026.

Better than expectedNet income increased by 7.7% year-over-year.Diluted EPS increased from $2.75 to $2.89.Net interest income grew by 10.7%, and net interest margin improved by 25 basis points.Total assets and deposits showed healthy growth.The average cost of deposits decreased significantly, contributing to margin expansion.The efficiency ratio improved, indicating better operational leverage.

Summary

Net income for the year ended December 31, 2025, increased by $9.3 million, or 7.7%, to $130.1 million, compared to $120.8 million in 2024.
Diluted earnings per share rose to $2.89 in 2025 from $2.75 in 2024.
Total assets grew by $156.1 million, or 1.6%, reaching $9.7 billion as of December 31, 2025.
Total deposits increased by $188.8 million, or 2.5%, to $7.6 billion as of December 31, 2025.
Net interest income increased by $37.3 million, or 10.7%, to $385.3 million in 2025.
The net interest margin improved by 25 basis points to 4.22% in 2025, primarily due to a 60 basis point decrease in the average rate paid on interest-bearing liabilities.
Total loans and leases outstanding increased by $602.5 million, or 8.7%, to $7.5 billion as of December 31, 2025, driven by commercial and industrial loans and commercial real estate.
The acquisition of First Security Bancorp, Inc. was completed on April 1, 2025, for approximately $41.5 million, resulting in $147,000 in goodwill.
The provision for credit losses increased by $9.1 million to $36.1 million in 2025, mainly due to loan portfolio growth and higher non-performing loans.
Non-performing loans and leases increased to $71.3 million (0.95% of total loans) in 2025 from $62.1 million (0.90%) in 2024.
The company repurchased 922,729 shares of common stock for $23.7 million under a stock repurchase program in 2025.
A new stock repurchase program authorizing the purchase of up to 2,250,000 shares was approved for 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to strong financial performance, including significant net income and net interest income growth, improved efficiency, and strategic expansion through acquisition. While there's an increase in credit loss provisions and non-performing loans, the overall financial health and capital position remain robust.

Positives

Net income increased by 7.7% to $130.1 million in 2025, demonstrating strong profitability growth.
Diluted earnings per share increased to $2.89 in 2025, up from $2.75 in 2024.
Total assets grew to $9.7 billion, and total deposits increased to $7.6 billion, indicating balance sheet expansion.
Net interest income increased significantly by 10.7% to $385.3 million, reflecting improved core banking performance.
Net interest margin improved by 25 basis points to 4.22%, driven by a lower average cost of deposits (2.17% in 2025 vs. 2.61% in 2024).
The efficiency ratio improved to 51.83% (50.37% adjusted) in 2025, indicating better cost management relative to revenue.
Return on average assets increased to 1.36% (1.41% adjusted) in 2025.
Successful completion of the First Security Bancorp, Inc. acquisition on April 1, 2025, expanding market presence.
Strong organic growth in the loan and lease portfolio, particularly in commercial and industrial loans and commercial real estate.
Byline Bank was the tenth most active originator of SBA 7(a) loans nationally and the most active in Illinois for the fiscal year ended September 30, 2025.
Total stockholders' equity increased by $176.4 million, or 16.2%, to $1.3 billion.
Byline Bank was considered 'well capitalized' as of December 31, 2025, exceeding all regulatory capital requirements.

Negatives

Provision for credit losses increased by $9.1 million to $36.1 million in 2025, indicating higher expected loan losses.
Non-performing loans and leases increased to 0.95% of total loans in 2025 from 0.90% in 2024, suggesting a slight deterioration in asset quality.
Net loan accretion income decreased by $3.1 million to $10.4 million in 2025, and is expected to continue to decline.
Loan servicing revenue decreased by $644,000, or 5.0%, in 2025.
Net gains on sales of loans decreased by $1.8 million, or 7.4%, primarily due to lower market premiums for U.S. government guaranteed loans.
The average yield on interest-earning assets decreased by 18 basis points to 6.28% in 2025.

Risks

Uncertainty regarding domestic, foreign, and geopolitical developments, and the United States and global economic outlook that may impact market conditions or affect demand for certain banking products and services.
Unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than anticipated or changes in the value of investments.
Deterioration in the financial condition of borrowers resulting in significant increases in loan and lease losses and provisions for those losses.
Competitive pressures in the financial services industry relating to both pricing and loan/lease structures, which may impact growth rate.
Unanticipated changes in monetary policies of the Federal Reserve or significant adjustments in the pace of, or market expectations for, future interest rate changes.
Adverse effects on information technology systems resulting from failures, human error, or cyberattack, including disruptions or security breaches at third-party service providers.
Greater-than-anticipated costs to support business growth, including investments in new lines of business, products, services, or technology.
The impact of possible future acquisitions, including integration costs and burdens.
Legislative or regulatory changes, particularly potential changes in regulation, supervision, examination, and enforcement priorities of federal banking agencies.
Changes in Small Business Administration ('SBA') and U.S. Department of Agriculture ('USDA') U.S. government guaranteed lending rules, regulations, loan products, and funding limits.
Inability to attract, retain, or the loss of key personnel or an inability to recruit appropriate talent cost-effectively.
Underestimation of credit losses inherent in the loan and lease portfolio, leading to losses in excess of the allowance for credit losses.
Dependence on the accuracy and completeness of information about customers and counterparties, which if inaccurate, incomplete, or fraudulent, could result in losses.
Decline in the value of financial instruments owned, particularly investment securities, due to market interest rate increases or credit losses.
Lack of liquidity affecting operations, potentially due to inability to raise funds through deposits, borrowings, or asset sales.
Dependence on dividends from Byline Bank, which are subject to federal and state regulatory limitations.
Inability to implement growth strategy or manage costs effectively, leading to lower earnings or profitability.
New lines of business, products, or technologies may subject the company to additional risks, including unintended consequences from AI implementation.
Significant dependence on the real estate markets in which the company operates, with a significant percentage of the loan portfolio secured by real estate.
Occurrence of fraudulent activity, breaches or failures of information security controls, or cybersecurity-related incidents.
Failure to keep pace with rapid technological change in the financial services industry, including the emergence of AI.
Specific risks associated with originating SBA and other government guaranteed loans, including potential loss of SBA Preferred Lender status or changes to program rules.
Inaccuracy of accounting estimates and risk management processes and controls, particularly for allowance for credit losses, intangible asset valuation, and fair value estimates.
Potential impairment of goodwill, which could adversely impact results of operations and financial condition.
Uncertainty surrounding potential legal, regulatory, and policy changes by the presidential administration in the United States.
Expected consolidated assets to exceed $10 billion, which may result in increased regulation, supervision, and compliance costs, and reduced revenue from interchange fees.
Risks associated with completed and potential acquisitions, including execution risks, failure to realize anticipated benefits, and integration challenges.
Loss of deposits increasing funding costs and negatively affecting liquidity.
Highly competitive and changing industry and market area, facing competition from larger banks, FinTech companies, and other financial institutions.
Principal stockholder, MBG Investors I, L.P., has significant influence, and its interests could conflict with other stockholders.
Future sales of common stock in the public market, including by pre-IPO stockholders, could lower the stock price.

Future Outlook

Management expects loan accretion income to continue to decline as acquired loans mature, assuming no additional acquisitions. The effective tax rate for 2026 is expected to be approximately 25% to 27%. The company anticipates exceeding $10 billion in total consolidated assets in the future, which will subject it to increased regulation and supervision, potentially leading to higher compliance costs and reduced revenue from debit card interchange fees. The CFPB has proposed changes to the small business lending rule that would reduce the number of institutions subject to it and the amount of data collected, extending the compliance date for all entities to January 1, 2028.

Management Comments

Our aspiration to be the preeminent commercial bank in Chicago drives our focus on market expansion, deepening client relationships, and fostering a strong-cross sell culture to enhance retention and revenue diversification.
We also prioritize process improvement and productivity enhancements, leveraging technology and best practices to improve efficiency, scalability, and the overall customer experience, all with commitment to disciplined oversight and aligned risk practices.
We believe our small business customers value our ability to provide convenience and access to local, responsive decision makers.
We plan to continue to leverage our seasoned management team, the attractive market opportunity in the Chicago metropolitan area, our diversified lending approach and our track record of successfully integrating acquisitions to drive future growth.
We believe that having a deep understanding of customers, longstanding ties to the communities in which we operate, a strong market position, and exceptional employees allow us to provide the attention, responsiveness, and customized service our customers seek while offering a diverse range of products to serve a variety of needs.
At Byline, we are a bank that believes in putting our name behind everything we do, and we are here to roll up our sleeves and help our customers write their stories. Our #1 core value, reflected in our 'Things That Matter,' is our People, all of whom are encouraged to live out a shared purpose of making peoples lives better, helping businesses thrive, and strengthening the communities we serve.
We continue to cautiously manage our deposit pricing strategies to seek to maintain our net interest margin.

Industry Context

StockSavvy.ai notes that Byline Bancorp's performance in 2025, characterized by increased net income, asset growth, and an improved net interest margin, reflects a strong position within the competitive Chicago metropolitan banking market. The strategic acquisition of First Security Bancorp aligns with broader industry trends of consolidation among regional banks seeking to expand market share and achieve economies of scale. The increase in provision for credit losses and non-performing loans, while a negative, is a common challenge across the banking sector, particularly in a dynamic interest rate environment and with evolving economic conditions. The company's focus on SBA lending and small ticket equipment leasing provides diversification, which is a prudent strategy given the cyclical nature of traditional commercial real estate and industrial lending. The ongoing regulatory scrutiny, especially regarding cybersecurity and consumer protection, is a universal challenge for financial institutions, and Byline's proactive measures are in line with industry best practices.

Comparison to Industry Standards

Byline Bank was the tenth most active originator of SBA 7(a) loans in the country and the most active SBA 7(a) lender in Illinois for its fiscal year ended September 30, 2025, indicating strong performance in this niche compared to national and state peers.
The net interest margin of 4.22% in 2025 is competitive within the regional banking sector, especially given the decrease in the average cost of deposits, which suggests effective liability management compared to peers facing funding competition.
The efficiency ratio of 51.83% (50.37% adjusted) demonstrates a solid operational efficiency, comparing favorably to many regional banks that often target efficiency ratios below 60% to be considered high-performing.
The increase in non-performing loans to 0.95% of total loans, while an increase, remains within manageable levels for a regional bank, though it warrants close monitoring relative to industry averages for similar loan portfolios.
Byline Bank's 'well capitalized' status with a CET1 ratio of 13.35% and Total Capital Ratio of 14.57% significantly exceeds regulatory minimums and is generally robust compared to global benchmarks and other U.S. regional banks, providing a strong buffer against potential losses.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Executive Vice President, General Counsel and Corporate Secretary	NA	Brian Doran	January 2025	Appointment
Corporate Treasurer	Thomas J. Bell III	Douglas Howe	December 2025	Appointment

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Policy Adoption	Board of Directors adopted a new stock repurchase program authorizing the purchase of up to 2,250,000 shares of outstanding common stock, effective January 1, 2026.	January 1, 2026	Enhances capital management and shareholder returns, providing flexibility for market-driven repurchases.
Policy Renewal/Amendment	Second Amendment to the Second Amended and Restated Term Loan and Revolving Credit Agreement, renewing the revolving line-of-credit facility of up to $15.0 million and extending its maturity date to May 24, 2026.	May 25, 2025	Ensures continued access to a flexible credit facility for liquidity management.
Regulatory Compliance	Company elected to opt into the regulators joint current expected credit losses ('CECL') transition provision, fully phasing in the capital impact as of January 1, 2025.	January 1, 2025	Aligns capital calculations with new accounting standards, potentially impacting capital ratios and provision for credit losses.

Legal Proceedings

The company is not presently a party to any legal proceedings the resolution of which management believes would have a material adverse effect on its business, financial condition, liquidity, results of operation, cash flows or capital levels.

Related Party Transactions

Loans to related parties (executive officers, directors, principal stockholders, and their affiliates) are on substantially the same terms as those for comparable unrelated persons and do not involve more than normal risk of collectability. No material loans to related parties as of December 31, 2025 and 2024.
Deposits from related parties were not material as of December 31, 2025 and 2024.
No receivables outstanding from related parties as of December 31, 2025 and 2024.

Stakeholder Impact

**Shareholders:** Positive impact from increased net income, diluted EPS, and an improved efficiency ratio. The new stock repurchase program and continued cash dividends ($0.40 per share in 2025) indicate a commitment to shareholder returns. However, increased provision for credit losses and non-performing loans could be a concern.
**Employees:** The company emphasizes 'Our People' as its #1 core value, with a focus on attracting, retaining, and developing talent, competitive compensation, benefits, and professional development. Share-based compensation expense increased, indicating continued employee incentives. Management changes in key roles suggest ongoing strategic adjustments.
**Customers:** The acquisition of First Security Bancorp expands the branch network and service offerings, particularly in the Chicago metropolitan area. Continued focus on small and medium-sized businesses and U.S. government guaranteed lending programs aims to meet diverse customer needs. Digital banking improvements are also noted to keep pace with evolving preferences.
**Regulators:** The company remains 'well capitalized' and is subject to extensive federal and state banking regulations. Compliance with new accounting standards (CECL) and ongoing regulatory changes (CRA, small business lending rule, cybersecurity) requires significant attention and resources. The anticipated growth beyond $10 billion in assets will trigger additional regulatory oversight.
**Communities:** The company's strategic plan includes building meaningful, supportive relationships in the communities it serves, and providing greater accessibility to banking products and services to minority-owned small businesses and SMBs in lowand moderate-income areas.

Next Steps

The 2026 Annual Meeting of Stockholders is scheduled to be held on June 2, 2026.
The new stock repurchase program authorizing the purchase of up to 2,250,000 shares will be in effect from January 1, 2026, until December 31, 2026, unless terminated earlier.
Byline Bank is required to be in compliance with the small business lending rule by July 1, 2026, though a proposed rule suggests a further extension to January 1, 2028.
Additional requirements for the revised CRA regulatory framework will be applicable on January 1, 2027, unless the proposed rescission and reinstatement of the prior framework is finalized.
The company expects its effective tax rate for 2026 to be approximately 25% to 27%.
Management expects loan accretion income to continue to decline as acquired loans mature, assuming no additional acquisitions.
The company anticipates exceeding $10 billion in total consolidated assets in the future, which will trigger additional regulatory requirements and supervision.

Key Dates

Date	Description
2013	Company recapitalization and acquisition of Baytree Leasing Company LLC.
October 13, 2016	Company entered into a $30.0 million revolving credit agreement with a correspondent bank.
October 2016	Thomas Abraham became Senior Vice President, SBA Sales Manager of SBC.
June 2017	Company's Board of Directors adopted the 2017 Omnibus Incentive Compensation Plan and the Employee Stock Purchase Plan (ESPP).
May 2018	Acquisition of First Evanston Bancorp, Inc. completed.
August 7, 2018	Change in Control Severance Agreement with Brogan Ptacin dated.
October 11, 2018	Existing Negative Pledge Agreement dated.
August 2019	Mark Fucinato became Senior Vice President and Senior Credit Officer of Byline Bank.
October 2019	Michelle Johnson became Executive Vice President and Chief Risk Officer of Byline Bank. Dana Rose became Executive Vice President and Chief Human Resources Officer of Byline Bank.
January 2019	John M. Barkidjija became Executive Vice President and Head of Commercial Real Estate and Specialty Finance of Byline Bank. Brogan Ptacin became Executive Vice President and Head of Commercial Banking for Byline Bank.
February 2020	Megan Biggam became Executive Vice President of Community Banking of Byline Bank.
January 1, 2021	U.S. Congress passed the Corporate Transparency Act.
February 2021	Roberto R. Herencia became Executive Chairman and Chief Executive Officer.
November 2021	Nicolas Mando became Executive Vice President and Chief Technology and Operations Officer of Byline Bank.
January 1, 2022	Beginning of the three-year phase-in period for the capital impact of CECL adoption.
May 1, 2022	Compliance required for the federal regulators' rule concerning notification requirements for banks related to significant computer security incidents.
August 2022	Thomas J. Bell III became Executive Vice President and Chief Financial Officer of Byline and Byline Bank. Sherylle Olano became Senior Vice President and Chief Accounting Officer of Byline and Byline Bank.
October 2022	FDIC published a final rule to increase initial base deposit insurance assessment rate schedules.
January 1, 2023	Increased deposit insurance assessment rates began.
March 2023	Most recently completed CRA examination, with a rating of 'Satisfactory'.
July 1, 2023	Acquisition of Inland Bancorp, Inc. completed.
October 24, 2023	OCC, FDIC, and FRB jointly issued a final rule to revise the CRAs implementing regulations.
October 2023	FRB proposed rules to reduce the maximum permissible interchange fee cap.
January 17, 2024	Company entered into a Letter Agreement with the Federal Reserve Bank of Chicago to access the Bank Term Funding Program ('BTFP').
January 22, 2024	Company opened an advance of $200.0 million from the FRB as part of the BTFP.
May 1, 2024	IDFPR's proposed rules to implement the IL-CRA were adopted and filed with the Illinois Secretary of State.
May 2024	FDIC published a proposed rule related to incentive-based compensation.
June 25, 2024	CFPB issued interim final rules to extend compliance deadlines for the small business lending rule.
September 19, 2024	BTFP advance repaid in full.
September 30, 2024	Agreement and Plan of Merger with First Security Bancorp, Inc. dated.
December 5, 2024	Board of Directors approved a new stock repurchase program authorizing the purchase of up to 1,250,000 shares.
January 1, 2025	Capital impact of CECL adoption fully phased in. Stock repurchase program (1,250,000 shares) became effective.
January 2025	Brian Doran became Executive Vice President, General Counsel and Corporate Secretary for Byline and Byline Bank. Variable rate term loan paid in full.
March 2025	FDIC withdrew the Proposed FDIC Incentive Compensation Rule. FinCEN issued an interim final rule removing BOI reporting requirement under the Corporate Transparency Act.
April 1, 2025	Acquisition of First Security Bancorp, Inc. completed.
May 21, 2025	Company entered into the Second Amendment to the Second Amended and Restated Term Loan and Revolving Credit Agreement.
May 25, 2025	Second Amendment to the Second Amended and Restated Term Loan and Revolving Credit Agreement became effective.
June 12, 2025	Estate of Daniel L. Goodwin and Equity Shares Investors, LLC completed sale of 4,282,210 shares of common stock in a registered public offering.
June 18, 2025	CFPB issued interim final rules to further extend compliance deadlines for the small business lending rule.
July 16, 2025	Agencies issued a joint notice of proposed rulemaking to rescind the October 2023 CRA final rule and reinstate the prior framework.
August 7, 2025	Company issued $75.0 million in 6.875% fixed-to-floating rate subordinated notes maturing August 15, 2035.
August 22, 2025	Company provided notice of full redemption for subordinated notes due 2030.
September 30, 2025	SBA fiscal year ended, Byline Bank was the tenth most active originator of SBA 7(a) loans in the country and the most active in Illinois.
October 1, 2025	Company redeemed the entire $75.0 million outstanding principal amount of subordinated notes due 2030.
October 30, 2025	FDIC and OCC issued a notice of proposed rulemaking to define 'unsafe or unsound practice'.
November 13, 2025	CFPB issued a notice of proposed rulemaking to further revise the small business lending rule.
November 25, 2025	Federal banking regulators issued a proposed rule to lower the community bank leverage ratio from 9% to 8%.
December 2025	Douglas Howe appointed Corporate Treasurer of Byline Bank.
December 11, 2025	Board of Directors approved a new stock repurchase program authorizing the purchase of up to 2,250,000 shares.
December 31, 2025	Fiscal year end. Total assets $9.7 billion, total gross loans and leases $7.5 billion, total deposits $7.6 billion, total stockholders equity $1.3 billion.
January 1, 2026	New stock repurchase program (2,250,000 shares) became effective. Applicability date for the majority of the provisions in the October 2023 CRA final rule.
February 3, 2026	Record date for cash dividend of $0.12 per share declared on January 21, 2026.
February 17, 2026	Payment date for cash dividend of $0.12 per share declared on January 21, 2026.
February 24, 2026	Number of common stock shares outstanding was 45,590,691.
February 27, 2026	Date of filing of the Annual Report on Form 10-K.
June 2, 2026	Scheduled date for the 2026 Annual Meeting of Stockholders.
July 1, 2026	Byline Bank's required compliance date for the small business lending rule under interim final rules.
December 15, 2026	Effective date for ASU 2025-08 (Purchased Loans) and ASU 2025-09 (Hedge Accounting Improvements) for public business entities. Effective date for ASU 2024-03 (Expense Disaggregation Disclosures) for annual periods.
January 1, 2027	Additional requirements for CRA regulations will be applicable.
December 15, 2027	Effective date for ASU 2024-03 (Expense Disaggregation Disclosures) for interim periods.
January 1, 2028	Proposed extended compliance date for all entities subject to the small business lending rule.
September 30, 2028	Statutory deadline for the DIF reserve ratio to reach 1.35%.
August 15, 2030	Subordinated notes issued on August 7, 2025, bear a fixed interest rate until this date, then floating. Company may redeem notes quarterly starting this date.
August 15, 2035	Maturity date for $75.0 million subordinated notes issued on August 7, 2025.

Recommendation

buy

The filing indicates strong financial performance with a notable increase in net income, diluted EPS, and net interest income, coupled with an improved net interest margin and efficiency ratio. The strategic acquisition of First Security Bancorp expands market reach, and the company maintains a robust capital position, classified as 'well capitalized.' While there's an increase in credit loss provisions and non-performing loans, these are manageable within the context of overall growth and strong capital. The new stock repurchase program signals confidence in future performance and a commitment to shareholder value. These factors suggest a positive outlook for the stock.

Keywords

Banking, Financial Services, Commercial Banking, Community Banking, SBA Loans, USDA Loans, Equipment Leasing, Wealth Management, Chicago Metropolitan Area, SEC Filing, 10-K, Financial Performance, Net Interest Income, Deposits, Loans, Credit Quality, Acquisition, Capital Ratios, Cybersecurity, Interest Rate Risk

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