Byline Bancorp, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following is a discussion and analysis of Byline Bancorp, Inc.’s financial condition and results of operations and should be read in conjunction with our Unaudited Interim Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report. The words "the Company," "we," "Byline," "management," "our" and "us" refer to Byline Bancorp, Inc. and its consolidated subsidiaries, unless we indicate otherwise. In addition to historical information, this discussion contains forward looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled "Special Note Regarding Forward Looking Statements" and "Risk Factors". Byline assumes no obligation to update any of these forward looking statements.

Forward-Looking Statements

Statements contained in this report and in other documents we file with or furnish to the Securities and Exchange Commission ("SEC") that are not historical facts may constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, strategies, predictions, forecasts, objectives or assumptions of future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipates," "believes," "expects," "can," "could," "may," "predicts," "potential," "opportunity," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "seeks," "intends" and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual strategies, actions or results to differ materially from those expressed in such statements, and are not guarantees of future results or other events or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions or results, based on management’s current expectations, assumptions and estimates on the date hereof, and there can be no assurance that actual strategies, actions or results will not differ materially from expectations, readers are cautioned not to place undue reliance on such statements.

Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results or conditions to differ materially from those reflected in forward-looking statements include:

• 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, and the impact on our customers, which could impair the ability of our borrowers to repay outstanding loans and leases, impair collateral values and further increase our allowance for credit losses - loans and leases, as well as result in possible asset impairment charges;
• unforeseen credit quality problems or changing economic conditions that could result in charge-offs greater than we have anticipated in our allowance for credit losses - loans and leases or changes in the value of our investments;
• commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
• deterioration in the financial condition of our borrowers resulting in significant increases in our loan and lease losses and provisions for those losses and other related adverse impacts to our results of operations and financial condition;
• fair value estimates of certain of our assets and liabilities, which could change in value significantly from period to period;
• competitive pressures in the financial services industry in our market areas relating to both pricing and loan and lease structures, which may impact our growth rate;
• demand for loan products and deposit flows;
• unanticipated developments in pending or prospective loan and/or lease transactions or greater-than-expected paydowns or payoffs of existing loans and leases;
• inaccurate information and assumptions in our analytical and forecasting models used to manage our balance sheet;
• unanticipated changes in monetary policies of the Federal Reserve or significant adjustments in the pace of, or market expectations for, future interest rate changes;
• availability of sufficient and cost-effective sources of liquidity, funding, and capital as and when needed;
• our ability to attract, retain or the loss of key personnel or an inability to recruit appropriate talent cost-effectively;
• adverse effects on our information technology systems resulting from failures, human error or cyberattack, including the potential impact of disruptions or security breaches at our third-party service providers, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;
• greater-than-anticipated costs to support the growth of our business, including investments in new lines of business, products and services, or technology, process improvements or other infrastructure enhancements, or greater-than-anticipated compliance or regulatory costs and burdens;
• the impact of possible future acquisitions, if any, including the costs and burdens of integration efforts;
• the ability of the Company to receive dividends from Byline Bank;
• legislative or regulatory changes, particularly potential changes in regulation. supervision, examination and enforcement priorities of the federal banking agencies in regard to financial services companies and/or the products and services offered by financial services companies;
• changes in Small Business Administration ("SBA") and U.S. Department of Agriculture ("USDA") U.S. government guaranteed lending rules, regulations, loan and lease products and funding limits, including specifically the SBA Section 7(a) program, as well as changes in SBA or USDA standard operating procedures or changes to the status of Byline Bank as an SBA Preferred Lender;
• changes in accounting principles, policies and guidelines applicable to bank holding companies and banking generally;
• the impact of a possible change in the federal or state income tax rates on our deferred tax assets and provision for income tax expense;
• our ability to implement our growth strategy, including via acquisitions;
• the possibility that any of the anticipated benefits of acquisitions will not be realized or will not be realized within the expected time period;
• the risk that the integration of acquisition operations will be materially delayed or will be more costly or difficult than expected;
• the effect of mergers on customer relationships and operating results; and
• other risks detailed from time to time in filings we make with the SEC.

These risks and uncertainties should be considered in evaluating any forward-looking statements, and undue reliance should not be placed on such statements. Forward looking statements speak only as of the date they are made. You should also consider the risks, assumptions and uncertainties set forth in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the SEC on February 28, 2025, as well as those set forth in the reports we file with the SEC. We assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Overview

Our Business

We are a bank holding company headquartered in Chicago, Illinois, and conduct all our business activities through our subsidiary, Byline Bank, a full service commercial bank, and Byline Bank’s subsidiaries. Through Byline Bank, we offer a broad range of banking products and services to small and medium sized businesses, commercial real estate and financial sponsors and to consumers who generally live or work near our branches. We also offer online account opening to consumer and business customers through our website and provide trust and wealth management services to our customers. In addition to our traditional commercial banking business, we provide small ticket equipment leasing solutions through Byline Financial Group, a wholly-owned subsidiary of Byline Bank, headquartered in Bannockburn, Illinois, with sales offices in Illinois, and sales representatives in Illinois, Michigan, and New York. We participate in U.S. government guaranteed lending programs and originate U.S. government guaranteed loans. Byline Bank is a leading originator of SBA loans and was the most active 7(a) lender in Illinois for the fiscal year ended June 30, 2025.

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provision for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

First Security Bancorp, Inc. Acquisition

On April 1, 2025, we completed our acquisition (the "First Security acquisition") of First Security Bancorp, Inc. ("First Security") under the terms of a definitive merger agreement. As a result of the merger, First Security's wholly-owned bank subsidiary, First Security Trust and Savings Bank, was merged with and into Byline Bank. Refer to Note 3—Acquisition of a Business for additional discussion.

Critical Accounting Policies and Significant Estimates

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America ("GAAP") and to general practices within the banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes, which are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

These critical accounting policies and estimates include (i) determination of the allowance for credit losses, (ii) the valuation of intangible assets such as goodwill, and assessment of impairment, (iii) fair value estimations, and (iv) the determination and assessment of impairment for other intangible assets.

The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 of our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, which we filed with the SEC on February 28, 2025.

Allowance for credit losses

The allowance for credit losses ("ACL") represents management’s estimate of current expected credit losses over the life of a financial asset carried at amortized cost at an appropriate level based upon management’s evaluation of the adequacy of collectively and individually evaluated loss reserves.

The ACL is maintained at a level that management believes is appropriate to provide for current expected credit losses as of the dates of the Consolidated Statements of Financial Condition, and we have established methodologies for the determination of its adequacy. The methodologies are set forth in a formal policy and take into consideration relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. We increase our ACL by recording provisions for current expected credit losses against our income and decrease by charge‑offs, net of recoveries.

The evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. While management uses available information to recognize losses on loans and leases, changes in economic or other conditions may necessitate revision of the estimate in future periods.

For each portfolio, management estimates expected credit losses over the life of each loan and lease utilizing lifetime or cumulative loss rate methodology. The lifetime loss rates are estimated by analyzing a combination of internal and external data related to historical performance of each loan and lease pool over a complete economic cycle. Loss rates are based on historical averages for each loan and lease pool, adjusted to reflect the impact of a forward-looking forecast of certain macroeconomic variables, primarily unemployment rates, which management considers to be both reasonable and supportable. Various economic scenarios are considered and weighted to arrive at the forecast that most reflects management’s expectation of future conditions. After a one-year forecast period, a one-year reversion period adjusts loss experience to the historical average on a straight-line basis.

Management also considers qualitative risk factor adjustments that are intended to capture internal and external trends not reflected in historical loss history. Each risk factor is assigned an allowance level based on management’s judgment as to the expected impact of each risk factor on each loan and lease portfolio and is monitored quarterly. All loans and leases of $500,000 or greater with an internal risk rating of substandard or below, or on nonaccrual status, are individually evaluated for impairment on a quarterly basis.

The Company also maintains an allowance for credit losses on off-balance sheet credit exposures for unfunded loan commitments. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life based on management’s consideration of past events, current conditions, and reasonable and supportable economic forecasts. Management tracks the level and trends in unused commitments and takes into consideration the same factors as those considered for purposes of the allowance for credit losses on outstanding loans.

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of net assets acquired in connection with our recapitalization and acquisitions using the acquisition method of accounting. Goodwill is not amortized but is periodically evaluated for impairment under the provisions of ASC Topic 350, Intangibles—Goodwill and Other ("ASC 350").

Impairment testing is performed using either a qualitative or quantitative approach at the reporting unit level. Our goodwill is allocated to Byline Bank, which is our only applicable reporting unit for the purposes of testing goodwill for impairment. We have selected November 30 as the date to perform the annual goodwill impairment test. Additionally, we perform a goodwill impairment evaluation on an interim basis when events or circumstances indicate impairment potentially exists.

Other intangible assets

Other intangible assets primarily consist of core deposit intangible assets and customer relationship intangible. In valuing intangible assets, we consider variables such as servicing costs, attrition rates and market discount rates. Intangible assets are reviewed annually, or more frequently when events or changes in circumstances occur that indicate that their carrying values may not be recoverable. If the recoverable amount of the intangible asset is determined to be less than its carrying value, we would then measure the amount of impairment based on an estimate of the fair value at that time. We also evaluate whether the events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life. Core deposit intangibles are currently amortized over an approximate ten-year period and customer intangibles are amortized over a twelve-year period.

Fair value of Financial Instruments

ASC Topic 820, Fair Value Measurement, defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.

The degree of management judgment involved in determining the fair value of assets and liabilities is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not available, management judgment is necessary to estimate fair value. In addition, changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we would use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement.

See Note 15 of our Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2025, included in this report, for a complete discussion of our use of fair value of financial assets and liabilities and their related measurement practices.

Recently Issued Accounting Pronouncements

Refer to Note 2 of our Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2025, which is included in this report, for a description of recent accounting pronouncements, including the effective dates of adoption and anticipated effects on our results of operations and financial condition.

Primary Factors Used to Evaluate Our Business

As a financial institution, we manage and evaluate various aspects of both our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our consolidated financial statements as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance, and the final condition and performance of comparable financial institutions in our region. Comparison of our financial performance against other financial institutions is impacted by the accounting for acquired non‑credit-deteriorated and purchased credit deteriorated loans.

Results of Operations

Overview

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans and lease receivables, including accretion income on loans, investment securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of non-interest income, consisting primarily of income from fees and service charges on deposits, loan servicing revenue, wealth management and trust income, ATM and interchange fees, and net gains on sales of investment securities and loans. Other factors contributing to our results of operations include our provisions for credit losses, provision for income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and equipment expenses, and other miscellaneous operating costs.

Selected Financial Data

(dollars in thousands, except share and per share data)

(1) Represents a non-GAAP financial measure. See "Reconciliations of non-GAAP Financial Measures" for a reconciliation to the most directly comparable GAAP financial measure.

(2) Represents non-interest expense less amortization of intangible assets divided by net interest income and non-interest income.

(3) Calculation excludes merger-related expenses, secondary public offering of common stock expenses and impairment of right-of-use assets.

(4) Interest income and rates include the effects of a tax equivalent adjustment to adjust tax-exempt investment income on tax-exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

We reported consolidated net income of $30.1 million for the three months ended June 30, 2025 compared to net income of $29.7 million for the three months ended June 30, 2024, an increase of $411,000. The increase in net income was attributable to a $9.4 million increase in net interest income and a $1.6 million increase in non-interest income, offset by a $6.4 million increase in non-interest expense, and a $5.9 million increase in provision for credit losses. Net income was $0.66 per basic and per diluted common share for the three months ended June 30, 2025, compared to $0.68 per basic and per diluted common share for the three months ended June 30, 2024.

The increase in net interest income was mainly a result of lower rates paid on deposits. The increase in non-interest income was mainly due to an increase in other non-interest income mainly from swap activity. The increase in non-interest expense was primarily due to increases in salaries and employee benefits driven by merger-related costs and merit increases.

Our annualized return on average assets was 1.25% for the three months ended June 30, 2025 compared to 1.31% for the three months ended June 30, 2024. Our annualized return on average stockholders’ equity was 10.24% for the three months ended June 30, 2025 compared to 11.83% for the three months ended June 30, 2024. Our efficiency ratio was 52.61% for the three months ended June 30, 2025 compared to 52.19% for the three months ended June 30, 2024. Our adjusted efficiency ratio was 48.20% for the three months ended June 30, 2025, compared to 52.19% for the three months ended June 30, 2024.

We reported consolidated net income of $58.3 million for the six months ended June 30, 2025 compared to net income of $60.1 million for the six months ended June 30, 2024, a decrease of $1.8 million. The decrease in net income was primarily attributable to a $9.0 million increase in non-interest expense and an increase of $8.4 million in provision for credit losses, offset by a $12.1 million increase in net interest income and a $2.5 million decrease in the provision for income taxes. Net income was $1.31 per basic and $1.30 per diluted common share for the six months ended June 30, 2025, compared to $1.39 per basic and $1.37 per diluted common share for the six months ended June 30, 2024.

The increase in non-interest expense during the six months ended June 30, 2025 was mostly due to an increase in salaries and employee benefits mainly related to the First Security acquisition. The increase in provision for credit losses was mainly due to the First Security acquisition and weakening macroeconomic conditions. The increase in net interest income during the six months ended June 30, 2025 was mainly a result of decrease in costs of total interest-bearing liabilities.

Our annualized return on average assets was 1.25% for the six months ended June 30, 2025 compared to 1.33% for the six months ended June 30, 2024. Our annualized return on average stockholders’ equity was 10.28% for the six months ended June 30, 2025 compared to 12.04% for the six months ended June 30, 2024. Our efficiency ratio was 53.11% for the six months ended June 30, 2025 compared to 52.06% for the six months ended June 30, 2024. Our adjusted efficiency ratio was 50.54% for the six months ended June 30, 2025 compared to 51.97% for the six months ended June 30, 2024.

Net Interest Income

Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest and dividends on interest-earning assets, which include loans, leases and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, which include interest-bearing deposits, subordinated debt, Federal Home Loan Bank ("FHLB") advances, junior subordinated debentures and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread, and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as the annualized net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Because of our recapitalization and acquisitions, we derive a portion of our interest income from the accretable discounts on purchase credit deteriorated and acquired non-credit-deteriorated loans. The accretion is generally recognized over the life of the loan. This accretion will continue to have an impact on our net interest income as long as loans acquired with a discount at acquisition represent a meaningful portion of our interest-earning assets. As of June 30, 2025 and December 31, 2024, purchased credit deteriorated loans accounted for under ASC Topic 326 represented 1.8% of our total loan and lease portfolio.

Changes in the market interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. In addition, our interest income includes the accretion of the discounts on our acquired loans, which will also affect our net interest spread, net interest margin and net interest income.

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Yields have been calculated on a pre-tax basis (dollars in thousands).

(1) Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Fees included in loan and lease interest income were $2.3 million for each of the three months ended June 2025 and 2024, respectively. Non-accrual loans and leases are included in total loan and lease balances.

(2) Interest income and rates include the effects of a tax equivalent adjustment to adjust tax-exempt investment income on tax-exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

(3) Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(4) Represents net interest income (annualized) divided by total average interest-earning assets.

(5) Average balances are average daily balances.

(1) Loan and lease balances are net of deferred origination fees and costs and initial direct costs. Fees included in loan and lease interest income were $4.6 million and $4.0 million for the six months ended June 2025 and 2024, respectively. Non-accrual loans and leases are included in total loan and lease balances.

(2) Interest income and rates include the effects of a tax equivalent adjustment to adjust tax-exempt investment income on tax-exempt investment securities to a fully taxable basis, assuming a federal income tax rate of 21%.

(3) Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(4) Represents net interest income (annualized) divided by total average interest-earning assets.

(5) Average balances are average daily balances.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Changes applicable to both volume and rate have been allocated to volume. Yields have been calculated on a pre-tax basis. The table below is a summary of increases and decreases in interest income and interest expense resulting from changes in average balances (volume) and changes in average interest rates (dollars in thousands):

(1) Includes loans and leases on non-accrual status.

(1) Includes loans and leases on non-accrual status.

Net interest income for the three months ended June 30, 2025 was $96.0 million compared to $86.5 million during the same period in 2024, an increase of $9.4 million, or 10.9%. Interest income increased $3.0 million for the three months ended June 30, 2025 compared to the same period in 2024 primarily a result of growth in the loan and lease portfolio, both from acquired loans and organic growth. Interest expense decreased by $6.5 million for the three months ended June 30, 2025 compared to the same period in 2024 mostly due to lower rates paid on interest-bearing deposits and change in deposit mix.

Net interest income for the six months ended June 30, 2025 was $184.2 million compared to $172.1 million during the same period in 2024, an increase of $12.1 million, or 7.0%. Interest income decreased $513,000 for the six months ended June 30, 2025 compared to the same period in 2024 primarily as a result of lower yields on loans and leases, offset by growth in the loan and lease portfolio. Interest expense decreased by $12.6 million for the six months ended June 30, 2025 compared to the same period in 2024 mostly due lower rates paid on interest-bearing deposits and change in deposit mix.

The net interest margin for the three months ended June 30, 2025 was 4.18%, an increase of 20 basis points compared to 3.98% for the three months ended June 30, 2024. The increase was primarily attributable to lower rates paid on deposits. The net interest margin for the six months ended June 30, 2025 was 4.13%, an increase of 14 basis points compared to 3.99% for the six months ended June 30, 2024. The increase was primarily attributable to lower rates paid on deposits.

Net loan accretion income was $3.0 million for the three months ended June 30, 2025 compared to $3.7 million for the three months ended June 30, 2024, a decrease of $678,000 mainly due to acquired loans converting to originated. Total net loan accretion on acquired loans contributed 13 basis points to the net interest margin for the three months ended June 30, 2025 compared to 17 basis points for the three months ended June 30, 2024.

Net loan accretion income was $5.6 million for the six months ended June 30, 2025 compared to $7.9 million for the six months ended June 30, 2024, a decrease of $2.4 million due to acquired loans converting to originated. Total net loan accretion on acquired loans contributed 12 basis points to the net interest margin for the six months ended June 30, 2025 compared to 18 basis points for the six months ended June 30, 2024.

Assuming no additional acquisitions, we expect loan accretion income to decline over time. Based on our portfolio, the estimated projected accretion income for the remaining periods as of June 30, 2025 is summarized as follows (dollars in thousands):

(1) Estimated projected accretion excludes contractual interest income on acquired loans and leases.

(2) Projections are undated quarterly, assume no prepayments, and are subject to change.

Provision for Credit Losses

The provision for credit losses reflects the amount required to maintain the ACL at an appropriate level based upon management’s evaluation of collectively and individually evaluated loss reserves. The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management’s evaluation, is appropriate to provide coverage for current expected credit losses in the loan and lease portfolio. The ACL is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior charge-offs.

The provision for credit losses was $11.9 million for the three months ended June 30, 2025, compared to $6.0 million for the three months ended June 30, 2024, an increase of $5.9 million and is comprised of a provision for credit losses - loans and leases and a provision for credit losses - unfunded commitments. Provision for credit losses - loans and leases was $11.8 million for the three months ended June 30, 2025, and $6.9 million for the three months ended June 30, 2024, an increase of $4.9 million. On April 1, 2025, a provision for credit losses of $864,000 was recorded on acquired non-credit-deteriorated loans related to the First Security acquisition. The provision for credit losses - unfunded commitments was a provision of $166,000 and a recapture of $833,000 for the three months ended June 30, 2025 and 2024, respectively.

The provision for credit losses was $21.1 million for the six months ended June 30, 2025, compared to $12.7 million for the six months ended June 30, 2024, an increase of $8.4 million. Provision for credit losses - loans and leases was $20.8 million for the six months ended June 30, 2025, and $13.8 million for the six months ended June 30, 2024, an increase of $7.0 million. The provision for credit losses - unfunded commitments reflects a provision of $269,000 and a recapture of $1.1 million for the six months ended June 30, 2025 and 2024, respectively.

Non-Interest Income

The following table presents the major components of non-interest income for the periods presented (dollars in thousands):

Fees and service charges on deposits represent amounts charged to customers for banking services, such as fees on deposit accounts, and include, but are not limited to, maintenance fees, insufficient fund fees, overdraft protection fees, wire transfer fees, and other charges. Fees and service charges on deposits were $2.6 million and $2.5 million for the three months ended June 30, 2025 and 2024, respectively. Fees and service charges on deposits were $5.3 million and $5.0 million for the six months ended June 30, 2025 and 2024, respectively. The increases were primarily due to increases in deposit balances.

While portions of the loans that we originate are sold and generate gains on sale revenue, servicing rights for the majority of loans that we sell are retained by us. In exchange for continuing to service loans that have been sold, we receive servicing revenue from a portion of the interest cash flow of the loan. We generated $3.1 million and $3.2 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the three months ended June 30, 2025 and 2024, respectively. We generated $6.1 million and $6.6 million in loan servicing revenue on the sold portion of the U.S. government guaranteed loans for the six months ended June 30, 2025 and 2024, respectively. At June 30, 2025 and 2024, the outstanding balance of guaranteed loans serviced was $1.7 billion.

Loan servicing asset revaluation represents net changes in the fair value of our servicing assets. Loan servicing asset revaluation had a downward adjustment of $2.1 million and $2.5 million for the three months ended June 30, 2025 and 2024, respectively, a change of $318,000. Change in the quarterly revaluation was mainly due to a changes in prepayment speeds. Loan servicing asset revaluation had a downward adjustment of $3.2 million for both the six months ended June 30, 2025 and 2024, a change of $30,000.

Net gains on sales of loans were $5.4 million for the three months ended June 30, 2025 compared to $6.0 million for the three months ended June 30, 2024, a decrease of $622,000 or 10.3%, driven mainly by lower premiums. We sold $73.0 million of U.S. government guaranteed loans during the three months ended June 30, 2025 compared to $72.5 million during the three months ended June 30, 2024. Net gains on sales of loans were $10.4 million for the six months ended June 30, 2025 compared to $11.6 million for the six months ended June 30, 2024, a decrease of $1.2 million or 10.5%, driven by a lower volume of loans sold. We sold $143.2 million of U.S. government guaranteed loans during the six months ended June 30, 2025 compared to $146.4 million during the six months ended June 30, 2024.

Wealth management and trust income represents fees charged to customers for investment, trust, or wealth management services and are primarily determined by total assets under administration. Wealth management and trust income was $1.1 million for the three months ended June 30, 2025 compared to $942,000 for the three months ended June 30, 2024, an increase of $132,000 or 14.0%. Wealth management and trust income was $2.2 million for the six months ended June 30, 2025 compared to $2.1 million for the six months ended June 30, 2024, an increase of $57,000 or 2.7%. The increases were primarily driven by higher fees from higher asset managed balances. Assets under administration were $783.1 million and $665.7 million as of June 30, 2025 and 2024, respectively.

Other non-interest income was $3.3 million for the three months ended June 30, 2025 compared to $1.8 million for the three months ended June 30, 2024, an increase of $1.5 million or 85.5%. The increase was primarily driven by net gains on sales of leased equipment, income associated with bank owned life insurance, and increased swap fee income. Other non-interest income was $5.6 million for the six months ended June 30, 2025 compared to $4.0 million for the six months ended June 30, 2024, an increase of $1.6 million or 40.1%. The increase was primarily driven by net gains on sales of leased equipment, income associated with bank owned life insurance, and increased swap fee income.

Non-Interest Expense

The following table presents the major components of non-interest expense for periods presented (dollars in thousands):

Salaries and employee benefits, the single largest component of our non-interest expense, totaled $37.8 million and $33.9 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $3.9 million, or 11.5%. Salaries and employee benefits, totaled $74.1 million for the six months ended June 30, 2025 compared to $67.9 million for the six months ended June 30, 2024, an increase of $6.2 million, or 9.1%. The increase was primarily a result of merger-related expenses, merit increases, lower deferred salaries, and higher commissions paid.

Loan and lease related expenses were $938,000 for the three months ended June 30, 2025 compared to $741,000 for the three months ended June 30, 2024, an increase of $197,000, or 26.5%. Loan and lease related expenses were $1.8 million for the six months ended June 30, 2025, compared to $1.4 million for the six months ended June 30, 2024, an increase of $339,000 or 23.7%. The increase was primarily driven by higher government guaranteed loan expenses and higher taxes and insurance expenses.

Legal, audit, and other professional fees were $4.8 million for the three months ended June 30, 2025 compared to $3.7 million for the three months ended June 30, 2024, an increase of $1.1 million or 30.6%. Legal, audit, and other professional fees were $8.1 million for the six months ended June 30, 2025 compared to $6.4 million for the six months ended June 30, 2024, an increase of $1.7 million or 25.9%. The increases were principally driven by merger-related expenses and fees and expenses related to the secondary public offering of our common stock.

Data processing was $5.0 million for the three months ended June 30, 2025 compared to $4.0 million for the three months ended June 30, 2024, an increase of $950,000 or 23.6%. Data processing was $10.2 million for the six months ended June 30, 2025, compared to $8.2 million for the six months ended June 30, 2024, an increase of $2.0 million or 24.2%. The increases were driven by merger-related expenses.

Other non-interest expense was $4.8 million for the three months ended June 30, 2025 compared to $4.9 million for the three months ended June 30, 2024, a decrease of $70,000 or 1.4%. Other non-interest expense was $9.7 million for the six months ended June 30, 2025, compared to $10.7 million for the six months ended June 30, 2024, a decrease of $930,000 or 8.7%. These decreases were mostly due to gains on sales of assets held for sale related to the sale of two properties.

Our efficiency ratio was 52.61% for the three months ended June 30, 2025 compared to 52.19% for the three months ended June 30, 2024. The change in our efficiency ratio for the three months ended June 30, 2025 was driven by the increase in non-interest expense. Our adjusted efficiency ratio was 48.20% for the three months ended June 30, 2025 compared to 52.19% for the three months ended June 30, 2024. Our efficiency ratio was 53.11% for the six months ended June 30, 2025, compared to 52.06% for the six months ended June 30, 2024. The change in our efficiency ratio was due to higher non-interest expense. Our adjusted efficiency ratio was 50.54% for the six months ended June 30, 2025, compared to 51.97% for the six months ended June 30, 2024.

Please refer to the "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

Income Taxes

Our provision for income taxes for the three months ended June 30, 2025 totaled $8.8 million compared to $10.4 million for the three months ended June 30, 2024, a decrease of $1.6 million, or 15.3%. The decrease in income tax expense was principally due to a higher discrete income tax benefit due to the exercise of stock options and vesting of restricted shares. Our effective tax rate was 22.7% for the three months ended June 30, 2025 and 26.0% for the three months ended June 30, 2024.

Our provision for income taxes for the six months ended June 30, 2025 totaled $18.1 million compared to $20.6 million for the six months ended June 30, 2024, a decrease of $2.5 million or 12.1%. The decrease in income tax expense was principally due to a decrease in net income before provision for income taxes. Our effective tax rate was 23.7% for the six months ended June 30, 2025 and 25.5% for the six months ended June 30, 2024.

We expect our effective tax rate for 2025 to be approximately 25-27%.

Financial Condition

Condensed Consolidated Statements of Financial Condition Analysis

Our total assets increased by $223.7 million, or 2.4%, to $9.7 billion at June 30, 2025 compared to $9.5 billion at December 31, 2024. The increase in total assets was primarily due to an increase of $421.2 million in loans and leases, or 6.1%, from $6.9 billion at December 31, 2024 to $7.3 billion at June 30, 2025, and an increase in securities available for sale of $159.5 million, or 11.3%. Our originated loan and lease portfolio increased by $362.2 million and our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio increased by $59.0 million. The increase in our originated portfolio was primarily attributed to the growth in the commercial and industrial and commercial real estate portfolios. The increase in our purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases portfolio was attributed to the First Security acquisition.

Total liabilities increased by $122.8 million, or 1.5%, to $8.5 billion at June 30, 2025 compared to $8.4 billion at December 31, 2024. Total deposits increased by $351.9 million, or 4.7%, driven by the First Security acquisition, and growth in money market accounts, offset by decreases to time deposits. Other borrowings decreased by $204.7 million, or 33.1%, mainly due to decreased FHLB advances.

Investment Portfolio

Our investment securities portfolio consists of securities classified as available-for-sale and held-to-maturity. There were no securities classified as trading in our investment portfolio as of June 30, 2025 or December 31, 2024. All available-for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest. Securities available-for-sale consist primarily of residential mortgage-backed securities, commercial mortgage-backed securities and U.S. government agencies securities.

Securities available-for-sale increased by $159.5 million, or 11.3%, from $1.4 billion at December 31, 2024 to $1.6 billion at June 30, 2025. The increase was primarily attributed to the First Security acquisition, increases in fair value, and purchases of securities.

During the six months ended June 30, 2025, our last remaining held-to-maturity security, which was carried at amortized cost, matured. Securities held-to-maturity were $605,000 at December 31, 2024.

The following table summarizes the fair value of the available-for-sale and held-to-maturity securities portfolio as of the dates presented (dollars in thousands):

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Certain securities in unrealized loss positions have fair values less than amortized cost and, therefore, contain unrealized losses. At June 30, 2025, we evaluated the securities that had an unrealized loss for credit losses and determined there were none. There were 298 investment securities with unrealized losses at June 30, 2025. We anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

The following table (dollars in thousands) set forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of June 30, 2025. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

(1) The weighted average yields are based on amortized cost.

Total non-taxable securities classified as obligations of states, municipalities and political subdivisions were $53.5 million at June 30, 2025, a decrease of $85,000 from December 31, 2024.

There were no holdings of securities of any one issuer, other than U.S. government-sponsored entities and agencies, with total outstanding balances greater than 10% of our stockholders’ equity as of June 30, 2025 or December 31, 2024.

Restricted Stock

As a member of the FHLB system, Byline Bank is required to maintain an investment in the capital stock of the FHLB. No market exists for this stock, and it has no quoted market value. The stock is redeemable at par by the FHLB and is, therefore, carried at cost. In addition, Byline Bank owns stock of Bankers’ Bank that was acquired as part of a bank acquisition. The stock is redeemable at par and carried at cost. As of June 30, 2025 and December 31, 2024, we held $18.6 million and $27.5 million, respectively, in FHLB and Bankers’ Bank stock. We evaluate impairment of our investment in FHLB and Bankers’ Bank based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. We did not identify any indicators of impairment of FHLB and Bankers’ Bank stock as of June 30, 2025 and December 31, 2024.

Loan and Lease Portfolio

Lending-related income is the most important component of our net interest income and is the main driver of the results of our operations. Total loans and leases at June 30, 2025 and December 31, 2024 were $7.3 billion and $6.9 billion, respectively, an increase of $421.2 million, or 6.1%. Originated loans and leases were $6.6 billion at June 30, 2025, an increase of $362.2 million, or 5.8%, compared to $6.2 billion at December 31, 2024. Purchased credit deteriorated loans and acquired non-credit-deteriorated loans and leases were $722.0 million at June 30, 2025, an increase of $59.0 million, or 8.9%, compared to $663.0 million at December 31, 2024. The increase in our originated portfolio was primarily attributed to organic loan and lease growth, and renewals of acquired loans and leases that are now reflected with originated loans. The increase in the purchased credit deteriorated and acquired non-credit-deteriorated loan and lease portfolio was driven by the First Security acquisition.

We strive to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral. Loans, excluding leases, are typically made to real estate, manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and operations. As of June 30, 2025, the loan portfolio included $425.1 million of unguaranteed 7(a) SBA and USDA loans with exposure to the following top three industries: 20.5% retail trade, 13.2% accommodation and food services, and 8.9% manufacturing. The following table shows our allocation of originated, purchase credit deteriorated and acquired non-credit-deteriorated loans and leases as of the dates presented (dollars in thousands):

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Loans collateralized by real estate include: commercial real estate, residential real estate, and construction, land development, and other land. In the aggregate, loans collateralized by real estate comprised 50.6% and 51.6% of the total loan and lease portfolio at June 30, 2025 and December 31, 2024, respectively.

Commercial Real Estate Loans. Commercial real estate ("CRE") loans comprised the largest portion of the real estate loan portfolio as of June 30, 2025 and December 31, 2024 and totaled $2.5 billion, or 67.3% of real estate loans and 34.0% of the total loan and lease portfolio at June 30, 2025. At December 31, 2024, commercial real estate loans totaled $2.4 billion and comprised 66.0% of real estate loans and 34.1% of the total loan and lease portfolio. Purchased credit deteriorated commercial real estate loans increased from $82.9 million as of December 31, 2024 to $84.7 million as of June 30, 2025, an increase of $1.8 million, or 2.2%.

As part of our risk assessment strategy, we strive to maintain a diversified commercial real estate portfolio, which is reviewed periodically by primary collateral type and geographic location. The following tables present details of our commercial real estate portfolio by collateral type and state (location of the property), as of the date presented:

(dollars in thousands)

(1) Represents collateral types that represent less than 1% of the total loan and lease portfolio.

(2) Represents states and territories with less than 1% of the CRE portfolio.

The composition of the commercial real estate loan portfolio remained stable at June 30, 2025 compared to December 31, 2024. Industrial/warehouse, retail/restaurant, and office remain the top three collateral types in the CRE portfolio, and represented 25.8% of total loans and leases held for investment at June 30, 2025 compared to 26.8% at December 31, 2024. CRE office represents 10.4% of our total CRE portfolio as of June 30, 2025, compared to 10.5% as of December 31, 2024. Geographically, CRE loans in Illinois increased to 23.4% of total loans and leases held for investment and represented 68.7% of total CRE loans at June 30, 2025, compared to 23.1% of total loans and leases held for investment and 67.8% of total CRE loans at December 31, 2024. CRE loans outside of Illinois comprised 10.6% of total loans and leases held for investment as of June 30, 2025, compared to 10.8% as of December 31, 2024.

Owner occupied CRE loans were $1.4 billion, or 19.7% of our loan and lease portfolio at June 30, 2025, compared to $1.4 billion, or 20.0% of our loan and lease portfolio at December 31, 2024, an increase of $62.2 million, or 4.5%. Non-owner occupied CRE loans were $1.1 billion , or 14.4% of our loan and lease portfolio at June 30, 2025, compared to $975.6 million, or 14.1% of our loan and lease portfolio at December 31, 2024, an increase of $76.8 million, or 7.9%. Non-owner occupied CRE loans were 84.0% and 82.6% of Byline Bank total capital, at June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025 and December 31, 2024, CRE loan concentration, as defined in the Federal Register to include owner-occupied and non-owner occupied CRE loans, construction land development and other land loans, multifamily property loans, and loans to finance CRE, construction and land development activities (that are not secured by real estate), as a percentage of Byline Bank total capital were 274.1% and 278.2%, respectively. We have not experienced portfolio concentration shift during the six months ended June 30, 2025, nor have we changed our CRE underwriting standards.

Residential real estate loans. Residential real estate loans totaled $733.7 million at June 30, 2025 compared to $726.1 million at December 31, 2024, an increase of $7.6 million, or 1.0%. The residential real estate loan portfolio comprised 19.8% and 20.3% of real estate loans as of June 30, 2025 and December 31, 2024, respectively, and 10.0% and 10.4% of total loans and leases at June 30, 2025 and December 31, 2024, respectively. Purchased credit deteriorated and acquired non-credit-deteriorated residential real estate loans decreased from $212.7 million at December 31, 2024 to $199.6 million at June 30, 2025, a decrease of $13.1 million, or 6.1%. Multifamily real estate loans were $440.6 million and $429.9 million, or 35.2% and 36.4% of Byline Bank total capital, at June 30, 2025 and December 31, 2024, respectively.

Construction, land development, and other land loans. Construction, land development, and other land loans totaled $480.5 million at June 30, 2025 compared to $489.3 million at December 31, 2024, a decrease of $8.8 million, or 1.8%. The construction, land development and other land loan portfolio comprised 13.0% and 13.7% of real estate loans at June 30, 2025 and December 31, 2024, respectively, and 6.6% and 7.1% of the total loan and lease portfolio at June 30, 2025 and December 31, 2024, respectively. The construction, land development and other land loan portfolio was 38.3% and 41.3% of Byline Bank total capital, at June 30, 2025 and December 31, 2024, respectively.

Commercial and industrial loans. Commercial and industrial loans totaled $2.9 billion at June 30, 2025 and $2.6 billion at December 31, 2024, an increase of $251.0 million, or 9.6%. The commercial and industrial loan portfolio comprised 39.1% and 37.9% of the total loan and lease portfolio at June 30, 2025 and December 31, 2024, respectively. Included in the commercial and industrial loans is our sponsored finance portfolio, as of June 30, 2025, we had $727.1 million in sponsor finance loans outstanding, to 62 portfolio companies.

Lease financing receivables. Lease financing receivables comprised 10.0% and 10.4% of the loan and lease portfolio at June 30, 2025 and December 31, 2024, respectively. Total lease financing receivables were $731.6 million and $715.9 million at June 30, 2025 and December 31, 2024, respectively, an increase of $15.7 million, or 2.2%.

Loan and Lease Portfolio Maturities and Interest Rate Sensitivity

The following table shows our loan and lease portfolio by scheduled maturity at June 30, 2025 (dollars in thousands):

At June 30, 2025, 45.7% of the loan and lease portfolio bears interest at fixed rates and 54.3% at floating rates. The expected life of our loan portfolio will differ from contractual maturities because borrowers may have the right to curtail or prepay their loans with or without penalties. Because a portion of the portfolio is accounted for under ASC 326, the carrying value is significantly affected by estimates and it is impracticable to allocate scheduled payments for those loans based on those estimates. Consequently, the tables presented include information limited to contractual maturities of the underlying loans.

Allowance for Credit Losses - Loans and Leases

The ACL is determined by us on a quarterly basis, although we are engaged in monitoring the appropriate level of the allowance on a more frequent basis. The ACL reflects management’s estimate of current expected credit losses inherent in the loan and lease portfolios. The computation includes elements of judgment and high levels of subjectivity.

Factors considered by us include, but are not limited to, actual loss experience, peer loss experience, changes in size and risk profile of the portfolio, identification of individual problem loan and lease situations that may affect a borrower’s ability to repay, application of a reasonable and supportable forecast, and evaluation of the prevailing economic conditions. Changes in conditions may necessitate revision of the estimate in future periods.

We assess the ACL based on three categories: (i) originated loans and leases, (ii) acquired non-credit-deteriorated loans and leases, and (iii) purchased credit deteriorated loans.

Total ACL was $107.7 million at June 30, 2025 compared to $98.0 million at December 31, 2024, an increase of $9.7 million or 9.9%. The increase was primarily due to increases associated with individually evaluated loans and adjustments from acquired purchased credit deteriorated ("PCD") loans. Total ACL to total loans and leases held for investment, net before ACL, was 1.47% and 1.42% of total loans and leases at June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, approximately $34.6 million of the ACL was allocated to the unguaranteed portion of SBA 7(a) and USDA loans.

The following tables present an analysis of the allowance for credit losses - loans and leases for the periods presented (dollars in thousands):

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Non-Performing Assets

Non-performing loans and leases include loans and leases 90 days past due and still accruing and loans and leases accounted for on a non-accrual basis. Non-performing assets consist of non-performing loans and leases plus other real estate owned. Non-performing assets at June 30, 2025 and December 31, 2024 totaled $72.5 million and $67.2 million, with the increase driven mainly by increases to non-accrual loans and leases. The U.S. government guaranteed portion of non-performing loans totaled $8.8 million at June 30, 2025 and $9.9 million at December 31, 2024.

Total other real estate owned ("OREO") decreased from $5.2 million at December 31, 2024 to $4.9 million at June 30, 2025. The decrease in OREO resulted from sales of OREO properties.

The following table sets forth the amounts of non-performing loans and leases, non-performing assets, and OREO at the dates indicated (dollars in thousands):

(1) Includes $12.3 million and $2.8 million of non-accrual loan modifications at June 30, 2025 and December 31, 2024, respectively.

(2) For the six months ended June 30, 2025 and 2024, $2.8 million and $3.1 million in interest income would have been recorded had non-accrual loans been current.

Deposits

Our loan and lease growth is funded primarily through core deposits. We gather deposits primarily through each of our 44 branch locations in the Chicago metropolitan area and one branch in Wauwatosa, Wisconsin. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, interest-bearing products, savings accounts, and certificates of deposit. We offer competitive online, mobile, and direct banking channels. Small businesses are a significant source of low cost deposits as they value convenience, flexibility, and access to local decision makers that are responsive to their needs.

Total deposits at June 30, 2025 were $7.8 billion, representing an increase of $351.9 million, or 4.7%, compared to $7.5 billion at December 31, 2024, driven by an increase in money market demand accounts. Non-interest-bearing deposits were $1.8 billion, or 22.7% of total deposits, at June 30, 2025, a decrease of $17.1 million, or 1.0%, compared to $1.8 billion at December 31, 2024, or 23.5% of total deposits. Core deposits were 86.6% and 85.9% of total deposits at June 30, 2025 and December 31, 2024, respectively.

The following table shows the average balance amounts and the average contractual rates paid on our deposits for the periods indicated (dollars in thousands):

Our average cost of deposits was 2.27% during the three months ended June 30, 2025, compared to 2.63% for the three months ended June 30, 2024. Our average cost of deposits was 2.28% during the six months ended June 30, 2025, compared to 2.60% for the six months ended June 30, 2024. These decreases were principally attributed to lower rates paid on time deposits and changes in deposit mix. The ratio of our average non-interest bearing deposits to total average deposits was 23.0% during the three months ended June 30, 2025, compared to 25.0% during the three months ended June 30, 2024. The ratio of our average non-interest bearing deposits to total average deposits ratios was 23.2% during the six months ended June 30, 2025 compared to 25.5% during the six months ended June 30, 2024.

We had $125.6 million in brokered time deposits at June 30, 2025 and $364.8 million at December 31, 2024, which represented 1.6% and 4.9% of total deposits, respectively. The decrease in brokered deposits was due to increases in other sources of funding.

The following table shows time deposits and other time deposits of $250,000 or more by time remaining until maturity as of June 30, 2025 (dollars in thousands):

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Total estimated uninsured deposits were $2.6 billion and $2.2 billion as of June 30, 2025 and December 31, 2024. Estimated uninsured deposits reflect amounts disclosed in our regulatory reports, adjusted to exclude related accrued interest and intercompany deposit balances.

Short Term and Long Term Borrowings

In addition to deposits, we also utilize FHLB advances as a supplementary funding source to finance our operations. The Bank’s advances from the FHLB are collateralized by commercial, residential and multi-family real estate loans and securities. At June 30, 2025 and December 31, 2024, we had an available borrowing capacity from the FHLB of $3.0 billion and $2.7 billion, respectively, subject to the availability of collateral. At June 30, 2025, the Company had $380.0 million of FHLB advances outstanding with a maturities ranging from July 2025 to September 2025.

On January 17, 2024, the Company entered into a Letter Agreement with the Federal Reserve Bank ("FRB") that allowed us to access the Bank Term Funding Program ("BTFP"). On January 22, 2024, the Company opened an advance of $200.0 million from the FRB as part of the BTFP. Under the terms of the BTFP, the Bank pledged securities to FRB Chicago as collateral for available advances. The advance carried a fixed interest rate of 4.91%. Advances under the BTFP were prepayable at any time without a prepayment penalty. On September 19, 2024, the Company repaid the BTFP advance in full.

The Company also has the capacity to borrow funds from the discount window of the Federal Reserve System. There were no borrowings outstanding under the FRB discount window line as of June 30, 2025 and December 31, 2024. The Company pledges loans as collateral for any borrowings under the FRB discount window.

The following table sets forth certain information regarding our short-term borrowings at the dates and for the periods presented (dollars in thousands):

(1) Net of pay-fixed interest rate swaps designated as cash flow hedges. Refer to Note 16 - Derivative Instruments and Hedge Activities of the notes to condensed consolidated financial statements contained in Item 1 of this report for further information.

Customer Repurchase Agreements (Sweeps)

Securities sold under agreements to repurchase represent a demand deposit product offered to customers that sweep balances in excess of the Federal Deposit Insurance Corporation insurance limit into overnight repurchase agreements. We pledge securities as collateral for the repurchase agreements. Securities sold under agreements to repurchase increased by $2.0 million, from $32.1 million at December 31, 2024 to $34.1 million at June 30, 2025.

Liquidity

We manage liquidity based upon factors that include the amount of core deposits as a percentage of total deposits, the level of diversification of our funding sources, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the availability of assets to be readily converted into cash without undue loss, the amount of cash and liquid securities we hold and the re-pricing characteristics and maturities of our assets when compared to the re-pricing characteristics of our liabilities, the ability to securitize and sell certain pools of assets and other factors.

Our liquidity needs are primarily met by cash and investment securities positions, growth in deposits, cash flow from amortizing loan portfolios, and borrowings from the FHLB. For additional information regarding our operating, investing, and financing cash flows, see Consolidated Statements of Cash Flows in our Unaudited Interim Condensed Consolidated Financial Statements included elsewhere in this report.

As of June 30, 2025, Byline Bank had maximum borrowing capacity from the FHLB of $3.3 billion and $758.3 million from the FRB. As of June 30, 2025, Byline Bank had open FHLB advances of $380.0 million and open letters of credit of $14.2 million. Based on collateral, our available aggregate borrowing capacity at June 30, 2025 was $1.3 billion. In addition, Byline Bank had uncommitted federal funds lines available of $135.0 million available at June 30, 2025.

As of December 31, 2024, Byline Bank had maximum borrowing capacity from the FHLB of $3.3 billion and $792.3 million from the FRB. As of December 31, 2024, Byline Bank had open FHLB advances of $575.0 million and open letters of credit of $11.5 million. Based on collateral and securities pledged, our available aggregate borrowing capacity at December 31, 2024 was $1.1 billion. In addition, Byline Bank had an uncommitted federal funds line available of $127.5 million available at December 31, 2024.

The Company is currently party to a revolving credit agreement with a correspondent bank with availability of up to $15.0 million that matures on May 24, 2026. The revolving line of credit bears interest at either Secured Overnight Financing Rate plus 205 basis points or the Prime Rate minus 75 basis points, not to be less than 2.00%, based on the Company’s election, which is required to be communicated at least three business days prior to the commencement of an interest period. If the Company fails to provide timely notification, the interest rate will be Prime Rate minus 75 basis points. At June 30, 2025 and December 31, 2024, the line of credit had a no outstanding balance.

The variable term loan was paid off in January 2025. At December 31, 2024, the variable term loan had an interest rate of 6.83% and an outstanding balance of $11.7 million.

There are regulatory limitations that affect the ability of Byline Bank to pay dividends to the Company. See Note 21 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.

We expect that our cash and liquidity resources will be generated by the operations of Byline Bank, which we expect to be sufficient to satisfy our liquidity and capital requirements for at least the next twelve months.

Capital Resources

Stockholders’ equity at June 30, 2025 was $1.2 billion compared to $1.1 billion at December 31, 2024, an increase of $100.9 million, or 9.2%. The increase was primarily driven by an increase in retained earnings and the issuance of shares of our common stock in connection with the acquisition of First Security.

The Company and Byline Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.

Under applicable bank regulatory capital requirements, each of the Company and Byline Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Byline Bank must also meet certain specific capital guidelines under the prompt corrective action framework. The capital amounts and classification are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Byline Bank to maintain minimum amounts and ratios of CET1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets, (referred to as the "leverage ratio"), as defined under these capital requirements.

As of June 30, 2025, Byline Bank exceeded all applicable regulatory capital requirements and was considered "well-capitalized". There have been no conditions or events since June 30, 2025 that management believes have changed Byline Bank’s classifications.

The regulatory capital ratios for the Company and Byline Bank to meet the minimum capital adequacy standards and for Byline Bank to be considered well capitalized under the prompt corrective action framework and the Company’s and Byline Bank’s actual capital amounts and ratios are set forth in the following tables as of the periods indicated (dollars in thousands):

The ratios above reflect the Company’s election to opt into the regulators’ joint Current Expected Credit Loss ("CECL") transition provision, which allows the Company to phase in the capital impact of the adoption of CECL over the three years beginning January 1, 2022. Accordingly, capital ratios as of June 30, 2025 reflect 100% of the CECL impact and December 31, 2024 reflect 75% of the CECL impact.

The Company and Byline Bank must maintain a capital conservation buffer consisting of CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. The conservation buffers for the Company and Byline Bank exceed the minimum capital requirement as of June 30, 2025.

Provisions of state and federal banking regulations may limit, by statute, the amount of dividends that may be paid to the Company by Byline Bank without prior approval of Byline Bank’s regulatory agencies. The Company is economically dependent on the cash dividends received from Byline Bank. These dividends represent the primary cash flow from operating activities used to service obligations. For the six months ended June 30, 2025 the Company received $40.0 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note, junior subordinated debentures in connection with its trust preferred securities interest, principal and interest payments related to its term note and revolving line of credit, and to fund other Company-related activities. For the year ended December 31, 2024, the Company received $46.0 million in cash dividends from Byline Bank, in order to pay the required interest on its outstanding subordinated note and junior subordinated debentures in connection with its trust preferred securities interest, principal and interest on its term loan and revolving line of credit, and to fund other Company-related activities.

On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program was in effect from January 1, 2024 until December 31, 2024, and we did not purchase any shares of our common stock under the stock repurchase program during 2024.

On December 5, 2024, we announced that our Board of Directors approved a new stock repurchase program authorizing the purchase of up to an aggregate of 1,250,000 shares of our outstanding common stock. The program will be in effect from January 1, 2025 until December 31, 2025, unless terminated earlier. The shares may, at the discretion of management, be repurchased from time to time in open market purchases as market conditions warrant or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be discontinued at any time. The actual timing, number and share price of shares purchased under the repurchase program will be determined by us at our discretion and will depend on a number of factors, including the market price of our stock, general market and economic conditions and applicable legal requirements. The shares authorized to be repurchased represented approximately 2.8% of the Company’s outstanding common stock at December 31, 2024. The Company purchased 543,599 and 569,599 shares under this program during the three and six months ended June 30, 2025.

Dividends declared on common shares were $4.6 million and $4.0 million for the three months ended June 30, 2025 and 2024, respectively. Dividends paid on common shares were $4.8 million and $4.1 million for the three months ended June 30, 2025 and 2024, respectively. Dividends declared on common shares were $9.1 million and $7.9 million for the six months ended June 30, 2025 and 2024, respectively. Dividends paid on common shares were $9.1 million and $8.0 million for the six months ended June 30, 2025 and 2024, respectively.

On July 22, 2025, our Board of Directors declared a cash dividend of $0.10 per share payable on August 18, 2025 to stockholders of record of our common stock as of August 4, 2025.

Off-Balance Sheet Items and Other Financing Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Condensed Consolidated Statements of Financial Condition. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Byline Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral is primarily obtained in the form of commercial and residential real estate (including income producing commercial properties).

Letters of credit are conditional commitments issued by Byline Bank to guarantee the performance of a customer to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 2.69% to 15.00% and maturities up to 2046. Variable rate loan commitments have interest rates ranging from 3.50% to 17.75% and maturities up to 2048.

Our exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as for funded instruments. We do not anticipate any material losses as a result of the commitments and standby letters of credit.

We enter into interest rate swaps that are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and its known or expected cash payments principally related to certain variable rate loans, money market accounts and variable rate borrowings. We also enter into interest rate swaps with certain qualified borrowers to facilitate the borrowers’ risk management strategies and concurrently entered into mirror-image derivatives with a third party counterparty.

We recognize derivative financial instruments at fair value regardless of the purpose or intent for holding the instrument. We record derivative assets and derivative liabilities on the Condensed Consolidated Statements of Financial Condition within accrued interest receivable and other assets, and accrued interest payable and other liabilities, respectively. Because the derivative assets and liabilities recorded on the balance sheet at June 30, 2025 do not represent the amounts that may ultimately be paid under these contracts, these assets and liabilities are listed in the table below (dollars in thousands):

See Note 16—Derivative Instruments and Hedge Activities of our Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2025, included in this report, and Note 21—Segment Information of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on derivatives.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in our "Selected Financial Data" are not measures of financial performance in accordance with GAAP. Our management uses the non‑GAAP financial measures set forth below in its analysis of our performance:

• "Adjusted net income" and "adjusted diluted earnings per share" exclude certain significant items, which include merger-related expenses, secondary public offering of common stock expenses, and impairment charges on right-of-use ("ROU") assets, adjusted for applicable income tax. Management believes the significant items are not indicative of or useful to measure the Company’s operating performance on an ongoing basis.
• "Net interest income, fully taxable-equivalent" and "net interest margin, fully taxable-equivalent" are adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. Management believes the metric provides useful comparable information to investors and that these measures may be useful for peer comparison.
• "Total revenue" is the combination of net interest income and non-interest income. Management believes the metric is an important measure of the Company's operating performance on an ongoing basis.
• "Adjusted non-interest expense" is non-interest expense excluding certain significant items, which include impairment charges on right-of -use assets, secondary public offering of common stock expenses, and merger-related expenses.
• "Adjusted efficiency ratio" is adjusted non-interest expense less amortization of intangible assets divided by net interest income and non-interest income. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Adjusted non-interest expense to average assets" is adjusted non-interest expense divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Adjusted return on average stockholders’ equity" is adjusted net income divided by average stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Adjusted return on average assets" is adjusted net income divided by average assets. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Non-interest income to total revenues" is non-interest income divided by net interest income plus non-interest income. Management believes that it is standard practice in the industry to present non-interest income as a percentage of total revenue. Accordingly, management believes providing these measures may be useful for peer comparison.
• "Pre‑tax pre‑provision net income" is pre‑tax income plus the provision for credit losses. Management believes this metric demonstrates income excluding the tax provision or benefit and the provision for credit losses, and enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
• "Adjusted pre-tax pre-provision net income" is pre-tax pre-provision net income excluding certain significant items, which include impairment charges on right-of-use assets, secondary public offering of common stock expenses, and merger-related expenses. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Pre‑tax pre‑provision return on average assets" is pre-tax income plus the provision for credit losses, divided by average assets. Management believes this ratio demonstrates profitability excluding the tax provision or benefit and excludes the provision for credit losses.
• "Adjusted pre-tax pre-provision return on average assets" excludes certain significant items, which include impairment charges on right-of-use assets, secondary public offering of common stock expenses, and merger-related expenses.
• "Tangible common equity" is defined as total stockholders’ equity reduced by preferred stock and goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.
• "Tangible assets" is defined as total assets reduced by goodwill and other intangible assets. Management does not consider servicing assets as an intangible asset for purposes of this calculation.
• "Tangible book value per common share" is calculated as tangible common equity, which is stockholders’ equity reduced by preferred stock and goodwill and other intangible assets, divided by total shares of common stock outstanding. Management believes this metric is important due to the relative changes in the book value per share exclusive of changes in intangible assets.
• "Tangible common equity to tangible assets" is calculated as tangible common equity divided by tangible assets, which is total assets reduced by goodwill and other intangible assets. Management believes this metric is important to investors and analysts interested in relative changes in the ratio of total stockholders’ equity to total assets, each exclusive of changes in intangible assets.
• "Tangible net income available to common stockholders" is net income available to common stockholders excluding after-tax intangible asset amortization.
• "Adjusted tangible net income available to common stockholders" is tangible net income available to common stockholders excluding certain significant items. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Return on average tangible common stockholders’ equity" is tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.
• "Adjusted return on average tangible common stockholders’ equity" is adjusted tangible net income available to common stockholders divided by average tangible common stockholders’ equity. Management believes the metric is an important measure of the Company’s operating performance on an ongoing basis.

We believe that these non‑GAAP financial measures provide useful information to its management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non‑GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP financial measures that we and other companies use. Management also uses these measures for peer comparison.

Reconciliations of Non-GAAP Financial Measures

(dollars in thousands, except per share data)

79

(dollars in thousands)

80

(dollars in thousands, except share and per share data)

81

Our primary market risk is interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates.

We seek to measure and manage the potential impact of interest rate risk. Interest rate risk occurs when interest-earning assets and interest-bearing liabilities mature or re-price at different times, on a different basis or in unequal amounts. Interest rate risk also arises when our assets, liabilities and off-balance sheet contracts each respond differently to changes in interest rates, including as a result of explicit and implicit provisions in agreements related to such assets and liabilities and in off-balance sheet contracts that alter the applicable interest rate and cash flow characteristics as interest rates change.

We are also exposed to interest rate risk through the retained portion of the U.S. government guaranteed loans we make and the related servicing rights. Our U.S. government guaranteed loan portfolio is comprised primarily of SBA 7(a) loans, virtually all of which are quarterly or monthly adjustable with the prime rate. The SBA portfolio reacts differently in a rising rate environment than our other non-guaranteed portfolios. Generally, when interest rates rise, the prepayments in the SBA portfolio tend to increase.

Our management of interest rate risk is overseen by our Board of Directors and management asset liability committees based on a risk management infrastructure approved by our Board of Directors that outline reporting and measurement requirements. Our risk management infrastructure also requires a periodic review of all key assumptions used, such as identifying appropriate interest rate scenarios, setting loan prepayment rates based on historical analysis, non-interest-bearing and interest-bearing demand deposit decay rate assumptions, liability repricing beta based on historical analysis and the targeted investment term of capital. The committees closely monitor our interest sensitivity exposure, asset and liability allocation decisions, liquidity and capital positions, and local and national economic conditions and attempts to structure the loan and investment portfolios and funding sources to maximize earnings within acceptable risk tolerances.

We manage the interest rate risk associated with our interest-bearing liabilities by managing the interest rates and tenors associated with our borrowings from the Federal Home Loan Bank our other borrowings, and deposits from our customers that we rely on for funding. We manage the interest rate risk associated with our interest-earning assets by managing the interest rates and tenors associated with our investment and loan portfolios, from time to time purchasing and selling investment securities.

We utilize interest rate derivatives to hedge our interest rate exposure on commercial loans when it meets our customers’ and Byline Bank’s needs. As of June 30, 2025, we had a notional amount of $1.9 billion of interest rate derivatives outstanding that includes customer derivatives and those on Byline Bank's balance sheet. The overall effectiveness of our hedging strategies is subject to market conditions, the quality of our execution, the accuracy of our valuation assumptions, the associated counterparty credit risk and changes in interest rates.

We do not engage in speculative trading activities relating to interest rates, foreign exchange rates, commodity prices, equities or credit.

Evaluation of Interest Rate Risk

We evaluate interest rate risk through the use of two different models: net interest income ("NII") simulations and economic value of equity ("EVE") simulations. The simulations provide an estimate of the impact of changes in interest rates on equity and net interest income based on a variety of assumptions. Changes in assumptions may significantly alter the results of our simulations.

We use an NII simulation model to measure and evaluate potential changes in our net interest income. We run various hypothetical interest rate scenarios at least quarterly and compare these results against a scenario with no changes in interest rates. Our NII simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) predefined credit spreads for both investment securities and loans, (3) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, and (4) the effect of interest rate limitations in our assets, such as floors and caps. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

We use an EVE simulation to analyze the Company's long-term view of interest rate risk as it analyzes the Company's future cash flows. EVE is defined as the present value of the Company's assets, less the present value of its liabilities, adjusted for off-balance sheet items, with the results showing a theoretical change in the economic value of stockholders' equity as interest rates change. Our EVE simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) asset prepayment speed assumptions, (2) deposit decay rate assumptions, (3) predefined credit spreads for both investment securities and loans (4) re-pricing characteristics for market-rate-sensitive instruments on and off balance sheet, (5) amortization schedule, and (6) discount rates associated with the products on balance sheet.

Potential changes to our net interest income and economic value of equity in hypothetical rising and declining interest rate scenarios calculated as of June 30, 2025 are presented below.

We also conduct NII simulations that incorporate a dynamic balance sheet and ramp rate shock scenarios. The balance sheet reflects management’s growth expectations, while interest rates are modeled using an implied forward yield curve, reflecting market expectations of future rate movements. Ramp rate shocks are applied gradually, shifting up or down by 1/12th of the total change each month over the first 12 months. Under these scenarios, a gradual 100 and 200 basis point downward ramp rate shock would decrease NII by 2.2% and 4.2%, respectively, over the next 12 months. Conversely, a gradual 100 and 200 basis point upward ramp rate shock would increase NII by 2.7% and 5.4%, respectively, over the same period.

The Bank's aggregate interest rate risk exposure is monitored and managed based on the economic outlook and under guidance of board-approved policy limits. The results of the simulations are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted, including: the timing, magnitude, and frequency of interest rate changes, changes in market conditions, depositor behavior changes, and management strategies.

The Company’s management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of June 30, 2025, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

There have been no material changes to the risk factors previously disclosed in the "Risk Factors" section included in our Form 10-K for our fiscal year ended December 31, 2024 that was filed with the SEC on February 28, 2025.