バイライン・バンコープ (BY) 2026年第3四半期決算説明会：過去最高益、マージン拡大、預金拡大

主要なポイント

• バイライン・バンコープが発表した2026年第3四半期の純利益は、過去最高の4180万ドル（希薄化後1株当たり0.94ドル）となりました。EPSは前四半期比で4%増加し、前年同期比では約15%増加しました。
• 売上高（純収益）は過去最高の1億2100万ドルに達し、第2四半期から3%増加しました。純金利収入は1億370万ドルに増加し、純金利マージンは5ベーシスポイント拡大して4.33%となりました。
• 預金残高は1億6800万ドル増の80億ドルとなり、年率換算で8.5%の伸びを示しました。預貸率は96.1%から93.2%へと改善しました。
• 返済額3億9600万ドルが新規実行額3億6200万ドルを上回ったため、貸出金残高は約1%減少して75億ドルとなりました。経営陣は第4四半期の貸出金残高が概ね横ばいで推移すると予想しています。
• 同社はイリノイ・ステート・バンコープの買収合意を発表しました。経営陣はバイラインの資産規模が2027年に100億ドルを超えると予想しており、これによりダービン修正条項の影響は2028年後半まで先送りされることになります。
• バイラインは約52万2000株を2020万ドルで自社株買いし、四半期配当を16.7%引き上げて1株当たり0.14ドルとしました。

主要財務実績

事業および営業業績

預金の伸びは利付当座預金および無利息要求払預金が牽引した一方、マネー・マーケット口座および普通預金残高の減少により一部相殺されました。預金基盤の強化により、バイラインは約8000万ドルのブローカー預金を含む大口調達資金を返済し、預貸率を低下させることができました。

新規貸付は引き続き活発でした。新規実行額は第2四半期から55%増加して3億6200万ドルとなりましたが、3億9600万ドルに上る高い返済額と融資枠利用率の低下が新規貸付額を上回りました。融資枠利用率は61%から57%に低下しましたが、これには1億1200万ドルの新規コミットメントライン設定も一部影響しています。

経営陣は、商業・産業ローン（C&Iローン）、スポンサー・ファイナンス、SBAローン、および機器リース全体において成長の機会が残されていると述べました。バイラインは商業用不動産ポートフォリオの削減を目指しているわけではありませんが、中長期金利の上昇により、取引活動や評価額、融資需要が抑制される可能性があります。

非金利収入は、100万ドルを超える一時的なBOLI収入に加え、スワップ取引およびウェルスマネジメント収益の増加が寄与しました。これらの増収分は、サービシング資産の評価額低下により一部相殺されました。

信用クオリティは一様ではありませんでした。要注意・要管理貸出金の割合は3四半期連続で低下し、3.9%から3.1%に改善しました。しかし、2件の大口取引先の影響により、不良債権比率は22ベーシスポイント上昇しました。経営陣は、一方を太陽光関連業界へのエクスポージャー、もう一方を不良消費者クレジットカード債権を買い取るC&I借入金先と特定し、両者に対して適切な引当金を計上していると付け加えました。

経営陣の見通し

• 第4四半期の貸出金：新規実行額が継続的な返済額を相殺するため、残高は概ね横ばいで推移すると経営陣は予想しています。
• 第4四半期の純金利収入：金利見通しと、年末時点での資産規模を100億ドル未満に抑えるためのバランスシート管理を反映し、1億300万ドル〜1億500万ドルと予想されています。
• 第4四半期の非金利収入：約550万ドルの売却益収入を含め、1400万ドル〜1500万ドルと予想されています。前四半期比での減少は、第3四半期のBOLIによる追い風からの正常化を反映しています。
• 第4四半期の非金利費用：主にインセンティブ報酬、福利厚生費、マーケティング費用の増加により、6200万ドル〜6400万ドルと予想されています。経営陣は2027年第1四半期にコストが減少すると見込んでいますが、具体的なレンジは提示していません。
• 通期エフィシエンシー・レシオ：経営陣は引き続き50%以下を見込んでいます。
• 2027年実効税率：約25.5%と推計されています。
• 2027年貸出金成長率：経営陣は、金利、返済、商業用不動産の動向に関する不確実性を認めつつも、買収の影響を除いたベースで1桁台半ばの成長を妥当と引き続き考えています。

リスクと注視事項

高い貸出金返済額が、引き続きバランスシートの拡大に対する主な制約となっています。経営陣は、第3四半期の返済活動が事前に想定していたよりも活発であり、正確な予測が困難であることを認めました。

貸出金ポートフォリオの過半が変動金利であるため、金利上昇は純金利収入の支えとなる可能性がありますが、商業用不動産取引やSBAローンの実行を減速させるリスクもあります。経営陣は預金価格設定ももう1つの不確実要素として挙げ、一般的なベータ値を30%〜40%、大口定期預金（CD）を含めると40%〜50%と試算しています。

また、バイラインは2026年末まで総資産を100億ドル未満に維持するため、特定のバランスシート活動を制限しています。経営陣は債券購入を保守的に抑えており、この制約が解除される2027年第1四半期以降に購入を増やす可能性があると述べました。

純貸倒損失額は年率換算で31ベーシスポイントに上昇し、2件の大口取引先の影響で不良債権が増加しました。それにもかかわらず、貸倒引当金比率は3ベーシスポイント上昇して1.51%となりました。

アナリスト質疑応答の要点

• 預金の伸び：経営陣は今四半期の伸びについて、単一のプログラムによるものではなく、新たな法人顧客との取引関係構築によるものだと説明しました。コア預金の獲得は引き続き戦略的優先事項であると改めて強調しました。
• 貸出金のリプライシング：リースを含む固定金利貸出金のうち、四半期ごとに約3億5000万ドルが満期を迎えるかリプライシングされる見込みです。資産クラスに応じて異なるものの、新規実行利回りが約7.0%〜7.25%であるのに対し、現在の利回りは約5.15%となっています。
• 変動金利の比率：SOFR連動ローンがポートフォリオの34%、プライムレート連動ローンが19%、その他の変動金利ローンが4%を占めました。
• イリノイ・ステート・バンコープの買収：経営陣は本件取引を、競合のない関係性重視の買収であると説明しました。この買収により、コア預金、顧客関係、およびバイラインのプレゼンスが限定的だったシカゴの一部地域でのカバレッジが強化されると期待されています。
• M&A環境：経営陣は買収に関する議論が引き続き活発であり環境も建設的であると述べつつ、潜在的な取引はフランチャイズを強化し、経済的合理性があるものでなければならないと強調しました。
• 資本配分：オーガニックな成長が最優先事項であり、次いで持続可能な増配とM&Aが続きます。自社株買いは自動的なコミットメントではなく、資本の柔軟な余剰運用手段とみなされています。
• 営業レバレッジ：経営陣は2027年に収益の伸びが費用の伸びを上回ることを目指しており、平均総資産に対する非金利費用の削減に引き続き注力しています。

決算説明会トランスクリプト全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, and welcome to Byline Bancorp's Third Quarter 2026 Earnings Call. My name is Ben, and I will be your conference operator today. [Operator Instructions] Please note, the conference call is being recorded. At this time, I would like to introduce Brooks Rennie, Head of Investor Relations for Byline Bancorp to begin the conference call.

Brooks Rennie

Thank you, Ben. Good morning, everyone, and thank you for joining us today for the Byline Bancorp's Third Quarter 2026 Earnings Call. In accordance with Regulation FD, this call is being recorded and is available via webcast on our Investor Relations website, along with our earnings release and the corresponding presentation slides.

As part of today's call, management may make certain statements that constitute projections, beliefs or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed. The company's risk factors are disclosed and discussed in its SEC filings.

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

As a reminder for investors, we plan to participate in 2 investor conferences during the quarter, the Hovde Group Financial Services Conference in Orlando and the Piper Sandler Financial Services Conference in Miami, both in November.

With that, I will now turn the conference call over to Alberto Paracchini, President of Byline Bancorp.

Alberto Paracchini

Thank you, Brooks. Good morning, everyone, and thank you for joining us to review our third quarter results. With me today are our Chairman and CEO, Roberto Herencia; our CFO, Tom Bell; and our Chief Credit Officer, Mark Fucinato.

In terms of the agenda for today, I'll kick us off with the highlights for the quarter, followed by Tom, who will walk you through the financials. I'll come back before wrapping up the call for questions. As always, you can find the deck for this morning on the IR section of our website, and please refer to the disclaimer at the front.

Before we get started, I'd like to pass the call over to Roberto for his comments. Roberto?

Roberto Herencia

Thank you, Alberto, and good morning to all. Thank you for spending a few minutes with us this morning. Another excellent quarter with notable positive developments. Financial results were solid and consistent, quite a few records achieved this quarter. Key metrics were once again top quartile or top decile among our peer group. We increased our dividend during the quarter and continue to repurchase shares opportunistically. We also announced the acquisition of Illinois State Bancorp.

And with that, the analyst community gets the certainty they've been so eager to obtain as to when we will cross that $10 billion threshold. Before passing the call back to Alberto and the team, I'd like to talk about these details, I want to spend a few minutes as I usually do, talking about our people and leadership, which is, of course, what makes these results possible.

Sadly, I first want to take a moment to remember our colleague, Matt Robertson, who passed away in September. Matt was part of the Byline family for more than 7 years and led one of our commercial real estate teams. He was an accomplished banker and a respected leader in the Chicago commercial real estate community. What stands out the most about Matt is the impact he had on the people around him. Matt was a mentor to many of our younger bankers and credit professionals. He was known for his positive attitude, his commitment to his colleagues and customers and the energy he brought to Byline every day.

I talk often about the importance of our people and the culture we're building at Byline. Matt represented so much of what we value, relationships, mentorship, teamwork and genuinely caring about the people around you. We miss Matt greatly, and our thoughts remain with his wife, his children and all of Matt's family, friends and colleagues. We are grateful for the time we had with Matt and for the lasting impact he made at Byline and on so many of us personally.

More broadly, I'm especially proud that Byline was recently named one of American Bankers 2026 Best Banks to Work For. This recognition is particularly meaningful because employee feedback is a central part of this evaluation. We work hard to build a culture where people feel connected to the organization, have opportunities to develop and build meaningful careers and understand the important role they play in our success. We remain focused on developing our people, creating opportunities from within and making sure we have the leadership depth necessary for $10 billion and beyond, and we actually do.

This leads directly to the leadership transitions and organizational changes we announced earlier this month, effective January 1, 2027. Brogan Ptacin, Head of Commercial Banking; and Mark Fucinato, our Chief Credit Officer, will retire at the end of this year after a combined 25 years of service to Byline. Brogan has been instrumental in building our commercial banking franchise and strengthening our position in the Chicago market.

While Mark has played an equally important role in strengthening our credit infrastructure and building the disciplined credit culture that is fundamental to how we operate. Both have also invested considerable time in developing the people around them, a condition to their retirement. I'm being playful with that last comment, of course, just a bit. We are incredibly grateful for their leadership and the lasting positive impact they have had here at Byline.

We're delighted that Brogan and Mark will remain involved in advisory capacities for the foreseeable future with us. If we had an official Chicago Bankers Hall of Fame, these 2 individuals would be inducted without a wait period. As part of these planned transitions, we shared in an 8-K earlier this month the names of the named executive officers that will lead the reorganized commercial bank and credit functions.

There are also many other promotions that cascade from these changes beyond the NEOs, including expanded responsibilities and even a swap or exchange of roles into C-suite leaders as part of our commitment to developing leadership. Singling out all of them would not be appropriate in an earnings call. The overarching message, however, is that these moves are intentional, giving talented leaders opportunities to lead different parts of the organization, building broader experience and strengthening our executive bench as we cross the $10 billion threshold.

We have known for some time that these transitions were approaching, and we've been deliberate in preparing for them. To me, that is what good succession planning looks like. We are confident in the team we have in place and excited about what this next generation of leadership will bring to Byline. I am proud of the organization we're building together. These changes demonstrate the depth of leadership we have developed across the company and reinforce something I have said many times, our people and our culture are fundamental to our success. This team, our people in general anchors the optimism and excitement I feel about Byline's growth prospects and our progress towards becoming the premier commercial bank in Chicago.

With that, Alberto, I'll turn it back to you.

Alberto Paracchini

Great. Thank you, Roberto. Moving on to Slide 4 on the deck. The third quarter combined strong financial results with several important milestones. We delivered record net income and revenue, expanded our net interest margin and grew deposits while maintaining strong capital levels. We also announced a definitive agreement to acquire Illinois State Bancorp and returned capital to shareholders through a higher dividend as well as share repurchases.

All in all, a very productive quarter for Byline. Net income came in at $41.8 million or $0.94 per diluted share, up from $40.2 million and $0.90 last quarter. EPS was up 4% linked quarter and up approximately 15% from a year ago. Revenue reached a record $121 million, up 3% from the second quarter with growth in both net interest income and noninterest income. These results translated into an ROA of 167 basis points, ROTCE of just under 15% and pretax pre-provision ROA of 245 basis points.

Expenses totaled $59.8 million, and our efficiency ratio was 48.4%. While the ratio increased from the second quarter, it improved by 260 basis points on a year-on-year basis. Turning to the balance sheet. Deposits grew $168 million or 8.5% annualized to $8 billion. Our loan-to-deposit ratio declined to 93.2% from 96.1% last quarter, and we used excess cash to reduce wholesale funding and manage the size of the balance sheet. Loans and leases declined roughly 1% to $7.5 billion as elevated payoffs more than offset strong origination activity.

We ended the quarter with assets just below $10 billion and have flexibility to manage the balance sheet through year-end. We expect to cross the $10 billion threshold in 2027, which would defer the impact of Durbin until the second half of 2028. Moving to asset quality. Credit costs for the quarter were $6.7 million, reflecting net charge-offs of $5.8 million and a small reserve build. Net charge-offs came in at 31 basis points, consistent with prior guidance.

Nonperforming loans increased 22 basis points for the quarter, driven by 2 relationships, 1 government-guaranteed and commercial that moved to nonaccrual status during the quarter. Our allowance increased 3 basis points to just over 1.5% of total loans. Criticized and classified loans declined to 3.1% from 3.9% last quarter, marking the third consecutive quarterly decline. Capital levels continue to remain strong. During the quarter, we repurchased approximately 522,000 shares totaling $20.2 million. Importantly, we executed across all 4 of our capital priorities during the quarter, supporting organic growth, increasing our dividend, deploying capital towards M&A and returning capital through share repurchases.

With that, I'll turn the call over to Tom, who will walk you through the financials.

Thomas J. Bell

Thank you, Alberto, and good morning, everyone. Starting with our loans on Slide 5. Total loans ended the quarter at $7.5 billion, down 1% from the second quarter. Origination activity was strong with $362 million in new loans, up $129 million or 55% linked quarter. However, payoff activity continued and remained elevated at $396 million, up 17% linked quarter.

Line utilization decreased to 57% from 61% last quarter, reflecting higher net repayment activity and the impact of $112 million of new line commitments added during the quarter. Looking ahead, we currently expect fourth quarter loan balances to remain flat as payoff activity and new business production are expected to largely offset.

Turning to Slide 6. Total deposits were $8 billion for the quarter, up 2.1% or 8.5% annualized linked quarter. From a mix perspective, growth was driven by interest checking balances and DDAs, partially offset by lower money market and saving balances. The solid deposit growth for the quarter allowed us to reduce our reliance on wholesale funding and improve our loan-to-deposit ratio to 93.2% from 96.1%. Deposit costs increased modestly for the quarter, up 3 basis points to 1.95%, while the cost of interest-bearing deposits increased 5 basis points to 2.54%.

Turning to Slide 7. We had record high net interest income of $103.7 million, up 3% from the prior quarter, primarily due to higher income from investment securities, reduced wholesale funding costs and the additional day in the quarter. This was partially offset by higher deposit costs. The net interest margin increased 5 basis points to 4.33%. The improvement reflected higher yields on cash and securities and lowering borrowing costs, partially offset by higher deposit costs.

Excluding accretion, the NIM increased 10 basis points linked quarter. Given our asset-sensitive position, we are well positioned to grow our net interest income in a rising rate environment. That said, given the rate outlook and the management of the balance sheet to stay under $10 billion for year-end, we expect net interest income to be in the $103 million to $105 million range for the fourth quarter.

Turning to Slide 8. Noninterest income totaled $17.3 million in Q3, an increase of 3% compared to the second quarter. The increase was primarily driven by higher BOLI income. We also had higher swap income and wealth management income, partially offset by lower servicing asset valuation. Our guidance for Q4 remains unchanged with gain on sale revenues at $5.5 million, with total noninterest income to be in the $14 million to $15 million range.

Turning to Slide 9. Expenses came in at $59.8 million, up 6% from the prior quarter, primarily due to higher incentive compensation, partially offset by lower marketing expenses. Noninterest expense to average assets continued to move lower at 2.39%, an improvement of 8 basis points year-over-year. Looking ahead to Q4, our noninterest expense guidance will be higher at $62 million to $64 million, which reflects higher incentive compensation, benefit costs and marketing expense.

Notwithstanding the higher expense guidance for the fourth quarter, we still believe that our full year efficiency ratio will be at or below 50%. Before moving to credit, I want to briefly touch on taxes. During the third quarter, we purchased tax credits, which reduced our effective tax rate to 23.3% from 25.7% last quarter. Looking ahead to 2027, we currently estimate our annual effective tax rate to be in the 25.5% range.

Turning to Slide 10. Net charge-offs were $5.8 million or 31 basis points annualized compared to $4.4 million or 24 basis points last quarter. Criticized and classified loans declined to 3.1% of total loans from 3.9% last quarter. And our allowance for credit losses was $113 million or 1.51% of total loans, up 3 basis points from last quarter, driven by an increase in the individually assessed category.

Moving on to capital on Slide 11. Capital ratios increased during the quarter and remain well above regulatory requirements. CET1 increased 37 basis points to 13.29%. Our TCE ratio was 11.12% at September 30, down 24 basis points linked quarter due to higher AOCI and the impact of share repurchases, but up 34 basis points year-over-year. As a result of our strong capital position, we continue to return capital to stockholders. During the quarter, we repurchased roughly 522,000 shares of common stock and increased our quarterly cash dividend by 16.7% to $0.14 per share. Our capital position is a source of strength and continues to provide flexibility to fund organic growth, return capital to stockholders and pursue strategic opportunities.

With that, Alberto, back to you.

Alberto Paracchini

Thank you, Tom. So to wrap up, we're pleased with this quarter's results and remain focused on executing our strategy. Our priorities are straightforward: grow customer relationships, deliver profitable growth and invest in the business while preserving a strong balance sheet.

We do all of that while maintaining credit discipline, close portfolio monitoring and balancing risk with reward. Looking ahead to the fourth quarter, our pipelines remain healthy, and we're confident in our ability to serve customers and compete effectively in the market. Our capital position gives us flexibility to support growth, invest back into the business and return capital to shareholders.

Looking ahead, we're prepared to operate above $10 billion in assets and welcome Illinois State Bancorp's customers, employees and shareholders to Byline in 2027. We believe the combination will strengthen our deposit base, expand our market presence and add new customer relationships. We remain optimistic about the opportunities ahead and focused on delivering long-term value to our shareholders.

Before we open the call for questions, I'd like to recognize Mark Fucinato, who is here today participating in his 25th and final quarterly earnings call before retiring. Mark joined Byline in 2019 and has served as Chief Credit Officer since 2020. During his tenure, Mark has made significant contributions to our company. Our processes and practices are stronger. Our credit culture has matured and the relationship between our lines of business and credit has become a competitive advantage.

I am fortunate to work with Mark and grateful for his friendship and support over the last 7 years. On behalf of Byline, our Board and all of us here, thank you for your contribution and years of service. We wish you well in retirement. I'd also like to take a moment to introduce Scott Hawthorne, who will succeed Mark as Chief Credit Officer at the beginning of 2027. Scott joined Byline 3.5 years ago and is currently Deputy Chief Credit Officer. He brings more than 20 years of banking and credit experience, having worked prior to Byline at MB Financial and Fifth Third.

Finally, thank you to all of our employees for their commitment to customers and their contributions to another strong quarter. And with that, operator, we can open the call up for questions.

Operator

[Operator Instructions] Your first call from the line of Nathan Race with Piper Sandler.

質疑応答

Nathan Race

Congratulations on your upcoming retirement, Mark. Wishing you all the best, your next chapter.

Mark Fucinato

Appreciate it.

Nathan Race

I wanted to start on just the strong core deposit growth in the quarter. Obviously, it helped you kind of pay down some wholesale funding in the quarter. And just maybe curious, Alberto, if you can just unpack some of the drivers. Is it just some typical blocking and tackling, pulling market share? And to what extent do you have kind of visibility into kind of additional kind of core deposit gathering at this clip just to maybe continue to work down some wholesale funding sources and to drive and support the NIM.

Alberto Paracchini

Yes. Good question, Nate. So obviously, it's -- when you annualize the growth this quarter, it looks super solid at 8.5%. The growth was actually a bit higher because we also repaid, Tom, roughly around $80 million in broker deposits. So net, it was really double-digit growth. Joking, putting -- trying to put a joke aside, but I wish we can continue to grow at that type of rate going forward. But in all reality, I think the growth this quarter was just simply blocking and tackling.

As you know, we are more commercially focused. So as we bring in new banking relationships, they can be lumpier coming in. And I think that's the short answer to your question. It's just we added -- we continue to add banking relationships. We had a good quarter of that. If you look at the changes in the balances, it was driven by interest checking, noninterest-bearing obviously moved higher also, which certainly helps. So the mix remained attractive.

But in terms of going forward, Nate, listen, it's -- as you know, we've always been very focused on the right-hand side of the balance sheet. We believe that fundamentally, that's really where the value of a financial institution lies. And we'll continue to always be prioritizing deposit growth going forward. And again, in terms of -- what's driving it is, again, just the focus on the strategy, customer by customer, the segments and certainly the commercial banking orientation. So hopefully, I gave you some color there. Hopefully, that answers your question.

Nathan Race

Yes, that helps. And maybe a question for Tom. I know you don't really guide to margin, but if we do get a couple more Fed rate hikes as the forward curve implies, just any thoughts on betas between both loans and deposit costs as we move into 4Q into the first part of next year?

Thomas J. Bell

Sure. Nate, on the loan side, just hit that first. I mean, we continue to have cash flows and runoff in the, I'll call it, $350 million in fixed rate loans that would reprice. Obviously, the book is over -- a little bit over 50% floating rate. So that should give you some guidance on the betas there. On the liability side, we haven't seen much to date for interest-bearing deposits and total deposits, but generally, probably in that 30% to 40% range is the beta. And if you include CDs, I think about it more like 40% to 50%.

Nathan Race

Okay. Got it. And just one last one for me. Just -- I appreciate the guide on kind of flat loans for the fourth quarter, just given some of the payoff headwinds. But as you look out to next year and just given that we're perhaps kind of in the latter innings of some of the recycling of acquired loans that we discussed last quarter and maybe also the latter innings of some of the kind of the COVID era CRE loans paying off to some degree. Just is there anything that you see on the horizon, Alberto, that would cause you guys to not achieve kind of mid-single-digit growth in loans next year, notwithstanding the acquisition impact?

Alberto Paracchini

Really good question, Nate, and thanks for asking it. And I know you were the one that asked the same question last quarter. And I think, look, we probably underestimated a little bit how strong the payoff activity was going to be this quarter relative to what we told you in 2Q. That being said, there -- I mean, it's always hard to forecast that variable perfectly. Sometimes we get it right, sometimes we don't. And certainly, this quarter was one of those. That being said, if you look at the origination activity, the origination activity remains really good.

We're seeing plenty of opportunities. Credit demand looks okay broadly in the market. So we still -- when we look at that and when you normalize a bit for the elevated payoff activity heading into next year, I think that kind of mid-single-digit range, obviously, adjusting the base to reality and also to the reality that we'll be managing the balance sheet here over the last quarter of this year to make sure that we stay under $10 billion through 2026.

We still feel good about that mid-single-digit range into 2027. That being said, we're in a rising rate environment. You've heard me comment in the past about real estate transaction volume being lower, the market being competitive. That's likely to be the case in 2027 with higher rates. Also, you have to factor in, it's not just prime or SOFR, it's really the backup in treasury rates, which will have an impact to some degree on cap rates and valuations, and that's likely going to have an impact on transaction activity going into next year. So with that caveat and all the other uncertainties that you well know that are -- that exist in the environment today, I still think that for us, that single mid-digit kind of growth rate in terms of loans is probably the right place.

Operator

Your next call comes from the line of Brendan Nosal of Hovde Group.

Brendan Nosal

Maybe just starting off here on kind of your recent M&A announcement. I know it's a little stale at this point, but could you just give us a little bit of background on how the Illinois State deal came to be and just kind of one or 2 things that you're most excited about for that transaction?

Alberto Paracchini

So it came to be through a meeting and getting to know the owners and the leadership of that institution earlier in the year. We certainly knew of them. We knew who they were. We -- I personally didn't know them personally, but we had been tracking that institution for some time. And we had the opportunity to meet, and it was a situation where you had the leadership team there had built that organization over roughly a 40-year period, and we're looking to find a good home for the franchise, the customers, the employees, the relationships that they had built over that period of time.

And Brendan, as we've conveyed and talked about in the past, we think we are a really good home for those types of situations. And this is just one example, very similar to some of the transactions that we've done here in the past. So that was the gist of it. I can tell you that it was relationship-driven. This was not a competitive situation. We had a meeting of the minds. We felt we were a good fit for each other, and we worked on trying to get to an outcome that certainly was good for both parties, and we think we were able to do that.

So that's in context the background on the transaction. In terms of what it adds, it adds -- it solidifies our market presence in certain parts of the city where we are just not there. It adds customer relationships. And as always, it's a source of core deposits and funding to the bank.

Brendan Nosal

Yes. That's super helpful. Second one for me, just kind of sticking on this theme. It's just been a really active period for M&A kind of in and around the state of Illinois over the past couple of months. You obviously got kind of your bite at that with the deal that we just discussed. But as you look at the M&A landscape, are there still potential partners that you think could come to market in the near to medium term? Or has the pipeline for potential partners kind of in your markets depleted somewhat?

Alberto Paracchini

No, I think we're still -- there's still opportunities there, Brendan. I think as the usual wording that people use to describe kind of the M&A environment. I mean, I think there's active chatter. I think for us, it's just sticking to our knitting, looking to do transactions that make sense that are accretive to the franchise that hopefully, with partners that we like and that -- where they're looking to partner and put their institution with a partner that can provide them with just better capabilities and a home for the business that they've built. So I think, look, the chatter in the marketplace continues, and I think -- I would say I think the environment is constructive.

Operator

Your next call comes from the line of Damon DelMonte of KBW.

Damon Del Monte

Just wanted to ask on the outlook for noninterest income, Tom. Could you just kind of help us connect the dots for the range that you gave of $14 million to $15 million off of this quarter? I'm guessing there was some -- I think you called out a couple of onetime items maybe this quarter that kind of would get us down to that lower level?

Thomas J. Bell

That's correct, Damon. The BOLI income was a onetime event. So that kind of brings us back to normal operating levels.

Damon Del Monte

Yes. So that was like a couple of million maybe?

Thomas J. Bell

Little over $1 million, yes.

Damon Del Monte

A little over $1 million. Okay. All right. Great. And then on the expense side, the lift from this quarter, is that just kind of like year-end accruals and anything else particularly driving that?

Thomas J. Bell

That's correct. Year-end accruals and then some of the marketing campaigns that we maybe didn't do in the third quarter that we anticipate in the fourth quarter, the timing of those expenses. So the marketing expense could be a little bit higher in the fourth quarter.

Damon Del Monte

Got it. Okay. And then...

Alberto Paracchini

Yes. Damon, I was going to add maybe to what Tom said. I think when you look at our performance, obviously, performance this year has been super solid. So what you're seeing in terms of the fourth quarter is aligned with that in terms of the higher incentive compensation.

Damon Del Monte

Got it. That makes sense. A good year. And then just one more quick one on credit. I think you called out a couple of loans that drove the NPA increase this quarter. Any color on those, maybe size or industry or anything like that?

Mark Fucinato

Damon, Mark Fucinato. So one of them was in the solar industry, and we expect that one to hopefully be resolved sometime early next year. We're well reserved against that one. And the other one was a C&I credit that involved a company that does purchase of distressed credit card consumer debt. And these are both long-term customers at the bank. So these things occur once in a while. We've been tracking them for a long time, and we're properly reserved against both of those situations at the present time.

Operator

Your next call comes from the line of Daniel Tamayo of Raymond James.

Daniel Tamayo

Maybe first, just curious kind of as we think about the crossing of the $10 billion and the actions that you're taking to stay below in 2026, is there any kind of reversal of those actions in '27 and the beginning of the year that would kind of create an increase in the balance sheet abnormal growth kind of early on, maybe having to do with liquidity or something like that, that we should be thinking about as we model out next year?

Thomas J. Bell

I think so, Danny. We've been kind of conservative on any bond purchases right now just because we don't want to go over. So that's certainly an area where we're a little light on a percentage basis, and you would expect in the first quarter that, that would change.

Daniel Tamayo

Okay. And then can you give a little bit of color around the loan sales in the third quarter? I mean, just looking at the line items, it looks like it came from construction and maybe C&I, but just curious where you were selling and then just thoughts if that -- it was a onetime event or there's some potential for that to continue?

Thomas J. Bell

Sure. So the bulk of those sales are the government-guaranteed loans that we sell every quarter. That's something we disclosed in the loan side this time because there were some SAG assets that were sold and some other loans that other banks took a participation in, so to speak. So that -- those are small pieces in C&I, but the bulk of the sales are the SBA sales.

Daniel Tamayo

Okay. So that's kind of regular way stuff, but it was just elevated in the quarter is the way to think about it?

Thomas J. Bell

Yes.

Alberto Paracchini

Yes. I think we highlight, Danny, I think I would emphasize just the one that ultimately matters a lot is really the government guaranteed kind of -- recurring government-guaranteed loan sales. You can think of the other ones as really not having very material economic impact in terms of the P&L.

Daniel Tamayo

And how much were those, Alberto?

Thomas J. Bell

You remember, it's just the -- I'm sorry, what's the question?

Alberto Paracchini

The delta between the...

Thomas J. Bell

Well, we sold like $70 million -- $77 million of SBA loans residual as SAG assets and a couple of loans we sold to participations.

Roberto Herencia

It's about $30 million.

Thomas J. Bell

$30 million. But I think that point these are not like asset sales where we're taking a significant loss or a gain that we were as part of a business structure. It's just operating balance sheet.

Daniel Tamayo

Okay. And then lastly, if I'm looking at this correctly, the purchase accounting accretion came down quite a bit in the quarter. Just curious if you're expecting a rebound in that level from a scheduled perspective in the fourth quarter.

Thomas J. Bell

I mean it's less than $1 million a quarter. I would think it's -- we've given guidance in the past, and the numbers are so small now, at least excluding any future transactions, which we haven't really disclosed yet. So more to come on that, but it's a couple of million dollars currently for '27 in total.

Daniel Tamayo

Okay. So it's that we're still running off from these levels. There was nothing unusual in the third quarter in terms of excel, I guess, it would be the other way.

Thomas J. Bell

Maybe.

Alberto Paracchini

No, I think the point that we tried to highlight, Danny, is like if you just look at the margin ex accretion, obviously, the growth in the margin for the quarter was more significant than it was with accretion included. I think accretion was like roughly 5 basis points, ex accretion was like 10 basis points, which for a quarter where, yes, rates increase, but that increase happened very much towards the latter part of the quarter. So that's still not baked in. So we still think to Tom's comments in his remarks, it's a nice tailwind going into the fourth quarter and 2027.

Operator

Your next call comes from the line of Brandon Rud with Stephens. Your next call comes from the line of Brian Martin with Brean Capital.

Brian Martin

Just a couple for me. Just, Tom, on the -- just on the September, do you have a sense for -- is there a big difference in the September margin exit versus what it was for the quarter? Just trying to gain some perspective on the timing of those wholesale payoffs in the quarter if it had an impact? Or is it pretty -- the average for the quarter is a pretty good base.

Thomas J. Bell

Pretty consistent averages over quarter. Some of the payoffs that did happen happened in the middle part of September. So I would say, generally, the margin is pretty much consistent on average versus period end.

Brian Martin

Okay. And then just on your outlook, Alberto, you suggested, as you have in the past on the real estate, if we are in a little bit of a rising rate environment, that may tail off a bit. But your guide or comfort level still seems to be in that mid-single-digit outlook is in the coming quarters. I mean does C&I make up for that potential slowdown in real estate, and that's how we should think about where the growth is in the coming quarters more on the C&I side and maybe a little bit less real estate, that's kind of your outlook today that can overcome it?

Alberto Paracchini

Yes. I still think we're -- listen, we're -- it's not to say that we are deliberately trying to reduce our CRE book. We are not. In fact, if you've tracked kind of our CRE concentration ratio today, we're probably at a pretty low point, which means we have ample capacity to grow that category. I'm just cautioning against an environment. If you think about the beginning of this year and what market expectations were in terms of rates, it was for lower rates.

I think a lot of people on the commercial real estate space were anticipating, given the fact that rates are going to trend lower, properties were going to come to market, transactions were going to come to market and activity overall in terms of financing that was going to increase. I can't point to anything now other than just, look, we've had a significant backup in long intermediate and longer-term rates, and that's likely to have some impact on projects and overall activity in real estate next year.

That being said, as you well know, the environment can change very quickly. There are variables in the environment that if they were to reverse. So the geopolitics, the rise in oil, inflation trending down, then you can obviously see a reversal of kind of that environment in terms of that having an impact then on the business. So I'm just highlighting that. But to answer your question in terms of our business in general, you are going to see -- it's really more broader than just, say, C&I.

We expect that we'll see growth coming from the different business lines that we have that constitute that. So C&I, so that's our bread and butter, commercial banking business, our sponsor business, the SBA business, unless we get into an environment where we're seeing significantly higher rates that are likely to impact that originations in that business. I mean, I think activity there remains solid. And then lastly, our leasing business there as well. So leasing this year has been probably a little slower than in the past. As you know, that's a book that tends to repay very quickly because it's just the nature of that business. So that's an area also that we anticipate that going into next year, capital spending continues to remain solid, demand for essential used equipment of the type that we finance continues to be good. So that's a business that we anticipate also can grow next year.

Brian Martin

Okay. And sorry if I wasn't clear. I guess that was -- your point is what I was suggesting is that if real estate does potentially slow a little bit, it sounds like you've got some pretty good runway in these other areas to kind of offset that if it does happen, and we'll see if it does. But thanks for the clarification on that and the bit of color on the other segments that can help out on that.

Maybe just the last for me was the -- just -- I mean, the efficiency ratio and expense management has been great. Just kind of wondering how you're thinking about operating leverage in '27 versus '26 and just how to think about that given certainly the inflationary costs and whatnot and how to balance that with such a great level where it's at today.

Thomas J. Bell

That's a great question. I think we still, again, want to focus on revenue growth over expense growth, so having operating leverage there. We're still working on the numbers, Brian. So more to come on that. But generally speaking, we want revenue growth to exceed expense growth.

Alberto Paracchini

It's a habit, Brian, in terms of -- this is not something that it's -- that we focus on this quarter and then we don't talk about it or focus again. I mean it's constant. So it's not -- we want to continue to drive the efficiency, you have a revenue component there that impacts it, but we want to continue to drive that cost-to-asset ratio down. So we are -- remain very focused on that. Some of that is just scale as we continue to grow the balance sheet, we want to make sure that we're -- that, that growth translates into better scale, but it's a habit, and it's a constant source of focus for us.

Operator

Your next call comes from the line of Brandon Rud with Stephens.

Brandon Rud

Sorry about earlier, I'm not sure what was happening there. If I can ask 2 questions. Just the first one, just to clarify, Tom, the $350 million of fixed rate maturities, is that per quarter? And then what -- how do those roll-off yields compare to new origination rates?

Thomas J. Bell

Sure. Yes, that's for the quarter. That includes leasing. And the rate is, call it, 5.15-ish. So we think about 7%, 7.25% for yields, depending on the asset class.

Brandon Rud

200 basis points or so uptick there. Okay. Perfect. And then just one on the buyback with the deal announced earlier this month. Are you restricted from repurchasing additional shares until that closes? Or are you still open for more buybacks here in the fourth quarter?

Thomas J. Bell

No.

Operator

[Operator Instructions] Your next call comes from the line of Kenneth James of StoneX Group.

Kenneth James

I just kind of wanted to circle back to kind of the balance sheet and kind of growth expectations. I mean the main thing I'm trying to wrap my head around is the degree of time that you've kind of been managing these elevated payoffs and also around the $10 billion number. I mean, how long does it take to kind of get back up to a normal growth range? I mean, I guess I have a natural kind of inclination that once you get past the end of the year that the balance sheet could kind of behave like a coiled spring, kind of back up to a mid-single-digit growth rate. And I'm just wondering, is that a fair assumption? Or does that need to be tempered? I'll let you answer that part first.

Thomas J. Bell

Sure. I think we think mid-single digits is appropriate as we move forward ex any M&A transaction that we're going to close. So we've been operating in that level. Again, line utilization was down for the quarter. That's kind of not a normal thing that happens. So we expect that over time to move up. And that would certainly give us positive loan growth if we would have had line utilization unchanged quarter-over-quarter. So I think, generally speaking, mid-single digits is kind of where we're operating.

Kenneth James

Okay. And then in terms on the deposit side and kind of the rising rate environment, how do you guys manage your deposit cost in terms of how much of the deposit base is centrally managed on a rate sheet versus linked to an index and automated versus negotiated individually, just generally speaking.

Thomas J. Bell

We have pricing committee meetings that meet weekly, and we review the competition. We look at our balance sheet needs and we set rates based on that. We have standard rack rates, and we offer promotional rates from time to time in the marketplace. And there's certainly -- depending on the size of the deposit base, there may be some exceptions given. But generally speaking, it's rack rate type pricing. There are some index priced products like, for example, instead of doing brokered CDs, we do brokered money market. So we did that for balance sheet management purposes. And so that's indexed to a Fed funds rate or a SOFR rate.

Kenneth James

Okay. And then in terms of betas that we might see now versus last time, -- and what's kind of assumed in your sensitivity modeling? I mean, are they similar? I mean, kind of the 40% to 50% total deposit beta number you mentioned, I guess I kind of have an inclination that if we just get 3 hikes at 3 meetings that betas could be managed lower than 500 basis points was last time. Is that a fair assumption or in line with your thinking the market would allow you to do that? Or is last time is a better assumption?

Thomas J. Bell

The -- we think more to come on that. We'll have to see how they behave. But generally speaking, at least to date, they seem to be reverting back to the normal quotes that we gave on betas. As the Fed was moving in that cycle up, the last 100 basis points really hurt banks, all banks. And I think it was because of the, obviously, the liquidity events that were going on at the time. I mean we've been able to bring back our cost of funds from that level even though the Fed was on hold for some time here, our margin expanded over the year. And I think we're planning on the 40 to 50 that we already disclosed, but we'll certainly defend our deposit base and our customers. And if we have to go higher, we will. But to date, we aren't seeing it in the marketplace.

Alberto Paracchini

Yes. Ken, every cycle is different. I wish we were perfect on this, but there's just a lot of uncertainty on, call it, on that topic. History can help you, can certainly give you ranges in terms of how depositors are going to behave. But to Tom's point, we can look back to the last cycle and early on that hike cycle, betas were barely moving. And then all of a sudden, we got to a certain threshold and customers woke up, people became much more sensitive, and you saw how banks reacted to that.

The reality of this is even though we talk about uniformity and betas, people talk about deposit betas, the betas for interest-bearing deposits. The reality is it's just a mix of betas. We have certain pockets of the portfolio that are more rate sensitive and therefore, the betas are going to be higher, that will react quicker, then we have some other parts of the deposit book that are not going to be that sensitive and are not going to react very quickly to changes in rates. So how all of that comes out, I think to Tom's point, that's our view today. But obviously, that's subject to some degree of uncertainty because this hike, like all other hikes are -- tend to be a little bit different from the previous one.

Operator

Your next call comes from the line of Brendan Nosal of Hovde Group.

Brendan Nosal

Just want to circle back to the cost conversation real quick, get the guide for the fourth quarter. It sounds like some of those things could be transitory or pushed from the third quarter. And I'm just asking because I'm wondering if the full $62 million to $64 million in the fourth quarter carries through into early 2027 or if there is some kind of transitory costs that could fall out of the run rate at the turn of the calendar.

Thomas J. Bell

Good question. You're right. It's -- this is December is the fourth quarter estimate. We expect the cost to come down in the first quarter. We're not really ready to give guidance there yet, but the incentive comp is driving the higher expense base for Q4 guidance.

Operator

Your next call comes from the line of Nathan Race of Piper Sandler.

Nathan Race

Just going back to buybacks, pretty strong activity there. I think it's maybe the second highest level of buybacks in the quarter from what we've seen over the last handful of years. And that's with the stock trading kind of near kind of all-time high. So just curious if there's anything to read into that in terms of just maybe how consistent buybacks to a pace of the degree we saw this quarter can be kind of a more continuous component to your excess capital management strategy, just given how strong your capital levels are and which still probably provides flexibility for acquisitions to the extent they materialize going forward?

Alberto Paracchini

I think the -- I think, Nate, if you think -- just -- I would put it in the context of kind of the capital priorities that we lay out in terms of supporting organic growth, that's from a -- whether you measure it from an earnback perspective or you measure it from kind of just roughly a yield perspective, that's probably the top use of capital.

So first and foremost, supporting that. Second, over time, and this past quarter, you saw us do that in terms of having be able to do consistently over time, dividend increases that are, call it, very sustainable. So -- but that's an example of something that, again, we did this quarter. Thirdly, in this quarter, we had the opportunity to do that is having enough capital and putting that capital to work in M&A transactions.

And then you have the safety valve at the end, which is the buyback. And when it comes to the buyback, it's not necessarily buyback at all costs. We're not in a situation where like you can think about some of the largest banks in the country where they have really no other use other than to buy back. We have options in terms of what to do with the capital. So we're going to be sensitive to what that buyback yield is, what the earn-back is on a buyback relative to the other uses that we potentially have. So hopefully, that frames it and gives you a sense.

Nathan Race

Yes. That's helpful. And just maybe one more for Tom. You mentioned 50% of the loan book is floating. Do you have a mix between prime and SOFR there?

Thomas J. Bell

It's in the deck.

Roberto Herencia

It's in the deck, Nate.

Nathan Race

Sorry, I didn't catch that.

Thomas J. Bell

SOFR is 34%, prime is 19% and other is 4%.

Alberto Paracchini

It's on Page 7 of the deck, Nate.

Operator

Thank you for your questions today. I will now turn the call back over to Mr. Alberto Paracchini for any closing remarks.

Alberto Paracchini

Great. Thank you, operator. So thank you for joining us this morning. We appreciate your continued interest in Byline. I hope you all have a happy Halloween, happy Thanksgiving and a happy start to the holiday season, and we look forward to talking to you again in the new year. With that, that concludes the call. Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.