Business Context and Reporting Period
Company: Byline Bancorp, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 30, 2020 (Event Date: August 3, 2020)
Context: The Company announced the completion of an offering of additional subordinated notes to raise capital for general corporate purposes and to further capitalize its subsidiary, Byline Bank.
Key Financial Metrics
- Debt Issuance: $25.0 million aggregate principal amount of 6.000% Fixed-to-Floating Rate Subordinated Notes due 2030.
- Offering Price: 100.617% of aggregate principal amount.
- Net Proceeds: Approximately $24.6 million (after underwriting discounts, commissions, and estimated offering expenses).
- Interest Rate Structure:
- Fixed Period: 6.000% per annum from issuance until July 1, 2025.
- Floating Period: Three-Month Term SOFR plus 588 basis points from July 1, 2025, to maturity (July 1, 2030).
- Payment Schedule: Semi-annual payments (Jan 1, Jul 1) during fixed period; quarterly payments (Jan 1, Apr 1, Jul 1, Oct 1) during floating period.
Material Changes vs. Prior Period
This filing represents a new capital event rather than a comparative financial period. The $25.0 million offering is an addition to, and fully fungible with, a prior $50.0 million issuance of the same note series completed on June 26, 2020. The total outstanding principal for this series is now $75.0 million.
Guidance, Outlook, and Risks
- Use of Proceeds: General corporate purposes, including working capital and further capitalization of Byline Bank.
- Redemption Restrictions: The Company has committed to the Federal Reserve not to redeem these notes for at least five years from issuance, except in the event of a "Tax Event," "Tier 2 Capital Event," or if required to register as an investment company.
- Subordination: The Notes are structurally subordinated to all liabilities of the Company's subsidiaries (including Byline Bank deposits) and junior to all senior indebtedness of the Company.
- Regulatory Approval: Any redemption of the Notes is subject to Federal Reserve approval to the extent required by capital regulations.
Investor Verification Checklist
- Verify the total outstanding principal of the 6.000% Fixed-to-Floating Rate Subordinated Notes due 2030 is now $75.0 million.
- Confirm the net proceeds of approximately $24.6 million were received and allocated as stated.
- Review the commitment to the Federal Reserve regarding the five-year non-redemption period.
- Assess the impact of the floating rate benchmark (Three-Month Term SOFR) on future interest expense post-2025.
- Examine the structural subordination status relative to Byline Bank's deposit liabilities.