BYLINE BANCORP, INC. (BY): what the price requires

At today's price, BYLINE BANCORP, INC. (BY) is priced for 11.3% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/BY

Headline

FieldValue
TickerBY
CompanyBYLINE BANCORP, INC.
Current price$37.42/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed11.3%
Return on equity now10.3%
ROE gap+1.0pp
Price-to-book1.33x

Solve inputs: computed at a 9.5% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.3pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.90σ
cohort percentile (of 119 peers)45
sustained it ~10 years at this level72%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.03x3expensive
Earnings0.75x2justifies
Relative0.83x3justifies
Growth1.05x1expensive

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.1%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$33.241.13xyesTBVPS $24.00 × 1.39x (ROE (TTM) 10.9% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$35.001.07xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$33.451.12xyesBV/sh $28.42, ROE (TTM) 10.9%, ke 9.3%
Two-Stage Excess ReturnAsset$36.181.03xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$35.481.05xyesRev $0.4B, growth 13% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 5.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$45.290.83xyesEPS $3.08, growth 15% (input: historical EPS growth), PEG=0.82 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$44.380.84xyes√(22.5 × EPS $3.08 × BVPS $28.42) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$97.860.38xyesEPS $3.08 × (8.5 + 2×14.7%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$67.940.55xyesEPS $3.08 × (PEG 1.5 × growth 14.7% (input: historical EPS growth)) → PE 22.1x
Earnings YieldEarnings$33.301.12xyesEPS $3.08 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (dilution)4.3%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

At about $35, Byline Bancorp trades near 1.3 times book value, which for a bank inverts into an assumption that it sustains a return on equity around 11%. That is right at what it has recently earned, so the price asks the bank to keep doing what it already does, not to improve dramatically.

The franchise earns an unusually high margin for a community bank. The first quarter of 2026 produced a net interest margin of 4.34%, EPS of $0.83 ahead of estimates, and a return on equity near 11%, helped by a specialty in Small Business Administration lending that the bank both holds and sells into the secondary market for fee income.

Capital allocation is disciplined. Byline returned 40% of net income to shareholders in the quarter through a $0.12 dividend and buybacks, while building capital to an 11.4% CET1 ratio. The risks are the standard bank risks: commercial real estate concentration, credit normalization, and the interest-rate cycle.

Bull Case

Start with how Byline allocates its capital, because the discipline there is the through-line of the investment case. In the first quarter of 2026 the bank returned 40% of net income to shareholders, through a $0.12 quarterly dividend and the repurchase of about 318,000 shares, while still building its CET1 capital ratio to 11.4%. That combination, paying and buying back stock while growing the capital cushion, signals a management team that funds growth and returns from earnings rather than stretching the balance sheet. The bank has also grown through acquisitions over the years, expanding its share count deliberately to build scale in its Chicago market, where it is now the second-largest bank headquartered in the city, with 44 Chicagoland branches and about $9.9 billion in assets.

The earnings engine is genuinely differentiated for a bank this size. Byline runs a high net interest margin, 4.34% in the first quarter of 2026, well above a typical community bank, anchored by a specialty in Small Business Administration lending. The 10-K describes the model: the bank sells the government-guaranteed portion of "SBA and USDA loans into the secondary market while retaining the non-guaranteed portion of the loan and the servicing rights," which "allows us to realize one time gain" income plus ongoing servicing fees (FY2025 10-K, accession 0001193125-26-083194). That generates fee income on top of spread income and recycles capital, and the bank has prudently de-risked the portfolio over time, cutting unguaranteed government-guaranteed exposure from about 15% of loans years ago toward the mid-single digits while still servicing $1.6 billion of loans for investors.

The valuation and the returns make the value case. First-quarter 2026 EPS of $0.83 beat estimates, the return on equity ran near 11%, and credit quality is stable with strong capital. At about 1.3 times book the price implies the bank simply sustains the roughly 11% return it is already earning, a low bar relative to its record. Every valuation family, asset, earnings-power, relative, and growth, lands at or above the price, with the price-to-tangible-book and excess-return reads just above the quote. For an investor who wants a well-run, high-margin community bank with a differentiated SBA franchise, disciplined capital return, and a price that asks only for continuation rather than improvement, Byline offers exactly that.

Bear Case

The cycle question for Byline is whether its high margin and clean credit are near a peak. A 4.34% net interest margin is excellent for a community bank, but it benefits from the current rate environment and from the higher-yielding SBA and small-business loans the bank specializes in. If short rates fall, those floating-rate loans reprice down and the margin compresses; if rates stay high, deposit competition keeps funding costs elevated. The margin already ticked down two basis points in the quarter on lower loan yields, an early sign that the peak may be behind it. The price assumes the bank sustains an 11% return on equity, and that return is partly a function of a margin that the rate cycle could erode.

Credit is the bigger cyclical risk, and it cuts two ways for Byline specifically. Small-business and SBA borrowers are among the first to feel an economic slowdown, so the very lending that drives the high margin also concentrates the bank's exposure to the most cyclically sensitive borrowers. On top of that, the 10-K flags commercial real estate concentration, citing the regulatory guidance that an institution "is potentially exposed to significant commercial real estate concentration" risk, and notes that "the credit quality of our loan and lease portfolio can have a significant impact on our earnings" (FY2025 10-K, accession 0001193125-26-083194). Credit looks pristine now, but credit always looks best late in a cycle, and a recession that hits small businesses and commercial real estate at once would pressure both the margin and the provision for loan losses, the two levers that drive the bank's earnings.

Then there is the acquisition-and-integration model and the modest upside in the price. Byline has grown substantially through deals, which adds integration risk, the possibility of an underestimated credit mark on an acquired book, and steady share-count growth that dilutes per-share metrics. On valuation, while the methods support the price, the bank already trades at about 1.3 times book and 1.4 times tangible book, a premium to many community-bank peers, and the relative read sits right at the current price. That means the market already credits Byline for its high margin and clean credit; there is limited re-rating upside, and the asset-based methods sit only marginally above the price. The bet is that the high margin holds, credit stays clean, and the SBA franchise keeps generating fee income through the cycle. If the rate environment compresses the margin, small-business credit normalizes, or commercial real estate stress emerges, a bank already priced at a premium to book has little cushion before the value support thins.

Valuation

A bank is worth the return it earns on its capital, so Byline is valued off price-to-book rather than an operating multiple. At about $35 (June 27, 2026) the stock trades near 1.3 times book value and about 1.4 times tangible book, which inverts into an assumption that the bank sustains a return on equity around 11%. For reference, it has recently been earning about 10.3% to 10.9%, so the implied return is right at what it already delivers, not a stretch. That premium to book is the market's way of recognizing Byline's above-average margin and returns, and it sits in the lower half of its peer group on price-to-book despite those better metrics.

The method families are uniformly supportive, clustered close to the price. The price-to-tangible-book model lands near $33, applying a premium multiple to tangible book of $24.00 per share for a bank earning above its cost of equity. The excess-return methods, building from book value plus the spread of return on equity over cost of equity, land in the $33 to $36 range, right around the quote. The relative-valuation read on a sector P/E lands at $35, and the earnings-yield method near $33. The blended read across applicable methods is near $36, just above the current price. The consistency is the signal: this is a bank fairly valued for the high-quality returns it earns, with the methods bracketing the price rather than diverging.

The honest conclusion: Byline is priced at a justified premium to book for a bank that earns an above-average return, and the price asks mainly for continuation. The bet is that the high net interest margin holds, the SBA franchise keeps generating spread and fee income, credit quality stays clean, and capital keeps getting returned through the dividend and buyback. If that continues, a 1.3-times-book bank earning 11% on equity is fairly valued with a modest dividend and ongoing buyback support. The risk is the standard bank cycle: a margin squeeze if rates fall, small-business or commercial-real-estate credit normalization, or integration missteps on future deals would pull the return below the 11% the price assumes, and with the stock already at a premium to book, the downside in a credit cycle outweighs the limited re-rating upside.

Catalysts

The recent print was a solid beat. First-quarter 2026 net income was $37.6 million with EPS of $0.83, ahead of the roughly $0.75 consensus, on revenue of $112.4 million and net interest income of $99.9 million, with a net interest margin of 4.34%. Total assets were $9.9 billion, deposits $7.8 billion, and loans $7.5 billion, and the CET1 capital ratio stood at 11.4%. (stocktitan, Morningstar)

The SBA franchise is the differentiated driver. Byline closed $102.6 million in SBA loan commitments in the quarter, grew its on-balance-sheet SBA 7(a) portfolio to $443.2 million, and continues to service $1.6 billion of loans for investors, generating fee income while it has de-risked unguaranteed government-guaranteed exposure to about 5.4% of loans from roughly 15% in 2016. (Investing.com)

Capital return and sentiment frame the rest. The bank repurchased about 318,000 shares and declared a $0.12 quarterly dividend, returning roughly 40% of net income to shareholders. (stocktitan) The things to watch over the coming quarters: whether the net interest margin holds as the rate environment shifts, the pace of SBA originations and gain-on-sale income, credit trends in small-business and commercial-real-estate lending, the integration of any future acquisitions in the consolidating Chicago banking market, and the continued cadence of buybacks and dividends.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive BY report on boothcheck