A Look at Byline Bancorp’s Valuation After New Fixed-to-Floating Rate Exchange Offer Announcement

Byline Bancorp (NYSE:BY) just made headlines with a fresh move in the capital markets, announcing a fixed-to-floating rate exchange offer for its junior subordinated unsecured notes. The offer totals $75 million and the notes mature in August 2035. This is a meaningful step for any bank, especially considering the current interest rate landscape and evolving regulatory environment. The company’s decision to issue new debt with variable rates and a mix of callable, junior, and subordinated features reflects how it is managing its balance sheet and positioning for future growth. Stepping back, Byline Bancorp has seen its stock price climb 14% over the past year, continuing a longer-term trend with gains of nearly 39% in three years and an impressive 164% over five years. Shorter-term performance has picked up as well, with shares up 14% over the past month and a 10% increase in the last quarter. The latest exchange offer is the culmination of a series of moves aimed at both supporting ongoing operations and building shareholder value, underlining a pattern of steady execution and measured risk management. After these steady gains and this latest capital markets event, is Byline Bancorp offering a buying opportunity for investors, or has the market already priced in its growth plans?

Most Popular Narrative: 8.6% Undervalued

According to the most widely followed narrative, Byline Bancorp is currently valued at approximately 8.6% below its estimated fair value. Analysts see room for upside based on future growth and operational execution.

"The successful integration of First Security, including immediate cost synergies and system upgrades, has expanded Byline Bancorp's lending and deposit base while improving operational efficiency. This development sets the stage for higher net interest income and improved net margins going forward."

Want to know what’s powering this undervaluation call? The narrative is fuelled by aggressive forward projections, major operational efficiencies, and some bold targets for future profit margins. Think you know which big assumptions are driving this valuation? Dive in to see which figures could be the difference makers. These numbers might surprise you.

Result: Fair Value of $32.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, several factors could challenge this bullish outlook, such as the risk of integration issues and potential slowdowns in digital transformation compared to its peers.

Find out about the key risks to this Byline Bancorp narrative.

Another View: A Deep Discount?

A closer look from our DCF model points to a very different story. It suggests the shares could be trading at a significant discount. Does this method capture hidden value, or is it too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Byline Bancorp for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Byline Bancorp Narrative

If you see things differently or want to dig deeper into the numbers yourself, you can craft your own take in just minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Byline Bancorp.

Looking for more investment ideas?

Now is the perfect time to seize emerging opportunities and outpace the market. The right tools and fresh strategies will set your portfolio apart. Don’t let the next big winner slip by.

• Unlock higher yields when you check out dividend stars offering returns over 3% with our dividend stocks with yields > 3%.
• Spot tomorrow's tech leaders by starting your research into artificial intelligence breakthroughs using AI penny stocks.
• Capitalize on bargains by tracking down undervalued companies based on future cash flows with our undervalued stocks based on cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com