USCB FINANCIAL HOLDINGS, INC. Q1 FY2025 earnings call

Key Points

• The bank had its best quarter since IPO in Q1 2025, with fully diluted EPS up 65% y-o-y.
• Florida's economy is strong, forecasted to grow 2.8% in 2025, outpacing the nation's average.
• Added three senior bankers in Q1 to support business lending, association banking, and deposit production.
• Declared a cash dividend of $0.10 per share, payable 6/05/2025.
• Loan pipeline is robust and diversified, with anticipation of high single-digit to low double-digit loan and deposit growth in Q2.
• Focus on relationship-driven organic growth and disciplined balance sheet management.

In the first quarter of 2025, USCB Financial Holdings had strong financial performance. Loans surpassed $2 billion, with average loans increasing $205.3 million or 11.5% compared to Q1 2024. Average deposits grew by $166.6 million or 8.1% y-o-y. Net income was $0.38 per diluted share, a 65% increase over the prior year. Return on average assets was 1.19%, Return on average equity was 14.15%. NIM was 3.1%, down slightly from the prior quarter but improving year-over-year. The efficiency ratio improved to 52.79%, and tangible book value per share was up $0.42 to $11.23.

Forward-Looking Statements

• Anticipate Q2 loan and deposit growth in the high single-digit to low double-digit range.
• Margin outlook is flat to slightly up in the coming quarters, with expectation to outperform models if interest rates are cut.
• Loan and deposit growth is tempered by cautious optimism due to uncertainties from new trade and policy impacts.

Risk Factors

• Impact of trade tariffs and related economic uncertainty on client business sectors.
• Competitive pressures on deposit rates affecting the margin.
• Short-term nature of correspondent bank loans may lower weighted average coupon, though they provide protection in rising rate environments.

Q: About deposit growth verticals and seasonal impacts A: Deposit growth occurred in key areas like correspondent banking, HOA, and business banking; growth was balanced with no significant seasonal drag Q: On NIM trajectory and ALCO models A: Margin is expected to be flat to up, with ALCO models having conservative assumptions but the bank expects to outperform, especially with potential rate cuts Q: Deposit growth outlook with new hires A: Added production personnel in HOA, business, and retail verticals; HOA has potential later in the year with association reserve plan implementation Q: Expense base and hiring A: Expense base is around $12.1 million, expected to increase with company performance and additional hires Q: Margin and corresponding banking trade finance A: Margin is flat to up, corresponding banking loans are short-term with full relationships, and trade finance impact on the portfolio is low Q: Credit outlook A: Non-performing assets and classified loans are expected to improve in Q2 with the sale of a yacht and resolution of certain loan issues