USCB Financial Holdings, Inc. Q4 FY2025 earnings call

Key Points

• 2025 was a successful year with strong performance in assets, loans, deposits, net interest income, and credit quality.
• In Q3 2025, completed a $40 million subordinated debt issuance and used most proceeds to repurchase ~2 million shares.
• Q4 2025 GAAP diluted EPS was $0.07, but excluding nonoperating items, operational diluted EPS was $0.44.
• Repositioned balance sheet by reinvesting proceeds into higher-yielding loans, with Q4 2025 being the strongest loan production quarter.
• Expenses: GAAP noninterest income/expense reflect restructuring, operating efficiency ratio 55.92%. Board approved 25% increase in quarterly cash dividend to $0.125 per share.

Total assets reached $2.8 billion, up 8.1% year-over-year. Loans grew by $216 million or 11%, deposits increased $171 million or 7.9%. Net interest income expanded to 3.27%, improving from 3.16% in the prior year. Credit quality remains excellent with nonperforming loans at 0.14% of total loans. Tangible book value per share increased 10.8% year-over-year to $11.97. Specialty business lines (private client, correspondent, association banking) grew to $686 million or 29.3% of total deposits.

Forward-Looking

• Expect NIM improvement in 2026 supported by rate cuts and deposit strategy.
• Loan yields expected to remain above 6% in 2026.
• Focus on expanding deposit base in 2026 with 4 key business lines: Business Banking, Private Client Group, Association Banking, Correspondent Banking.

Risks

• Deposit shrinkage at year-end due to client business moves and correspondent banking swings, but expected to rebuild.
• Potential impact of rate cuts on funding costs and asset yields.

Q: About deposit trends and loan-to-deposit ratio A: Luis and Rob discussed deposit shrinkage at year-end due to specific client moves and correspondent banking swings, but expect to rebuild deposits. Rob mentioned loan-to-deposit ratio target of 90%-95%.

Q: On SBA vertical A: Luis explained the plan to expand SBA 7a lending in Hialeah, Medley, and Doral markets, aiming for $40-$50 million in annual volume over 3 years.

Q: On margin and loan growth A: Rob discussed NIM outlook as flat to slightly up in Q1 2026 and loan growth expected to be high single digits to low double digits.

Q: On tax rate A: Rob explained tax rate guidance of 26.4% is due to compliance with out-of-state loan income tax liabilities for prior periods.

Q: On expenses and fee outlook A: Rob talked about expense base around $13.2 million for Q4 2025 and expected fee income to be in the $3.5-$3.8 million range in 2026