USCB Financial Holdings, Inc. Reports Diluted EPS of $0.14 for Q4 2023

Rhea-AI Summary

USCB Financial Holdings, Inc. reported a net income of $2.7 million for the three months ended December 31, 2023, compared to $4.4 million for the same period in 2022. The company achieved loan production of $186 million with $150 million in loan fundings, showing improvement in operating environment. Net Interest Margin (NIM) improved by 5 bps, and accumulated comprehensive loss decreased by $7.0 million to $44.3 million. However, the efficiency ratio, net interest margin, and net interest income showed a decrease compared to the previous year. Total assets, loans, deposits, and stockholders' equity all increased. The ACL increased by $3.6 million to $21.1 million at December 31, 2023, and non-performing loans to total loans was 0.03%. The company also repurchased shares of its common stock during the fourth quarter.

Positive

• Net income of $2.7 million for the three months ended December 31, 2023
• Loan production of $186 million with $150 million in loan fundings
• Improvement in operating environment
• Net Interest Margin (NIM) improved by 5 bps
• Accumulated comprehensive loss decreased by $7.0 million to $44.3 million
• Total assets, loans, deposits, and stockholders' equity increased
• Tangible book value per common share increased to $9.81

Negative

• Efficiency ratio, net interest margin, and net interest income showed a decrease compared to the previous year
• Non-performing loans to total loans was 0.03%

Insights

Financial Analyst

The reported figures by USCB Financial Holdings indicate a mixed financial performance, with a notable decrease in net income by approximately 38.6% year-over-year. This decline is a critical metric for investors as it reflects the company's profitability, which can affect the stock price and investor sentiment. The reduction in net interest income before provision for credit losses, which fell by 14.8%, is also significant as it suggests a decrease in the core earnings from the bank's lending and investing activities. This is particularly relevant given the aggressive Federal Reserve tightening, which can lead to higher interest expenses and impact the net interest margin (NIM).

Furthermore, the efficiency ratio's increase from 59.81% to 68.27% raises concerns about the bank's operational effectiveness, as a lower ratio is generally preferable, indicating better cost management. However, the increase in total assets and loans by 12.1% and 18.1%, respectively, indicates growth, which could be a positive sign for the company's future revenue potential. The repurchase of shares could signal management's confidence in the company's valuation and can be seen as a strategy to enhance shareholder value by potentially increasing earnings per share.

Market Research Analyst

The banking sector is highly sensitive to interest rate changes and the Federal Reserve's tightening cycle has a direct impact on banks' interest margins. USCB's strategic focus on higher-yield loan production and deposit pricing discipline is aimed at mitigating NIM compression, a common challenge for banks in such economic environments. The bank's loan fundings with a weighted average coupon of 8% on new loans suggest a tactical shift towards more lucrative lending amidst rising rates.

The increase in allowance for credit losses (ACL) by $3.6 million reflects a cautious approach in anticipation of potential credit losses, which aligns with the Current Expected Credit Losses (CECL) accounting standard. This standard requires banks to project credit losses over the life of loans and an increase in ACL could indicate a conservative stance on future credit risk. The bank's asset quality, as indicated by the low non-performing loans ratio, appears to be strong, which is a positive indicator for potential investors concerned about the risk profile of the bank's loan portfolio.

Economist

The bank's performance metrics, such as the annualized return on average assets and stockholders’ equity, have decreased to 0.48% and 5.88%, respectively. These returns are fundamental indicators of a bank's efficiency in utilizing its assets and equity to generate profits. The decline in these metrics could suggest that the bank's profitability is under pressure, possibly due to the macroeconomic environment characterized by the Federal Reserve's rate hikes. The inverted yield curve mentioned by the CEO is a traditional harbinger of economic slowdowns, which can lead to reduced borrowing and spending, affecting the bank's business operations. Investors may need to consider the potential for a challenging economic landscape ahead and how it might influence the bank's performance.

MIAMI, Jan. 25, 2024 (GLOBE NEWSWIRE) -- USCB Financial Holdings, Inc. (the “Company”) (NASDAQ: USCB), the holding company for U.S. Century Bank (the “Bank”), reported net income of $2.7 million or $0.14 per diluted share for the three months ended December 31, 2023, compared to net income of $4.4 million or $0.22 per diluted share, for the same period in 2022.

“I am pleased to announce the results of a robust quarter at U.S. Century Bank, achieving loan production of $186 million with $150 million in loan fundings having a weighted average coupon of 8% on new loans,” said Luis de la Aguilera, Chairman, President, and CEO.

“Despite facing one of the most aggressive Federal Reserve tightening periods in history, we've observed a steady improvement in our operating environment. Our Net Interest Margin (NIM) improved 5 bps in comparison to the previous quarter. Additionally, our accumulated comprehensive loss also showed improvement in the fourth quarter decreasing by $7.0 million to $44.3 million, which has increased our stockholders equity and tangible book value. As part of our commitment to address NIM compression, we executed a $10 million loss trade transaction selling lower-yielding securities and reinvesting the funds in higher-yielding investments. Acknowledging the industry-wide impact of an inverted yield curve on earnings, our focus in 2024 is geared towards continued higher-yield loan production, deposit pricing discipline, and leveraging our proven business lines as lead deposit aggregators,” said de la Aguilera.

Unless otherwise stated, all percentage comparisons in the bullet points below are calculated at or for the quarter ended December 31, 2023 compared to at or for the quarter ended December 31, 2022 and annualized where appropriate.

Profitability

• Annualized return on average assets for the quarter ended December 31, 2023 was 0.48% compared to 0.86% for the fourth quarter of 2022. Operating pre-tax pre-provision profit (PTPP) return on average assets (non-GAAP financial measure) for the quarter ended December 31, 2023 was 1.03% compared to 1.69% for the fourth quarter of 2022.
  
  
• Annualized return on average stockholders’ equity for the quarter ended December 31, 2023 was 5.88% compared to 9.91% for the fourth quarter of 2022.
  
  
• The efficiency ratio for the quarter ended December 31, 2023 was 68.27% compared to 59.81% for the fourth quarter of 2022. Operating efficiency ratio (non-GAAP financial measure) for the quarter ended December 31, 2023 was 64.63% compared to 53.46% for the fourth quarter of 2022.
  
  
• Net interest margin for the quarter ended December 31, 2023 was 2.65% compared to 3.45% for the fourth quarter of 2022.
  
  
• Net interest income before provision for credit losses was $14.4 million for the quarter ended December 31, 2023, a decrease of $2.5 million or 14.8% compared to the fourth quarter of 2022.
  

Balance Sheet

• Total assets were $2.3 billion at December 31, 2023, representing an increase of $253.3 million or 12.1% from December 31, 2022.
  
  
• Total loans were $1.8 billion at December 31, 2023, representing an increase of $273.5 million or 18.1% from December 31, 2022.
  
  
• Total deposits were $1.9 billion at December 31, 2023, representing an increase of $107.9 million or 5.9% from December 31, 2022.
  
  
• Total stockholders’ equity was $192.0 million at December 31, 2023, representing an increase of $9.5 million or 5.2% from December 31, 2022. Total stockholders’ equity includes accumulated comprehensive loss of $44.3 million at December 31, 2023 compared to accumulated comprehensive loss of $44.8 million at December 31, 2022.
  

Asset Quality

• Allowance for credit losses (“ACL”) was calculated under the Current Expected Credit Losses (“CECL”) standard methodology for all periods in 2023 and the incurred loss methodology for all periods in 2022.
  
  
• The ACL increased by $3.6 million to $21.1 million at December 31, 2023 from $17.5 million at December 31, 2022.
  
  
• The ACL represented 1.18% of total loans at December 31, 2023 and 1.16% at December 31, 2022.
  
  
• Non-performing loans to total loans was 0.03% at December 31, 2023 compared to 0.00% at December 31, 2022.
  

Non-interest Income and Non-interest Expense

• Non-interest income was $1.3 million for the three months ended December 31, 2023, an increase of $1.4 million compared to negative $0.1 million for the same period in 2022.
  
  
• Non-interest expense was $10.7 million for the three months ended December 31, 2023, an increase of $705 thousand or 7.0% compared to $10.0 million for the same period in 2022.
  

Capital

• During the fourth quarter, the Company repurchased 92,317 shares of the Company’s common stock at a weighted average price per share of $10.45. The aggregate purchase price for the repurchase was approximately $968 thousand, including transaction costs. The repurchase was made through open market transaction pursuant to the Company’s publicly announced stock repurchase program. As of December 31, 2023, 80,080 shares remained authorized for repurchase under the program.
  
  
• During 2023, the Company repurchased 669,920 shares of the Company’s common stock at a weighted average price per share of $11.28. The aggregate purchase price for repurchases was approximately $7.6 million, including transaction costs. The repurchases were made through open market transactions pursuant to the Company’s publicly announced stock repurchase program.

• As of December 31, 2023, total risk-based capital ratios for the Company and the Bank were 12.78% and 12.65%, respectively.
  
  
• Tangible book value per common share (non-GAAP financial measure) at December 31, 2023 was $9.81, representing an increase of $0.69 from December 31, 2022. Tangible book value per common share at December 31, 2023 was negatively affected by $2.26 due to an accumulated comprehensive loss of $44.3 million. At December 31, 2022, tangible book value per common share of $9.12 was negatively affected by $2.24 due to $44.8 million in accumulated comprehensive loss.  
  

Conference Call and Webcast

The Company will host a conference call on Friday, January 26, 2024, at 11:00 a.m. Eastern Time to discuss the Company’s unaudited financial results for the quarter ended December 31, 2023. To access the conference call, dial (833) 816-1416 (U.S. toll-free) and ask to join the USCB Financial Holdings Call.

Additionally, interested parties can listen to a live webcast of the call in the “Investor Relations” section of the Company’s website at www.uscentury.com. An archived version of the webcast will be available at the same location shortly after the live call has ended.

About USCB Financial Holdings, Inc.

USCB Financial Holdings, Inc. is the bank holding company for U.S. Century Bank. Established in 2002, U.S. Century Bank is one of the largest community banks headquartered in Miami, and one of the largest community banks in the State of Florida. U.S. Century Bank is rated 5-Stars by BauerFinancial, the nation’s leading independent bank rating firm. U.S. Century Bank offers customers a wide range of financial products and services and supports numerous community organizations, including the Greater Miami Chamber of Commerce, the South Florida Hispanic Chamber of Commerce, and ChamberSouth. For more information about us or to find a banking center near you, please call (305) 715-5200 or visit www.uscentury.com.

Forward-Looking Statements

This earnings release may contain statements that are not historical in nature and are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that are not historical facts. The words “may,” “will,” “anticipate,” ”could”, “should,” “would,” “believe,” “contemplate,” “expect,” “aim,” “plan,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth and balance sheet restructuring.

These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Potential risks and uncertainties include, but are not limited to:

• the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
• our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry;
• the accuracy of our financial statement estimates and assumptions, including the estimates used for our credit loss reserve and deferred tax asset valuation allowance;
• the efficiency and effectiveness of our internal control procedures and processes;
• our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate;
• adverse changes or conditions in the capital and financial markets, including actual or potential stresses in the banking industry;
• deposit attrition and the level of our uninsured deposits;
• legislative or regulatory changes and changes in accounting principles, policies, practices or guidelines, including the on-going effects of the implementation of the Current Expected Credit Losses (“CECL”) standard;
• the lack of a significantly diversified loan portfolio and the concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real estate, in particular, commercial real estate;
• the effects of climate change;
• the concentration of ownership of our common stock;
• fluctuations in the price of our common stock;
• our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic growth as well as growth through other means, such as future acquisitions;
• inflation, interest rate, unemployment rate, market and monetary fluctuations;
• impacts of international hostilities and geopolitical events;
• increased competition and its effect on the pricing of our products and services as well as our net interest rate spread and net interest margin;
• the loss of key employees;
• the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, employee, or third-party fraud and cybersecurity-breaches; and
• other risks described in this earnings release and other filings we make with the Securities and Exchange Commission (“SEC”).
  

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance  that actual results will not differ materially from expectations. Therefore, you are cautioned not to place undue reliance on any forward-looking statements. Further, forward-looking statements included in this earnings release are made only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events, unless required to do so under the federal securities laws. You should also review the risk factors described in the reports the Company has filed or will file with the SEC.

Non-GAAP Financial Measures

This earnings release includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes certain operating performance measures. Management has included these non-GAAP financial measures because it believes these measures may provide useful supplemental information for evaluating the Company’s operations and underlying performance trends. Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included in the exhibits to this earnings release.

All numbers included in this press release are unaudited unless otherwise noted.

Contacts:

Investor Relations
InvestorRelations@uscentury.com 

Media Relations
Martha Guerra-Kattou
MGuerra@uscentury.com 

USCB FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
	Three Months Ended December 31,								Twelve Months Ended December 31,
	2023				2022				2023				2022
Interest income:
Loans, including fees	$	24,803			$	17,836			$	87,884			$	60,825
Investment securities		2,511				2,306				10,012				9,346
Interest-bearing deposits in financial institutions		662				455				3,121				929
Total interest income		27,976				20,597				101,017				71,100
Interest expense:
Interest-bearing checking		327				34				901				86
Savings and money market accounts		9,126				2,866				29,658				5,173
Time deposits		2,733				616				8,500				1,509
FHLB advances and other borrowings		1,414				215				3,390				671
Total interest expense		13,600				3,731				42,449				7,439
Net interest income before provision for credit losses		14,376				16,866				58,568				63,661
Provision for credit losses		1,475				880				2,367				2,495
Net interest income after provision for credit losses		12,901				15,986				56,201				61,166
Non-interest income:
Service fees		1,348				1,093				5,055				4,010
Gain (loss) on sale of securities available for sale, net		(883	)			(1,989	)			(1,859	)			(2,529	)
Gain on sale of loans held for sale, net		105				205				801				891
Loan settlement		-				-				-				161
Other non-interest income		756				568				3,406				2,695
Total non-interest income		1,326				(123	)			7,403				5,228
Non-interest expense:
Salaries and employee benefits		6,104				6,080				24,429				23,943
Occupancy		1,262				1,256				5,230				5,058
Regulatory assessments and fees		412				222				1,453				930
Consulting and legal fees		642				371				1,899				1,890
Network and information technology services		552				483				2,016				1,806
Other operating expense		1,747				1,602				6,781				5,682
Total non-interest expense		10,719				10,014				41,808				39,309
Net income before income tax expense		3,508				5,849				21,796				27,085
Income tax expense		787				1,415				5,251				6,944
Net income	$	2,721			$	4,434			$	16,545			$	20,141
Per share information:
Net income per common share, basic	$	0.14			$	0.22			$	0.84			$	1.01
Net income per common share, diluted	$	0.14			$	0.22			$	0.84			$	1.00
Weighted average shares outstanding:
Common shares, basic		19,503,043				20,000,753				19,621,698				19,999,323
Common shares, diluted		19,573,350				20,172,438				19,687,634				20,176,838

USCB FINANCIAL HOLDINGS, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands, except per share data)
	As of or For the Three Months Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Income statement data:
Net interest income	$	14,376			$	14,022			$	14,173			$	15,997			$	16,866
Provision for credit losses		1,475				653				38				201				880
Net interest income after provision for credit losses		12,901				13,369				14,135				15,796				15,986
Service fees		1,348				1,329				1,173				1,205				1,093
Gain (loss) on sale of securities available for sale, net		(883	)			(955	)			-				(21	)			(1,989	)
Gain on sale of loans held for sale, net		105				255				94				347				205
Other income		756				1,532				579				539				568
Total non-interest income		1,326				2,161				1,846				2,070				(123	)
Salaries and employee benefits		6,104				6,066				5,882				6,377				6,080
Occupancy		1,262				1,350				1,319				1,299				1,256
Regulatory assessments and fees		412				365				452				224				222
Consulting and legal fees		642				513				386				358				371
Network and information technology services		552				481				505				478				483
Other operating expense		1,747				1,686				1,908				1,440				1,602
Total non-interest expense		10,719				10,461				10,452				10,176				10,014
Net income before income tax expense		3,508				5,069				5,529				7,690				5,849
Income tax expense		787				1,250				1,333				1,881				1,415
Net income	$	2,721			$	3,819			$	4,196			$	5,809			$	4,434
Per share information:
Net income per common share, basic	$	0.14			$	0.20			$	0.21			$	0.29			$	0.22
Net income per common share, diluted	$	0.14			$	0.19			$	0.21			$	0.29			$	0.22
Balance sheet data (at period-end):
Cash and cash equivalents	$	41,062			$	33,435			$	87,280			$	63,251			$	54,168
Securities available-for-sale	$	229,329			$	218,609			$	218,442			$	229,409			$	230,140
Securities held-to-maturity	$	174,974			$	197,311			$	220,956			$	186,428			$	188,699
Total securities	$	404,303			$	415,920			$	439,398			$	415,837			$	418,839
Loans held for investment(1)	$	1,780,827			$	1,676,520			$	1,595,959			$	1,580,394			$	1,507,338
Allowance for credit losses	$	(21,084	)		$	(19,493	)		$	(18,815	)		$	(18,887	)		$	(17,487	)
Total assets	$	2,339,093			$	2,244,602			$	2,225,914			$	2,163,821			$	2,085,834
Non-interest-bearing deposits	$	552,762			$	573,546			$	572,360			$	633,606			$	629,776
Interest-bearing deposits	$	1,384,377			$	1,347,376			$	1,348,941			$	1,196,856			$	1,199,505
Total deposits	$	1,937,139			$	1,920,922			$	1,921,301			$	1,830,462			$	1,829,281
FHLB advances and other borrowings	$	183,000			$	102,000			$	87,000			$	120,000			$	46,000
Total liabilities	$	2,147,125			$	2,061,718			$	2,042,229			$	1,979,963			$	1,903,406
Total stockholders' equity	$	191,968			$	182,884			$	183,685			$	183,858			$	182,428
Capital ratios:(2)
Leverage ratio		9.28	%			9.26	%			9.32	%			9.36	%			9.61	%
Common equity tier 1 capital		11.62	%			11.97	%			12.27	%			12.04	%			12.53	%
Tier 1 risk-based capital		11.62	%			11.97	%			12.27	%			12.04	%			12.53	%
Total risk-based capital		12.78	%			13.10	%			13.42	%			13.20	%			13.65	%
(1) Loan amounts include deferred fees/costs.
(2) Reflects the Company's regulatory capital ratios which are provided for information purposes only; as a small bank holding company, the Company is not subject to regulatory capital requirements.

USCB FINANCIAL HOLDINGS, INC.
AVERAGE BALANCES, RATIOS, AND OTHER DATA (UNAUDITED)
(Dollars in thousands)
	As of or For the Three Months Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Average balance sheet data:
Cash and cash equivalents	$	57,069			$	90,742			$	94,313			$	50,822			$	61,892
Securities available-for-sale	$	215,649			$	222,134			$	224,913			$	230,336			$	242,144
Securities held-to-maturity	$	181,151			$	218,694			$	192,628			$	187,826			$	184,459
Total securities	$	396,800			$	440,828			$	417,541			$	418,162			$	426,603
Loans held for investment(1)	$	1,698,611			$	1,610,864			$	1,569,266			$	1,547,393			$	1,456,780
Total assets	$	2,268,811			$	2,250,258			$	2,183,542			$	2,120,218			$	2,051,867
Interest-bearing deposits	$	1,336,470			$	1,353,516			$	1,270,657			$	1,179,878			$	1,150,049
Non-interest-bearing deposits	$	577,133			$	587,917			$	601,778			$	664,369			$	653,820
Total deposits	$	1,913,603			$	1,941,433			$	1,872,435			$	1,844,247			$	1,803,869
FHLB advances and other borrowings	$	139,000			$	85,326			$	93,075			$	61,600			$	37,500
Total liabilities	$	2,085,182			$	2,065,357			$	1,999,304			$	1,936,847			$	1,874,311
Total stockholders' equity	$	183,629			$	184,901			$	184,238			$	183,371			$	177,556
Performance ratios:
Return on average assets(2)		0.48	%			0.67	%			0.77	%			1.11	%			0.86	%
Return on average equity(2)		5.88	%			8.19	%			9.13	%			12.85	%			9.91	%
Net interest margin(2)		2.65	%			2.60	%			2.73	%			3.22	%			3.45	%
Non-interest income (loss) to average assets(2)		0.23	%			0.38	%			0.34	%			0.40	%			(0.02	)%
Efficiency ratio(3)		68.27	%			64.64	%			65.25	%			56.32	%			59.81	%
Loans by type (at period end):(4)
Residential real estate	$	204,419			$	188,880			$	183,093			$	184,427			$	185,636
Commercial real estate	$	1,047,593			$	1,005,280			$	989,401			$	987,757			$	970,410
Commercial and industrial	$	219,757			$	212,975			$	169,401			$	160,947			$	126,984
Foreign banks	$	114,945			$	94,640			$	85,409			$	97,405			$	93,769
Consumer and other	$	191,930			$	173,096			$	167,845			$	149,410			$	130,429
Asset quality data:
Allowance for credit losses to total loans		1.18	%			1.16	%			1.18	%			1.20	%			1.16	%
Allowance for credit losses to non-performing loans		4,505	%			4,070	%			3,871	%			3,886	%			-	%
Total non-performing loans(5)	$	468			$	479			$	486			$	486			$	-
Non-performing loans to total loans		0.03	%			0.03	%			0.03	%			0.03	%			-	%
Non-performing assets to total assets(5)		0.02	%			0.02	%			0.02	%			0.02	%			-	%
Net charge-offs (recoveries of) to average loans(2)		(0.00	)%			(0.00	)%			0.01	%			(0.01	)%			(0.00	)%
Net charge-offs (recovery) of credit losses	$	(3	)		$	(5	)		$	29			$	(49	)		$	(2	)
Interest rates and yields:(2)
Loans		5.79	%			5.55	%			5.33	%			5.17	%			4.86	%
Investment securities		2.46	%			2.52	%			2.26	%			2.20	%			2.13	%
Total interest-earning assets		5.16	%			4.89	%			4.68	%			4.51	%			4.21	%
Deposits		2.53	%			2.39	%			1.99	%			1.29	%			0.77	%
FHLB advances and other borrowings		4.04	%			3.19	%			3.42	%			3.27	%			2.27	%
Total interest-bearing liabilities		3.66	%			3.41	%			2.97	%			2.08	%			1.25	%
Other information:
Full-time equivalent employees		196				194				198				196				191
(1) Loan amounts include deferred fees/costs.
(2) Annualized.
(3) Efficiency ratio is defined as total non-interest expense divided by sum of net interest income and total non-interest income.
(4) Loan amounts exclude deferred fees/costs.
(5) The amounts and percentages for total non-performing loans and total non-performing assets are the same at the dates presented since there were no impaired investments or other real estate owned (OREO) recorded.

USCB FINANCIAL HOLDINGS, INC.
NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
	Three Months Ended December 31,
	2023									2022
	Average Balance			Interest			Yield/Rate(1)			Average Balance			Interest			Yield/Rate(1)
Assets
Interest-earning assets:
Loans(2)	$	1,698,611		$	24,803		5.79	%		$	1,456,780		$	17,836		4.86	%
Investment securities(3)		404,850			2,511		2.46	%			429,020			2,306		2.13	%
Other interest-earnings assets		49,583			662		5.30	%			53,717			455		3.36	%
Total interest-earning assets		2,153,044			27,976		5.16	%			1,939,517			20,597		4.21	%
Non-interest-earning assets		115,767									112,350
Total assets	$	2,268,811								$	2,051,867
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing checking	$	49,675			327		2.61	%		$	61,976			34		0.22	%
Saving and money market deposits		1,004,805			9,126		3.60	%			871,269			2,866		1.31	%
Time deposits		281,990			2,733		3.85	%			216,804			616		1.13	%
Total interest-bearing deposits		1,336,470			12,186		3.62	%			1,150,049			3,516		1.21	%
FHLB advances and other borrowings		139,000			1,414		4.04	%			37,500			215		2.27	%
Total interest-bearing liabilities		1,475,470			13,600		3.66	%			1,187,549			3,731		1.25	%
Non-interest-bearing demand deposits		577,133									653,820
Other non-interest-bearing liabilities		32,579									32,942
Total liabilities		2,085,182									1,874,311
Stockholders' equity		183,629									177,556
Total liabilities and stockholders' equity	$	2,268,811								$	2,051,867
Net interest income				$	14,376								$	16,866
Net interest spread(4)							1.50	%								2.96	%
Net interest margin(5)							2.65	%								3.45	%
(1) Annualized.
(2) Average loan balances include non-accrual loans. Interest income on loans includes accretion of deferred loan fees, net of deferred loan costs.
(3) At fair value except for securities held to maturity. This amount includes FHLB stock.
(4) Net interest spread is the average yield earned on total interest-earning assets minus the average rate paid on total interest-bearing liabilities.
(5) Net interest margin is the ratio of net interest income to total interest-earning assets.

USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands)
	As of or For the Three Months Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Pre-tax pre-provision ("PTPP") income:(1)
Net income	$	2,721			$	3,819			$	4,196			$	5,809			$	4,434
Plus: Provision for income taxes		787				1,250				1,333				1,881				1,415
Plus: Provision for credit losses		1,475				653				38				201				880
PTPP income	$	4,983			$	5,722			$	5,567			$	7,891			$	6,729
PTPP return on average assets:(1)
PTPP income	$	4,983			$	5,722			$	5,567			$	7,891			$	6,729
Average assets	$	2,268,811			$	2,250,258			$	2,183,542			$	2,120,218			$	2,051,867
PTPP return on average assets(2)		0.87	%			1.01	%			1.02	%			1.51	%			1.30	%
Operating net income:(1)
Net income	$	2,721			$	3,819			$	4,196			$	5,809			$	4,434
Less: Net gains (losses) on sale of securities		(883	)			(955	)			-				(21	)			(1,989	)
Less: Tax effect on sale of securities		224				242				-				5				504
Operating net income	$	3,380			$	4,532			$	4,196			$	5,825			$	5,919
Operating PTPP income:(1)
PTPP income	$	4,983			$	5,722			$	5,567			$	7,891			$	6,729
Less: Net gains (losses) on sale of securities		(883	)			(955	)			-				(21	)			(1,989	)
Operating PTPP income	$	5,866			$	6,677			$	5,567			$	7,912			$	8,718
Operating PTPP return on average assets:(1)
Operating PTPP income	$	5,866			$	6,677			$	5,567			$	7,912			$	8,718
Average assets	$	2,268,811			$	2,250,258			$	2,183,542			$	2,120,218			$	2,051,867
Operating PTPP return on average assets(2)		1.03	%			1.18	%			1.02	%			1.51	%			1.69	%
Operating return on average assets:(1)
Operating net income	$	3,380			$	4,532			$	4,196			$	5,825			$	5,919
Average assets	$	2,268,811			$	2,250,258			$	2,183,542			$	2,120,218			$	2,051,867
Operating return on average assets(2)		0.59	%			0.80	%			0.77	%			1.11	%			1.14	%
Operating return on average equity:(1)
Operating net income	$	3,380			$	4,532			$	4,196			$	5,825			$	5,919
Average equity	$	183,629			$	184,901			$	184,238			$	183,371			$	177,556
Operating return on average equity(2)		7.30	%			9.72	%			9.13	%			12.88	%			13.23	%
Operating Revenue:(1)
Net interest income	$	14,376			$	14,022			$	14,173			$	15,997			$	16,866
Non-interest income		1,326				2,161				1,846				2,070				(123	)
Less: Net gains (losses) on sale of securities		(883	)			(955	)			-				(21	)			(1,989	)
Operating revenue	$	16,585			$	17,138			$	16,019			$	18,088			$	18,732
Operating Efficiency Ratio:(1)
Total non-interest expense	$	10,719			$	10,461			$	10,452			$	10,176			$	10,014
Operating revenue	$	16,585			$	17,138			$	16,019			$	18,088			$	18,732
Operating efficiency ratio		64.63	%			61.04	%			65.25	%			56.26	%			53.46	%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Annualized.

USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands, except per share data)
	As of or For the Three Months Ended
	12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Tangible book value per common share (at period-end):(1)
Total stockholders' equity	$	191,968			$	182,884			$	183,685			$	183,858			$	182,428
Less: Intangible assets(2)		-				-				-				-				-
Tangible stockholders' equity(2)	$	191,968			$	182,884			$	183,685			$	183,858			$	182,428
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding		19,575,435				19,542,290				19,544,777				19,622,380				20,000,753
Tangible book value per common share(2) (3)	$	9.81			$	9.36			$	9.40			$	9.37			$	9.12
Operating diluted net income per common share:(1)
Operating net income	$	3,380			$	4,532			$	4,196			$	5,825			$	5,919
Total weighted average diluted shares of common stock		19,573,350				19,611,897				19,639,682				19,940,606				20,172,438
Operating diluted net income per common share:	$	0.17			$	0.23			$	0.21			$	0.29			$	0.29
Tangible Common Equity/Tangible Assets(1)
Tangible stockholders' equity	$	191,968			$	182,884			$	183,685			$	183,858			$	182,428
Tangible total assets(2)	$	2,339,093			$	2,244,602			$	2,225,914			$	2,163,821			$	2,085,834
Tangible Common Equity/Tangible Assets(2)		8.21	%			8.15	%			8.25	%			8.50	%			8.75	%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Since the Company has no intangible assets, tangible stockholders' equity, tangible book value per share and tangible total assets are the same amounts as stockholders' equity, book value per share and total assets calculated under GAAP.
(3) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

FAQ

What was the net income reported for the three months ended December 31, 2023?

The net income reported for the three months ended December 31, 2023 was $2.7 million.

What was the loan production achieved by the company?

The company achieved loan production of $186 million with $150 million in loan fundings.

What was the change in the accumulated comprehensive loss?

The accumulated comprehensive loss decreased by $7.0 million to $44.3 million.

What was the increase in total assets from December 31, 2022, to December 31, 2023?

Total assets increased by $253.3 million or 12.1% from December 31, 2022, to December 31, 2023.

What was the ACL at December 31, 2023?

The ACL was $21.1 million at December 31, 2023.

What was the non-interest income for the three months ended December 31, 2023?

The non-interest income was $1.3 million for the three months ended December 31, 2023.

What was the change in non-interest expense from the same period in 2022?

Non-interest expense increased by $705 thousand or 7.0% compared to the same period in 2022.

What was the tangible book value per common share at December 31, 2023?

The tangible book value per common share at December 31, 2023 was $9.81.