USCB Financial (USCB) - 2024 Q3 - Quarterly Report

Financial Performance - The company reported net income of $6.9 million or$0.35 per diluted share for the three months ended September 30, 2024, compared to $3.8 million or$0.19 per diluted share for the same period in 2023[83]. - Net income for the three months ended September 30, 2024, was $6,949 thousand, an increase of$3,130 thousand or 82% compared to $3,819 thousand for the same period in 2023[91]. - Net income for Q3 2024 reached$6,949 million, an increase from $6,209 million in Q2 2024 and$4,612 million in Q3 2023[132]. - Operating revenue totaled $21,547 million, compared to$20,508 million in Q2 2024 and $17,622 million in Q3 2023, reflecting a strong growth trajectory[132]. - The annualized return on average assets for the quarter ended September 30, 2024, was 1.11$0.35, compared to $0.31 in Q2 2024 and$0.23 in Q3 2023, reflecting improved profitability[134]. Asset and Loan Growth - Total assets were $2.5 billion at September 30, 2024, representing an increase of$259.4 million or 11.6% from September 30, 2023[83]. - Total loans were $1.9 billion at September 30, 2024, representing an increase of$254.8 million or 15.2% from September 30, 2023[83]. - Total loans increased to $1,931,362 thousand as of September 30, 2024, from$1,780,827 thousand at December 31, 2023, marking an increase of 8.5%[89]. - Total loans, net of deferred fees/costs, increased by $150.5 million, or 11.3$1.93 billion as of September 30, 2024, compared to December 31, 2023[105]. - The commercial real estate lending segment represented approximately 56.8% of the total gross loan portfolio as of September 30, 2024[105]. - As of September 30, 2024, approximately 56% of the loans have adjustable/variable rates, while 44% have fixed rates[105]. Deposit Growth - Total deposits were $2.1 billion at September 30, 2024, representing an increase of$205.7 million or 10.7% from September 30, 2023[83]. - Total deposits grew to $2,126,617 thousand as of September 30, 2024, up from$1,937,139 thousand at December 31, 2023, indicating a rise of 9.8%[89]. - Customer deposits totaled $2,077,523 thousand as of September 30, 2024, with an average rate paid of 2.66$104,000 as of September 30, 2024[116]. Capital Ratios and Efficiency - As of September 30, 2024, the total risk-based capital ratios for the company and the bank were 13.22% and 13.14%, respectively[83]. - The Bank's total risk-based capital as of September 30, 2024, was $257,212 million, with a ratio of 13.14$156,587 million (8.00%) by $100,625 million[128]. - Tier 1 risk-based capital stood at$233,606 million with a ratio of 11.93%, surpassing the minimum requirement of $117,440 million (6.00$116,166 million[128]. - The leverage ratio as of September 30, 2024, was 9.28%, well above the minimum requirement of 4.00%[128]. - The efficiency ratio improved to 53.16% for the three months ended September 30, 2024, down from 64.64% for the same period in 2023, showing enhanced operational efficiency[91]. - The operating efficiency ratio improved to 53.16%, down from 56.37% in Q2 2024 and 63.41% in Q3 2023, indicating better cost management[132]. Non-Interest Income and Expenses - Non-interest income increased to $3,438 thousand for the three months ended September 30, 2024, up from$2,161 thousand for the same period in 2023, a growth of 59%[91]. - Non-interest income for Q3 2024 increased by $1.3 million or 59.1$3.4 million, primarily due to growth in SWAP loan fees[98]. - Non-interest expense for Q3 2024 increased by $1.0 million or 9.5$11.5 million, primarily due to higher salaries and employee benefits[100]. Credit Quality and Provisions - Provision for credit losses for Q3 2024 was $931 thousand, up from$653 thousand in Q3 2023, driven by growth in the loan portfolio[97]. - The allowance for credit losses to total loans ratio was 1.19% as of September 30, 2024, compared to 1.18% as of December 31, 2023[111]. - Non-performing loans totaled $2.725 million as of September 30, 2024, compared to$468 thousand as of December 31, 2023[111]. - The provision for credit losses for the three months ended September 30, 2024, was $831 thousand, compared to a recovery of$673 thousand for the same period in 2023[114]. Legal Matters - The Company faced litigation initiated on July 13, 2023, by three former shareholders, seeking damages exceeding $750,000 plus attorney's fees[137]. - On December 27, 2023, the Court dismissed the litigation with prejudice, ruling in favor of the Defendants[137]. - An appeal was filed by the Plaintiffs on May 1, 2024, challenging the Court's dismissal and claiming errors in the ruling[137]. - The Company believes the appeal lacks merit and intends to vigorously defend against it[137]. - Management assesses that the likelihood of the litigation impacting consolidated results is remote, but acknowledges potential adverse effects from unfavorable outcomes[137]. - The Company intends to defend itself vigorously against any pending or future claims and litigation[137].