USCB Financial Q4 Earnings Call Highlights

Core Insights - The company executed a deliberate securities restructuring aimed at improving net interest margin, selling securities that represented approximately 12.6% of the available-for-sale portfolio as of November 30, 2025, with a weighted average yield of 1.70% and reinvesting proceeds into loans yielding 6.15% [1][6] Financial Performance - For the fourth quarter, the GAAP diluted EPS was reported at $0.07, impacted by non-operating items including a $44.6 million sale of lower-yielding securities resulting in an after-tax loss of $5.6 million [3] - Operational diluted EPS, excluding non-operating items, was $0.44, consistent with the prior quarter, with an operating return on average assets of 1.14% and return on average equity of 15.05% [2] Asset and Loan Growth - Total assets reached $2.8 billion, reflecting an 8.1% year-over-year increase, while loans grew by $216 million, or 11%, attributed to strong commercial activity [5] - Average loans rose by $31.9 million from the prior quarter, with gross loan production totaling $196 million in the fourth quarter [9] Deposit Trends - Average deposits decreased by $3.9 million from the prior quarter but increased by $314.6 million year-over-year, with a notable increase in DDA balances [7] - The company experienced a significant deposit movement at quarter-end, with a long-term client moving over $100 million, although this was largely recovered in January [8] Credit Quality - Non-performing loans were reported at 0.14% of total loans, with no loan losses during the quarter, and the allowance for credit losses rose to $25.5 million, representing 1.16% of the portfolio [12][13] Expense Management - Total expenses for the quarter were $14.3 million, with adjustments indicating an efficiency ratio of 51.87% when excluding certain items [15][16] - The company anticipates gradual increases in expenses due to hiring, with a baseline expense model of $13.2 million for 2026 [16] Capital Actions - The company issued $40 million in subordinated debt and repurchased about 2 million shares, approximately 10% of the company, at a weighted average price of $17.19 per share [17] - A 25% increase in the quarterly cash dividend to $0.125 per share was announced, supported by strong operating earnings [17] Strategic Priorities for 2026 - The company aims to expand its deposit base through a relationship-driven approach, focusing on four business lines: Business Banking, Private Client Group, Association Banking, and Correspondent Banking [18][19] - The SBA initiative is expected to grow annual volume to approximately $40 million to $50 million over the next three years [19] Overall Focus - The company remains committed to consistent performance, growing high-quality loans, strengthening core funding, and disciplined risk management while investing in personnel and returning value to shareholders [20]