USCB Financial (US:USCB)2026-01-23 17:00Financial Data and Key Metrics Changes - Total assets reached $2.8 billion, up 8.1% year-over-year [2] - Loans grew by $216 million, or 11%, reflecting strong commercial activity [2] - Deposits increased to $171 million, or 7.9%, demonstrating continued franchise growth [2] - Net interest income expanded to 3.27%, improving from 3.16% in the prior year [2] - Non-performing loans stood at 0.14% of total loans, indicating excellent credit quality [3] - Tangible book value per share increased 10.8% year-over-year to $11.97 [3] - GAAP-diluted EPS was reported at $0.07, with operational diluted EPS at $0.44 [4] Business Line Data and Key Metrics Changes - Average loans increased $31.9 million, or 6.02% annualized compared to the prior quarter [10] - Gross loan production totaled $196 million in Q4, with 43% from correspondent banking [12] - Average deposits were stable, down $3.9 million compared to the prior quarter but up $314.6 million year-over-year [10] - Non-interest income was $3.3 million for Q4, consistent with prior quarters, excluding the securities loss [21] Market Data and Key Metrics Changes - The bank's loan portfolio increased to just under $2.2 billion, with commercial real estate representing 57% [19] - The average interest-bearing deposit rates decreased to 3.02%, down from 3.29% in the third quarter [10] - The bank's balance sheet is liability sensitive, with 61% of the loan portfolio being variable-rate or hybrid [15] Company Strategy and Development Direction - The company aims to expand and strengthen its deposit base, focusing on relationship-driven growth rather than rate-driven [26] - Key business lines include Business Banking, Private Client Group, Association Banking, and Correspondent Banking, each with clear plans for growth [26][27] - The strategy for 2026 includes launching a new lending and deposit gathering team in targeted markets [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to build back deposits lost at year-end and emphasized the importance of deposit growth for 2026 [36] - The company anticipates further NIM improvement supported by rate cuts and ongoing execution of its deposit strategy [13] - The tax expense is expected to be modeled at 26.4% going forward, reflecting compliance with state tax liabilities [9][57] Other Important Information - The board approved a 25% increase in the quarterly cash dividend to $0.12 per share [5] - The company completed a $40 million subordinated debt issuance, primarily used for share repurchase [3] Q&A Session Summary Question: Deposit trends and year-end shrinkage - Management noted a significant deposit move of over $100 million from a long-term client, which is expected to rebuild over time [36] Question: Loan-to-deposit ratio preferences - Management prefers a loan-to-deposit ratio between 90-95% for optimal liquidity [39] Question: SBA vertical expansion - The SBA initiative has been growing prudently, with plans to increase annual volume to $40-50 million over the next three years [42] Question: Capital strategy and priorities for 2026 - The focus remains on building capital and returning it to shareholders, with no significant plans for new initiatives beyond organic growth [47] Question: Margin expectations for the first quarter - Management expects NIM to be flat to slightly up in the first quarter, influenced by deposit runoff and potential rate cuts [54] Question: Expense outlook and new hires - The expense base is expected to gradually increase with new hires, targeting a low 50% efficiency ratio [66] Question: Fee income outlook - Non-interest income is anticipated to build around $3.5-$3.8 million for 2026, driven by various fee-generating activities [68]