8-K
USCB FINANCIAL HOLDINGS, INC. (USCB)
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
__________________________
FORM
8-K
__________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported):
October 26, 2023
__________________________
USCB Financial Holdings, Inc.
(Exact name of Registrant as Specified in Its Charter)
__________________________
Florida
001-41196
87-4070846
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
2301 N.W. 87th Avenue
,
Doral
,
Florida
33172
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s Telephone
Number, Including Area Code: (
305
)
715-5200
__________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation
of the registrant under
any of the following provisions:
☐
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a
-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A common stock, $1.00 par value per share
USCB
The Nasdaq Stock Market LLC
Indicate by
check mark
whether the
registrant is
an emerging
growth company
as defined
in Rule
405 of
the Securities
Act of
1933
(§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b
-2 of this chapter).
Emerging growth company
☒
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
2
Item 2.02. Results of Operations and Financial Condition.
On October 26, 2023, USCB Financial Holdings, Inc. (the “Company”),
issued a press release announcing its financial results
for the
third quarter
ended September 30,
- A
copy of the
press release
is furnished
as Exhibit 99.1
to this Current
Report on
the
(“Form 8-K”) and is incorporated herein by reference.
The information
in this Item
2.02, including
Exhibit 99.1, is
being furnished
and shall not
be deemed
“filed” for purposes
of
Section 18 of the
Securities Exchange Act
of 1934 (the “Exchange
Act”), or otherwise subject
to the liability of
that section, and
shall
not be deemed
to be incorporated
by reference into
any filing under
the Securities Act of
1933 (the “Securities
Act”) or the
Exchange
Act except as expressly set forth by specific reference in such filing to this Form 8-K.
Item 7.01. Regulation FD Disclosure.
As previously announced, at 11:00 a.m. ET on October 27, 2023, the Company
will hold an earnings conference call to
discuss
its financial performance
for the quarter ended
September 30, 2023. A copy
of the slides forming
the basis of the presentation
is being
furnished as Exhibit 99.2 to this Current Report on Form
8-K and is incorporated herein by reference. A copy of the
slides has also been
posted to the Company’s investor relations
website, located at investors.uscenturybank.com.
The information
in this Item
7.01, including
Exhibit 99.2, is
being furnished
and shall not
be deemed
“filed” for purposes
of
Section 18
of the
Exchange Act,
or otherwise
subject to
the
liability of
that section,
and
shall not
be deemed
to be
incorporated
by
reference into any filing under the
Securities Act or the Exchange Act
except as set forth by
specific reference in such filing to
this Form
8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
99.1
USCB Financial Holdings, Inc. Press Release, dated October 26, 2023
99.2
Earnings Presentation, dated October 26, 2023
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
USCB Financial Holdings, Inc.
By:
/s/ Robert Anderson
Name:
Robert Anderson
Title:
Chief Financial Officer
Date: October 26, 2023
exhibit991
1
Exhibit 99.1
EARNINGS RELEASE
USCB Financial Holdings, Inc. Reports Diluted EPS of $0.19 for Q3 2023
MIAMI,
FL – October 26, 2023 – USCB Financial Holdings, Inc.
(the “Company”) (NASDAQ: USCB)
, the holding company for U.S. Century Bank (the “Bank”),
reported net income of $3.8
million or $0.19 per diluted
share for the three months
ended September 30, 2023, compared with net
income of $5.6 million or
$0.28 per
diluted share, for the same period in 2022.
“As we deliver our third quarter
earnings, I am pleased to highlight
the rebound in loan growth, following
earlier concerns this year about the
safety and soundness of the
banking industry,”
said Luis de la
Aguilera, Chairman, President and
CEO.
“We
are encouraged by the
continued diversification of our
loan growth, particularly the
59% in new non-CRE
loans for the quarter,” reported
de la Aguilera. “Our
commitment to enhancing
Net Interest Margin (NIM)
is evident in the
8.00% weighted average
coupon for the
quarter on new
loans, exceeding our
portfolio average,” he
said.
“Furthermore, we took
the opportunity to
restructure our bank-owned
life insurance,
which bolstered BOLI revenue by $982 thousand this quarter and we offset this one-time, non-recurring gain with a comparable size securities
loss. This small portfolio
restructuring will allow
us to optimize
our investment portfolio
by transitioning from
lower-yielding securities to
higher-return investments,” said
de la Aguilera. “Despite
a decrease in NIM early in the third quarter, September’s NIM increased to 2.70% which reflects the resilience and adaptive spirit of our bank in fortifying our financial
performance." said de la Aguilera.
Unless otherwise stated, all
percentage comparisons in the
bullet points below are
calculated for the quarter
ended September 30, 2023 compared
to the quarter
ended
September 30, 2022 and annualized where appropriate.
Profitability
•
Annualized return on average assets for the quarter ended September
30, 2023 was 0.67% compared to 1.09% for the third
quarter of 2022.
•
Annualized return on average stockholders’ equity for
the quarter ended September 30, 2023 was 8.19% compared
to 11.90% for the third quarter of 2022.
•
The efficiency ratio for the quarter ended September 30, 2023 was
64.64% compared to 54.58% for the third quarter of 2022.
•
Net interest margin for the quarter ended September 30, 2023 was
2.60% compared to 3.47% for the third quarter ended 2022.
•
Net interest income before provision for
credit losses was $14.0 million for
the quarter ended September 30,
2023, a decrease of $2.8 million or
16.4% compared to
the third quarter of 2022.
Balance Sheet
•
Total assets were $2.2 billion at September 30, 2023, representing an increase of $207.1 million
or 10.2% from September 30, 2022.
•
Total loans were $1.7 billion at September 30, 2023, representing an increase of $245.0 million
or 17.1% from September 30, 2022.
•
Total deposits were $1.9 billion at September 30, 2023, representing an increase of $124.3 million
or 6.9% from September 30, 2022.
•
Total stockholders’ equity was
$182.9 million at
September 30, 2023,
representing an
increase of $5.5
million or 3.1%
from September 30,
- Total stockholders’
equity
includes
accumulated
comprehensive
loss
of
$51.2
million
at
September 30,
2023
compared
to
accumulated
comprehensive
loss
of
$45.2
million
at
September 30, 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 $2.9 million to $19.5 million at September
30, 2023 from $16.6 million at September 30, 2022.
•
The allowance for credit losses represented 1.16% of total loans
at both September 30, 2023 and
at September 30, 2022.
•
Non-performing loans to total loans was 0.03% at September
30, 2023 compared to 0.00% at September 30, 2022.
Non-interest Income and Non-interest Expense
•
Non-interest income was $2.2
million for the
three months ended September
30, 2023, an increase
of $372 thousand
or 20.8% compared
to $1.8 million for
the same
period in 2022.
•
Non-interest expense was $10.5 million for the three
months ended September 30, 2023, an increase of
$329 thousand or 3.2% compared to $10.1
million for the
same period in 2022.
Capital
•
As of September 30, 2023,
172,397 shares remain authorized
for repurchase under the Company’s previously
announced share repurchase program.
No shares were
repurchased during the third quarter 2023.
2
•
As of September 30, 2023,
total risk-based capital ratios for the Company and
the Bank were 13.10% and 13.06%, respectively.
•
Tangible book value per common share (a non-GAAP measure)
of $9.36 was negatively affected by $2.62
due to accumulated comprehensive loss of
$51.2 million
at
September 30,
2023.
At
September 30, 2022,
tangible
book
value
per
common
share
of
$8.87
was
negatively
affected
by
$2.26
due
to
$45.2
million
in
accumulated comprehensive loss.
Conference Call and Webcast
The Company will host a
conference call on Friday,
October 27, 2023, at 11:00
a.m. Eastern Time to discuss the
Company’s unaudited financial results for
the quarter
ended September 30, 2023. To
access the conference call, dial (800) 715-9871
(U.S. toll-free) and ask to join the USCB
Financial Holdings Call or provide conference
ID 6813115.
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 in 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,” “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 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 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
security
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
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 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.
3
Contacts:
Investor Relations
InvestorRelations@uscentury.com
Media Relations
Martha Guerra-Kattou
MGuerra@uscentury.com
4
USCB FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS
OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Interest income:
Loans, including fees
$
22,523
$
15,954
$
63,081
$
42,989
Investment securities
2,833
2,201
7,501
7,040
Interest-bearing deposits in financial institutions
1,026
322
2,459
474
Total interest income
26,382
18,477
73,041
50,503
Interest expense:
Interest-bearing checking
331
19
574
52
Savings and money market accounts
8,779
1,141
20,532
2,307
Time deposits
2,565
363
5,767
893
FHLB advances and other borrowings
685
180
1,976
456
Total interest expense
12,360
1,703
28,849
3,708
Net interest income before provision for credit losses
14,022
16,774
44,192
46,795
Provision for credit losses
653
910
892
1,615
Net interest income after provision for credit losses
13,369
15,864
43,300
45,180
Non-interest income:
Service fees
1,329
934
3,707
2,917
Gain (loss) on sale of securities available for sale, net
(955)
(558)
(976)
(540)
Gain on sale of loans held for sale, net
255
330
696
686
Loan settlement
-
-
-
161
Other non-interest income
1,532
1,083
2,650
2,127
Total non-interest income
2,161
1,789
6,077
5,351
Non-interest expense:
Salaries and employee benefits
6,066
6,075
18,325
17,863
Occupancy
1,350
1,281
3,968
3,802
Regulatory assessments and fees
365
269
1,041
708
Consulting and legal fees
513
604
1,257
1,519
Network and information technology services
481
488
1,464
1,323
Other operating expense
1,686
1,415
5,034
4,080
Total non-interest expense
10,461
10,132
31,089
29,295
Net income before income tax expense
5,069
7,521
18,288
21,236
Income tax expense
1,250
1,963
4,464
5,529
Net income
$
3,819
$
5,558
$
13,824
$
15,707
Per share information:
Net income per common share, basic
$
0.20
$
0.28
$
0.70
$
0.79
Net income per common share, diluted
$
0.19
$
0.28
$
0.70
$
0.78
Weighted average shares outstanding:
Common shares, basic
19,542,723
20,000,753
19,661,685
19,998,841
Common shares, diluted
19,611,897
20,148,208
19,729,181
20,178,089
5
USCB FINANCIAL HOLDINGS, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands, except per share data)
As of or For the Three Months Ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Income statement data:
Net interest income
$
14,022
$
14,173
$
15,997
$
16,866
$
16,774
Provision for credit losses
653
38
201
880
910
Net interest income after provision for credit losses
13,369
14,135
15,796
15,986
15,864
Service fees
1,329
1,173
1,205
1,093
934
Gain (loss) on sale of securities available for sale, net
(955)
-
(21)
(1,989)
(558)
Gain on sale of loans held for sale, net
255
94
347
205
330
Other income
1,532
579
539
568
1,083
Total non-interest income
2,161
1,846
2,070
(123)
1,789
Salaries and employee benefits
6,066
5,882
6,377
6,080
6,075
Occupancy
1,350
1,319
1,299
1,256
1,281
Regulatory assessments and fees
365
452
224
222
269
Consulting and legal fees
513
386
358
371
604
Network and information technology services
481
505
478
483
488
Other operating expense
1,686
1,908
1,440
1,602
1,415
Total non-interest expense
10,461
10,452
10,176
10,014
10,132
Net income before income tax expense
5,069
5,529
7,690
5,849
7,521
Income tax expense
1,250
1,333
1,881
1,415
1,963
Net income
$
3,819
$
4,196
$
5,809
$
4,434
$
5,558
Per share information:
Net income per common share, basic
$
0.20
$
0.21
$
0.29
$
0.22
$
0.28
Net income per common share, diluted
$
0.19
$
0.21
$
0.29
$
0.22
$
0.28
Balance sheet data (at period-end):
Cash and cash equivalents
$
33,435
$
87,280
$
63,251
$
54,168
$
73,326
Securities available-for-sale
$
218,609
$
218,442
$
229,409
$
230,140
$
248,571
Securities held-to-maturity
$
197,311
$
220,956
$
186,428
$
188,699
$
178,865
Total securities
$
415,920
$
439,398
$
415,837
$
418,839
$
427,436
Loans held for investment
(1)
$
1,676,520
$
1,595,959
$
1,580,394
$
1,507,338
$
1,431,513
Allowance for credit losses
$
(19,493)
$
(18,815)
$
(18,887)
$
(17,487)
$
(16,604)
Total assets
$
2,244,602
$
2,225,914
$
2,163,821
$
2,085,834
$
2,037,453
Non-interest-bearing deposits
$
573,546
$
572,360
$
633,606
$
629,776
$
662,808
Interest-bearing deposits
$
1,347,376
$
1,348,941
$
1,196,856
$
1,199,505
$
1,133,834
Total deposits
$
1,920,922
$
1,921,301
$
1,830,462
$
1,829,281
$
1,796,642
FHLB advances and other borrowings
$
102,000
$
87,000
$
120,000
$
46,000
$
26,000
Total liabilities
$
2,061,718
$
2,042,229
$
1,979,963
$
1,903,406
$
1,860,036
Total stockholders' equity
$
182,884
$
183,685
$
183,858
$
182,428
$
177,417
Capital ratios:
(2)
Leverage ratio
9.26%
9.32%
9.36%
9.61%
9.48%
Common equity tier 1 capital
11.97%
12.27%
12.04%
12.53%
12.56%
Tier 1 risk-based capital
11.97%
12.27%
12.04%
12.53%
12.56%
Total risk-based capital
13.10%
13.42%
13.20%
13.65%
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.
6
USCB FINANCIAL HOLDINGS, INC.
AVERAGE BALANCES, RATIOS, AND OTHER DATA
(UNAUDITED)
(Dollars in thousands)
As of or For the Three Months Ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Average balance sheet data:
Cash and cash equivalents
$
90,742
$
94,313
$
50,822
$
61,892
$
77,887
Securities available-for-sale
$
222,134
$
224,913
$
230,336
$
242,144
$
331,206
Securities held-to-maturity
$
218,694
$
192,628
$
187,826
$
184,459
$
116,733
Total securities
$
440,828
$
417,541
$
418,162
$
426,603
$
447,939
Loans held for investment
(1)
$
1,610,864
$
1,569,266
$
1,547,393
$
1,456,780
$
1,398,761
Total assets
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
$
2,026,791
Interest-bearing deposits
$
1,353,516
$
1,270,657
$
1,179,878
$
1,150,049
$
1,107,129
Non-interest-bearing deposits
$
587,917
$
601,778
$
664,369
$
653,820
$
655,853
Total deposits
$
1,941,433
$
1,872,435
$
1,844,247
$
1,803,869
$
1,762,982
FHLB advances and other borrowings
$
85,326
$
93,075
$
61,600
$
37,500
$
43,935
Total liabilities
$
2,065,357
$
1,999,304
$
1,936,847
$
1,874,311
$
1,841,503
Total stockholders' equity
$
184,901
$
184,238
$
183,371
$
177,556
$
185,288
Performance ratios:
Return on average assets
(2)
0.67%
0.77%
1.11%
0.86%
1.09%
Return on average equity
(2)
8.19%
9.13%
12.85%
9.91%
11.90%
Net interest margin
(2)
2.60%
2.73%
3.22%
3.45%
3.47%
Non-interest income (loss) to average assets
(2)
0.38%
0.34%
0.40%
(0.02)%
0.35%
Efficiency ratio
(3)
64.64%
65.25%
56.32%
59.81%
54.58%
Loans by type (at period end):
(4)
Residential real estate
$
188,880
$
183,093
$
184,427
$
185,636
$
186,551
Commercial real estate
$
1,005,280
$
989,401
$
987,757
$
970,410
$
928,531
Commercial and industrial
$
212,975
$
169,401
$
160,947
$
126,984
$
121,145
Foreign banks
$
94,640
$
85,409
$
97,405
$
93,769
$
94,450
Consumer and other
$
173,096
$
167,845
$
149,410
$
130,429
$
100,845
Asset quality data:
Allowance for credit losses to total loans
1.16%
1.18%
1.20%
1.16%
1.16%
Allowance for credit losses to non-performing loans
4,070%
3,871%
3,886%
%
%
Total non-performing loans
(5)
$
479
$
486
$
486
$
-
$
-
Non-performing loans to total loans
0.03%
0.03%
0.03%
%
%
Non-performing assets to total assets
(5)
0.02%
0.02%
0.02%
%
%
Net charge-offs (recoveries of) to average loans
(2)
(0.00)%
0.01%
(0.01)%
(0.00)%
0.03%
Net charge-offs (recovery) of credit losses
$
(5)
$
29
$
(49)
$
(2)
$
91
Interest rates and yields:
(2)
Loans
5.55%
5.33%
5.17%
4.86%
4.53%
Investment securities
2.52%
2.26%
2.20%
2.13%
1.94%
Total interest-earning assets
4.89%
4.68%
4.51%
4.21%
3.82%
Deposits
2.39%
1.99%
1.29%
0.77%
0.34%
FHLB advances and other borrowings
3.19%
3.42%
3.27%
2.27%
1.63%
Total interest-bearing liabilities
3.41%
2.97%
2.08%
1.25%
0.59%
Other information:
Full-time equivalent employees
194
198
196
191
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 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.
7
USCB FINANCIAL HOLDINGS, INC.
NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
Three Months Ended September 30,
2023
2022
Average
Balance
Interest
Yield/Rate
(1)
Average
Balance
Interest
Yield/Rate
(1)
Assets
Interest-earning assets:
Loans
(2)
$
1,610,864
$
22,523
5.55%
$
1,398,761
$
15,954
4.53%
Investment securities
(3)
445,828
2,833
2.52%
450,514
2,201
1.94%
Other interest-earnings assets
83,479
1,026
4.88%
70,540
322
1.81%
Total interest-earning assets
2,140,171
26,382
4.89%
1,919,815
18,477
3.82%
Non-interest-earning assets
110,087
106,976
Total assets
$
2,250,258
$
2,026,791
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing checking
$
52,080
331
2.52%
$
66,585
19
0.11%
Saving and money market deposits
1,011,164
8,779
3.44%
823,521
1,141
0.55%
Time deposits
290,272
2,565
3.51%
217,023
363
0.66%
Total interest-bearing deposits
1,353,516
11,675
3.42%
1,107,129
1,523
0.55%
FHLB advances and other borrowings
85,326
685
3.19%
43,935
180
1.63%
Total interest-bearing liabilities
1,438,842
12,360
3.41%
1,151,064
1,703
0.59%
Non-interest-bearing demand deposits
587,917
655,853
Other non-interest-bearing liabilities
38,598
34,586
Total liabilities
2,065,357
1,841,503
Stockholders' equity
184,901
185,288
Total liabilities and stockholders' equity
$
2,250,258
$
2,026,791
Net interest income
$
14,022
$
16,774
Net interest spread
(4)
1.48%
3.23%
Net interest margin
(5)
2.60%
3.47%
(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.
8
USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands)
As of or For the Three Months Ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
3,819
$
4,196
$
5,809
$
4,434
$
5,558
Plus: Provision for income taxes
1,250
1,333
1,881
1,415
1,963
Plus: Provision for credit losses
653
38
201
880
910
PTPP income
$
5,722
$
5,567
$
7,891
$
6,729
$
8,431
PTPP return on average assets:
(1)
PTPP income
$
5,722
$
5,567
$
7,891
$
6,729
$
8,431
Average assets
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
$
2,026,791
PTPP return on average assets
(2)
1.01%
1.02%
1.51%
1.30%
1.65%
Operating net income:
(1)
Net income
$
3,819
$
4,196
$
5,809
$
4,434
$
5,558
Less: Net gains (losses) on sale of securities
(955)
-
(21)
(1,989)
(558)
Less: Tax effect on sale of securities
242
-
5
504
141
Operating net income
$
4,532
$
4,196
$
5,825
$
5,919
$
5,975
Operating PTPP income:
(1)
PTPP income
$
5,722
$
5,567
$
7,891
$
6,729
$
8,431
Less: Net gains (losses) on sale of securities
(955)
-
(21)
(1,989)
(558)
Operating PTPP income
$
6,677
$
5,567
$
7,912
$
8,718
$
8,989
Operating PTPP return on average assets:
(1)
Operating PTPP income
$
6,677
$
5,567
$
7,912
$
8,718
$
8,989
Average assets
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
$
2,026,791
Operating PTPP return on average assets
(2)
1.18%
1.02%
1.51%
1.69%
1.76%
Operating return on average assets:
(1)
Operating net income
$
4,532
$
4,196
$
5,825
$
5,919
$
5,975
Average assets
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
$
2,026,791
Operating return on average assets
(2)
0.80%
0.77%
1.11%
1.14%
1.17%
Operating return on average equity:
(1)
Operating net income
$
4,532
$
4,196
$
5,825
$
5,919
$
5,975
Average equity
$
184,901
$
184,238
$
183,371
$
177,556
$
185,288
Operating return on average equity
(2)
9.72%
9.13%
12.88%
13.23%
12.79%
Operating Revenue:
(1)
Net interest income
$
14,022
$
14,173
$
15,997
$
16,866
$
16,774
Non-interest income
2,161
1,846
2,070
(123)
1,789
Less: Net gains (losses) on sale of securities
(955)
-
(21)
(1,989)
(558)
Operating revenue
$
17,138
$
16,019
$
18,088
$
18,732
$
19,121
Operating Efficiency Ratio:
(1)
Total non-interest expense
$
10,461
$
10,452
$
10,176
$
10,014
$
10,132
Operating revenue
$
17,138
$
16,019
$
18,088
$
18,732
$
19,121
Operating efficiency ratio
61.04%
65.25%
56.26%
53.46%
52.99%
(1) The Company believes these non-GAAP measurements are
key indicators of the ongoing earnings power of the
Company.
(2)
Annualized.
9
USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands, except per share data)
As of or For the Three Months Ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity
$
182,884
$
183,685
$
183,858
$
182,428
$
177,417
Less: Intangible assets
-
-
-
-
-
Tangible stockholders' equity
$
182,884
$
183,685
$
183,858
$
182,428
$
177,417
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
19,542,290
19,544,777
19,622,380
20,000,753
20,000,753
Tangible book value per common share
(2)
$
9.36
$
9.40
$
9.37
$
9.12
$
8.87
Operating diluted net income per common share:
(1)
Operating net income
$
4,532
$
4,196
$
5,825
$
5,919
$
5,975
Total weighted average diluted shares of common stock
19,611,897
19,639,682
19,940,606
20,172,438
20,148,208
Operating diluted net income per common share:
$
0.23
$
0.21
$
0.29
$
0.29
$
0.30
Tangible Common Equity/Tangible Assets
(1)
Tangible stockholders' equity
$
182,884
$
183,685
$
183,858
$
182,428
$
177,417
Tangible total assets
(3)
$
2,244,602
$
2,225,914
$
2,163,821
$
2,085,834
$
2,037,453
Tangible Common Equity/Tangible Assets
8.15%
8.25%
8.50%
8.75%
8.71%
(1)
The Company believes these non-GAAP measurements
are key indicators of the ongoing earnings power
of the Company.
(2)
Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding
stock options.
(3) Since the Company has no intangible assets, tangible
total assets is the same amount as total assets calculated
under GAA
P.
exhibit992
Exhibit 99.2 EARNINGS PRESENTATION THIRD QUARTER
2023 NASDAQ: USCB USCB FINANCIAL HOLDINGS
FORWARD-LOOKING STATEMENTS This presentation
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,” “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 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 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 security breaches; and other risks described in this
presentation 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
presentation are made only as of the date hereof, and we undertake
no obligation to update or revise any forward-looking statements 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 USCB Financial
Holdings, Inc. filed or will file with the SEC. Non-GAAP
Financial Measures This presentation 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 measures because it believes these measures may
provide useful supplemental information for evaluating the
Company’s expectations 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 presentation. All numbers included
in this presentation are unaudited unless otherwise noted. 2
Q3 2023 HIGHLIGHTS GROWTH Average deposits increased
by $178.5 million or 10.1% compared to the third quarter 2022. Average
loans increased $212.1 million or 15.2% compared to the third quarter
- Liquidity sources at September 30, 2023, totaled $742
million in on-balance sheet and off-balance sheet sources. Insured
and collateralized deposits maintained at 51% for third quarter 2023. Tangible
Book Value per Share (1) at September 30, 2023 of $9.36
includes AOCI impact of ($2.62). PROFITABILTY Net
income was $3.8 million or $0.19 per diluted share. ROAA was 0.67%
compared to 1.09% for the third quarter 2022. ROAE was 8.19%
compared to 11.90% for the third quarter 2022. Efficiency ratio
was 64.64% compared to 54.58% for the third quarter 2022.
CAPITAL/CREDIT Credit metrics remain strong. One C&I
loan classified as nonaccrual for a total of $479 thousand. ACL coverage
ratio was 1.16% at September 30, 2023. Effective January 1, 2023, the
Company adopted the CECL methodology for estimating credit
losses. (1) Non-GAAP financial measure. 3
HISTORICAL FINANCIALS EOP for Balance Sheet amounts
Loans (1)
In millions $735.0 $1,677.0 2016 2017 2018 2019 2020 2021 2022 Q1
Q2 Q3 2023 2023 2023 Deposits In millions $782 $1,921 2016
2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 2023 2023 2023 Total
stockholders’ equity In millions $86 $183 2016 2017 2018 2019 202
0
2021 2022 Q1 Q2 Q3 2023 2023 2023 Allowance for credit
losses to non-performing loans 1.17% 1.16% 2016 2017 2018 2019
2020 2021 2022 Q1 Q2 Q3 2023 2023 2023 Net charge-offs
(recoveries of loan losses ($1,019) ($5) 2016 2017 2018 2019 2020 2021
2022 Q1 Q2 Q3 2023 2023 2023 Non-performing assets to
total assets 1.58% 0.02% 2016 2017 2018 2019 2020 2021 2022 Q1
Q2 Q3 2023 2023 2023 Net interest income In millions $30 $64
2016 2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 2023 2023 2023
Efficiency ration 94.15% 64.64% 2016 2017 2018 2019 2020 2021
2022 Q1 Q2 Q3 2023 2023 2023 PTPP ROAA (2) 0.24% 1.01% 2016
2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 2023 2023 2023
(1) Loan amounts include deferred fees/costs. (2) Non-GAAP financial
measure. Annualized. 4
FINANCIAL RESULTS In thousands (except per share
data) Balance Sheet (EOP) Q3 2023 Q2 2023 Q3 2022 Total
Securities $415,920 $439,398 $427,436 Total Loans (1) $1,676,520
$1,595,959 $1,431,513 Total Assets $2,244,602 $2,225,914
$2,037,453 Total Deposits $1,920,922 $1,921,301 $1,796,642
Total Equity (2) $182,844 $183,685 $177,417 Income Statement
Net Interest Income $14,022 $14,173 $16,774 Non-interest Income
$2,161 $1,846 $1,789 Total Revenue $16,183 $16,019
$18,563 Provision for Credit Losses $653 $38 $910 Non-interest
Expense $10,461 $10,452 $10,132 Net Income $3,819 $4,196
$5,558 Diluted Earning Per Share (EPS) $0.19 $0.21 $0.28 Weighted
Average Diluted Shares 19,611,897 19,639,682 20,148,208
(1) Loan amounts include deferred fees/costs. (2) Total Equity
includes accumulated comprehensive loss of $51.2 million for Q3 2023,
$46.3 million for Q2 2023, and $45.2 million for Q3 2022. 5
KEY PERFORMANCE INDICATORS Q3 2023 Q2 2023 Q3
2022 CAPITAL/CREDIT Tangible Common Equity/Tangible
Assets (1) 8.15% 8.25% 8.71%
Total Risk-Based Capital (2) 13.10% 13.42% 13.65% NCO/Avg
Loans (3) 0.00% 0.01% 0.03% NPA/Assets 0.02% 0.02%
0.00% Allowance Credit Losses/Loans 1.16% 1.18% 1.16%
PROFITABILITY Return On Average Assets (ROAA) (3)
0.67% 0.77% 1.09% Return On Average Equity (ROAE)
(3) 8.19% 9.13% 11.90% Net Interest Margin (3) 2.60% 2.73%
3.47% Efficiency Ratio 64.64% 65.25% 54.58% Non-Interest
Expense/Avg Assets (3) 1.84% 1.92% 1.98% GROWTH Total
Assets (EOP) $2,244,602 $2,225,914 $2,037,453 Total
Loans (EOP) $1,676,520 $1,595,959 $1,431,513 Total Deposits
(EOP) $1,920,922 $1,921,301 $1,796,642 Tangible Book
Value/Share (1)(4) $9.36 $9.40 $ 8.87 (1) Non-GAAP financial
measures. (2) Reflects the Company's regulatory capital ratios which
are provided for information purposes only; as a small bank holdin
g
company, the Company is not subject to regulatory capital
requirements. (3) Annualized. (4) AOCI effect on tangible book value
per share was ($2.62) for Q3 2023, ($2.37) for Q2 2023 and ($2.26)
for Q3 2022. 6
DEPOSIT PORTFOLIO Deposits AVG In millions $1,763
$1,804 $1,844 $1,872 $1,941 $217 $217 $225 $277 $290 $823
$871 $897 $940 $1,011 $67 $62 $58 $53 $52 $565 $654 $664 $602
$588 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Non-interest
-bearing deposits Interest-bearing checking deposits Money market
and savings Time deposits Deposit Cost "+ 525 bps Q3'23 vs
Q4'21" 0.25% 3.25% 4.50% 5.00% 5.25% 5.50% 0.21% 0.34% 0.77%
1.29% 1.99% 2.39% Q4 2021 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Q3 2023 Deposit Cost Fed Funds Rate (upper bound) Commentary
Average deposits increased $69.0 million or 14.62% annualized
compared to the prior quarter and $178.5 million or 10.1% compared
to the third quarter 2022. Deposit composition mix shifted towards
interest bearing and ICS/CDARS products. Average DDA balances
comprised 30.3% of total deposits as of September 30, 2023.
Deposit beta of 41% since Q4 2021. Deposit cost increasing but
at a slower pace. September deposit cost was at 2.42%. 7
DEPOSIT DISTRIBUTION EOP for Balance Sheet amounts Deposits
Composition Personal Business Broker Deposits Public Funds
11% 37% 49% 3% Deposits by Customer Segment In thousands
for balance sheet amounts De posit Type Total Balance
% of Total (#) Accounts Average Balance per Account Business
$ 944,477 49% 7,298 $ 129 Personal $ 714,150 37% 12,891
$ 55 PublicFunds $ 212,295 11% 30 $ 7,076 Brokered CDs
$ 50,000 3% 2 $ 25,000 Grand Total $ 1,920,922 100% 20,221
$ 95 Commentary Our deposit base reflects our business model:
a commercial bank. The total amount of uninsured deposits adjusted
to exclude the collateralized portion of public funds was 49%
at quarter end. Including the collateralized portion of public funds,
uninsured deposits were 53%. As of September 30, 2023, the
deposit balance of ICS/CDARS was $116.5 million, an increase
of $2.2 million from second quarter 2023. Uninsured Deposits to Total
Deposits (1) In millions 57% 59% 56% 49% 49% $765
$750 $802 $970 $985 $1,032 $1,079 $1,028 $951 $936 Q3 2022 Q4
2022 Q1 2023 Q2 2023 Q3 2023Uninsured Deposits Insured
Deposits Uninsured Deposits / Deposits (1) Excludes public
funds collateralized deposits amounting to 4% of total deposits.
8
LIQUIDITY EOP for Balance Sheet amounts Total Liquidity 31% 30%
28% 38% 33% 22% 20% 19% 14% 10% On Balance Sheet
Liquid Assets Total Liquidity Liquid Assets: On-Balance Sheet Liquidity
/ Total Assets Total Liquidity: Total Liquidity / Total
Assets Sources of Liquidity (in millions) 9/30/2023 On
Balance Sheet Liquidity Cash $4 Due from banks $25 Investment
securities unpledged $200 Total on balance sheet liquidity (Liquid
Assets) $229 Off Balance Sheet Liquidity FHLB excess capacity
$237 Bank Term Funding Program (BTFP) $134 Federal
Reserve Discount Window $37 Fed Fund Lines $105 Total off
balance sheet liquidity $513 [Total Liquidity $742 Liquidity calculation
excludes vault cash reserves Commentary We believe we
are well positioned to weather the current economic environment.
We have ample sources of liquidity both on and off-balance
sheet. Loan-to-deposits ratio increase due to additional loan production during
the quarter. We are enrolled in BTFP but have not drawn
any funds. Lon-to-Deposit Ratio 79.7% 82.4% 86.3% 83.1%
87.3% Sep-22 Dec-22 Mar-26 Jun-23 Sep-23 9
LOAN PORTFOLIO Total Loans (AVG) In millions
1,399 1,457 1,547 1,569 1,611 $7 $1 $1 $0 $0 $392 $1,456 $1,546
$1,569 $1,611 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Loans (Excl PPP) PPP Loans Loan Yields 4.53% 4.86% 5.17%
5.33% 5.55% 0.03% 0.04% 0.03% 0.02% 0.02% "+ 103 bps
Q3'23 vs Q3'22" 4.50% 4.82% 5.14% 5.31% 5.53% Q3 2022 Q4 2022
Q1 2023 Q2 2023 Q3 2023 Loan Coupon Loan fees Commentary
Average loans increased $41.6 million or 10.52% annualized compared
to prior quarter and $212.1 million or 15.2% compared
to the third quarter 2022. Loan coupon increased 22 bps compared
to prior quarter and 103 bps compared to the third quarter 2022. Loan
fees are normalizing after PPP loans have been forgiven and paid off.
10
LOAN PRODUCTION Net Loan Production Trend 4.85% 5.68% 6.66%
7.20% 8.00% $130 $129 $94 $67 $135 $71 $54 $22 $51 $55 Q3
2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Loan Production/Line
changes Loan Amortization/payoffs New loans average coupon
Commentary $296 million in new loan production in 2023 at increasing yields.
Weighted average coupon on new loans was 8.00% for
third quarter 2023, 247 bps above portfolio average. Q3
2023 loan production was well diversified; 41% C&I, 38% CRE, 6% consumer,
12% correspondent banks, and 3% residential. Loan composition
shows diversification and growth in C&I and consumer
loans. 11
NET INTEREST MARGIN Net Interest Income/Margin (1) In thousands
(except ratios) 3.47% 3.45% 3.22% 2.73% 2.60% $16,774 $16,866
$15,997 $14,173 $14,022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Q3 2023 Net Interest Income NIM Interest-Earning Assets
Mix (AVG) 4% 3% 2% 4% 4% 23% 22% 21% 20% 21%
0% 0% 0% 0% 0% 73% 75% 77% 76% 75% Q3 2022 Q4 2022
Q1 2023 Q2 2023 Q3 2023 Total loans (excluding PPP Loans)
PPP Loans Investment Securities Cash Balances & Equivalents Commentary
Net interest income decreased by $151 thousand compared to the
prior quarter predominately due to increase in deposit cost
and a liability sensitive balance sheet. Shift in deposit mix; out
of DDA and into interest bearing deposits. Third quarter NIM
decreased early in the quarter, however loan production, SWAPs,
and slower increase in deposit cost improved
the NIM mid-quarter. September NIM was 2.70%. NIM
expected to be stable or increase going forward, absent of further
rate hikes. Deposit cost is increasing but at a slower pace.
September deposit cost was 2.42%. Third quarter new loan production
at 8.00% coupon will continue to elevate portfolio loan yields.
Interest rate swaps will help improve NIM going forward.
At current rates, we expect approximately $500 thousand in additional
carry. (1) Annualized. 12
INTEREST RATE SENSITIVITY Loan Portfolio Repricing
Profile by Rate Type Hybrid ARM 4% Fixed Rate 41% Variable
Rate 55% 17% 13% 70% Prime CMT LIBR/SOFR Loan Repricing
Schedule Variable/Hybrid Rate Loans 31% 10% 13% 46% 0-1
yrs 1-2 yrs. 2-3 yrs. >3 yrs. Static NII Simulation Year
1&2 1.5% 2.7% 5.5% 10.2% +100 +200 +100 +200 Net Interest Income
change from base ($ in thousands and % change) 13
SECURITIES PORTFOLIO EOP for Balance Sheet amounts, in
millions Portfolio Composition • Treasury • CMO • MBS •
CMBS • SBA Leger Agency • Municipalities • Corporate • Bank
Subordinated Debt 5% 34% 23% 14% 7% 6% 4% 2% 5% Commentary
Securities portfolio had a fair value of $415.9 million. 52.6% of
the portfolio is classified as AFS, while 47.4% is classified as HTM.
The modified duration is 5.4 and the average life is 7 years. Duration
has increased as the result of higher rates and lower prepayments. We
expect to receive $29.8 million from the securities portfolio in
the 4Q 2023, these cashflows will support loan growth or debt repayment.
If rates remain at current levels through 2026, we expect to receive
$149.8 million on cashflows. 70.7% of the portfolio is invested
in mortgage-backed securities, boosting the liquidity. Securities Portfolio
Key Metrics Metrics as of 9/30/2023 Securities Portfolio Fair Value
$ 415.9 AFS as % of portfolio 52.6% HTM as % of portfolio
47.4% Portfolio Yield 2.3% Average Life 7.0 Mod Duration
5.4 AFS AOCI $ (60.3) Short Term Cashflows Base +100
-100 2023 $29.8 $29.5 $30.4 2024 $36.7 $33.8 $449 2025
$38.8 $31.9 $36.1 2026 $444 $43.0 $46.1 Total $149.7 $138.2
$157.5 Securities Portfolio % 36.0% 3à 2% 37.9% 14
ASSET QUALITY Allowance for Credit Losses In thousands (except
ratios) 1.16% 1.16% 1.20% 1.18% 1.16% $16,604 $17,487 $18,887
$18,815 $19,493 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Allowance for credit losses ACL/Total Loans Non-performing
Loans In thousands (except ratios) 0.00% 0.00% 0.03% 0.03% 0.03%
$0 $0 $486 $486 $479 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Non-accrual loans Non-performing loans to total loans Classified
loans (1) to Total Loans 0.07% 0.26% 0.25% 0.21% 0.27%
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Commentary
ACL coverage ratio is at 1.16% at September 30 2023, slightly
down from prior quarter due to improvement in economic outlook. One
C&I loan for $479 thousand was classified as nonaccrual on
September 30, 2023. No OREO. ACL increased by $678 thousand due
to net portfolio growth during the quarter. (1) Loans classified
as substandard at period end. No loans classified doubtful or loss at
period ends. 15
LOAN PORTFOLIO MIX Loan Portfolio Mix (1) Residential real
estate CRE - Owner occupied CRE - Non-owner occupied Commercial
and industrial Correspondent banks Consumer and other
11% 10% 50% 13% 6% 10% $1,675MM (1) Commentary
Total Loan balance at quarter end was $1,675 million (1). Commercial
Real Estate (owner occupied and non-owner occupied) was 60%
or $1,005 million of the total loan portfolio (1). CRE mix is diversified
and granular. Retail non-owner occupied makes up 29% of total
CRE or $295.8 million. CRE Loan Mix Other 3% Retail 29% Multifamily
17% Cre-Owner Occupied 17% (2) Office 12% Warehouse
10% Hotels 8% Land Construction 4% $1,005 MM CRE Loan Portfolio (non
-owner occupied and owner occupied) Weighted Average
Loan Type LTV) DSCR W Average Loan Size Retail
57% 1.68 $2.9 Multifamily 60% 1.38 $1.4 Office 58% 2.18 $1.5
Warehouse 59% 1.83 $1.3 Hotels 54% 1.96 $4.8 Other 57% 1.99
$1.8 Land/Construction 60% NA $3.1 As of 9/30/23 Excludes
unearned fees Includes loan types: office, warehouse, gas
station, retail and other (1) LTV - Loan to value ratio. (2) DSCR
- Debt service coverage ratio. (3) Balance in millions. 16
NON-INTEREST INCOME In thousands (except ratios) Q3 2023 Q2
2023 Q1 2023 Q4 2022 Q3 2022 Service fees $1,329 $1,173 $1,205
$1,093 $934 Gain (loss) on sale of securities available for
sale (955) - (21) (1,989) (558) Gain on sale of loans held for sale
255 94 347 205 330 Other income 1,532 579 539 568 1,083 Total
non-interest income $2,161 $1,846 $2,070 ($123) $1,789 Average
total assets $2,250,258 $2,183,542 $2,120,218 $2,051,867 $2,026,791
Non-interest income (loss)/Average assets (1) 0.38% 0.34%
0.40% (0.02%) 0.35% Commentary Service fees increased
from prior quarters due to an increase in wire fees. Loss on sale of securities
of $955 thousand due to portfolio restructuring strategy which
resulted in the sale of $7.7 million
of lower yielding securities. Strategic restructuring of bank-owned
life insurance increased other income by $982 thousand included
in other income; offset this one-time, non-recurring gain with
a comparable sized securities loss. (1) Annualized. 17
NON-INTEREST EXPENSE In thousands (except ratios) Q3 2023 Q2
2023 Q1 2023 Q4 2022 Q3 2022 Salaries and employee benefits
$6,066 $5,882 $6,377 $6,080 $6,075 Occupancy 1,350 1,319 1,299
1,256 1,281 Regulatory assessments and fees 365 452 224
222 269 Consulting and legal fees 513 386 358 371 604 Network and
information technology services 481 505 478 483 488 Other operating
expense 1,686 1,908 1,440 1,602 1,415 Total non-interest
expense $10,461 $10,452 $10,176 $10,014 $10,132 Efficiency
ratio 64.64% 65.25% 56.32% 59.81% 54.58% Average
total assets $2,250,258 $2,183,542 $2,120,218 $2,051,867 $2,026,791 Non
-interest expense / Average assets (1) 1.84% 1.92% 1.95% 1.94%
1.98% Full-time equivalent employees 194 198 196 191 191 Commentary
Salaries and employee benefits expense increased due to slight adjustments
in sales incentives. Other operating expense decreased
$222 thousand due to decrease in advertising and promotional expense, and
miscellaneous losses. Consulting and legal fees increased $150 thousand
due to a one-time, nonrecurring legal expense. Non-interest expense
/ Average assets has improved 14 bps year-over-year.
18
CAPITAL Capital Ratios « Q32023 Leverage Ratio TCE/TA
& Tier 1 Risk- Based Capital Total Risk- Based Capital AO
Cl In Millions 9.26% 8.15% 11.97% 13.10% ($51.2) Q22023 9.32%
8.25% 12.27% 13.42% ($46.3) 9.48% 5.00% 8.71% NA 12.56%
8.00% 13.65% 10.00% ($45.2) Commentary 172,397 common shares
remain authorized for repurchase under the current
repurchase program. AOCI was ($51.2) million or ($2.62) per share as of
September 30, 2023. Q3 2023 EOP shares outstanding: Common
Stock: 19,542,290 (1) 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. (2) Non-GAAP financial measures. 19
TAKEAWAYS Leading franchise located in
one of the most attractive Robust organic growth banking markets
in Florida and the U.S. Strong asset quality, with minimal charge
-
offs experienced since 2015 recapitalization Experienced and tested
management team Strong profitability, with pathway for future
enhancement identified Core funded deposit base with 30% Non- Interest
-Bearing Deposits (EOP) 20
APPENDIX - NON-GAAP RECONCILIATION In thousands
(except ratios) 9/30/2023 Pre-Tax Pre-Provision ("PTPP") Income:(1)
Net income $ 3,819 Plus: Provision for income taxes 1,250
Plus: Provision for credit losses 653 PTPP income $ PTPP Return on Average
Assets: PTPP income $ 5,722 Average assets $ 2,250,258 PTPP
return on average assets <2) 1.01% Operating Net Income:(1)
Net income $ 3,S19 Less: Net gains (losses) on sale of securities
(955) Less: Tax effect on sale of securities 242 Operating
net income $ 4,532 Operating PTPP Income:(l1 PTPP income
$ 5,722 Less: Net gains (losses) on sale of securities (955) Operating
PTPP Licorne $ 6,677 As of or for the three months ended 6/30/2023
3/31/2023 12/31/2022 9/30/2022 $ 4,196 $ 5,809 $ 4,434 $ 5,558
1,333 1,881 1,415
1,963 38 201 880 910 $ 5,567 $ 7,891 $ 6,729 $ 8,431 $ 5,567
$ 2,183,542 1.02% $ 7,891 $ 2,120,218 1.51% $ 6,729 $ 2,051,86
7
130% $ 8,431 $ 2,026,791 1.65% $ 4,196 $ 5,809 $ 4,434 $ 5,558
(21) (1,989) (558) 2 5 504 141_ $ 4,196 $ 5,825 $ 5,919 $ 5,975
$ 5,567 $ 7,891 $ 6,729 $ 8,431 I £11 (1,989) (5581 Î 5,567 Î 7,912
Î 8,718 Î S,9S9 Operating PTPP Return on Average Assets:(1>
Operating PTPP income $ 6,677 $ 5,567 $ 7,912 $ 8,718 $ 8,989
Average assets $ 2,250,258 $ 2,1S3,542 $ 2,120,218 $ 2,051,867
$ 2,026,791 Operating PTPP Return on average assets1'1 1.18%
1.02% 1.51% 1.69% 1.76% Operating Return on Average
Assets: <1( Operating net income $ 4,532 $ 4,196 $ 5,825 $ 5,919 $ 5,975
Average assets $ 2,250,258 $ 2,183,542 $ 2,120,218 $ 2,051,867
$ 2,026,791 Operating return on average assets ^ 0.80% 0.77% 1.11%
1.14% 1.17% Operating Return on Average Equity: Operating
net income $ 4,532 $ 4,196 $ 5,825 $ 5,919 $ 5,975 Average
equity $ 184,901 $ 184,238 $ 183,371 $ 177,556 $ 1S528S Operating return
on average equity 9.72% 9.13% 12.88% 1323% 12.79%
Operating Revenue:(1> Xet interest income X A M 4M f AMA p f 4 M
A A ♦VA A $ 14,022 2,161 (955) $ 14,173 $ 15,997 a 070 $
16,866 /1 TON $ 16,774 i 7<?q .\ on-interest income Less: Set gains
(losses) on sale of securities lotto Z,U/U (21) (1.9S9) 1,/ oy (558)
Operating revenue $ 17,138 $ 16,019 $ 18,088 $ 18,732
$ 19,121 Operating Efficiency Ratio: m Total non-interest
expense $ 10,461 $ 10,452 $ 10,176 $ 10,014 $ 10,132 Operating revenue
$ 17,138 $ 16,019 $ 18,088 $ 18,732 $ 19,121 Operating efficiency
ratio 61.04% 6525% 56.26% 53.46% 52.99% 1. The Company
believes these non-G AAP measurements are key indicators of
the ongoing earnings power of the Company 2. Annualized.
21
APPENDIX - NON-GAAP RECONCILIATION In thousands
(except ratios and share data) As of and for the three months ended
9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Tangible
Book Value per Common Share (at period-end): Total
stockholders' equity $ 182,884
$ 183,685 $ 183,858 $ 182,428 $ 177,417 Less: Intangible assets
_ _ _ _ _ Tangible stockholders' equity $ 182,884 $ 183,685 $ 183,858
$ 182,428 $ 177,417 Total shares issued and outstanding (at
period-end): Total common shares issued and outstanding
19,542,290 19,544,777 19,622,380 20,000,753 20,000,753 Tangible
book value per common share ~ $ 9.36 $ 9.40 $ 9.37 $ 9.12 $ 8.87 Operating
diluted net income per share of common stock: ^ Operating net income
$ 4,532 $ 4,196 $ 5,825 $ 5,919 $ 5,975 Weighted average
shares diluted 19,611,897 19,639,682 19,940,606 20,172,438 20,148,208
Operating diluted net income per share of common stock
$ 0.23 $ 0.21 $ 0.29 $ 0.29 $ 0.30 Tangible Common Equity/Tangible
Assets: Tangible stockholders' equity $ 182,884 $ 183,685 $
183,858 $ 182,428 $ 177,417 Tangible total assets 2,244,602 2,225,914
2,163,821 2,085,834 2,037,453 Tangible Common Equity/Ta
n
gib le total assets: 8.15% 8.25% 8.50% 8.75% 8.71% 1. The
Company believes these non-GAAP measurements are key indicators
of the ongoing earnings power of the Company. 2. Excludes
the dilutive effect, if any, of shares of common stock issuable
up on exercise of outstanding stock options. 3. $ince the Company
has no intangible assets, tangible total assets is the same amount
as total assets calculated under GAAP. 22
CONTACT INFORMATION LOU DE LA AGUILERA
Chairman, President & CEO (305) 715-5186 laguilera@uscentury.com
ROB ANDERSON EVP, Chief Financial Officer (305)
715-5393 rob.anderson@uscentury.com INVESTOR RELATIONS
InvestorRelations@uscentury.com 23