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USCB FINANCIAL HOLDINGS, INC. (USCB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered another record quarter: diluted EPS $0.40, net income $8.1M, ROAA 1.22%, ROAE 14.29%, and NIM expanded to 3.28% .
  • Versus estimates: EPS beat by $0.02 (actual $0.40 vs consensus $0.38*), while revenue (SPGI definition: net interest income after provision + non-interest income) was slightly below ($23.37M actual vs $23.72M consensus*, ~1.5% miss). Management highlighted margin tailwinds from late-June loan production that should benefit Q3 .
  • Operating efficiency improved: efficiency ratio fell to 51.77% (lowest since 2021), with deposit costs down and average DDAs up; non-interest expense rose on incentives tied to stronger performance .
  • Credit quality remained solid: ACL 1.18% of loans; NPLs decreased sequentially to 0.06% of loans; a ~$0.7M consumer loan collateral sale (yacht/tender) was largely pre-reserved, minimizing P&L impact .
  • Potential stock catalysts: ongoing NIM expansion, low-cost international deposits (~$268M at 1.74% cost), investment-grade ratings (KBRA), and a recurring $0.10 dividend; Q3 should see full-quarter lift from $95M loans closed late in Q2 .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record profitability with improving core metrics: “another consecutive record quarter,” NIM 3.28% on healthy loan growth and disciplined deposit pricing (CEO) .
  • Deposit execution: average DDAs rose $17.1M QoQ (12.2% annualized) and interest-bearing liabilities costs fell 5 bps QoQ (CFO) .
  • Pipeline and margin outlook: $187M new loan production (weighted average coupon 7.12%, +89 bps vs portfolio) with $95M closed late June driving expected Q3 NII uplift (CFO) .
  • International correspondent deposits are low-cost and sticky; ~$268M at 1.74% cost, with growth potential aided by new debt ratings (CFO/CEO) .

What Went Wrong

  • Slight revenue miss vs consensus (SPGI definition): $23.37M actual vs $23.72M consensus*, despite improving margin—driven by timing of late Q2 loan closings and softer SBA gain-on-sale QoQ .
  • Non-interest expense rose $0.58M QoQ (to $12.63M) due to sales incentives and bonuses aligned with performance, though efficiency improved overall .
  • Provision for credit losses increased to $1.03M (vs $0.68M in Q1) with net charge-offs of $0.70M tied to a consumer loan collateral sale (pre-reserved), and NPL ratio 0.06% (up YoY from 0.04%) .

Note: *Values retrieved from S&P Global.

Financial Results

Core P&L and Profitability (company-reported)

MetricQ4 2024Q1 2025Q2 2025
Net Interest Income (pre-provision) ($M)$19.36 $19.12 $21.03
Provision for Credit Losses ($M)$1.03 $0.68 $1.03
Net Interest Income (post-provision) ($M)$18.33 $18.43 $20.00
Non-interest Income ($M)$3.63 $3.72 $3.37
Operating Revenue ($M)$22.99 $22.83 $24.40
Diluted EPS ($)$0.34 $0.38 $0.40
ROAA (%)1.08 1.19 1.22
ROAE (%)12.73 14.15 14.29
NIM (%)3.16 3.10 3.28
Efficiency Ratio (%)55.92 52.79 51.77

Estimates Comparison (SPGI definitions)

MetricActual Q2 2025Consensus Q2 2025Beat/Miss
Diluted EPS ($)$0.40 $0.38*Beat (+$0.02; ~5.3%)*
Revenue ($M) (NII after provision + non-interest)$23.37*$23.72*Miss (~1.5%)*

Values retrieved from S&P Global.

Loan Portfolio by Type (Period-End, $000s)

Loan TypeQ2 2024Q1 2025Q2 2025
Residential Real Estate$256,807 $301,164 $307,020
Commercial Real Estate$1,053,030 $1,150,129 $1,206,621
Commercial & Industrial$248,525 $256,326 $263,966
Correspondent Banks$112,510 $103,026 $110,155
Consumer & Other$194,644 $218,711 $218,426
Total Loans (incl. deferred fees/costs)$1,869,249 $2,036,212 $2,113,318

KPIs and Funding

KPIQ2 2024Q1 2025Q2 2025
Total Assets ($M)$2,458.27 $2,677.38 $2,719.47
Total Deposits ($M)$2,056.70 $2,309.57 $2,335.66
Non-interest Bearing Demand ($M)$579.24 $605.49 $584.90
Interest-bearing Deposits ($M)$1,477.46 $1,704.08 $1,750.77
Deposit Cost (%) (total deposits; annualized)2.64 2.49 2.46
Interest-bearing Liabilities Rate (%)3.76 3.37 3.32
ACL / Loans (%)1.19 1.22 1.18
NPLs / Loans (%)0.04 0.20 0.06
Tangible Book Value/Share ($)$10.24 $11.23 $11.53

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan Growth2H 2025“Low-double-digit” trajectory implied by sustained originations ($150–$180M/quarter) Pipeline solid; Q3 slower seasonally but still targeting $150–$180M originations/quarter; late Q2 loans to lift Q3 NII Maintained (qualitative)
Loan YieldsQ3 2025Stable to modest improvement (prior commentary) Expected “stable or slightly improve” as new loans price above portfolio average (7.12% WA coupon in Q2) Maintained
NIM2H 2025Liabilities-sensitive; margin benefits from potential Fed cuts Liability-sensitive; margin should improve with cuts; deposit cost reduction opportunities (large MM book) Maintained
Non-interest Income (SBA sales)Q3 2025Strong pipeline (Q1) Expect higher SBA gain-on-sale in Q3 (pipeline strong) Raised (qualitative)
Expense Base2H 2025Rising with growth; aligned incentives ~$12.6M base in Q2; may gradually increase with performance; efficiency ratio improving Raised modestly
DividendOngoing$0.10 declared Q1 2025 $0.10 declared July 21, payable Sept 5; board reviews quarterly Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Rate Sensitivity/NIMNIM expanded; preparing for lower-rate environment Liability-sensitive; margin should improve if Fed cuts; NIM up to 3.28% Improving margin; positioned for cuts
International DepositsCore funding franchise highlighted; DDAs 27% at 1Q25 (KBRA) ~$268M foreign bank deposits at 1.74% cost; growth aided by KBRA ratings Growing low-cost base
Loan Production/PipelineConsistent originations ≥$150M/quarter $187M originations; $95M late-June closes drive Q3 uplift Strong momentum
AFS Securities/AOCIAOCI (~$44.5M) depresses TBV; securities yield low AOCI ($41.8M; -$2.08/share TBV impact); options to reduce drag over time Monitoring; potential optimization
SBA Gain-on-SaleUp in Q4; strong pipelines Slightly down QoQ; expected higher in Q3 Near-term recovery expected
Capital/DividendsDividend increased to $0.10 in Jan 2025 $0.10 declared; regulatory ratios strong (TRBC 13.73%) Stable/positive

Management Commentary

  • CEO: “We are proud to report another consecutive record quarter… This quarter, NIM reached 3.28%, driven by healthy loan growth and disciplined deposit pricing.”
  • CFO: “For the quarter, we closed $187 million in new loan production, with $95 million… closing in the last couple of weeks of June… will more fully materialize in Q3.”
  • CFO: “Our balance sheet… liability-sensitive for year one… if rate cuts occur… reprice funding sources more quickly than assets, which should provide a boost to our net interest margin.”
  • CCO: “The allowance for credit losses increased to $24.9 million… the $700,000 loss on the sale of a yacht and a tender vessel… had been reserved in previous quarters.”
  • CFO: “The AOCI was a negative $41.8 million… resulting in a -$2.08 impact on our tangible book value per share metric… we are monitoring options to improve forward earnings and profitability.”

Q&A Highlights

  • International deposits strategy: ~$268M from ~30 foreign banks; priced at ~1.74% cost, below overall deposit costs; goal to upgrade B→A banks and add 3–5 new banks by 2026 .
  • Margin outlook with rate cuts: liability-sensitive book; large money market base (~$1.2B) gives capacity to lower funding costs; margin should improve if Fed cuts .
  • Loan pipeline and growth: weekly lender pipeline meetings; Q3 typically slower seasonally, but still expecting $150–$180M quarterly originations; potential to reach low double-digit growth .
  • SBA gain-on-sale: down QoQ, but management expects higher Q3 numbers given strong pipeline .
  • M&A/talent: opportunistic hiring amid market dislocations; management maintains relationships with peer CEOs; shelf registration and KBRA ratings enhance strategic optionality .

Estimates Context

  • EPS beat: $0.40 actual vs $0.38 consensus* (+$0.02; ~5.3%)*, aided by NIM expansion and operating leverage .
  • Revenue (SPGI definition) slight miss: $23.37M actual vs $23.72M consensus* (~1.5% miss)*; management expects Q3 uplift from late-June originations .
  • Forward (next quarter): Q3 2025 EPS consensus 0.42*, revenue consensus $25.03M*; coverage remains limited (# of estimates: EPS 5; revenue 4)*.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin expansion remains the central driver: NIM at 3.28% with liability-sensitive positioning and deposit cost control offers upside in a rate-cut scenario .
  • Near-term earnings tailwind: $95M of Q2 loans closed late should contribute a fuller quarter of interest income in Q3; SBA gain-on-sale expected to improve .
  • Deposit franchise strengthening: disciplined pricing, rising DDAs, and low-cost international deposits (~1.74% cost) support spread and NIM resilience .
  • Credit quality buffered: ACL at 1.18%; recent NCOs tied to pre-reserved consumer collateral sale; NPLs well covered—supports stable risk costs .
  • Capital and TBV trajectory: strong regulatory ratios, ongoing dividend ($0.10), and plan to address AFS/AOCI drag over time could enhance TBV and ROE profile .
  • Watch narrative drivers: rate path (NIM sensitivity), deposit mix/cost, SBA pipeline, and securities/AOCI optimization—key to estimate revisions and stock multiple rerating .
  • Tactical setup: modest revenue miss vs consensus offset by EPS beat and efficiency gains; Q3 setup looks constructive with expected NII lift and fee recovery .