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UF

USCB FINANCIAL HOLDINGS, INC. (USCB)·Q4 2024 Earnings Summary

Executive Summary

  • EPS diluted was $0.34, up 143% YoY from $0.14, with net income of $6.9M; NIM rose to 3.16% and operating revenue reached $22.99M, marking continued margin expansion and revenue growth .
  • Non-recurring expenses (~$1.0M) reduced EPS by $0.04; adjusted efficiency ratio would have been ~51.41% vs reported 55.92% .
  • Board doubled the quarterly dividend to $0.10 per share, signaling confidence in earnings power and capital levels .
  • Consensus estimates from S&P Global were unavailable at the time of analysis; beat/miss vs Street cannot be assessed (S&P Global data access issue).

What Went Well and What Went Wrong

What Went Well

  • Margin expansion: NIM increased 13 bps QoQ to 3.16% and 51 bps YoY; CFO expects NIM to “hover around current levels near term” with potential expansion in 2025 on a normalized curve .
  • Deposit cost management: Quarterly average deposit cost fell to 2.48% from 2.66% in Q3 and 2.53% YoY, driven by repricing and walking away from rate-sensitive single-service clients .
  • Fee income strength: Non-interest income rose to $3.63M, supported by swap fees and $169K prepayment penalties; management built fees as a complementary earnings driver .

Management quotes:

  • CEO: “more than doubled…earnings this quarter to $0.34 per share. Our continued focus on reducing deposit costs has contributed to the net interest margin (NIM) expansion” .
  • CFO: “absent the nonrecurring expenses [EPS] would have been $0.38… efficiency ratio…51.41%” .

What Went Wrong

  • Expense uptick: Non-interest expense increased $1.4M QoQ due to non-routine items (restricted stock vesting, legal, forced-placed insurance, excise tax), pressuring reported efficiency .
  • Slight TBV/share retreat QoQ: Tangible book value per share dipped $0.09 QoQ to $10.81, driven by higher AOCI mark and share count .
  • Nonperforming loans higher YoY: NPLs rose to $2.7M (0.14% of loans) vs $468K (0.03%) YoY, though still low; ACL increased to $24.1M (1.22%) and net losses were zero .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Operating Revenue ($USD Thousands)$16,585 $20,508 $21,547 $22,985
Net Interest Income ($USD Thousands)$14,376 $17,311 $18,109 $19,358
Non-Interest Income ($USD Thousands)$1,326 $3,211 $3,438 $3,627
Diluted EPS ($USD)$0.14 $0.31 $0.35 $0.34
ROAA (%)0.48% 1.01% 1.11% 1.08%
ROAE (%)5.88% 12.63% 13.38% 12.73%
NIM (%)2.65% 2.94% 3.03% 3.16%
Efficiency Ratio (%)68.27% 56.33% 53.16% 55.92%

Segment and Portfolio Mix (EOP loans)

Loan Type ($USD Thousands)Q4 2023Q2 2024Q3 2024Q4 2024
Residential Real Estate$204,419 $256,807 $283,477 $297,979
Commercial Real Estate (Total)$1,047,593 $1,053,030 $1,095,112 $1,128,399
Commercial & Industrial$219,757 $248,525 $246,539 $258,311
Correspondent Banks$114,945 $112,510 $103,815 $82,438
Consumer & Other$191,930 $194,644 $198,604 $198,091

Key KPIs and Balance Sheet

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Total Assets ($USD Thousands)$2,339,093 $2,458,270 $2,503,954 $2,581,216
Loans HFI ($USD Thousands)$1,780,827 $1,869,249 $1,931,362 $1,972,848
Total Deposits ($USD Thousands)$1,937,139 $2,056,702 $2,126,617 $2,174,004
Total Equity ($USD Thousands)$191,968 $201,020 $213,916 $215,388
Tangible BV/Share ($)$9.81 $10.24 $10.90 $10.81
ACL / Loans (%)1.18% 1.19% 1.19% 1.22%
NPLs / Loans (%)0.03% 0.04% 0.14% 0.14%
Deposit Cost (%)2.53% 2.64% 2.66% 2.48%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025Not specifiedHigh single-digit to low double-digit growth expected New explicit range
NIM TrajectoryNear-term / 2025Not specifiedNIM to hover near current levels near term; potential expansion in 2025 with normalized yield curve Directional positive
Expense BaseQ1 2025Not specifiedQ1 expense base ~ $12M; expected to move up through 2025 New disclosure
Time Deposit Repricing2025Not specified~$180M maturing over next year; repriced lower aligned with Fed funds curve Operational update
DividendQ1 2025$0.05$0.10 per share declared Jan 21, 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Net Interest MarginNIM rose to 2.94% in Q2; 3.03% in Q3, citing asset mix and deposit cost management NIM 3.16%; expected to hold near term with potential expansion in 2025 Improving, stabilizing
Deposit Costs & MixOngoing efforts to reduce deposit costs; deposits growing YoY Average deposit cost fell to 2.48%; strategy to prune rate-sensitive deposits and focus on MM/CD terms Lowering costs
Fee Income (Swaps/SBA)Building diversified non-interest income Strong swaps in 2024; may trend down in 2025; plan to offset via wires/TM/SBA gains; aim to more than double SBA 7(a) activity Mix evolving
Asset QualityLow NPLs and stable ACL coverage ACL 1.22%; NPLs 0.14%; net losses zero; provision partly for yacht/consumer assets Stable/benign
Capital & DividendsTBV/share up; regular $0.05 dividend Dividend doubled to $0.10; AOCI more negative due to rate marks; TBV/share $10.81 Shareholder-friendly

Management Commentary

  • CEO: “Our continued focus on reducing deposit costs has contributed to…NIM expansion… The board approved to double the quarterly cash dividend to $0.10 per share” .
  • CFO: “Absent the nonrecurring expenses [EPS] would have been $0.38 per share… adjusted efficiency ratio would have been 51.41%… we expect loan growth to be in high single digits to low double digits… NIM will hover around current levels near term, with potential expansion in 2025” .
  • CCO: “ACL increased to $24 million… ratio…1.22%… NPLs remained at $2.7 million (0.14%)… net losses were 0 for the quarter and the year” .

Q&A Highlights

  • Loan pricing and competition: Yield on new originations dipped QoQ due to rates and mix (correspondent banking lines), but still ~89 bps above portfolio average; management prioritizes full relationships over price .
  • Deposits outlook: Deposits to grow in line with loans; challenge acknowledged; focus on relationship operating accounts and optimizing existing verticals (Private Client, MD Advantage, JurisT, association banking) .
  • Time deposit repricing: ~$180M expected to reprice lower over next year, aligned with Fed funds curve; potential benefit from rate cuts .
  • Fee income outlook: Swap fees likely to moderate in 2025; offsets via wires, TM fees, SBA gains; plan to more than double SBA 7(a) activity .
  • Reserve levels: ACL expected to grow modestly with loan growth; general pool ~1.19% viewed adequate given exemplary credit quality .

Estimates Context

  • S&P Global consensus estimates (EPS and revenue) for Q4 2024 were unavailable at the time of request due to data access limitations, so beat/miss vs Street cannot be assessed.
  • Reported diluted EPS was $0.34 and operating revenue was $22.99M for Q4 2024; if consensus becomes available, we would benchmark these figures to determine necessary estimate revisions .

Key Takeaways for Investors

  • Ongoing margin tailwinds: Deposit cost reductions and asset mix shifts continue to expand NIM; management sees potential for further NIM gains in 2025 on a normalized curve .
  • Earnings quality improving: Adjusted efficiency ratio ~51% (ex non-recurring) underscores positive operating leverage, despite one-off Q4 expenses .
  • Capital return catalyst: Dividend doubled to $0.10 signals confidence in forward earnings and supports a shareholder-friendly narrative .
  • Credit benign: NPLs remain low (0.14% of loans), net losses zero, ACL at 1.22%; reserve likely to scale with growth rather than deteriorating credit .
  • Fee diversification: While swap fees may normalize, wires/TM/SBA gains targeted to offset; SBA 7(a) activity planned to more than double, bolstering fee line .
  • Growth trajectory: High single-digit to low double-digit loan growth targeted; deposits to grow in line, supported by scalable verticals (attorneys, medical, associations, correspondent banking) .
  • Near-term trading: Dividend increase and margin stability are positive catalysts; watch Q1 expense run-rate (~$12M) and any moderation in fee income for impact on quarterly operating leverage .