1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM
__________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
__________________________
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
,
,
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (
)
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
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 January 25, 2024, USCB Financial Holdings, Inc. (the “Company”), issued a press release announcing its financial results
for the fourth quarter ended December 31, 2023. 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 January 26, 2024, the Company will hold an earnings conference call to discuss
its financial performance for the quarter ended December 31, 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
99.2
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: January 25, 2024
1
Exhibit 99.1
EARNINGS RELEASE
USCB Financial Holdings, Inc. Reports Diluted EPS of $0.14 for Q4 2023
MIAMI, FL – January 25, 2024 – USCB Financial Holdings, Inc. (the “Company”) (NASDAQ: USCB)
, the holding company for U.S. Century Bank (the “Bank”),
reported net income of $2.7 million or $0.14 per diluted share for the three months ended December 31, 2023, compared to net income of $4.4 million or $0.22 per diluted
share, for the same period in 2022.
“I am pleased to announce the results of a robust quarter at US Century Bank, achieving loan production of $186 million with $150 million in loan fundings having a
weighted average coupon of 8% on new loans.” said Luis de la Aguilera, Chairman, President and CEO
“Despite facing one of the most aggressive Federal Reserve tightening periods in history, we've observed a steady improvement in our operating environment. Our Net
Interest Margin (NIM) improved 5 bps in comparison to the previous quarter. Additionally, our accumulated comprehensive loss also showed improvement in the fourth
quarter decreasing by $7.0 million to $44.3 million, which has increased our stockholders equity and tangible book value. As part of our commitment to address NIM
compression, we executed a $10 million loss trade transaction selling lower-yielding securities and reinvesting the funds in higher-yielding investments. Acknowledging
the industry-wide impact of an inverted yield curve on earnings, our focus in 2024 is geared towards continued higher-yield loan production, deposit pricing discipline,
and leveraging our proven business lines as lead deposit aggregators.” said de la Aguilera.
Unless otherwise stated, all percentage comparisons in the bullet points below are calculated at or for the quarter ended December 31, 2023 compared to at or for the
quarter ended December 31, 2022 and annualized where appropriate.
Profitability
•
Annualized return on average assets for the quarter ended December 31, 2023 was 0.48% compared to 0.86% for the fourth quarter of 2022. Operating pre-tax pre-
provision profit (PTPP) return on average assets (non-GAAP financial measure) for the quarter ended December 31, 2023 was 1.03% compared to 1.69% for the
fourth quarter of 2022.
•
Annualized return on average stockholders’ equity for the quarter ended December 31, 2023 was 5.88% compared to 9.91% for the fourth quarter of 2022.
•
The efficiency ratio for the quarter ended December 31, 2023 was 68.27% compared to 59.81% for the fourth quarter of 2022. Operating efficiency ratio (non-
GAAP financial measure) for the quarter ended December 31, 2023 was 64.63% compared to 53.46% for the fourth quarter of 2022.
•
Net interest margin for the quarter ended December 31, 2023 was 2.65% compared to 3.45% for the fourth quarter of 2022.
•
Net interest income before provision for credit losses was $14.4 million for the quarter ended December 31, 2023, a decrease of $2.5 million or 14.8% compared to
the fourth quarter of 2022.
Balance Sheet
•
Total assets were $2.3 billion at December 31, 2023, representing an increase of $253.3 million or 12.1% from December 31, 2022.
•
Total loans were $1.8 billion at December 31, 2023, representing an increase of $273.5 million or 18.1% from December 31, 2022.
•
Total deposits were $1.9 billion at December 31, 2023, representing an increase of $107.9 million or 5.9% from December 31, 2022.
•
Total stockholders’ equity was $192.0 million at December 31, 2023, representing an increase of $9.5 million or 5.2% from December 31, 2022. Total stockholders’
equity includes accumulated comprehensive loss of $44.3 million at December 31, 2023 compared to accumulated comprehensive loss of $44.8 million at
December 31, 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 $3.6 million to $21.1 million at December 31, 2023 from $17.5 million at December 31, 2022.
•
The ACL represented 1.18% of total loans at December 31, 2023 and 1.16% at December 31, 2022.
•
Non-performing loans to total loans was 0.03% at December 31, 2023 compared to 0.00% at December 31, 2022.
Non-interest Income and Non-interest Expense
•
Non-interest income was $1.3 million for the three months ended December 31, 2023, an increase of $1.4 million compared to negative $0.1 million for the same
period in 2022.
•
Non-interest expense was $10.7 million for the three months ended December 31, 2023, an increase of $705 thousand or 7.0% compared to $10.0 million for the
same period in 2022.
2
Capital
•
During the fourth quarter the Company repurchased 92,317 shares of the Company’s common stock at a weighted average price per share of $10.45. The aggregate
purchase price for the repurchase was approximately $968 thousand, including transaction costs. The repurchase was made through open market transaction pursuant
to the Company’s publicly announced stock repurchase program. As of December 31, 2023, 80,080 shares remained authorized for repurchase under the program.
•
During 2023 the Company repurchased 669,920 shares of the Company’s common stock at a weighted average price per share of $11.28. The aggregate purchase
price for repurchases was approximately $7.6 million, including transaction costs. The repurchases were made through open market transactions pursuant to the
Company’s publicly announced stock repurchase program.
•
As of December 31, 2023,
total risk-based capital ratios for the Company and the Bank were 12.78% and 12.65%, respectively.
•
Tangible book value per common share (non-GAAP financial measure) at December 31, 2023 was $9.81, representing an increase of $0.69 from December 31,
2022. Tangible book value per common share at December 31, 2023 was negatively affected by $2.26 due to an accumulated comprehensive loss of $44.3 million.
At December 31, 2022, tangible book value per common share of $9.12 was negatively affected by $2.24 due to $44.8 million in accumulated comprehensive loss.
Conference Call and Webcast
The Company will host a conference call on Friday, January 26, 2024, at 11:00 a.m. Eastern Time to discuss the Company’s unaudited financial results for the quarter
ended December 31, 2023. To access the conference call, dial (833) 816-1416 (U.S. toll-free) and ask to join the USCB Financial Holdings Call.
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 at 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,” ”could”, “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 the 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 net 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 cybersecurity-
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 has filed or will file with the SEC.
3
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 financial 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.
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 December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Interest income:
Loans, including fees
$
24,803
$
17,836
$
87,884
$
60,825
Investment securities
2,511
2,306
10,012
9,346
Interest-bearing deposits in financial institutions
662
455
3,121
929
Total interest income
27,976
20,597
101,017
71,100
Interest expense:
Interest-bearing checking
327
34
901
86
Savings and money market accounts
9,126
2,866
29,658
5,173
Time deposits
2,733
616
8,500
1,509
FHLB advances and other borrowings
1,414
215
3,390
671
Total interest expense
13,600
3,731
42,449
7,439
Net interest income before provision for credit losses
14,376
16,866
58,568
63,661
Provision for credit losses
1,475
880
2,367
2,495
Net interest income after provision for credit losses
12,901
15,986
56,201
61,166
Non-interest income:
Service fees
1,348
1,093
5,055
4,010
Gain (loss) on sale of securities available for sale, net
(883)
(1,989)
(1,859)
(2,529)
Gain on sale of loans held for sale, net
105
205
801
891
Loan settlement
-
-
-
161
Other non-interest income
756
568
3,406
2,695
Total non-interest income
1,326
(123)
7,403
5,228
Non-interest expense:
Salaries and employee benefits
6,104
6,080
24,429
23,943
Occupancy
1,262
1,256
5,230
5,058
Regulatory assessments and fees
412
222
1,453
930
Consulting and legal fees
642
371
1,899
1,890
Network and information technology services
552
483
2,016
1,806
Other operating expense
1,747
1,602
6,781
5,682
Total non-interest expense
10,719
10,014
41,808
39,309
Net income before income tax expense
3,508
5,849
21,796
27,085
Income tax expense
787
1,415
5,251
6,944
Net income
$
2,721
$
4,434
$
16,545
$
20,141
Per share information:
Net income per common share, basic
$
0.14
$
0.22
$
0.84
$
1.01
Net income per common share, diluted
$
0.14
$
0.22
$
0.84
$
1.00
Weighted average shares outstanding:
Common shares, basic
19,503,043
20,000,753
19,621,698
19,999,323
Common shares, diluted
19,573,350
20,172,438
19,687,634
20,176,838
5
USCB FINANCIAL HOLDINGS, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in thousands, except per share data)
As of or For the Three Months Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Income statement data:
Net interest income
$
14,376
$
14,022
$
14,173
$
15,997
$
16,866
Provision for credit losses
1,475
653
38
201
880
Net interest income after provision for credit losses
12,901
13,369
14,135
15,796
15,986
Service fees
1,348
1,329
1,173
1,205
1,093
Gain (loss) on sale of securities available for sale, net
(883)
(955)
-
(21)
(1,989)
Gain on sale of loans held for sale, net
105
255
94
347
205
Other income
756
1,532
579
539
568
Total non-interest income
1,326
2,161
1,846
2,070
(123)
Salaries and employee benefits
6,104
6,066
5,882
6,377
6,080
Occupancy
1,262
1,350
1,319
1,299
1,256
Regulatory assessments and fees
412
365
452
224
222
Consulting and legal fees
642
513
386
358
371
Network and information technology services
552
481
505
478
483
Other operating expense
1,747
1,686
1,908
1,440
1,602
Total non-interest expense
10,719
10,461
10,452
10,176
10,014
Net income before income tax expense
3,508
5,069
5,529
7,690
5,849
Income tax expense
787
1,250
1,333
1,881
1,415
Net income
$
2,721
$
3,819
$
4,196
$
5,809
$
4,434
Per share information:
Net income per common share, basic
$
0.14
$
0.20
$
0.21
$
0.29
$
0.22
Net income per common share, diluted
$
0.14
$
0.19
$
0.21
$
0.29
$
0.22
Balance sheet data (at period-end):
Cash and cash equivalents
$
41,062
$
33,435
$
87,280
$
63,251
$
54,168
Securities available-for-sale
$
229,329
$
218,609
$
218,442
$
229,409
$
230,140
Securities held-to-maturity
$
174,974
$
197,311
$
220,956
$
186,428
$
188,699
Total securities
$
404,303
$
415,920
$
439,398
$
415,837
$
418,839
Loans held for investment
(1)
$
1,780,827
$
1,676,520
$
1,595,959
$
1,580,394
$
1,507,338
Allowance for credit losses
$
(21,084)
$
(19,493)
$
(18,815)
$
(18,887)
$
(17,487)
Total assets
$
2,339,093
$
2,244,602
$
2,225,914
$
2,163,821
$
2,085,834
Non-interest-bearing deposits
$
552,762
$
573,546
$
572,360
$
633,606
$
629,776
Interest-bearing deposits
$
1,384,377
$
1,347,376
$
1,348,941
$
1,196,856
$
1,199,505
Total deposits
$
1,937,139
$
1,920,922
$
1,921,301
$
1,830,462
$
1,829,281
FHLB advances and other borrowings
$
183,000
$
102,000
$
87,000
$
120,000
$
46,000
Total liabilities
$
2,147,125
$
2,061,718
$
2,042,229
$
1,979,963
$
1,903,406
Total stockholders' equity
$
191,968
$
182,884
$
183,685
$
183,858
$
182,428
Capital ratios:
(2)
Leverage ratio
9.28%
9.26%
9.32%
9.36%
9.61%
Common equity tier 1 capital
11.62%
11.97%
12.27%
12.04%
12.53%
Tier 1 risk-based capital
11.62%
11.97%
12.27%
12.04%
12.53%
Total risk-based capital
12.78%
13.10%
13.42%
13.20%
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
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Average balance sheet data:
Cash and cash equivalents
$
57,069
$
90,742
$
94,313
$
50,822
$
61,892
Securities available-for-sale
$
215,649
$
222,134
$
224,913
$
230,336
$
242,144
Securities held-to-maturity
$
181,151
$
218,694
$
192,628
$
187,826
$
184,459
Total securities
$
396,800
$
440,828
$
417,541
$
418,162
$
426,603
Loans held for investment
(1)
$
1,698,611
$
1,610,864
$
1,569,266
$
1,547,393
$
1,456,780
Total assets
$
2,268,811
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
Interest-bearing deposits
$
1,336,470
$
1,353,516
$
1,270,657
$
1,179,878
$
1,150,049
Non-interest-bearing deposits
$
577,133
$
587,917
$
601,778
$
664,369
$
653,820
Total deposits
$
1,913,603
$
1,941,433
$
1,872,435
$
1,844,247
$
1,803,869
FHLB advances and other borrowings
$
139,000
$
85,326
$
93,075
$
61,600
$
37,500
Total liabilities
$
2,085,182
$
2,065,357
$
1,999,304
$
1,936,847
$
1,874,311
Total stockholders' equity
$
183,629
$
184,901
$
184,238
$
183,371
$
177,556
Performance ratios:
Return on average assets
(2)
0.48%
0.67%
0.77%
1.11%
0.86%
Return on average equity
(2)
5.88%
8.19%
9.13%
12.85%
9.91%
Net interest margin
(2)
2.65%
2.60%
2.73%
3.22%
3.45%
Non-interest income (loss) to average assets
(2)
0.23%
0.38%
0.34%
0.40%
(0.02)%
Efficiency ratio
(3)
68.27%
64.64%
65.25%
56.32%
59.81%
Loans by type (at period end):
(4)
Residential real estate
$
204,419
$
188,880
$
183,093
$
184,427
$
185,636
Commercial real estate
$
1,047,593
$
1,005,280
$
989,401
$
987,757
$
970,410
Commercial and industrial
$
219,757
$
212,975
$
169,401
$
160,947
$
126,984
Foreign banks
$
114,945
$
94,640
$
85,409
$
97,405
$
93,769
Consumer and other
$
191,930
$
173,096
$
167,845
$
149,410
$
130,429
Asset quality data:
Allowance for credit losses to total loans
1.18%
1.16%
1.18%
1.20%
1.16%
Allowance for credit losses to non-performing loans
4,505%
4,070%
3,871%
3,886%
- %
Total non-performing loans
(5)
$
468
$
479
$
486
$
486
$
-
Non-performing loans to total loans
0.03%
0.03%
0.03%
0.03%
- %
Non-performing assets to total assets
(5)
0.02%
0.02%
0.02%
0.02%
- %
Net charge-offs (recoveries of) to average loans
(2)
(0.00)%
(0.00)%
0.01%
(0.01)%
(0.00)%
Net charge-offs (recovery) of credit losses
$
(3)
$
(5)
$
29
$
(49)
$
(2)
Interest rates and yields:
(2)
Loans
5.79%
5.55%
5.33%
5.17%
4.86%
Investment securities
2.46%
2.52%
2.26%
2.20%
2.13%
Total interest-earning assets
5.16%
4.89%
4.68%
4.51%
4.21%
Deposits
2.53%
2.39%
1.99%
1.29%
0.77%
FHLB advances and other borrowings
4.04%
3.19%
3.42%
3.27%
2.27%
Total interest-bearing liabilities
3.66%
3.41%
2.97%
2.08%
1.25%
Other information:
Full-time equivalent employees
196
194
198
196
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 and percentages 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 December 31,
2023
2022
Average
Balance
Interest
Yield/Rate
(1)
Average
Balance
Interest
Yield/Rate
(1)
Assets
Interest-earning assets:
Loans
(2)
$
1,698,611
$
24,803
5.79%
$
1,456,780
$
17,836
4.86%
Investment securities
(3)
404,850
2,511
2.46%
429,020
2,306
2.13%
Other interest-earnings assets
49,583
662
5.30%
53,717
455
3.36%
Total interest-earning assets
2,153,044
27,976
5.16%
1,939,517
20,597
4.21%
Non-interest-earning assets
115,767
112,350
Total assets
$
2,268,811
$
2,051,867
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing checking
$
49,675
327
2.61%
$
61,976
34
0.22%
Saving and money market deposits
1,004,805
9,126
3.60%
871,269
2,866
1.31%
Time deposits
281,990
2,733
3.85%
216,804
616
1.13%
Total interest-bearing deposits
1,336,470
12,186
3.62%
1,150,049
3,516
1.21%
FHLB advances and other borrowings
139,000
1,414
4.04%
37,500
215
2.27%
Total interest-bearing liabilities
1,475,470
13,600
3.66%
1,187,549
3,731
1.25%
Non-interest-bearing demand deposits
577,133
653,820
Other non-interest-bearing liabilities
32,579
32,942
Total liabilities
2,085,182
1,874,311
Stockholders' equity
183,629
177,556
Total liabilities and stockholders' equity
$
2,268,811
$
2,051,867
Net interest income
$
14,376
$
16,866
Net interest spread
(4)
1.50%
2.96%
Net interest margin
(5)
2.65%
3.45%
(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
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
2,721
$
3,819
$
4,196
$
5,809
$
4,434
Plus: Provision for income taxes
787
1,250
1,333
1,881
1,415
Plus: Provision for credit losses
1,475
653
38
201
880
PTPP income
$
4,983
$
5,722
$
5,567
$
7,891
$
6,729
PTPP return on average assets:
(1)
PTPP income
$
4,983
$
5,722
$
5,567
$
7,891
$
6,729
Average assets
$
2,268,811
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
PTPP return on average assets
(2)
0.87%
1.01%
1.02%
1.51%
1.30%
Operating net income:
(1)
Net income
$
2,721
$
3,819
$
4,196
$
5,809
$
4,434
Less: Net gains (losses) on sale of securities
(883)
(955)
-
(21)
(1,989)
Less: Tax effect on sale of securities
224
242
-
5
504
Operating net income
$
3,380
$
4,532
$
4,196
$
5,825
$
5,919
Operating PTPP income:
(1)
PTPP income
$
4,983
$
5,722
$
5,567
$
7,891
$
6,729
Less: Net gains (losses) on sale of securities
(883)
(955)
-
(21)
(1,989)
Operating PTPP income
$
5,866
$
6,677
$
5,567
$
7,912
$
8,718
Operating PTPP return on average assets:
(1)
Operating PTPP income
$
5,866
$
6,677
$
5,567
$
7,912
$
8,718
Average assets
$
2,268,811
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
Operating PTPP return on average assets
(2)
1.03%
1.18%
1.02%
1.51%
1.69%
Operating return on average assets:
(1)
Operating net income
$
3,380
$
4,532
$
4,196
$
5,825
$
5,919
Average assets
$
2,268,811
$
2,250,258
$
2,183,542
$
2,120,218
$
2,051,867
Operating return on average assets
(2)
0.59%
0.80%
0.77%
1.11%
1.14%
Operating return on average equity:
(1)
Operating net income
$
3,380
$
4,532
$
4,196
$
5,825
$
5,919
Average equity
$
183,629
$
184,901
$
184,238
$
183,371
$
177,556
Operating return on average equity
(2)
7.30%
9.72%
9.13%
12.88%
13.23%
Operating Revenue:
(1)
$
14,376
$
14,022
$
14,173
$
15,997
$
16,866
1,326
2,161
1,846
2,070
(123)
(883)
(955)
-
(21)
(1,989)
$
16,585
$
17,138
$
16,019
$
18,088
$
18,732
Operating Efficiency Ratio:
(1)
$
10,719
$
10,461
$
10,452
$
10,176
$
10,014
$
16,585
$
17,138
$
16,019
$
18,088
$
18,732
64.63%
61.04%
65.25%
56.26%
53.46%
(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
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity
$
191,968
$
182,884
$
183,685
$
183,858
$
182,428
Less: Intangible assets
(2)
-
-
-
-
-
Tangible stockholders' equity
(2)
$
191,968
$
182,884
$
183,685
$
183,858
$
182,428
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
19,575,435
19,542,290
19,544,777
19,622,380
20,000,753
Tangible book value per common share
(2) (3)
$
9.81
$
9.36
$
9.40
$
9.37
$
9.12
Operating diluted net income per common share:
(1)
Operating net income
$
3,380
$
4,532
$
4,196
$
5,825
$
5,919
Total weighted average diluted shares of common stock
19,573,350
19,611,897
19,639,682
19,940,606
20,172,438
Operating diluted net income per common share:
$
0.17
$
0.23
0.21
0.29
0.29
Tangible Common Equity/Tangible Assets
(1)
$
191,968
$
182,884
$
183,685
$
183,858
$
182,428
(2)
$
2,339,093
2,244,602
2,225,914
2,163,821
2,085,834
Tangible Common Equity/Tangible Assets
(2)
8.21%
8.15%
8.25%
8.50%
8.75%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Since the Company has no intangible assets, tangible stockholders' equity, tangible book value per share and tangible total assets are the same amounts as
stockholders' equity, book value per share and total assets calculated under GAAP.
(3) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.
Exhibit 99.2
EARNINGS PRESENTATION FOURTH QUARTER 2023 NASDAQ: USCB USCB Financial Holdings US CENTURY BANK
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,” “could,” “ 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 the 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 net 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 cybersecurity -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 financial 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 alternati ve 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.
Q4 2023 HIGHLIGHTS GROWTH Average deposits increased by $109.7 million or 6.1% compared to the fourth quarter 2022. Average loans increased $241.8 million or 16.6% compared to the fourth quarter 2022. Liquidity sources on December 31, 2023, totaled $620 million in on-balance sheet and off-balance sheet sources. Tangible Book Value per Share (1) on December 31, 2023, of $9.81 includes AOCI impact of ($2.26) increased from $9.36 in prior quarter end which included an AOCI impact of ($2.62). PROFITABILITY Net income was $2.7 million or $0.14 per diluted share and includes a pre-tax securities loss sale of $883 thousand. Net interest income before provision and NIM increased in the quarter compared to third quarter 2023. ROAA was 0.48% compared to 0.86% for the fourth quarter 2022. Consulting and legal fees increased $129 thousand due to a one -time, nonrecurring legal expense associated with the legacy shareholder lawsuit which was dismissed with prejudice. CAPITAL/ CREDIT During the quarter, the Company repurchased 92,317 shares of common stock at a weighted average price per share of $10.45. As of December 31, 2023, 80,080 shares remained authorized for repurchase under the Company’s publicly announced stock repurchase program At December 31, 2023, one C&I loan classified as nonaccrual for a total of $468 thousand. ACL coverage ratio was 1.18% at December 31, 2023, compared to 1.16% at September 30, 2023. Effective January 1, 2023, the Company adopted the CECL methodology for estimating credit losses.
HISTORICAL FINANCIALS EOP for Balance Sheet amounts Loans In millions2016 $735 2017 2018 2019 2020 2021 2022 2023 $1,781 Deposits In millions 2016 $782 2017 2018 2019 2020 2021 2023 $1,937 Total stockholders' equity In millions 2016$86 2017 2018 2019 2020 2021 2022 2023 $192 Allowance for credit losses to non-performing loans 2016 1.17% 2017 2018 2019 2020 2021 2022 2023 1.18% Net charge-offs (recoveries) of loan losses 2016 ($1,019) 2017 2018 2019 2020 2021 2022 2023 ($28) Non-performing assets to total assets 2016 1.58% 2017 2018 2019 2020 2021 2022 2023 0.02% Net Interest Income In millions 2016 $30 2017 2018 2019 2020 2021 2022 2023 $59 Efficiency ratio 2016 94.15% 2017 2018 2019 2020 2021 2022 2023 68.27% PTPP ROAA (2) 2016 0.24% 2017 2018 2019 2020 2021 2022 2023 (1) Loan amounts include deferred fees/costs.(2) Non-GAAP financial measure.
FINANCIAL RESULTS In thousands (except per share data) Q4 2023 Q3 2023 Q4 2022 Total Securities $404,303 $415,920 $418,839 Total Loans (1) $1,780,827 $1,676,520 $1,507,338 Total Assets $2,339,093 $2,244,602 $2,085,834 Total Deposits $1,937,139 $1,920,922 $1,829,281 Total Equity (2) $191,968 $182,844 $182,428 Net Interest Income $14,376 $14,022 $16,866 Non-Interest Income $1,326 $2,161 ($123) Total Revenue $15,702 $16,183 $16,743 Provision for Credit Losses $1,475 $653 $880 Non-Interest Expense $10,719 $10,461 $10,014 Net Income $2,721 $3,819 $4,434 Diluted Earning Per Share (EPS) $0.14 $0.19 $0.22 Operating Diluted EPS (3) $0.17 $0.23 $0.29 Weighted Average Diluted Shares 19,573,350 19,611,897 20,172,438 Balance Sheet (EOP) Income Statement (1) Loan amounts include deferred fees/costs.(2) Total Equity includes accumulated comprehensive loss of $44.3 million for Q4 2023, $51.2 million for Q3 2023, and $44.8 million for Q4 2022.(3) Non-GAAP financial measure.
KEY PERFORMANCE INDICATORS Q4 2023 Q3 2023 Q4 2022 In thousands (except for TBV/share) Total Assets (EOP) $2,339,093 $2,244,602 $2,085,834 Total Loans (EOP) $1,780,827 $1,676,520 $1,507,338 Total Deposits (EOP) $1,937,139 $1,920,922 $1,829,281 Tangible Book Value/Share (1)(4) $9.81 $9.36 $9.12 Return On Average Assets (ROAA) (3) 0.48% 0.67% 0.86% Return On Average Equity (ROAE) (3) 5.88% 8.19% 9.91% Net Interest Margin (3) 2.65% 2.60% 3.45% Efficiency Ratio 68.27% 64.64% 59.81% Non-Interest Expense/Avg Assets (3) 1.87% 1.84% 1.94% Tangible Common Equity/Tangible Assets (1) 8.21% 8.15% 8.75% Total Risk-Based Capital (2) 12.78% 13.10% 13.65% NCO/Avg Loans (3) 0.00% 0.00% (0.00%) NPA/Assets 0.02% 0.02% 0.00% Allowance Credit Losses/Loans 1.18% 1.16% 1.16% GROWTH PROFITABILITY CAPITAL/
DEPOSIT PORTFOLIO in this slide the Deposits AVG totals must be updated manually Same goes for the red bps math Deposits AVG In millions $1,804 $217 $62$654Q42022 $1,844 $225 $897 $58 $664 Q12023 $1,872 $277 $940 $53 $602 Q22023 $1,941 $290 $52 $588 Q3 2023 $1,914 $282 $1,005 $50 $577 Q42023 Non-interest-bearing deposits Interest-bearing checking deposits Moneymarket adnd savings Time deposits Commentary Average deposits decreased $27.8 million or 5.69% annualized compared to the prior quarter and increased $109.7 million or 6.1% compared to the fourth quarter 2022.Deposit composition mix shifted towards interest-bearing deposits. Average DDA balances comprised 30.1% of total deposits as of December 31, 2023. Deposit beta of 44% since Q4 2021.Deposit cost increasing but at a slower pace. Deposit Cost + 525 bps Q4’23 vs Q4’210.21%0.25% 4.50% 5.00% 5.25% 5.50% 5.50% Q42021 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Deposit Cost Fed Funds Rate (upper bound)
DEPOSIT DIST EOP for Balance Sheet amounts RIBUTION Deposits Composition Personal Business Brokered deposits Public Funds 3% 14%33%50% Commentary Our deposit base reflects our business model: a commercial bank. The total amount of uninsured deposits was 55% at quarter end.As of December 31, 2023, the deposit balance of ICS/CDARS was $107.3 million, a decrease of $9.2 million from end of third quarter 2023. Deposits by Customer Segment In thousands for balance sheet amounts Uninsured Deposits to Total Deposits in millions59%$750$1,079Q4202256%$802$1,028 Q12023 49% $970 $951 Q22023 49% $985$936 Q3 2023 55%$871 $1,066Q4 2023 uninsured deposits insured deposits uninsured deposits Deposit Type Total Balance % of Total (#) Accounts Average Balance per Account Business $970,644 50 7,243 134 Personal $648,095 33% 12,715 51 Public Funds $268,400 14% 47 5,711 Brokered CDs $50,000 3% 2 25,000 Grand Total $ 1,937,139 100% 20,007 $97
Deposits Trend (EOP) In millions $88 $30 $10 $48 12/31/2018 $229 $62 $38 $129 12/31/2019 $312 $97 $77 $138 12/31/2020 $352 $1 30$68$154 12/31/2021 $446 $172 $97 $177 12/31/2022$492 $16 $164 $112 $200 12/31/2023Global HOA JA MD advantage Commentary $404 million in deposit growth compared to December 31, 2018.Growth by vertical from 2018 to 2023: JA/PCG: $134 million.HOA: $102 million.Correspondent Banking & International Banking: $152 million.MD Advantage: $16 million.
LIQUIDITYEOP for Balance Sheet amountsTotal Liquidity30%28%38%33%27% 20% 19% 14% 10% 10% Dec-22 Mar-23 Jun-23 Sep-23 Dec-23On Balance Sheet Liquid Assets Total Liquidity Liquid Assets: On-Balance Sheet Liquidity / Total Assets Total Liquidity: Total Liquidity / Total AssetsSources of Liquidity (in millions) 12/31/2023On Balance Sheet LiquidityCash$7Due from banks$30Investment securities unpledged$188Total on balance sheet liquidity (Liquid Assets) $225Off Balance Sheet LiquidityFHLB excess capacity$124Bank Term Funding Program (BTFP) $132Federal Reserve Discount Window$34Fed Fund Lines$105Total off balance sheet liquidity$395Total Liquidity$620Liquidity calculation excludes vault cash reservesCommentaryWe 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-deposit ratio increased due to additional loan production during the quarter. We are enrolled in BTFP but did not draw any funds as of December 31, 2023. However, in early January, we drew down $80 million and paid off a similar amount of FHLB borrowings to take advantage of the less expensive funding source (70bps on $80 million). Loan-to-Deposit Ratio82.4% Dec-22 86.3% Mar-23 83.1% Jun-23 87.3% Sep-23 91.9% Dec-23
LOAN PORTFOLIOTotal Loans (AVG) In millions $1,457 $1$1,456 Q4 2022 $1,547 $1 $1,546 $1,569 $0$1,569 Q2 2023 $1,611 $0$1,611 Q3 2023 $1,699 $0$1,699 Q4 2023Loans (Excl PPP) PPP LoansLoan Yields4.86% 0.04% 4.82% 5.17%0.03%5.14%5.33%0.02%5.31%5.55%0.02%5.53%5.79%0.00%5.79%Q42022 Q12023 Q22023 Q42023Loan coupon Loan feesCommentaryAverage loans increased $87.7 million or 21.6% annualized compared to prior quarter and $241.8 million or 16.6% compared to the fourth quarter 2022.Loan coupon increased 26 bps compared to prior quarter and 97 bps compared to the fourth quarter 2022. Loan fees for the fourth quarter 2023 decreased due to realization of premium on purchased loans.While our average loan portfolio for the fourth quarter of 2023 was $1.7 billion, our EOP loan balance was $1.8 billion. + 97 bpsQ4’23 vs Q4’22
LOAN PRODUCTIONNet Loan Production TrendIn millions$129$545.68%$94$22$67$516.66%7.20%$67$517.20%8.00%$135$55$150$46 Q42022Q12023Q22023Q32023Q42023Loan Production/Line changes Loan Amortization/payoffs New loansaverage couponLoan Composition Trend(1) In millions$94828%63%9%Jun-20$1,77912%62%26% Dec-23Residential real estate Commercial real estate real Estate Loans Commercial and Industrial ,Foreign banks and consumer and other (1) Excludes unearned fees and PPP Loans. EOP. Commentary$446 million in new loan production in 2023 at higher rates.Weighted average coupon on new loans was 8.00% for fourth quarter 2023, 221 bps above portfolio average.Loan composition shift from real estate loans to non-CRE loans is steadily increasing, further diversifying our loan portfolio.
NET INTEREST MARGINNet Interest Income/Margin (1)in thousands(except ratios)3.45%$16,866 Q42022 3.22%$15,997Q120232.73%$14,173 Q2 2023 2.60% $14,022 Q3 2023 2.65% $14,376Q42023Net interest income NIMInterest-Earning Assets Mix(AVG)3%22%75%2%21%77%4%20%76%4%21%75%2%19%79%Q42022Q 12023Q22023Q32023Q42023Total Loans Investment securities Cash Balances & EquivalentsCommentaryNet interest income before provision and NIM increased in the quarter.NIM is expected to increase going forward due to:Slower increases in deposit costs New loans coming on at higher ratesNew advance from BTFP will represent savings of 70 bps on $80 million compared to previous FHLB borrowings. Loan to deposit ratio is increasingThe mix of our interest-earning assets continue to improve.
INTEREST RATE SENSITIVITYin this slide the Static NII Simulation percentages must be updated manuallyLoan Portfolio Repricing Profile by Rate Type Fixed Rate 42% Hybrid ARM 4% Variable Rate54% 17%15%68% Prime CMT LIBOR/SOFR Loan Repricing ScheduleVariable/Hybrid Rate Loans46%13%9%32%0-1yrs1-2yrs2-3yrs>3yrsStatic NII Simulation Year 1 & 2$6,000$5,000$4,000$3,000$2,000$1,000$0 0.8%+1001.1%+2004.5%+1008.1%+200Net Interest Income change from base ($ in thousands and % change)
SECURITIES PORTFOLIOEOP for Balance Sheet amounts, in millionsPortfolio CompositionCMO MBS CMBS SBA Agency Municipalities Corporate Bank subordinated Debt24%14%7%6%5%2%7%35%Commentary Securities portfolio was $404.3 million; 56.7% of the portfolio is classified as AFS, while 43.3% is classified as HTM.The modified duration is 5.5 and the average life is 6.9 years. Duration has increased as the result of higher rates and lower prepayments. We expect to receive $40.5 million from the securities portfoli o in 2024 at current rates; these cashflows will support loan growth or debt repayment. If rates drop 100 bps, we expect to receive $43.3 million.80.3% of the portfolio is invested in mortgage-backed securities, boosting the liquidity. Securities Portfolio Key MetricsMetrics as of 13/31/2023 Securities portfolio $404.3 AFS as % of portfolio 56.7% HTM as % of portfolio43.3% Portfolio Yield 2.4% Average Life 6.9 Mod Duration 5.5 AFS AOCI (50.1) Estimated Short Term Cashflows2024 $43.3 $4.5 $37.6 2025 $39.3 $36.8 $34.5 2026 $48.2 $46.4 $44.7 Total $130.8 $123.6 $116.8 Securities Portfolio % 32.4% 30.6% 28.9%
ASSET QUALITYAllowance for Credit Lossesin thousands (except ratios) 1.16% 1.20% 1.18% 1.16% 1.18% $17,487 Q42022 $18,887 Q12023 $18,815 Q22023 $19,493 Q3 2023 $21,084 Q4 2023Allowance for credit losses ACL Total LoansNon-performing Loans in thousands (except ratios)0.00% $0Q4 2022 0.03% $486 Q12023 0.03% $486 Q2 2023 0.03% $479 Q3 2023 0.03% $468 Q4 2023Non-accrual loans Non-performing loans to total loansCommentary ACL coverage ratio is at 1.18% on December 31, 2023, slightly up from prior quarter.One C&I loan for $468 thousand was classified as nonaccrual on December 31, 2023. No OREO.ACL increased by $1.6 million due to net loan growth during the quarter. Classified Loans (1) to Total Loans0.26%0.25%0.21%0.27%0.32%Q42022 Q12023Q22023Q32023Q42023(1) Loans classified as substandard at period end.
LOAN PORTFOLIO MIXLoan Portfolio Mix (1)Residential real estate CRE -owner occupied CRE Non-owner occupied commercial and industrial correspondent banks consumer and other49%12%6%11%12%10%$1,779MM(1) CommentaryTotal loan balance at quarter end was $1,779 million (1).Commercial Real Estate (owner occupied and non-owner occupied) was 59% or $1,048 million of the total loan portfolio(1).CRE mix is diversified and granular. Retail non-owner occupied makes up 27% of total CRE or $282.9 million. CRE Loan MixLand/construction 4% Other 3% Retail 27% Multifamily 17%CRE -owner occupied 17% Office 12% Warehouse 12%Hotels 8% $1,048MMAs of 12/31/23Excludes unearned feesIncludes loan types: office, warehouse, retail, and otherCRE Loan Portfolio (non-owner occupied and owner occupied)Loan Type LTV(1) DSCR (2) Weighted Average Average Loan size (3)Retail 55% 1.92 $2.9 Multifamily 59% 1.44 $1.4 Office 57% 2.06 $1.4 Warehouse 58% 1.82 $1.6 Hotels 55% 2.11 $5.1Other 59% 1.94 $1.7 Land/construction 52% NA $2.3(1) LTV - Loan to value ratio.(2) DSCR - Debt service coverage ratio.(3) Balance in millions.
NON-INTEREST INCOMEService feesGain $1,348 $1,329$1,173$1,205$1,093 (loss) on sale of securities available for sale(883) (955) -(21) (1,989Gain on sale of loans held for sale10525594347205Other income756 1,532 579539568Total non-interest income$1,326$2,161$1,846$2,070($123) Average total assets$2,268,811$2,250,258$2,183,542$2,120,218$2,051,867Non -interest income (loss)/Average assets (1) 0.23%0.38%0.34%0.40%(0.02%)CommentaryService fees have increased year over year due to new foreign correspondent banks and strategic pricing on wire fees.As part of our commitment to address NIM compression, we executed a $10 million loss trade transaction selling lower yielding securities and reinvesting the funds in higher-yielding investments and loans; resulting in a loss of $883 thousand. Excluding the loss on securities in the fourth quarter in 2023, non-interest income over average assets was 0.39%, in line with prior quarters. Q4 2023Q3 2023Q2 2023Q1 2023Q4 2022
NON-INTEREST EXPENSEQ4 2023Q3 2023Q2 2023Q1 2023Q4 2022In thousands (except ratios) 1,299 Salaries and employee benefits$6,104$6, 066$5,882$6,377$6,080Occupancy1,2621,3501,3191,2991,256Regulatory assessments and fees412365452224222Consulting and legal fees642513386358371Network and information technology services552481505478483Other operating expense1,747 1,686 1,908 1,440 1,602 Total non-interest expense$10,719 $10,461 $10,452 $10,176 $10,014 Efficiency ratio 68.27% 64.64% 65.25%56.32%56.32%59.81%Average total assets $2,268,811 $2,250,258 $2,183,542 $2,120,218 $2,051,867 Non-interest expense / Average assets (1) 1.87% 1.84% 1.92% 1.95% 1.94% Full-time equivalent employees 196 194 198 196 191Commentary Consulting and legal fees increased $129 thousand due to a one-time, nonrecurring legal expense associated with the previously disclosed legacy shareholder lawsuit commenced in 2023 which was dismissed in December 2023.Non-interest expense / Average assets has improved 7 bps year-over-year.Operational efficiency ratio(2) for the fourth quarter 2023 was 64.63%.
CAPITALCapital Ratios (1) Q4 2023Q3 2023Q4 2022Well- CapitalizedLeverage RatioTCE/TA (2) Tier 1 Risk-Based CapitaTotal Risk-Based Capitall9.28%9.26%9.61%5.00%8.09%8.15%8.75%NA11.62%11.97%12.53%8.00%12.78%13.10%13.65%10.00%AOCIIn Millions($44.3) ($51.2) ($44.8) CommentaryDuring the quarter, the Company repurchased 92,317 shares of common stock at a weighted average price per share of $10.45. AOCI was ($44.3) million or ($2.26) per share as of December 31, 2023.Q4 2023 EOP shares outstanding:Common Stock: 19,575,435(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.
TAKEAWAYSLeading franchise located in one of the most attractive banking markets in Florida and the U.S. Robust organic growthStrong asset quality, with minimal charge-offs experienced since 2015 recapitalizationExperienced and tested management teamStrong profitability, with pathway for future enhancement identifiedCore funded deposit base with 29% non-interest-bearing deposits (EOP)
APPENDIX - NON-GAAP RECONCILIATIONIn thousands (except ratios) Pre-tax-provison (“PTPP”) income: As of or for the three months ended 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022Net income (1) $2,721 $3,819 $ 4,196 $5,809 $4,434 Plus :Provision for income taxes 787 1,250 1,333 1,881 1,415 Plus:Provision for credit losses 1,475 653 38 201 880 PITPP income4,983 $5,722 $5,567 $7,891 $6,729 PTPP return on average assets (1) $4,983 $5,722 $5,567 $7,891 $6,729 Average assets $2,268,811 $2,250,258 $2,183,542 $2,120,2018 $2,051,867 PTPP return on average assets (2) 0.87% 1.01% 1.02% 1.51% 1.30%Operating net income: (1) $2,721 $ 3,819 $ 4,196 $ 5,809 $ 4,434 (883) (955) – (21) (1,989) Less : net gains (losses) on sale of securities Less :tax effect on sale of securities 224 242 – 5 504Operating net income $3,380 $ 4,532 $ 4,196 $ 5,825 $ 5,919 Operating PTPP income (1) $ 4,983 $5,722 $5,567 $7,891 $6,729 Less:net gains (losses) on sale of securities (883) (955) – (21) (1,989)Operating PTPP income $ 5,866 $ 6,677 $5,567 $7,912 $8,718Operating PTPP return on average assests: (1) $5,866 $6,677 $5,567 $ 7,912 $8,718Average asets $ 2,268,811 $ 2,250,258 $2,183,542 $2,120,218 $2,051,867 Operating PTPP return on average assets (2)1.03% 1.18% 1.02% 1.51%1.69%Opearting return on average assets : (1) $3,380 $ 4,532 $ 4,196 $ 5,825 $ 5,919 Average assets $ 2,268,811 $2,250,258 $ 2,183,542 $ 2,051,867 Opearting return on average assets (2) 0.59% 0.80% 0.77% 1.11% 1.14% Operating return on average equity : (1)$3,380 $4,532 $4,196 $5,825 $ 5,919 Average equity $183,629 $184,901 $184,238 $183,371 $177.556 Operating return on average equity 7.30% 9.72% 9.13% 12.88% 13.23%Operating revenue : (1) $ 14,376 $14,022 $14,173 $15,997 $16,866 Non-interest income 1,326 2,161 1,846 2,070 (123) Less :net gains (losses)on sale of securities
(833) (955)- (21)(1,989) Oerating revenue $ 16,585 $ 17,138 $16,019 $ 18,088 $ 18,732Operating Efficiency Ration: (1) $10,719 $10,461 $10,452 $10,176 $10,014 Operating revenue $16,585 $ 17,138 $16,019 $18,088 $18,732 Operating efficiency ration 64.63% 61.04% 65.25% 56.26% 53.46% (1)The company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the company (2)Annualized.
APPENDIX - NON-GAAP RECONCILIATIONIn thousands (except ratios and share data)As of or the for the three months ended Tangible book value per common share (at period -end) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022Total shareholder’s equity $ 191,9 68 $182,884 $183,858 $182,428 Less:Intangible assets (2) - - - - - tangible stockholder’s equity (2)$191,968 $182,884 $183,685 $ 183,858 $ 182,428 Total sharesissued and outstanding (at period-end) 19,575,435 19,542,290 19,544,777 19,622,380 20,000,753 Tangible book value per sommon shar (2)(3) 9.81 9.36 9.40 9.37 9.12Operating diluted net income per sommon share : (1)$3,380 $4,532 $ 4,196 $5,825 $ 5,919Total weighted average dilute shares of common stock 19,573,350 19,611,897 19,639,682 19,940,606 20,172,438 Operating diluted net income per sommon share : $ 0.17 $ 0.23 $ 0.21 $ 0.29 $ 0.29 Tangible Common Equity/Tangible Assets (1) $191,968 182,884 183,685 183,858 182,428 Tangible total assets (2) 2,339,093 $ 2,244,602 $ 2,225,914 $ 2,163,821 $ 2,085,834 Tangible common equity /tangible assets (2) 8.21% 8.15% 8.25% 8.50% 8.75% (1) The company believes these non-GAAP easurements are key indicators of the ongoing earnings power of the company. (2) Since the company has no intangible assets,tangible stockholders’s equity ,tangible book value per share and tangible assets are the same amounts as stockholders’ equity , book value per share and total assets calcul ated under GAAP.(3) Excludes the dilutive effect ,ifany,of shares of common stock issuable upon exercise of outstanding stock options.
LOU DE LA AGUILERAChairman, President & CEO (305) 715-5186laguilera@uscentury.com ROB ANDERSONEVP, Chief Financial Officer(305) 715-5393rob.anderson@uscentury.comINVESTOR RELATIONSInvestorRelations@uscentury.com