USCB - Earnings call transcript Q4 2024 | USCB Financial Holdings, Inc.

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Operator

Good morning and welcome to the USCB Financial Holdings Fourth Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded. I would now like to turn the conference over to Lu de la Aguilera, President and CEO. Please go ahead.

Luis de la Aguilera

you XXXX us Earnings thank Holdings USCB and Quarter Fourth Call. morning, for for joining Financial Good With me who today highlights Rob overview Anderson; reviewing the of our QX Chief of Slide Officer, highlights which Credit commenced Bill X. performance, Turner, bank's will on an and provide the is CFO,

our a Our our delivered and internal highlight for shareholders. bank record for results in QX as the budget impressive year XXXX Team outperformed results USCB

XXXX and year share. diluted QX A we EPS this earnings per posted per than in share more quarter ago, $X.XX $X.XX these doubled in to

continued has us interest production and Our deposits, focus from growing to on profitability. post solid profitability. continues costs reducing Florida's helping assets, contributed strong expansion, USCB quality resilient in and deposit economy, diversified margin loan Benefiting strong, net maintain to gains

performance will end representing on verticals, clients, of fourth as deposits In capital execution our banking grow will designed a deposit-focused compared and to focused target relationships the various million the growth, CFO, as XX% plan, as our These Driven our expand liquidity reviewing association further few banking quarter. quarter of disciplined QX new and initiatives the detail Anderson profitability, which by business correspondent comment and on our existing past a over I attorneys, client private business million, select or total commercial of profitably data points to ones. average positions. underscores Our of $XXX deposit-rich medical $XXX highlights, to professionals XXXX. well XX.X% business increased lines, as of grown have deposits

of XX.X% or XXXX. compared $XXX increased fourth loans Average quarter to million the

fourth the X compared line in loan quarter market of as loan the points increasing coupon to rates while has basis decreased Our quarter to basis XX the XXXX. compared pricing with points prior moved

an quarter diluted XXX.X% we look $X.XX million of the compared to fourth net $X.X share, at income profitability, or $X.X of XXXX. increase per was or As million

ROAA for provision to of of in compared $X for compared fourth fourth X.XX% was increased the past for XXXX QX again, before X.X% interest net XXXX. quarter million XX.XX% to past XXXX. for the ROA XX.X% was quarter, while quarter quarter the the fourth to of comparison income Similarly, the for or X.XX% XXXX quarter

the Board The of business company, Given power capital on trends March program dividend profitable practices. since performance will A Directors XXXX following common is guided outlook sheet. developing management an dividend on per has important people, on for the plan to maintaining shareholder earnings double XX, the be processes of the paid and strong levels, recapitalization. a execution consistently company's the conservative delivered to the to the to share return is quarterly investors our cash while by dividend XXXX, of self-explanatory, directionally Board The capital showing strong is value, balance best products cash focused and to January driver disciplined XXXX. The the approved committed of risk page the and our $X.XX historical The stock. of X, our efficient, Class

reviewed to attention CFO, will and our our turn specific let's performance results which indicators, by now So be financial Anderson. key Rob our

Robert Anderson

Okay. morning, Thank and everyone. Lu, you, good

another per been $X.XX X, Looking USCB. was have another share, would and record fantastic income quarter and expenses for as diluted would nonrecurring USCB. at QX characterize quarter the Net I Pages X absent $X.XX per for an share

efficiency quarter. was mark higher $XX.XX XX.XX%. and credit and benign. interest return the retreated average was And average on metrics rate on AOCI driven by count. expenses value for share would from the adjusted equity ratio remained XX The assets prior and share return nonrecurring been The up have reported, per higher Tangible last, to book a XX.XX%. $X.XX X.XX%, XX.XX%, was basis points NIM as X.XX% However, was

that with and on to year-over-year let's next basis. increase linked a overview, deposits quarter Deposits the both page. discuss on continue So

away quarter and fundamental of and has have in fund volume, loan the rate-sensitive driver from our basis to net deposits this margin and points a liquidity single funds used reduction Deposits in been service excess interest cost improvement. We walk our decreased product XX clients.

So with at compared quarter or loans loan and the book. or million that, Average of let's the XX% quarter $XXX to the million fourth increased annualized compared 'XX. look XX.X% $XX.X prior to

stable Additionally, or at couple quarters continue the book portfolio to the overall next yields will yields as loans above average, book of as increased above with new we we our loan X%. in loans coupons remain

penalties, and in help book scenario. we down prepayment reminder, all with a us rate loans a should As which floors

have As in in for be weeks. volatility to going single particularly digits double guidance, we experienced to the we forward, high since of rate couple expect high last loan interest low digits growth

Turning to Page X.

earning average book XX the yield time. to increase is to assets. been terms coupon have diversify see loan fourth for the points record for above Also we and basis we in coupon our the worth of over with can on X.XX%, loan production quarter, quarters, X in the past quarters, and which You quarter, coupon $XXX originated originated still million our while of in was it ticked noting new we last the able have And $XXX a million, loan a loans our that achieving portfolio helped is X loan X.XX% average. quarter weighted down this have

As of of non-real quarter estate book. the loans total end, XX% loan are

Let's the look margin. at

X this matter NIM impressive of impressive our success the basis most to Compared in XXXX, net In interest $X on to of fourth the quarters. or improvement has NIM. million the increased improvement net is income. income interest X.XX%, One XXXX, the the Equally XX from of story X.XX% quarter an XX.X%. of been went a year of accolades points

drivers loan larger significant an power this higher deposit include As sheet, we XXXX, in The asset enter and a increase earning will lower mix. generate costs, our going balance yields forward. improvement earnings

normalized near in term, we but yield expect current believe further curve. expansion around more levels Going given forward, the hover we a NIM can will XXXX

to in of couple XX. to the environment, model, over have is quarters According made notably, for as to retention balance Page money our prepare for last rate ALM neutral X sheet rates year CD long-term the most bank's strategic a we favored rates. on lower we have Moving market changes

CD will We interest to scenario. have term our X-month the adjust the rate expected Moreover, focused liabilities on we of and terms. X- depending on current

we are now, sheet. For balance a aiming for neutral

performance the benefits environment. predictable One uncertain financial a be is sheet more an that bank's of rate of neutral balance having the in can

mentioned calls, As the have balance pruned deposits clients. from rate-sensitive also earlier sheet product and single-service we on

into This have rates deposit couple more last we down without has our balance sheet. a resilient quarters, translated adjusted During the of meaningful losing relationships.

will new Fed this our that origination rise drop in at the does higher X- rate XX-year will help the And if Additionally, with fund and X-, help year, deposit rates rates. loans cost. the

as In will this us in us really a U.S. benefit a the book industry X over will tend more banking with loans great for general, spread short, normalized rate rates. at years but treasury give to curve, yield which we the is fixed

changes, we normalizes. term at and current hold believe these curve if can XXXX, NIM performance our expand especially With yield the into the levels near

to me quality. Bill let With it asset that, to discuss turn over

William Turner

turn Thank XX. you, Please Page Rob, everyone. to good and morning,

the related increased X.XX% the of X quarter. the As an allowance growth. you relationship million can in by credit was points consumer adequate fourth to loan for of This to to $XX the basis the to the due a which $XXX,XXX graph, $X during the provision million were provision a portfolio. of sender provision million net loan driven from [ first ratio losses increased a The a see $XX quarter. and quarterly ] the is remaining consisting vessel, yacht repossessed fourth was and

X remained less third year. graphs and to and at were the unchanged capital. Classified The bank nonperforming from loans quarter the X.XX% of no the The quarter increased losses $X.X Net XX and million to which quarter the for X.XX% slightly other the X% shows on end, of as than continues have represents represents loans real of estate. remaining portfolio. Page

increased composition basis the be retail, continues XX/XX. Commercial The mix quarter a and $X.X represents XX, million estate billion diversified. office or loan to portfolio fourth to the properties. multifamily, segmented portfolio owner-occupied $X.XX well on of at Page On shows graph the $XX The billion. XX% first portfolio the in real net between

The pass-through payment diversification. less peer second estate less the than remains coverage The quality quality performances good [ are remains banks. ratio each loans, show portfolio service ratios to portfolios below real of weighted average peer the loan past which the loan table at their X.X% and all commercial and breakout due of ] banks. and the than Rob? good with for the a and where The owner-occupied and segments also Overall, below portfolio adequate are ratios the the nonowner-occupied for values segment. demonstrate portfolio to commercial the of at the graph the estate graph debt is right of real XX%

Robert Anderson

the Thank the an with the clients obligations you, in uptick repeated businesses NIM, fee standout their swaps. of quarter have seen rate spot team's Bill. this we Outside interest swaps. and is interest performance bright in the Since the quarter for year. this of QX and year, were managing debt rate The other

expenses. items of $XXX,XXX let's had at service other look fees line we With other item. Additionally, penalties straightforward, line prepayment booked in

total base nonrecurring in million million expense over $X Our expenses. $XX.X was contained and

was of vesting recognized and to a $XXX,XXX on These expenses period, have vesting executives, award. Salaries year. X more stock will ratable shares a grant. benefits period months related have X-year and or vested first restricted for in contained vesting last of we accelerated the XXXX, an In $XXX,XXX stock couple period the the increased of a normalized the but

increased increased expenses $XXX,XXX Additionally, forced-placed $XXX,XXX insurance. legal various to items expenses other and related operating for

We the expect in reimbursement quarters. for both items coming

per improvement As in for basis, expenses year. XX.XX%, $X.XX the noted share had have On been our efficiency nonrecurring earnings line this would ratio slide, with adjusted is quarter. on the an negative fully impact per on our and which rate run the more guidance diluted a these share

forward, expense $XX up from Looking there million be we move QX XXXX. throughout around and base to expect

grant our rates in per value And restricted things increased individuals share; next, a performance that, result options bank; increased this to negatively and the $XX.X doubled share in increase current X-, with $X.XX capital. of and So future count note the period points. the X- million Three across we of turn exercising the per on capital: an dividend a increase interest tangible negative of to is quarter. with in XX-year let's the AOCI and a you This performance QX expected as impacts to book tenor the to end share direct and share. last, know, with first,

So with me back some for comments. closing turn it that, let Lu to

Luis de la Aguilera

Thanks, Rob.

in the to accessibility Florida the a and nation for rooted highly offers attract of second strength industry plans for economy, a business. year, past state are best and climate, workforce. a on the skilled consumers entrepreneurs Florida's global again ongoing state as which XXXX to which tax Our continues ranked welcoming was the This

increased As grown and hones this XX%, growth fuel economic Since IPO in our we expanding balance $XXX deposits seen launching total by have by while XXXX, have loans propels XX%, our million. and our assets both our sheet strategies.

services and the the With a state floor population by maximize grow was we XXXX economy's said, to low dynamic forecasted to and Consistent XX operational approaches largest country, that as credit million. pristine and U.S. in XXth X.X% Q&A. Florida forecast. the Century optimize to ahead growth in high If will I the economy to market. new world, We business growth would strong, of open the efficiency, continues which national in is continue be to like quality. residents migration double-digit diversified to maintain slightly be it profitability the range forecast single-digit the of in XXXX, as

Operator

[Operator Instructions]

with The first question Lay comes KBW. from Woody

Wood Lay

reflection competition X, Wanted average quarter. Slide specifically coupon rates were new know loan is thoughts and impacting Any you down start pricing? production. on bit weighted where of to increased moving. the also a the that a fourth sort little The But outlined yields on in there? were I production of

Luis de la Aguilera

County it. of Woody, and our were let's here I combination is of but Miami-Dade the say, went rates down that and a it's in down Competition variable with sporty, -- book both. to want think the and it's be possibility it, fully have Clearly, portion with we deposits pricing. we'll on not pass way we And want our if growth bank relationship focus the in on we again, for it. where is a

Robert Anderson

Yes.

are the And The group. credit. quarter production new commercial our add what or that would banking be, correspondent that those XXX-day in we our other have typically a a little thinner lines C&I estate are of to a real loans would loans I chunk loan those thing as fourth of well. And in did than typically

that that So yield. brought origination down quarter's

Wood Lay

up, deposit ahead? Does and How think loan impact for then the year do deposit like in in pickup are the industry expectations growth lower Got all is forward? to Florida market. it. That's going very at South costs And And does competition? does ability the helpful. competitive growth feel about it a you picking across that a

Robert Anderson

talked Good that loan here question. quarters I we mean, had a and for very engine years we've maybe at good probably USCB.

I coming deposits the challenge. be to loans, line deposit fully think And our really have think we're it strong, is down I the balance growing now, sales and will the the on challenge we're if the expect produce gearing bankers and have bank the both comes can that how to very and but market we right is the any sheet, would year. book ask the the in response. funding. And be But we with to you sides in that that happen our team of strong that

Wood Lay

deposit deposits maturity on and then schedule not overly lastly, But any time you of is XX% the repricing large. there And can color the provide Yes. dynamics? portfolio,

Robert Anderson

on I there. think have specifics next next, in it's I is year, treasurer about in Yes, but the don't the the answer me the repricing, giving what, my XXX

we'll We're lower. pricing opportunity there. So have that

I a good opportunity. think that's actually

the along or I say, curve. line Fed pricing, funds We with Fed would are funds

X to So down over or especially come XXXX. expect rate that we get we if time, book drops would in X

Wood Lay

Congrats nice on quarter. the

Operator

question Raymond with next James. Rose Michael The from is

Michael Rose

mentioned or specialty verticals deposits. I Lu, opening think, you in XX% the that so comments, the are, of

concern about and that Any the the there? some and competition to as Just related we move the of something read challenges there, from all to it challenges association is as of insurance deposit South related Is think given down that we just and deemphasize we've you then fairly And some just broadly maybe deposits. Florida things as of those like to sort the forward, relates just plan and associations all holistically? about. that it specifically rational to hurricanes

Luis de la Aguilera

banking. I'm association Sure. bullish on the

lives data, XX% a at think look the condominium. it's of state you in the I population over If of the

to look on analysis, choose the and focus that one. So of our managed. the that that is think owners ones renters, associations We professionally are thing those. credit every after versus We we qualifiers have go want at really single do I look don't really for there's them that When plenty we the number wisely. we our we

the So it beginning. is we've very interest be been best to our in from choosy as

clear we still be on going focus significant I the believe is that volume to and have a area. this

to verticals these at that the beginning growing. believe I continue I going So mentioned are that

Our Jurist well. is attorney the focused is deposit-rich Advantage, are which on business, clients Those which a it market, we responding. service

these MD on areas we So all are and scalable, both believe which develop plans focused them the I and to the is business Advantage, have well. medical that others, the

Michael Rose

fairly drove fees, Slide service Okay. increased maybe Rob, other you at on -- that what When just in is the XX. Helpful. category that look meaningfully that Q-on-Q?

Robert Anderson

the was that Yes, prepayment penalties.

get a we lot off prepayment did it. we like get said, paid And paid So some we booked we of on and then penalties. for floor

item service line the in fees. in was other that So

Michael Rose

if Got the on me. quarter. just And are obviously, it. maybe this some outlook year? then for into it. And hiring I you I for nonrecurring what year baked Florida for the plans missed just I maybe sorts lending items what's appreciate what relative appreciate market just that, more given your finally this discuss to markets. see little expenses, Can the plan Just bit assumptions like be for opportunistic strength and expense looks for you growth want of if the this hires? a those to competition the South of sorry

Luis de la Aguilera

do, staffed been for we something it. the is are for what and As that we good Being closely XXXX. our is at at and we've that we this, prepare we look feel plans we budget, properly opportunistic

on it we nothing for will in it's really are we're teams budgeting [ move available, comfortable but them, we our when individuals case proper feel So very prime are ]. and happens, action levels that those for that just staffing production become our

Operator

is with The Hovde Strickland Group. Feddie next question from the

Feddie Strickland

Just here. down wanted on drilling to fees a bit little start

good, I of income couple that you next I as fee in quarter. there. a swap would expect we think from should guys in mean still quarters it what pretty decent mentioned item? there's Rob, the line indicated, And came the Specifically, last you pipeline

Robert Anderson

Yes. definitely interest little That rates move I the market this a mean, I year, favored were around to where one's swap activity. bit. think going and

I offset -- be sale. And go XXXX. into think to that that be that our we'll decrease down, gain looking quiet our TM does increases SBA could fees and down looking in if we'll with on wire fees,

So that down into could trend XXXX.

that probably we would for of I million. think level not over activity XXXX. booked in the I anticipate year, $X

Feddie Strickland

That's fair. in kind much that what of opportunity we looking of and over year pipelines the see of of FDA, course kind going the on seeing grow And I what to could forward the you're just was terms was how ask potentially?

Luis de la Aguilera

planning than what this Well, more we we to did double year. were past in

Board strategy with past our have meeting. we that We shared actually a this

going Our gearing business be we're certain on to a focus is segment that up for.

This adept X led our are program, that Our Every launched was the the lender all has them for where lenders we years now we by have X(a) been -- initially, SBA is head. since that we've training on on been participating. department something program. single the it

They they marketing have strategy. their good support, goals their know and and

volume for we're I increase. to in So SBA this fee for year shape and think good that

Feddie Strickland

helpful. for And last That's me. just

most the financing yacht and between for segments other green thinking do areas, shoots the where the Just of see some lending about XXXX? specialty the you

Luis de la Aguilera

last -- with boat think We're as actually, the all years. steady Show it's the state. Palm cetera, throughout Boat et yacht the yacht of the the and all few up, Beach, all it's is International entering yacht I -- be season Miami the been financing coming going the the to shows the

spikes So volume. that usually

be to going steady is growing. I and think everything else

that last in lending side. X Every those single have feedback good our Our global side, from -- them X quarters, was bank we are on the the very of visited customers all on visited visitations. the

that new continue going already expect growing the borrowing We have. adding and the relationships that on relationships necessarily clients there, not they're and we to expanding but it's

feel forget productive very exactly XX% of what the over state comfortable I near HOA, a it's year to that said, are I as -- the we forward. continue HOAs XX So I'm going to but of is also, the it's Florida to going old. say very percentage almost going them. years with be And is, it's moving in

on the for there. to have roof, there's and they I to be think, windows opportunities certifications. be, XX- They're going tremendous be through redos on and So going XX-year going to looking

Operator

with Sandler. Stephen is The next question Piper from Scouten

Stephen Scouten

on if hopped minutes talk of apologies I but late. in was growth a Sorry, if few what this but -- a loan maybe and can been But still it, recent quarter, wondering you little it the has I light about obviously missed bit good past.

that elevated any or 'XX growth and or trend quite don't -- just just paydowns So you're you pan like could of about things a if all end line, in lower if trends was what hope? best you maybe how kind case seeing be think scenario guys out for other we

Luis de la Aguilera

Well you correspondent than on on a quarter, a terms. activity, this we more especially basis, payoff which our there quarterly of as banking normally section, XXX-day are past probably was bit earlier, quite see these mentioned

believe So to the and as going as the -- is borrowing -- that commercial don't in have prepayments area. issues have any again, on side. We we really there but we that continue far

attend I basis. on Rob meetings weekly as pipeline and all a does Bill

one doing. competition lenders. had our The in with is in past strong as the going is quarters. that forward, know We think, We what are we've the any constantly X as I pipeline, communication

is That's be be that think that to it's I the going So said we're believe high we planning low And earlier, as growth. single-digit, double-digit what I to going loan for. there. demand

Stephen Scouten

built hey, and you Or verticals a then out of to Are I helps kind horizon or have opportunities the fuel initiatives deposit helpful. is drive towards growth new said, deposit the just that Okay. working any potentially even in on continuation the there know, endeavor growth? it maximization And front you platforms? had that deposit it's would deposit from you the maximizing potential. any Great. Rob, a maximizing really potential the to higher what guys those guys team's of Very of loan new

Robert Anderson

Yes.

it's think we what I have. optimizing

a in are people expertise. I of talented think lot the that of team we this Advantage have past on their year. area MD We sophisticated started

opportunity a there's there. think lot of I

tools continued Group giving just seeing of the and Private and the I a I a Our products, is it's Client they're growing fantastic the and activity And job lot what market. think think our growth. have we doing and in team right

part I sure with is So our tweak we'll think our key maybe continue can accounts. And grow we deposit book in to of the and line operating the book loan get a we have. it's expense, on side. new verticals add I tad think or we X working I or But deposit the don't plans what teams the we that think with need incentive to new making

Luis de la Aguilera

banking, they the the and If developed we I this incredibly in that business the believe because attorney can, chose and scalable banking, association the are we correspondent market. medical

maximizing have. really within And not are new we it's lines, what in new about opportunities So teams. about adding it's strategies, bring to they the

the We and are very believe the to that and our ones trained ones people with market and we've that of lot successfully, to that execute demand. a have chosen, developed we But and on done those look have very I for continue scalable will opportunities.

Stephen Scouten

great guys of for have minimis levels. a be build continues loans. but just thing loss kind nonaccruals, percentage reserve commentary of as reserve Obviously, book, That's to the I then de And that. loan a me you fantastic scalability. appreciate on would Nice. the credit last

of think if percentage flat loan more existing forward, loans? that Or do kind holds it be loss percentage about move cover of of just we see as As dollars exemplary you relative the guys credit? where building growth reserve incremental to those reserves versus a we credit and loan your how is, could

William Turner

reserve it or the -- the Yes, tick loans growth the grow. as will we point net basis the comment. in in will grow X the as relation -- Thank the you portfolio for the up to probably X exemplary credit grow

or X as steady as each basis even long see we As we no go holding or quarter forward. there's in basis hiccups X slow, growth steady point point credit should quality,

Robert Anderson

moved just were, don't we to I I last on we to maybe think X.XX% know, around X.XX%. quarter, adding think that, up I

yacht vessel that think put general Other of is than around I I Bill the that, That's the think we -- adequate. certainly part mentioned X.XX%. on. provision that pool the and is a probably the

of quality. You some benchmark credit the that compared to

think but we're with maybe loan in So will very think growth, reserved. Bill I it I don't adequately dollars, certainly I materially move mentioning think. is

Stephen Scouten

Yes, for sure.

That Okay. makes lot on a great of a a Congrats year. sense. great and quarter

Operator

question-and-answer This session. would to back the over concludes like Lu turn remarks. Aguilera de our for closing I conference any la to

Luis de la Aguilera

attendance. Okay. Century Thank next behalf your attendance you again for for very I all you look team, to much On your of our the at would call. and U.S. U.S. forward -- the to thank meet earnings like

Operator

The conference attending concluded. today's for has now Thank presentation. you

now may disconnect. You

USCB Financial (USCB) 24 Jan 252024 Q4 Earnings call transcript