USCB Financial Q2 Earnings Call Highlights

USCB Financial posted Q2 2026 net income of $9.1 million, or $0.49 per diluted share, up from $0.40 a year earlier, as total assets topped $3 billion and loan production hit a record $272 million. Net interest margin expanded to 3.49% and the efficiency ratio improved to 49.97% for the first time below 50%, helped by stronger loan yields, disciplined funding costs, and lower-cost deposit mix. Credit quality remained strong , with nonperforming loans falling to 0.09% of total loans and net charge-offs staying low at 0.05% of average loans, while management reiterated expectations for high-single-digit to low-double-digit net loan growth in the second half of 2026. USCB Financial NASDAQ: USCB reported second-quarter 2026 net income of $9.1 million, or $0.49 per diluted share, up from $0.40 per diluted share a year earlier. The company said the quarter was marked by record loan production, higher net interest margin, controlled expenses and continued low credit losses as total assets surpassed $3 billion. Chairman, President and CEO Luis de la Aguilera said the asset milestone reflected years of relationship-driven growth in South Florida. Total assets rose 11% year over year, while loans reached $2.3 billion, up 9.9%. Deposits totaled $2.5 billion, up 5% from the prior year. Margin expansion and loan growth Net interest income increased to $24.4 million, rising $2.3 million from the first quarter, according to Chief Financial Officer Rob Anderson. Net interest margin expanded 22 basis points sequentially to 3.49%, supported by higher loan yields, a shift toward higher-yielding earning assets and disciplined funding costs. Average loans increased $81.2 million from the first quarter, an annualized growth rate of 15%, while the loan portfolio yield increased to 6.20% from 6.11% in the first quarter. The company reported record new loan production of $272 million, with $116 million, or 42.6% of the quarterly total, closed during June. Correspondent Banking loans accounted for $83 million, or 30.6%, of quarterly loan production. Anderson said those loans are generally 180-day notes tied to SOFR and carried a 5.22% new-loan yield. Excluding Correspondent Banking activity, new loan production carried a weighted average yield of 6.20%. The company reiterated its expectation for high-single-digit to low-double-digit net loan growth during the second half of 2026. Anderson said third-quarter production could moderate from the record second-quarter level to roughly $175 million to $190 million, though he described the pipeline as robust. USCB said its loan production remained diversified, with 42% classified as commercial real estate and 58% as non-commercial real estate. De la Aguilera said commercial real estate concentration has declined from 63% of the portfolio in 2020 to 57% by mid-2026. Deposit mix and funding strategy Average deposits rose $61.9 million from the first quarter, or 10.2% on an annualized basis. Average noninterest-bearing demand deposits increased $47.4 million, or 32.5% annualized, pushing average DDA balances above $600 million. The improved deposit mix helped lower the total deposit cost by four basis points sequentially to 2.16%, a 30-basis-point improvement from a year earlier. However, end-of-period deposits were modestly below the prior quarter after the company exited brokered certificates of deposit and other high-cost, non-relationship deposits. Anderson said USCB replaced some of that funding with lower-cost Federal Home Loan Bank advances. He said the company would continue to prioritize granular, low-cost deposits while using wholesale funding selectively to optimize the balance sheet. De la Aguilera also highlighted a new deposit initiative supporting 1031 exch...