USCB Financial Holdings, Inc.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Mr. Luis de la Aguilera, CEO. Sir, please go ahead.

Thank you, and good morning. Thank you for joining us for USDB Financial Holdings 2025 Second Quarter Earnings Call. With me today reviewing our Q2 highlights is CFO Rob Anderson and Chief Credit Officer Bill Turner, who will provide an overview of the bank's performance, the highlights of which commence on slide three. I'm very pleased to report that U.S. Century Bank delivered another consecutive record quarter with continued improvement in our profitability ratios. posting a return on average equity of 14.29%, a return on average assets of 1.22%, and a fully diluted earnings per share of 40 cents compared to 31 cents per fully diluted share for the same period in 2024. This past Monday, the bank marked its fourth anniversary since launching a successful IPO on July 21st, 2021. Since then, management's overarching focus has been to safely grow the bank as a high-performing franchise, while prudently managing risk and capital allocation to deliver long-term value to our shareholders. That goal remains, our efforts continue, and as always, the team executes on a clearly defined and communicated business plan. Our strong franchise presence in key South Florida markets enables us to achieve steady, sustainable, profitable growth, reflecting the success of our strategic initiatives and diversified business lines. Also, the success of our deposit verticals has resulted in a diversified funding base, which has helped us to manage our NIM under an evolving economic environment. Part of the success has been reflected in our valuation. USCB stands out as one of the few independent banks with a meaningful scale in the Miami-Dade MSA, having $2.1 billion in local deposits across 10 branches, positioning us uniquely among area competitors, offering clients a relationship-driven experience backed by local decision-making with deep market knowledge. Our ability to combine personalized service with strong financial performance continues to differentiate UCB in our competitive landscape. To this point, average deposits increased 13.7% annualized compared to the previous quarter to 2.3 billion, reflecting the trust and confidence of our clients, as well as the efforts to prudently hire proven production personnel. As previously reported, And in support of our deposit focus, we added four new producers in the first half of the year, two in business banking, one deposit-focused business developer, and another supporting our association banking, which targets the deposit-rich South Florida condominium market. Next month, our private client group will add another experienced vice president at our Coral Gables location. As management develops our three-year strategic plan, we aim to remain agile and responsive to creative, hiring and business opportunities, and their execution. To this point, the company has done two things to prepare ourselves for the quick execution if and when market conditions present themselves. In May, we filed a $100 million universal shelf offering. The shelf allows the company to offer various securities over a period of time as needed without the requirement to file a new registration statement for each offering. Shortly thereafter, Kroll Bond Rating Agency assigned both the company and the bank investment grade debt ratings. The investment grade ratings will support the deposit gathering activity of a foreign correspondent bank team as several of their existing and potential bank clients set deposit limit on U.S. bank correspondents unless they are credit rated. This action will allow us to gather more deposits from this customer base. We view both actions as customary and prudent steps to further prepare ourselves to quickly and efficiently execute strategic initiatives as they present themselves over time. The following page is self-explanatory, directionally showing nine select historical trends since recapitalization. Profitable performance based on sound and conservative risk management is what our team is focused on consistently delivering. So now, let's draw our attention to our specific financial results and key performance indicators, which will be reviewed by our CFO, Rob Anderson.

Thank you, Lou, and good morning, everyone. Looking at pages five and six, I would describe the second quarter of 2025 as a highly successful quarter for USTB. In fact, it was another record for us. Net income was 8.1 million or 40 cents per diluted share, up 29% over the prior year. Total loans were up 15.1% annualized compared to the prior quarter, and the portfolio hit another milestone by closing above 2.1 billion. Deposits rose 4.5% annually from the previous quarter, giving us strong liquidity to support upcoming loan growth. Profitability ratios were equally as impressive. Return on average assets was 1.22%. Return on average equity was 14.29%. The NIM improved to 3.28%. Efficiency ratio improved to 51.77%. And our tangible book value per share was up 30 cents for the quarter to $11.53. And last, Credit metrics remain within management expectations. The net charge off of 14 basis points this quarter was in large part provided for last quarter. So the impact on earnings this quarter was negligible. Bill will touch on this in a bit. So with that overview, let's discuss deposits on the next page. Deposits have demonstrated sustained growth on both a quarterly and year-over-year basis through ongoing effective execution across our diverse business verticals, we have been able to grow our deposit book and reduce the cost of deposit, despite no movement in the Fed funds rate this year. The increase in deposit balances and improvement in the cost of funds is mostly driven by higher average DDA balances for the quarter. Average DDA balances increased 17.1 million or 12.2% annually compared to the prior quarter. And we successfully lowered the interest bearing liabilities by five basis points from the prior quarter, which helped improve our overall cost of deposits by three basis points. Let's move on to the loan book. On a linked quarter basis, average loans grew 70 million or 14.3% annualized. Compared to the second quarter of 2024, we grew 229 million or 12.5%. Regardless of the comparison point, our growth was at the top end of our previous guidance. Alongside this growth, we saw our loan yield climb six basis points from the previous quarter, and seven basis points compared to Q2 of 2024. The loan yield improvement was driven by higher yields on new loan production and a stable SOFR rate throughout Q2. Looking ahead and assuming no rate changes this quarter, loan yields are expected to remain stable or improve slightly as new loans are booked with yields higher than the portfolio average yield. Moving on to page nine. For the quarter, we closed $187 million in new loan production, with $95 million of that closing in the last couple weeks of June. Due to the late addition of these loans, the full impact of the quarterly loan production to interest income was not fully realized in Q2, but will more fully materialize in Q3. The weighted average coupon on new loans was 7.12%, and 89 basis points higher than the portfolio average yield. our loan portfolio continues to diversify, shifting away from real estate-related loans and into other various loan types. Now having reviewed both deposit and loan performance, let's see the impact on the margin. On both a quarterly basis and a yearly basis, the NIM continues to improve, reflecting the strength of our asset mix and disciplined balance sheet management. Net interest income experienced notable growth, increasing by 1.9 million or 40.3% annualized over the prior quarter, and up 3.7 million or 21.5% compared to Q2 of 24. This increase was driven by several factors, including a larger balance sheet, higher yields on both loans and securities, coupled with lower deposit costs. Additionally, and as just mentioned, the 95 million in new loan production, which happened late in the quarter, will more fully impact earnings in Q3. Let's turn to page 11 to see the impact on changing rates on our balance sheets. In the past several quarters, our strategy has been to prepare for a lower rate environment and a more normalized yield curve. This strategic positioning has begun to yield benefits as evidenced by an increasing margin and profitability. Our balance sheet currently demonstrates a liability sensitive profile for year one and transitions to an almost neutral balance sheet for year two. We view this transition very positively for two reasons. First, if rate cuts occur in the near term, this will allow us to reprice our funding sources more quickly than our assets, which should provide a boost to our net interest margin. Second, as the yield curve returns to a more traditional shape, a positive upward sloping yield curve, we will be well positioned to capture the widening spread between lower cost short-term funding and higher yielding long-term assets. This combination of agility and preparedness enhances our ability to navigate both the declining and normalizing rate environment, supporting sustained margin improvement in the quarters ahead. So with that, let me turn it over to Bill to discuss asset quality.