USCB Financial Holdings, Inc.

Good day and welcome to the USCB Financial Holdings third quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Luis de la Aguilera, President and CEO. Please go ahead.

Good morning, everyone, and thank you for joining us today to review USCB Financial Holdings' third quarter 2026 results. Joining me on the call today are Chief Financial Officer Rob Anderson and Chief Credit Officer Sergio Garrido, who will provide additional detail on the company's performance, beginning with the highlights summarized on slide three. I am pleased to report another strong quarter for USCB Financial Holdings. We delivered record quarterly earnings and continue to build on the momentum we have established over the past several years. Even more importantly, through the first nine months of 2026, we have generated approximately $28 million in net income, already surpassing the full-year earnings reported in any year since our IPO. We also delivered a 16.03% return on average equity, and a 1.27% return on average assets, reflecting the strength of our franchise, the resilience of our markets and the disciplined execution of our team. Just as importantly, these results were achieved while maintaining a strong risk profile. Credit quality remained sound with negligible charge-offs during the quarter and allowance for credit losses of 1.16% of loans and non-performing assets representing only 0.26% of total assets. conservative risk management and discipline underwriting continue to be the hallmarks of the USCB franchise. We also continue to benefit from a diversified relationship-driven business model. Our specialized banking verticals, including association banking, private client group, and correspondent banking now generate approximately 30% of our deposits and provide a valuable source of stable relationship-based funding. On the lending side, our portfolio remains well diversified across commercial real estate residential real estate, commercial and industrial lending, correspondent banking, and specialty lending businesses, helping us manage risk while supporting consistent growth. While the summer months are typically slower period for USCB, we remain focused on executing our strategy, strengthening client relationships, and investing in future growth. This month, we expanded our deposit gathering capabilities with the addition of a seasoned team of four deposit-focused bankers from a national competitor, who collectively managed more than $700 million in deposits. Strategic talent acquisitions such as these remain an important component for our long-term growth strategy, and we continue to be successful in attracting high-performing banking professionals. This team will be based in our Hollywood and Aventura banking centers, further strengthening our presence in Broward County and supporting future growth opportunities throughout South Florida. Earlier this year, we also launched a fourth commercial banking production team headquartered in our Doral Banking Center. To support this expansion, we have already added two experienced commercial lenders and a portfolio manager with additional positions expected to be filled during the fourth quarter. The Doral Medley Hialeah Corridor represents one of South Florida's most vibrant concentrations of small businesses, industrial enterprises, and commercial activity. We believe this market represents Significant opportunities for commercial lending, treasury management services, owner-occupied real estate financing, and business deposit growth. This team will also serve as a catalyst for expanding our SBA lending activities. Additional business development personnel are being added to support these efforts, while SBA training initiatives are being implemented throughout our production platform to further enhance our ability to serve small business customers. Growing deposits further diversifying our loan portfolio and expanding non-interest income opportunities, including SBA loan sales and treasury management revenues remain key strategic priorities for USCB. I'd like now to spend a moment on slide four, which is largely self-explanatory. These nine historical trends tell an important story about USCB's transformation and performance since recapitalization. They reflect the steady and reliable progress we have made in growing the franchise, increasing profitability, Strengthening Capital, and Improving Operational Efficiency and Maintaining Discipline Credit Performance. What I find most meaningful about these trends is that they demonstrate consistency. Our results are not the product of a single quarter or a favorable market cycle. Rather, they reflect years of discipline execution, prudent balance sheet management, sound underwriting, and a long-term commitment in building shareholder value. As you look across these charts, you'll see a business that has consistently grown deposits Loans, Earnings and Capital, while maintaining strong credit quality and a conservative risk profile. Since our recapitalization, we have successfully navigated multiple economic cycles, periods of rising and falling interest rates, the pandemic, inflationary pressures, and significant changes across the banking industry. The reach of these environments, our focus has remained unchanged, building a stronger franchise, serving our clients exceptionally well, managing risk conservatively, and creating long-term value for our shareholders. The discipline is reflected throughout these historical trends. Sustainable, profitable performance anchored by sound and conservative risk management is what our management team is focused on delivering year after year. We believe that consistency is one of the defining characteristics of the USCB franchise and one of the primary reasons we remain well positioned for continued growth and success. With that perspective, I'll turn the call over to Rob Anderson, who will walk us through our third quarter results and discuss the drivers behind another Record Earnings Order for USCB.

Rob? Thank you, Lou, and good morning, everyone. The third quarter produced record earnings for Team USCB. We delivered the highest quarterly net income since our IPO, held on to the step-up in net interest income we achieved in Q2, and did it while investing in people and technology, which will strengthen our franchise going forward. Highlights include net income was $9.5 million at $0.51 per diluted share, up from $0.49 last quarter, and up 13.3% over the prior year. Net interest income was $24.3 million, essentially in line with our strong second quarter and up $3 million or 14.2% year-over-year, a clear reflection of the earnings power of a larger balance sheet. Average loans were 8.8% annualized over the prior year and 10% year-over-year, consistent with our guidance despite the typical summer slowdown. Return on average equity improved to 16.03% and return on average assets was 1.27%. The NIM was 3.37%, still 23 basis points higher than a year ago, and importantly, the margin exited the quarter at 3.41% in September. I'll walk through the drivers on page 11. Credit remains sound with a very small charge-off of $23,000 and provision of $53,000. As we indicated last quarter, the tax line moderated with some changes in our deferred tax assets. The efficiency ratio was 54.62%, reflecting deliberate investment in talent, including front office sales professionals. Intangible book value per share was $12.42, up 7.5% year over year. The quarterly change reflects the rate-driven mark on our securities portfolio. Average deposits for the quarter totaled $2.5 billion, up 22.3 million or 3.6% annualized over the second quarter, and average DDA balances are up 40.7 million or 7.2% year over year. On pricing, I'm pleased with the discipline of our team. The total deposit cost was 2.19%, 34 basis points lower than a year ago, and the cost of interest-bearing deposits held flat at 2.90%. Even as market rates moved higher in September, the modest three-basis point uptick in total deposit cost was simply mixed, as some DDA balances moved into interest-bearing accounts, not a change in our pricing. On an end-of-period basis, deposits are up $101 million, or 4.3% since year-end. Quarter-end balances absorb seasonal outflow of approximately $54 million in public funds, which we expect to return later this year. Excluding public funds, deposits grew approximately $48 million in the quarter. Core deposit growth remains our number one priority, and we are investing behind it. We have added dedicated deposit-focused relationship bankers who are already building strong pipelines. We have also given our officers greater pricing flexibility to win new operating relationships, and any new loan pricing exception now carries a higher deposit commitment. Together, these steps position us to grow stable, relationship-based funding, the most valuable part of our franchise, in a higher-rate environment. So with that, let's move on to the loan book. On an average basis, loans increase 50 million or 8.8% annualized over the prior quarter and 210 million or 10% year-over-year, right within the high single-digit to low double-digit range we have communicated to you. At quarter end, loans stood at $2.3 billion, up $191 million, or 9% from a year ago, as new fundings of $156 million fully replaced payoffs and amortization during the quarter. Loan yield was 6.11% compared to 6.2% last quarter. That change was driven by lower loan fee income, largely the accelerated amortization of premiums and fees on loans that paid off, a timing item, not a pricing issue. The underlying book continues to reprice higher. Older fixed-rate vintages are resetting at today's rates. As you'll see on the next page, the coupon on new production is moving up. Turning to the production slide, new loan production was $156 million, up 18% from the third quarter of last year, a solid result for what has historically been our slowest season. Year-to-date, we have originated $616 million in new loans, which speaks to the depth of demand in our South Florida market. Just as important is the quality of that production. The average coupon on new loans rose 12 basis points to 6.02%, excluding correspondent banking. New loans came on at 6.29%, about 18 basis points above our portfolio yield. As a reminder, our correspondent banking loans are typically 180-day notes tied to SOFR, so they reprice quickly, a natural benefit with short-term rates moving higher. while also bringing full relationship, low-cost deposits, and wire activity. Payoffs and amortization were $155 million, consistent with the elevated prepayment activity we have seen throughout 2026, and payoffs are a normal feature of a healthy, well-performing book and our embedded prepayment penalties protect yield and earnings, contributing to over $600,000 year-to-date. Let's move on to the margins. Turning to the margin, net interest income was $24.3 million, holding near the record level we reached in Q2, and up 3 million or 14.2% year-over-year. The NIM was 3.37% compared to 3.49% last quarter. And using the waterfall on the page, more than half of that change, seven basis points, came from lower loan fee income tied to payoff activities. A shift in funding makes toward lower or towards interest-bearing deposits and borrowings accounted for three basis points and lower income on other earning assets for the two basis points. On a year-over-year basis, the margin is still 23 basis points higher from 314 and September came in at 341, so we are entering the fourth quarter with good momentum. Now I word on the rate environment. Because it has shifted, market rates moved higher in September and the forward curve suggest that we may stay elevated for some time. As we have discussed on prior calls, our balance sheet is modestly liability sensitive in the near term. So higher short-term rates put some pressure on funding costs, but we have several levers working in our favor. First, about 64% of our loan book is variable or hybrid rate, and new and renewing loans are coming on at higher coupons. Specifically in Q4, we have 610 million of loans that are repricing, tied to Sofora Prime at a weighted average yield of 6.37%. These loans would reprice with any rate increase. Additionally, we have $106 million maturing, predominantly short-term correspondent loans, which typically renew and currently have a weighted average yield of 5.8%, and given the current rate environment, these would also reprice higher. We put excess cash to work during the quarter, buying approximately $33 million of investment-grade corporate bonds at 5.23%, about 190 basis points above the existing portfolio yield. Additionally, our interest rate caps, which we put on last year, are designed to protect the balance sheet if rates continue to rise at a fast pace. The $100 million notional caps will be in the money if SOFR hits $450 million. and most importantly, the return of public funds and new relationship deposit is generated by our new deposit team should allow us to pay down higher cost wholesale borrowings in the fourth quarter. Putting that together, we believe we can hold or improve the NIM for the fourth quarter and we guide to the 340 range, broadly consistent with our September exit rate. So with that, let me pass it over to Sergio to discuss asset quality.