USCB Financial Holdings, Inc. (the "Company"), the holding company for U.S. Century Bank (the "Bank"), reported record net income of $10.8 million, or $0.55 per diluted share, for the six months ended June 30, 2024, compared to $10.0 million, or $0.51 per diluted share, for the same period in 2023. For the second quarter of 2024, the Company reported net income of $6.2 million, or $0.31 per diluted share, compared to $4.2 million, or $0.21 per diluted share, for the same period in 2023.
The Company's strong financial performance was driven by robust loan and deposit growth, net interest margin expansion, and disciplined expense management. Total assets reached $2.5 billion as of June 30, 2024, representing a 10.4% increase from June 30, 2023. Total loans grew to $1.9 billion, a 17.1% increase from the prior year period, while total deposits increased 7.0% to $2.1 billion over the same timeframe.
Net interest income before provision for credit losses was $32.5 million for the six months ended June 30, 2024, an increase of $2.3 million, or 7.6%, compared to the same period in 2023. The net interest margin expanded to 2.94% in the second quarter of 2024, up 32 basis points from the prior quarter, driven by higher earning asset yields and lower funding costs.
Non-interest income was $5.7 million for the six months ended June 30, 2024, an increase of $1.8 million, or 45.0%, compared to the same period in 2023. This growth was primarily attributable to higher service fees, gain on sale of loans, and other income.
The Company's efficiency ratio improved to 56.33% in the second quarter of 2024, compared to 65.25% in the same period of 2023, reflecting the Company's disciplined expense management. Total non-interest expense was $22.7 million for the six months ended June 30, 2024, an increase of $2.1 million, or 10.2%, compared to the same period in 2023, primarily due to higher salaries and employee benefits.
The allowance for credit losses increased to $22.2 million, or 1.19% of total loans, as of June 30, 2024, compared to $18.8 million, or 1.18% of total loans, as of June 30, 2023. Non-performing loans to total loans remained low at 0.04% as of June 30, 2024.
Luis de la Aguilera, Chairman, President, and CEO of USCB Financial Holdings, stated that the record quarterly earnings and continued strong loan and deposit growth demonstrate the success of the Company's strategic initiatives and the resilience of its business model. He added that the Company remains focused on diversifying the loan portfolio, enhancing fee-based businesses, and maintaining disciplined expense management, all while delivering superior service to customers.
Business Overview
USCB Financial Holdings, Inc. is the bank holding company for U.S. Century Bank, which was established in 2002 and is one of the largest community banks headquartered in Miami, Florida. The Bank offers a wide range of financial products and services, including commercial and consumer lending, deposit accounts, and treasury management solutions, to small and medium-sized businesses, professionals, and individuals in South Florida.
The Company's loan portfolio is well-diversified, with commercial real estate loans comprising 56% of the total as of June 30, 2024, down from 63% four years ago. The Bank has also grown its commercial and industrial, residential real estate, and consumer and other loan segments to reduce concentration risk. The Bank's deposit base is also diversified, with 52% in commercial deposits, 32% in personal deposits, 12% in public funds, and 4% in brokered deposits as of June 30, 2024.
Financial Condition and Liquidity
As of June 30, 2024, the Company had total assets of $2.5 billion, total loans of $1.9 billion, and total deposits of $2.1 billion. The Company's loan-to-deposit ratio was 90.9% as of June 30, 2024, compared to 83.1% as of June 30, 2023, reflecting the strong loan growth during the period.
The Company's liquidity position remains strong, with cash and cash equivalents of $77.3 million and securities available-for-sale and held-to-maturity of $406.1 million as of June 30, 2024. The Company also has access to additional liquidity sources, including borrowing capacity from the Federal Home Loan Bank and the Federal Reserve Bank.
Capital Strength
The Company's capital ratios remain well above regulatory well-capitalized thresholds. As of June 30, 2024, the Company's total risk-based capital ratio was 13.12%, the tier 1 risk-based capital ratio was 11.93%, and the leverage ratio was 9.03%. The Bank's total risk-based capital ratio was 13.01% as of June 30, 2024.
During the second quarter of 2024, the Company paid a quarterly cash dividend of $0.05 per share of Class A common stock and repurchased 25,000 shares of Class A common stock at a weighted average cost of $12.04 per share. As of June 30, 2024, the Company had 547,980 shares remaining authorized for repurchase under its share repurchase programs.
Outlook
The Company remains optimistic about its future prospects, driven by the strength of the Florida economy, which continues to outperform the national average. The Company expects to maintain its momentum in loan and deposit growth, net interest margin expansion, and disciplined expense management.
For the full year 2024, the Company anticipates low-double-digit percentage growth in both loans and deposits, with a net interest margin in the range of 2.80% to 3.00%. The Company also expects to maintain its strong asset quality, with non-performing loans to total loans remaining below 0.50%.
Conclusion
USCB Financial Holdings, Inc. has delivered impressive financial results, driven by its strategic focus on diversifying its loan portfolio, enhancing its fee-based businesses, and maintaining disciplined expense management. The Company's strong liquidity position, capital strength, and positive outlook for the Florida economy position it well for continued success. As the Company celebrates its third anniversary as a public company, it remains committed to delivering value to its shareholders, customers, and the communities it serves.