USCB Financial (NASDAQ:USCB) management used its fourth-quarter 2025 earnings call to highlight a year of balance sheet growth and solid credit performance, while also explaining two notable non-operating items that weighed on reported quarterly results. Executives said actions taken late in the year—particularly a securities portfolio restructuring—were designed to improve net interest margin and earnings power in 2026.
Full-year growth and key balance sheet metrics
Chairman, President and CEO Lou de la Aguilera said 2025 was “another successful year” focused on executing the company’s business plan. Total assets reached $2.8 billion, up 8.1% year-over-year. Loans grew by $216 million, or 11%, which management attributed to strong commercial activity and disciplined underwriting. Deposits increased by $171 million, or 7.9%, and tangible book value per share rose 10.8% year-over-year to $11.97.
Reported EPS impacted by securities sale and prior-period state tax expense
For the fourth quarter, de la Aguilera said GAAP diluted EPS was $0.07, reflecting two items management characterized as non-operating. First, USCB sold $44.6 million of lower-yielding available-for-sale securities as part of a portfolio repositioning, resulting in an after-tax loss of $5.6 million, or $0.31 per diluted share. Second, the company recorded $0.06 per share of income tax liability expense tied to prior periods for income generated in states outside Florida.
Excluding those two items, management said operational diluted EPS was $0.44, which it described as consistent with the prior quarter. Anderson said that, on this same adjusted basis, operating return on average assets was 1.14% and operating return on average equity was 15.05%. The operating efficiency ratio for the quarter was 55.92%.
Anderson said the securities restructuring was deliberate and aimed at improving net interest margin. The securities sold represented about 12.6% of the AFS portfolio as of Nov. 30, 2025, and carried a weighted average yield of 1.70%. Proceeds were reinvested into loans yielding 6.15%, according to management.
Deposits, loan growth, and margin outlook
Anderson said average deposits were down $3.9 million from the prior quarter but up $314.6 million year-over-year. A positive development in the mix was a $26.4 million increase in DDA balances from the third quarter, representing 24.3% of total average deposits. On pricing, interest-bearing deposit rates decreased 27 basis points to 3.02%, while total deposit costs improved 25 basis points sequentially and 20 basis points year-over-year.
In the Q&A session, Anderson addressed quarter-end deposit changes, citing two specific items occurring in the final two weeks of the year: a long-term client moved “well over $100 million” in deposits as part of a previously communicated business decision, while another roughly $50 million swing occurred in correspondent banking deposits. Anderson said the correspondent swing “has pretty much been recovered already in January,” and noted that correspondent clients often pay down loans at year-end. He added that the client relationship remains substantial, with more than $112 million still on deposit.
On loan growth, management described strong production late in the quarter. Average loans rose $31.9 million from the prior quarter (6.02% annualized) and $172.3 million year-over-year. Anderson said gross loan production totaled $196 million in the fourth quarter, with $83.5 million, or 43%, coming from correspondent banking. Those correspondent loans were described as short-tenored 180-day loans tied to SOFR, with a 5.26% new-loan yield, which contributed to a modest decline in overall portfolio yield to 6.16% amid Federal Reserve rate cuts. Excluding correspondent production, new loan yields were 6.43% for the quarter, and management said it expects loan yields to remain above 6% in 2026.
Discussing net interest margin, Anderson said the balance sheet is liability sensitive, and the company’s asset-liability model suggests it remains positioned to benefit from an easing rate cycle. He noted that of the $2.18 billion loan portfolio, 61% (about $1.33 billion) is variable-rate or hybrid, and approximately $692 million is scheduled to reprice or mature over the next year.
When asked about near-term margin performance, Anderson said he would “model flat to slightly up” for the first quarter, noting some deposit runoff that was partially backfilled with higher-cost FHLB advances.
Credit quality and reserve levels
Chief Credit Officer Bill Turner reported the allowance for credit losses rose to $25.5 million at quarter-end, representing 1.16% of the portfolio. The company recorded a $480,000 provision driven mostly by $59 million in net loan growth, and Turner said there were no loan losses during the quarter.
Non-performing loans increased by about $2 million, with the non-performing ratio at 0.14% of the portfolio. Turner attributed the change to two past-due residential real estate loans in collection, which he said are well collateralized and not expected to result in losses. Classified loans rose to $6.4 million, or 0.29% of the portfolio, also tied to the same two loans. Turner added that the bank continues to have no other real estate.
Turner said the loan portfolio ended the year just under $2.2 billion, with commercial real estate representing 57% of the portfolio (about $1.2 billion) centered in retail, multifamily, and owner-occupied loans. He also noted weighted average loan-to-values in the CRE portfolio were below 60% and debt service coverage ratios were described as adequate by segment.
Expenses, capital actions, and 2026 priorities
Anderson said non-interest income, excluding the securities loss, was $3.3 million in the fourth quarter and consistent with prior quarters. On expenses, total expense base was $14.3 million and included $759,000 related to a new bonus plan for non-management personnel and enhancements to sales incentives and retention programs. Anderson said that $759,000 represents an annual expense that will be accrued monthly going forward based on performance. Consulting and legal fees increased $315,000 from the prior quarter, including $275,000 tied to non-routine expenses related to a universal shelf offering and share repurchase earlier in 2025. Other operating expenses rose $137,000 due to force-placed insurance for specific borrowers, which management said it expects to be reimbursed for in coming quarters.
Adjusting for the $759,000 and $275,000 items, Anderson said fourth-quarter expenses would have been $13.2 million, producing an adjusted efficiency ratio of 51.87%, and he suggested $13.2 million as a baseline for modeling 2026 expenses, with gradual increases expected due to hiring.
On capital, management reiterated actions taken in 2025, including a $40 million subordinated debt issuance in the third quarter and the repurchase of about 2 million shares—roughly 10% of the company—at a weighted average price of $17.19 per share. The company also announced the board approved a 25% increase in the quarterly cash dividend to $0.125 per share, citing strong operating earnings. Anderson said the bank’s regulatory capital levels remain well above well-capitalized thresholds, and management looks to deploy capital where return on average equity is between 15% and 17%.
Looking to 2026, de la Aguilera said expanding and strengthening the deposit base is a top priority, emphasizing a relationship-driven approach. He said USCB plans to lean on four business lines—Business Banking, Private Client Group, Association Banking, and Correspondent Banking—and provided deposit and growth targets discussed on the call:
- Business Banking: ended 2025 with nearly $400 million in deposits; launching a new team focused on Doral, Medley, and Hialeah with an emphasis on SBA and C&I lending, operating accounts, and treasury services.
- Private Client Group: grew deposits 18% to $300 million; adding relationship talent with hires expected between Q1 and Q2 to deepen professional services relationships.
- Association Banking: management set a 2026 deposit growth target of $100 million; the team manages more than 480 homeowner association relationships and is focusing on property management company relationships.
- Correspondent Banking: grew to $235 million in deposits by year-end; focus includes onboarding three to five new correspondent banks and expanding trade finance and fee income opportunities.
In Q&A, de la Aguilera also discussed the bank’s SBA initiative, describing it as an extension of work launched about four years ago. He said the SBA effort delivered over $1 million in fee income last year and that management would like to grow annual volume over the next three years to about $40 million to $50 million.
Closing the call, de la Aguilera said the company’s focus remains consistent performance, growing high-quality loans, strengthening core funding, and disciplined risk management, while continuing to invest in people and return value to shareholders.
About USCB Financial (NASDAQ:USCB)
USCB Financial (NASDAQ: USCB) is a bank holding company headquartered in Columbia, South Carolina, serving as the parent company of United Security Bank. Established to support community banking in the Midlands region, the company focuses on relationship-driven financial services tailored to both individuals and businesses. As a regional player, USCB Financial emphasizes personalized service through a network of full-service branch offices.
The company’s core business activities include commercial and consumer lending, deposit products and alternative delivery channels.
