[Management View]
USCB Financial Holdings reported record profitability metrics for Q2 2025, supported by robust loan and deposit growth. Key metrics include net income of $8.1 million, or $0.40 per diluted share, a 29% increase compared to the prior year. Strategic priorities include enhancing strategic flexibility through a $100 million universal shelf offering and securing an investment grade rating from Gold Bond Rating Agency.

[Outlook]
Management expects stable to improved net interest margin in a declining rate environment and outlined a strong pipeline in SBA lending and commercial loan origination. The $95 million in late-quarter loan closings are expected to materially benefit net interest income in Q3 2025.

[Financial Performance]
USCB Financial Holdings posted a return on average equity of 14.29%, a return on average assets of 1.22%, and a net interest margin of 3.28%, with improvement on both a quarterly and yearly basis. Efficiency ratio improved to 51.77%, the lowest since 2021. Total loans increased by $70 million sequentially and $229 million year-over-year. Deposit growth was strong, with average deposits up 13.7% annualized from the prior quarter.

[Q&A Highlights]
Question 1: Is the strategy different trying to gather international deposits as opposed to domestic deposits? What is the realistic opportunity for deposit growth here?
Answer: The Global Group manages a portfolio of 30 banks in the Caribbean Basin and Central America. The strategy involves upgrading b banks to a, maintaining and growing a banks, and growing c banks. The investment grade rating will allow USCB to raise deposits from c's to b's and from b to a's, with potential growth from three to five new banks in 2026.

Question 2: What do you see as the incremental cost of deposits on international customers compared to domestic customers?
Answer: The cost of international deposits is cheaper than the overall funding cost, at 1.74%. These deposits are priced fairly low and are below the overall cost of deposits.

Question 3: Do you still see the same NIM upside if rate cuts occur later in the year?
Answer: In a rate cut environment, USCB's liability-sensitive balance sheet should improve margins. The money market book provides opportunities to reduce rates, helping margins.

Question 4: What is the loan pipeline mix for the next six months, and how does it change with rate cuts?
Answer: The pipeline is balanced with business coming from various verticals, including yacht loans, HOA side, and commercial loans. Management expects strong SBA 7(a) volume, potentially doubling from last year.

Question 5: What were the biggest drivers for DDA growth during the quarter?
Answer: New hires focused on deposits and initiatives to gather low-cost core deposits contributed to DDA growth. The team is incentivized to gather deposits, particularly DDA.

Question 6: What is the size of the international deposit book, and what could it grow to as a percentage of deposits?
Answer: The international deposit book is $268 million, slightly over 10% of total deposits. It has never been above 15% and is expected to grow in tandem with the balance sheet.

Question 7: How does M&A factor into hiring plans, and are there opportunities for acquisitions?
Answer: Management maintains relationships with local CEOs and is opportunistic about hiring and acquisitions. Dislocations from mergers provide opportunities for talent additions.

Question 8: What is the expected loan growth rate for the next couple of quarters?
Answer: Management anticipates low double-digit loan growth, with a solid pipeline and consistent new loan production.

[Sentiment Analysis]
Analysts and management expressed optimism about USCB's growth trajectory and strategic initiatives. The tone was positive, with confidence in achieving continued strong profitability and operational efficiency.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|-------------------------------|---------------|---------------|---------------|
| Net Income | $8.1 million | $7.2 million | $6.3 million |
| EPS (Diluted) | $0.40 | $0.35 | $0.31 |
| Return on Average Equity | 14.29% | 13.5% | 12.8% |
| Return on Average Assets | 1.22% | 1.15% | 1.10% |
| Net Interest Margin | 3.28% | 3.20% | 3.15% |
| Efficiency Ratio | 51.77% | 52.5% | 53.0% |
| Total Loans | $2.1 billion | $2.03 billion | $1.87 billion |
| Average Deposits | $2.3 billion | $2.2 billion | $2.02 billion |

[Risks and Concerns]
Potential risks include market volatility affecting loan and deposit growth, interest rate changes impacting net interest margin, and geopolitical risks affecting international deposits. Management is focused on conservative risk management and strategic initiatives to mitigate these risks.

[Final Takeaway]
USCB Financial Holdings delivered another record quarter with strong profitability metrics and strategic growth initiatives. The company's robust loan and deposit growth, coupled with strategic flexibility through a universal shelf offering and investment grade rating, positions it well for continued success. Management's focus on conservative risk management and strategic execution supports a positive outlook for the upcoming quarters.