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DATE

Apr. 24, 2026, 10 a.m. ET

Call participants

  • Chairman, President, and Chief Executive Officer — Lou De La Aguilera
  • Chief Financial Officer — Rob Anderson
  • Chief Credit Officer — William Turner

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Takeaways

  • Net income -- $9.4 million, or $0.51 per diluted share on a GAAP basis, with an operating diluted EPS of $0.47 after normalizing for a tax benefit.
  • Total assets -- $2.8 billion, increasing 6.3% year over year, reflecting steady balance sheet expansion.
  • Loan growth -- Loans rose 10.1% year over year to $2.2 billion, with $188 million in gross loan production for the quarter.
  • Deposit growth -- Deposits increased 8% year over year to $2.5 billion, with specialized business verticals accounting for 30% of deposits ($747 million).
  • Deposit costs -- Total deposit cost declined by eight basis points quarter over quarter to 2.2%, aided by lower-cost funding in private client group (just over 2%), and correspondent banking (1.65%).
  • Net interest margin -- Expanded to 3.27% from 3.10% a year ago; March margin was 3.28%, and management expects it to remain flat or slightly higher near term.
  • Nonperforming loans -- Remained low at 0.16% of total loans, with net charge-offs at zero for the quarter.
  • Allowance for credit losses -- Rose to $26.1 million, equating to 1.16% of the loan portfolio, following a $602,000 provision.
  • Noninterest income -- Reached $4.2 million (15.8% of revenue), with record swap fees of $1.6 million, although swap fees are expected to normalize in subsequent quarters.
  • Efficiency ratio -- Reported at 52.36%, consistent with previous periods, with total expenses at $13.7 million (down $564,000 from Q4, mainly due to last quarter's one-time items).
  • Tangible book value per share -- Rose 8.9% year over year to $12.23, even with AOCI headwinds.
  • Total risk-based capital ratio -- Reported at 14.09%, indicating robust capital strength supporting growth and dividends.
  • Dividend -- Quarterly cash dividend of $0.125 per share was declared and confirmed as sustainable for the remainder of the year.
  • New lending & expansion initiatives -- Launched a new lending team for the Airport West market and expanded association banking and correspondent banking units, targeting high-growth regions and niche verticals.

Summary

USCB Financial Holdings (USCB 1.80%) reported a record quarter fueled by greater loan and deposit growth outpacing prior years, while maintaining stable margins and exceptional asset quality. Management expects continued balance sheet momentum driven by a strong loan pipeline, ongoing investments in specialty deposit verticals, and focused expansion into Broward and Palm Beach counties, including plans to open two to four new branches over the next three years. Strategic investments in relationship-driven banking models, combined with a branch-light and technology-enabled framework, are intended to extend market share without sacrificing operational efficiency. Short-term margin expansion is anticipated as late-quarter loan production accrues to net interest income and as higher-yielding assets replace lower-rate roll-offs. Capital levels are positioned to support ongoing organic growth, measured cost expansion, and a stable dividend as the company executes its three-year plan.

  • Chief Financial Officer Anderson stated, "We are clocking a 1.25% ROA and 16% on equity. I do not see those materially moving down."
  • Chief Executive Officer De La Aguilera highlighted the deposit-rich condominium association vertical, with 29% year-over-year deposit growth and a $160 million deposit balance at quarter end.
  • Association banking loans reached $126 million, reflecting 11.5% annual growth, and Broward/Palm Beach loan portfolios exceeded $445 million despite just one branch in the region.
  • Private client group, correspondent, and HOA verticals are emphasized for further deposit cost stability, with average costs well below the overall deposit rate.
  • Management confirmed that the recent $130 million commercial deposit outflow in Q4 was "anticipated and managed," with end-of-period deposit levels fully recovered in Q1 through broad-based growth.
  • Correspondent banking loans comprised 30% of new production at a 5.13% yield; excluding this segment, new production yields averaged 6.2%.
  • The normalized tax rate for future quarters is guided to be 20.4%.

Industry glossary

  • SOFR: Secured Overnight Financing Rate, a benchmark interest rate used for U.S. dollar-denominated derivatives and loans, widely adopted as a replacement for LIBOR.
  • AOCI: Accumulated Other Comprehensive Income, reflecting unrealized gains or losses excluded from net income, typically from securities or pension plans.
  • Correspondent banking: A business line in which the bank provides financial services, including loans and wire transfers, to other foreign banks, generating both loan and low-cost deposit activity.
  • Efficiency ratio: A measure of noninterest expense as a percentage of total revenue, used to evaluate bank operational efficiency; lower percentages indicate stronger efficiency.
  • Classified loans: Loans identified by risk grading as requiring management attention due to performance or collateral concerns, but not necessarily nonperforming or impaired.

Full Conference Call Transcript

Lou De La Aguilera: Good morning, and thank you for joining us for the USCB Financial Holdings, Inc. first quarter 2026 earnings call. I am Lou De La Aguilera, Chairman, President, and CEO of USCB Financial Holdings, Inc. Joining me today are Rob Anderson, our Chief Financial Officer, and William Turner, our Chief Credit Officer. Rob will walk you through our financial results in detail, and William will review credit quality and portfolio trends. We are very pleased to report on another record quarter highlighted by strong core earnings, disciplined balance sheet execution, and our continued focus on maintaining strong credit quality. For the quarter ending 03/31/2026, the company generated net income of $9.4 million, or $0.51 per diluted share on a GAAP basis.

On an operating or adjusted basis, diluted EPS was $0.47, operating ROAA was 1.25%, ROAE was 15.92%, and the efficiency ratio was 52.36%. These results reflect consistent execution of our long-term business model focused on disciplined growth, prudent risk management, and sustainable profitability. At a high level, total assets reached $2.8 billion, up 6.3% year over year. Loans increased 10.1% year over year from $2.2 billion driven by continued strong, diversified production. Deposits grew 8% year over year to $2.5 billion, supported by specialized business verticals as well as a well-diversified deposit base.

Our deposit-focused business verticals—namely association banking, a private client group, and correspondent banking—have steadily grown to 30% of deposits, or $747 million as of 03/31/2026, a $62 million quarter-over-quarter increase. Net interest margin expanded to 3.27%, up from 3.10% in the prior year, reflecting effective asset deployment and improving funding costs. Importantly, this growth has not come at the expense of credit quality; nonperforming loans remain exceptionally low at 0.16% of total loans, and net charge-offs were effectively zero for the quarter. Our first quarter performance demonstrates the benefits of actions we have taken over the past several quarters to enhance earning power and balance sheet resilience.

Loan production was strong during the quarter with $188 million in gross loan production, over half of which occurred in March, positioning us for continued momentum into the second quarter. While the timing of production limited full-quarter earnings contribution, the pipeline supports future net interest income expansion. On the funding side, we continue to see the benefits of our specialized deposit franchises. Average deposits increased by nearly $212 million year over year, while deposit costs declined to 2.2%, improving by 29 basis points from the first quarter of last year. Capital remains a key strength of the company. During April, our Board declared a quarterly cash dividend of $0.125 per share, reflecting confidence in our earnings durability and capital generation.

Tangible book value per share increased to $12.23, an 8.9% year-over-year increase even after absorbing the market-related AOCI impacts. Overall, it was a balanced quarter with strong earnings, solid growth, stable margins, and strong credit quality, all while maintaining conservative capital levels. The following page is self-explanatory, directionally highlighting nine select historical trends since recapitalization. Consistent, efficient, profitable performance based on conservative risk management is what our team focuses on consistently delivering. With that overview, I will now turn the call over to Rob to review our financial results in greater detail.

Rob Anderson: Thank you, Lou, and good morning, everyone. Looking at pages five and six, I would describe 2026 Q1 as a highly successful quarter for USCB Financial Holdings, Inc. The team posted very solid results, which I am proud to share with you today. The balance sheet, specifically the loan book, continues to grow within our stated range of high single- to low double-digit growth. Deposits increased this quarter, outpacing loan growth and ensuring sufficient liquidity for future lending. Credit remained solid, and our profitability ratios came in line with internal projections.

While we made $0.51 on a GAAP basis, the company recognized a $619,000 income tax benefit in the quarter due to an adjustment of the deferred tax asset relating to 2025. Adjusting our GAAP figures for this one item, you will find the operating or adjusted numbers on page six. This includes operating return on average assets of 1.25%, operating return on average equity of 15.92%, an efficiency ratio of 52.36%, operating diluted earnings per share of $0.47, NPA to assets of 0.13%, allowance for credit losses stable at 1.16%, total risk-based capital at 14.09%, and tangible book value per share at $12.23. So with that overview, let us discuss deposits on the next page.

Average deposits for the quarter totaled approximately $2.4 billion, representing an increase of $212 million year over year. On a linked-quarter basis, average deposits declined by $26 million and that sequential movement requires some context. Late in the fourth quarter, a large commercial client withdrew approximately $130 million, which reduced our average deposit balance entering the first quarter. Importantly, this was an anticipated and managed outflow, and the end-of-period chart demonstrates we have since recovered from that decline. On an end-of-period basis, total deposits increased by $149 million during the quarter, highlighting both the resilience of our franchise and our ability to respond quickly to large, discrete client movements. Equally important is deposit pricing.

Total deposit cost declined eight basis points quarter over quarter to 2.2%, which played a meaningful role in allowing us to keep the net interest margin stable. With ongoing rate volatility, we anticipate deposit costs will stay near current levels. Although some competitors are offering higher rates, a relationship-driven deposit base should ensure stable pricing and funding. So with that, let us move on to the loan book. On an average basis, loans increased $46.8 million quarter over quarter, which equates to an 8.9% annualized growth rate. Year over year, average loans grew 9.6% and well within management's expectations.

Net loan growth at the end of the period was $52 million, showing strong production momentum, and two key dynamics stood out on this. First, a significant portion of our loan production occurred late in the quarter, and second, loan payoffs occurred early in the quarter. This timing is visible in the chart and translates to a lower earnings impact in the quarter. More specifically on page nine, gross loan production totaled $188 million during the quarter, with $114 million, or 60%, closing in March. Additionally, SOFR rates were lower for most of the quarter, further influencing loan yield metrics. Correspondent banking loans represented 30% of quarterly production and carried a new loan yield of 5.13%.

Excluding this segment, weighted average yield on the new loan production was 6.2% for the quarter. It is important to remember that these correspondent loans are short term in nature, typically 180 days, tied to SOFR, and serve a strategic purpose by adding asset sensitivity and optionality to the balance sheet. Additionally, these banks have over $250 million in low-cost deposits with significant wire volume, a very profitable business vertical for USCB Financial Holdings, Inc. Looking ahead, we expect new loan production yields to remain around these levels. Turning to page 10, net interest margin was flat at 3.27% for the quarter.

Despite successfully lowering deposit costs, overall margin was impacted by lower-than-expected loan interest income largely driven by timing and volatility rather than structural pressure. Specifically, interest income was constrained, as mentioned before, by a combination of factors: loan closings that occurred late in the quarter, elevated payoffs early in the period, and lower SOFR rates throughout much of the quarter. These pressures were partially offset by improvements in deposit pricing and higher yields in the securities portfolio, which helped stabilize our margin. Importantly, we have now expanded [inaudible] after quarter, and the underlying trajectory remains intact.

As recently originated loans season into earnings, we expect incremental improvement in interest income, which should support a very modest margin expansion later this year. That said, ongoing rate volatility may limit the degree to which deposit costs can move materially lower from here, and our focus remains on disciplined pricing, balance sheet mix, and execution, all aimed at protecting the margin while positioning the franchise for improved profitability. With that, let me pass it over to William to discuss asset quality.

William Turner: Thank you, Rob, and good morning, everyone. As you can see from page 11, the first graph shows the allowance for credit losses increased to $26.1 million at the end of the first quarter and at an adequate 1.16% of the loan portfolio. We made a $602,000 loan provision to the allowance that was driven mostly by the $52 million in net loan growth. There were no loan losses during the quarter. The remaining graphs on page 11 show the nonperforming loans at quarter end grew by six basis points, or almost $500,000. The nonperforming ratio stands at 0.16% of the portfolio, and these loans are well covered by the allowance and compare favorably to peer banks at year-end 2025.

The increase was related to two past-due residential real estate loans that are in the process of collection. All nonperforming loans are well collateralized, and no loss is expected. Classified loans also increased during the quarter to $6.8 million, or 0.3% of the portfolio, and represent 2.2% of capital. The increase is related to the two nonperforming residential loans previously mentioned. No losses are expected from the classified loan pool. The bank continues to have no other real estate. Overall, the quality of the loan portfolio is good. Now let me turn it back over to Rob.

Rob Anderson: Thank you, William. Total noninterest income for Q1 was $4.2 million, up from the previous quarter and accounting for 15.8% of total revenue. Service fee income reached $3.1 million, mainly driven by record swap fees of $1.6 million amid strong loan activity and strong sales execution with rate volatility in the quarter. While fee performance was exceptional this quarter, we expect swap-related fees to normalize in Q2 as market conditions stabilize. Overall, noninterest income performance in the quarter highlights the diversification of our revenue streams and the value of our fee-based capabilities. Let us take a look at our expenses.

Our total expenses amounted to $13.7 million, which is $564,000 less than the previous quarter, predominantly due to various one-time items in Q4 of last year. The efficiency ratio stood at 52.4% for the quarter, which is consistent with prior periods. Additionally, headcount increased this quarter, and more hires are planned for Q2. You should expect expenses to increase but at a measured pace, and the efficiency ratio should remain in the low-50% range. In a minute, Lou will speak about some specific strategies that will tie this together. So with that, let us move on to capital. Capital ratios remain robust and continue to strengthen. Total risk-based capital currently stands at 14.09%.

The dividend remains at $0.125, and given our projected earnings and capital generation profile, we anticipate further improvement in capital ratios over the coming quarters. So with that, let me turn it back to Lou for some closing comments.

Lou De La Aguilera: Thank you, Rob. Before we conclude, I would like to briefly expand on how our operating model is translating into tangible growth opportunities across South Florida, particularly in Miami-Dade, Broward, and Palm Beach Counties. In March, we launched a new lending team located at our recently remodeled Doral headquarters banking center. This new production unit will focus on developing one of Miami-Dade's densest small-business, high-growth areas, the Airport West market, encompassing the adjacent cities of Doral, Hialeah, and Medley. USCB Financial Holdings, Inc. has banking centers in each of these markets, and this new lending team will partner with each branch to leverage business development opportunities.

Led by a proven senior lender as team leader along with two business development officers and supported by a portfolio manager and lending assistant, existing staff has been reassigned to largely field this team. To round off this new production unit, a new senior C&I lender has been hired. In effect, this new team will have a total of two new production hires, as the rest is composed from current team members. Another production unit, which is expanding, is our association banking team, which was launched as a business vertical focused on the deposit-rich condominium market. This unit has grown to serve over 470 condominium associations in the Tri-County market, of which 136 are in the Broward–Palm Beach markets.

At quarter end 2026, this business unit totaled $160 million in deposits, posting a 29% year-over-year deposit growth rate. The association banking team also closed Q1 2026 with $126 million in loans, reflecting an 11.5% annual growth rate. Led by an experienced Senior Vice President, the Association Banking Unit has hired a new production officer who will focus on developing Palm Beach and the Treasure Coast, from Port St. Lucie north to Vero Beach. The Tri-County Miami-Dade MSA reports approximately 13,000 condominium associations housing over 600,000 condo units, denoting a clear opportunity for growth.

Since 2015, USCB Financial Holdings, Inc. has tactically adopted a branch-light, technology-enabled model, consolidating our physical footprint from 18 locations to 10 while more than tripling the size of our balance sheet. This approach has allowed us to scale efficiently, deploy capital productively, and service clients through a relationship-driven, high-touch model without the overhead associated with a traditional large branch network. Our investments in digital capabilities and centralized operations enable our bankers to focus on what matters most: local market knowledge, speed of execution, and client service. The results in Broward and Palm Beach Counties provide compelling proof of concept.

As of 03/31/2026, the bank serves over 2,100 clients across these two counties, with approximately $445 million in loans and $415 million in deposits, despite operating only one physical branch location between them. In Broward County alone, we have built a base of 1,850 customers supported by $234 million in loans and $259 million in deposits, while Palm Beach County has grown to 253 customers, $122 million in loans, and $156 million in deposits. Importantly, this growth has been driven primarily through referral activity, direct calling efforts, and our specialized verticals, rather than reliance on legacy branch traffic.

These metrics reinforce our belief that there is substantial unmet demand for a commercially focused, relationship-driven bank led by local decision makers who understand the market. As a result, we believe the time is right to thoughtfully extend our physical presence by opening two to four strategically located branches in Broward and Palm Beach Counties over the next three years. These locations will be designed to complement, not duplicate, our existing branch-light strategy and will be staffed by proven local talent with deep market relationships, allowing us to further capture market share, deepen client penetration, and accelerate organic growth while maintaining strict discipline around returns and expense efficiency.

We view this next phase of expansion not as a departure from our model, but as a natural evolution, deploying physical offices when the data already demonstrates scale, profitability, and long-term opportunity. The three strategies I have just outlined align well with USCB Financial Holdings, Inc.'s relationship-driven business model. Growth in professional firms, closely held businesses, and income-producing real estate continues to generate high-quality loan and deposit opportunities. Our specialized verticals and conservative underwriting allow us to participate in this growth while maintaining excellent credit quality. Simply put, Florida's strength maintains a powerful headwind for USCB Financial Holdings, Inc., and we believe the state's long-term fundamentals continue to support sustainable growth opportunities for our franchise.

With that said, operator, we are now ready to open the line for Q&A.

Operator: We will now open the call for questions. At this time, we will begin the question-and-answer session. To ask a question, you may press star and then 1 using a touch-tone telephone. To withdraw your question, you may press star and 2. If you are using a speakerphone, we ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then 1 to join the question queue. Our first question today comes from Will Jones from KBW. Please go ahead with your question.

William Bradford Jones: Yeah, hey. Thanks. Good morning, guys.

Rob Anderson: Good morning.

William Bradford Jones: Hey, Rob, I wanted to start firstly on the margin. This quarter, it felt like, just with some of the loan dynamics with the payoffs early and the growth late, that we did not really get to see the fully optimized margin from the bond restructure that you guys did and some of the liquidity deployment that you had planned. Is there a way to look at what a March NIM would have looked like, just as we think about a good starting point for the margin going forward?

Rob Anderson: Yeah. On the margin, our net interest income was down slightly. You had the day count in there, of course, but also we had elevated payoffs real early in the quarter. We had some clients that sold some properties that left, and then around 60% of our loan production occurred in March. The March margin was right around 3.28%. It has been pretty steady for the three months. I would anticipate all the additional earning assets that came in mainly in the last two weeks of March to help fuel net interest income for the second quarter. We have a very strong pipeline right now, probably one of the strongest we have seen.

April activity was strong on the loan side as well. So I would anticipate flat to slightly higher margin given what we are doing on the deposits, and we do not have to pay up for deposits either. So I would model flat to slightly up near term.

William Bradford Jones: Do you have just the new incremental deposits this quarter—what that is costing and kind of what the competitive dynamics are looking like today?

Rob Anderson: Yeah. So we grew about $149 million in the quarter, and it was very broad based. Lou mentioned about $62 million of that came from our specialty verticals, meaning the private client group, correspondent banking, and our homeowners association, which we have been emphasizing and will continue to put a lot of resources behind. The balance of it came across the board, and in the meantime, we decreased the cost of the entire deposit book by eight basis points in the quarter. So it is not like we are paying up for that funding. Our DDA has been strong in the early parts of April.

So we feel pretty confident about maintaining our deposit costs in and around the current levels. I can tell you the specialty verticals have a much lower deposit cost than overall. For instance, our private client group deposit cost in that book is a little over 2%, correspondent banking is probably around 1.65%, and our HOA deposits are probably around a similar amount.

William Bradford Jones: Alright. That is great. That is very helpful color. Then I guess just dovetailing a little on some of your final thoughts there. It feels like the next two, three, four, five years are going to be a pretty transformational period for you guys just in terms of what you want to do with the growth of the franchise. Within that comes a little bit of upfront investment, as you talked about. But it still feels like you are going to carry some pretty solid revenue momentum just from that growth.

So what is the right way to think about operating leverage as we look out maybe over this year and next, and then maybe curtail that on some near-term profitability goals that you might have?

Rob Anderson: It is a good question, Will. We have been modeling that out. We do have a really strong three-year strategic plan. It does involve some investments, mainly moving up to Broward and Palm Beach, in addition to investing heavily in Miami-Dade. I think the word that I would use will be measured. We are clocking a 1.25% ROA and 16% on equity. I do not see those materially moving down. Of course, asset quality has been our cornerstone, but we will be making investments. I think you can expect the expenses to tick up, but we are still growing the balance sheet at a double-digit pace and compounding our equity around 16%.

That should translate into good earnings and returns for our shareholders that are well within what I would say is our current performance.

Lou De La Aguilera: And to add to that, the fact that we have built out in Broward and Palm Beach the portfolios we have in loans and deposits—so we are at $445 million in loans and over $415 million in deposits—that is as large as some smaller banks up there that have multiple branches. So we already have the demand. It is a clear proof of concept. Over 2,100 customers. We feel that strategically, opening banking centers, we can not only service those customers more readily, but also attract new ones. As you know, over the last decade, there has been a lot of M&A activity in Broward and Palm Beach, and there is, I think, a wide-open opportunity for us.

William Bradford Jones: Yeah. Well, it is certainly a fun growth story to cover. So look forward to seeing what you guys do over the next few years.

Lou De La Aguilera: Thanks, Will.

Operator: Our next question comes from Michael Rose from Raymond James. Please go ahead with your question.

Michael Edward Rose: Hey, good morning, guys. Thanks. I just wanted to follow up on some of the deposit commentary, and I know that was kind of your one priority coming into the year. You executed both on the interest-bearing front, but especially on the NIB front; mix remained relatively stable. As we think about efforts to ramp up or continue loan growth at higher levels—and, Lou, you did a really good job outlining some of the priorities and strategies as we move forward—and I know you described some of the deposit aspects as well, but should we anticipate any change in that mix?

And then maybe just from a shorter-term perspective, Rob, what are you assuming in terms of rate cuts, if any? It seems like the forward curve does not have any in there. Just the ability to put a cap on deposit costs for some of the growth in some of the specialty verticals? I know there is a lot in there, but just trying to frame up the deposit conversation.

Rob Anderson: Maybe I will start. Early in the quarter—February time frame—it seemed like rates were starting to move down. Then March hit, and rates started moving back up. We are not anticipating rate cuts near term, but there is still, I think, one in the forward curve going forward. As a reminder, we still profile liability sensitive, just slightly, which I think would benefit us, and we have been able to outperform our modeling. So I think if we do get the rate cuts, that will be beneficial to the margin. We have put a lot of emphasis on our deposit book because we feel that is where we add franchise value—having small, granular, low-cost deposits across the board.

So we have made investments in our private client group, in our HOA space, in our correspondent banking, and of course in our business banking and just how we price and go after deposits across the board. We are talking to the sales team constantly, whether it is in pipeline meetings or monthly leadership meetings; that is a heavy focus for us. I think you can continue to see both loans and deposits growing at double digits. We have given that guidance before. This quarter was a little outsized on the deposit side, but we needed that given what we had at year-end.

I do not think the deposit cost is going to move materially next quarter unless we have a rate cut, which is not anticipated at this time.

Michael Edward Rose: Okay. Perfect. I appreciate it. And then I think I heard, Rob, earlier that you expect swap fees to normalize—not surprised there. Service charges were up this quarter, which is nice to see. I think you previously talked about a $4 million to $4.5 million a quarter kind of run rate for fee income. I know it is a smaller piece relative to spread income for sure, but any updated thoughts there as we move forward and you grow on the deposit side?

Rob Anderson: On the noninterest and on the fee side, the swaps were the outstanding item in the quarter. I think the sales team really knows how to work with their customers, position that as a product where they can choose either a fixed rate or a swap. That was elevated. February we had a fair amount that locked in at a little bit tighter spreads. March came in a little tighter, but February was a good month. I think you will see the swap number come back down to maybe $700,000 a quarter, and that would put maybe total fees, all else being equal, right around maybe $3.07 million, somewhere around there for the quarter.

But certainly $4.2 million was a nice quarter for us and a standout, and the team did a great job.

Michael Edward Rose: Okay. Great. And maybe just one final one for me. Obviously, you continue to have really strong capital levels. They bumped up higher this quarter despite pretty strong balance sheet growth. Any thoughts around normalized capital levels as you execute upon these growth plans? And maybe what that could translate to from either a ROTCE or an ROA perspective over the intermediate to longer term as we think about the story playing out with all the growth initiatives you talked about earlier?

Rob Anderson: This year, we increased our dividend to $0.125 a quarter. I think that will remain at that level for the current time. Our capital is really supporting our growth, but when we are compounding our capital at 16%–17%, which I think is a great return for a bank our size, we are going to build capital. We are growing our earnings faster than our balance sheet, so that should continue to grow our capital levels. I think our capital levels are good from where they are, but we will continue to deploy it at a profitable pace as well.

We may rethink the dividend, but I would say that is pretty safe at the current levels for the balance of the year.

Michael Edward Rose: Great. Definitely a high-class problem.

Lou De La Aguilera: Thank you, Michael.

Operator: Our next question comes from Feddie Strickland from Hovde. Please go ahead with your question.

Feddie Justin Strickland: Hey, good morning. It sounds like there is maybe still a little bit of room for the margin to grow from here, maybe on the yield side. It looks like the weighted average yield on new production was around 6.20% in the deck. What is the pickup you are seeing there versus what you are seeing on loans rolling off, particularly maybe fixed-rate CRE coming up for repricing?

Rob Anderson: It is a good question. Our production—the pipeline—is really strong right now. It is probably one of the strongest that we have had in a long time, and it is more balanced earlier in the quarter. Outside of the correspondent piece, which was a little bit lower this past quarter, the yields were around 6.20%. I think today they are hovering right around that for really solid, gold-plated CRE-type properties. I would anticipate that we would be right around the same level. I do not see that moving significantly higher or significantly lower on the loan yield. We have not changed our pricing significantly, and our pipeline is really strong at those levels.

We tend to want to keep the sales team focused with volume and pricing that is in the market today, where we do not have to go chase up. Given where we are in terms of our growth and what we are putting on, we do not have to go out and chase a lot of lower-yielding assets. I would say at or near the current levels would be good for modeling, Feddie.

Feddie Justin Strickland: And, Rob, what I was trying to get at is: do you have anything that is coming off at lower rates that is being replaced with that 6.20% or so? That is what I am curious about.

Rob Anderson: Yeah, we do. We have some that we originated in 2021 that are still at lower rates and will be moving off. I think we had a payoff the other day at 4.85%. That was probably maybe a $7 million to $10 million loan that came off. I do not have the exact number that is rolling off, but we would anticipate—given we had over $50 million of net loan growth—that $50 million is a good number to model for the coming quarter as well, given our pipeline is similar to what we had, maybe a little bit more elevated.

Feddie Justin Strickland: Appreciate that. That is helpful. And then, on the correspondent banking side, obviously strong growth there this quarter. Was that kind of expected or seasonal, or was any of that driven by some of the geopolitical turmoil we have seen lately?

Lou De La Aguilera: That was planned, Feddie. We want to grow that book responsibly. Our focus is the Caribbean Basin and Central America. To that effect, we have onboarded three new banks this quarter, and we are looking at an additional five. Our team just visited with one with our lead director in Central America. We do quarterly visits, and just like a domestic customer, they are eager for customer service and execution, and I think that we are poised to do that. On the loans, keep in mind that the term of these loans is 180 days. The business is really relationship driven because not all the banks borrow, but all of them have deposits, and they are low-cost deposits.

We do a tremendous amount of wire activity, so for us, it is a very good business. It gives us diversity on the loan side and cheap funding, and these are very established banks. We look very carefully at country risk, and the banks by and large are very well capitalized and very established.

Feddie Justin Strickland: Great color. Thanks for that, Lou. And just one last quick one here, Rob. I know you had a one-time tax item this quarter. What should we expect as a good normalized tax rate going forward?

Rob Anderson: For modeling, I would use about 20.4%. I think that is a good rate to use going forward.

Feddie Justin Strickland: Alright. Perfect. Thanks for taking my questions.

Operator: Star and then 1. To withdraw your questions, you may press star and 2. Our next question comes from Howard Feinglass from Freedom Capital. Please go ahead with your question.

Howard Feinglass: Sorry, hit it by accident.

Operator: Mr. Feinglass, please proceed with your question.

Lou De La Aguilera: I believe he said it was by accident. Gotcha.

Operator: Once again, if you would like to ask a question, please press star and 1. I am showing no additional questions at this time. I would like to turn the floor back over to the management group for any closing comments.

Lou De La Aguilera: Thank you. In closing, the first quarter was an excellent start to 2026, effectively a strong kickoff to our three-year strategic plan. We delivered record earnings, continued to grow the balances prudently, maintained strong margins, and preserved outstanding credit quality while returning capital to shareholders. Our franchise remains well positioned in one of the most attractive banking markets in the country, supported by a differentiated business model and a proven management team. We appreciate the continued confidence and support of our shareholders, clients, and employees, and look forward to speaking with you next quarter. I wish you all a great day, and thank you for your continued confidence in USCB Financial Holdings, Inc.

Operator: And with that, we will be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.