USCB Financial (NASDAQ:USCB) reported record quarterly earnings for the third quarter of 2026, supported by year-over-year loan growth and net interest income, while management outlined continued investments in deposit gathering, commercial lending and technology.
Net income totaled $9.5 million, or $0.51 per diluted share, compared with $0.49 per diluted share in the prior quarter and an increase of 13.3% from a year earlier. For the first nine months of 2026, the company generated approximately $28 million in net income, exceeding its reported earnings for any full year since its initial public offering, President and CEO Lou de la Aguilera said.
Return on average equity was 16.03%, while return on average assets was 1.27%. Tangible book value per share increased 7.5% year over year to $12.42.
Net Interest Income Holds Near Record Level
Net interest income was $24.3 million, essentially unchanged from the prior quarter’s strong level and up $3 million, or 14.2%, from a year earlier. The net interest margin was 3.37%, down from 3.49% in the second quarter but 23 basis points above the year-earlier level. The margin exited September at 3.41%.
Chief Financial Officer Rob Anderson said more than half of the sequential margin decline—seven basis points—resulted from lower loan fee income tied to payoff activity. Funding mix changes toward interest-bearing deposits and borrowings reduced the margin by three basis points, while lower income on other earning assets accounted for another two basis points.
Average loans rose $50 million from the preceding quarter, representing 8.8% annualized growth, and increased $210 million, or 10%, year over year. At quarter-end, loans totaled $2.3 billion, up 9% from a year earlier. New loan production reached $156 million, up 18% from the third quarter of 2025, while payoffs and amortization totaled $155 million.
The average coupon on new loans increased 12 basis points to 6.02%. Excluding correspondent banking loans, new production carried an average coupon of 6.29%, above the company’s portfolio yield. Anderson said USCB had $610 million of loans repricing in the fourth quarter at a weighted-average yield of 6.37%, along with $106 million of maturing loans, primarily short-term correspondent banking loans.
Management said it expects fourth-quarter net interest margin in the 3.40% range, broadly in line with the September exit rate. The company also expects to use returning public funds and new relationship deposits to reduce higher-cost wholesale borrowings.
Deposit Growth and Expansion Initiatives
Average deposits were $2.5 billion, up $22.3 million from the second quarter, or 3.6% on an annualized basis. Average demand deposit account balances increased $40.7 million, or 7.2%, from a year earlier. Total deposits were up $101 million, or 4.3%, since year-end on an end-of-period basis.
Quarter-end balances included an approximately $54 million seasonal outflow of public funds, which management expects to return later in the year. Excluding public funds, deposits grew about $48 million during the quarter, Anderson said.
Total deposit costs were 2.19%, down 34 basis points from a year earlier, while the cost of interest-bearing deposits was unchanged from the second quarter at 2.90%. Anderson said a modest increase in total deposit costs during the quarter reflected mix changes as some demand deposit balances shifted into interest-bearing accounts rather than a change in pricing.
During October, the company added a four-person deposit-focused banking team from a national competitor. De la Aguilera said the team had collectively managed more than $700 million in deposits and will be based in the company’s Hollywood and Aventura banking centers, supporting its Broward County presence.
USCB also continued building its fourth commercial banking production team, headquartered in Doral. The company has hired two commercial lenders and a portfolio manager, with additional roles expected to be filled in the fourth quarter. Management said the team will focus on commercial lending, treasury management, owner-occupied real estate financing, business deposits and expanded SBA lending in the Doral, Medley and Hialeah corridor.
Credit Metrics Remain Concentrated Despite Rise in Nonperforming Loans
Credit quality remained largely stable, though nonperforming loans increased to $7.7 million, or 33 basis points of total loans, from $2.1 million, or nine basis points, at the end of the second quarter. Chief Credit Officer Sergio Garrido said the increase was primarily attributable to one loan that the company is monitoring and managing closely.
Classified loans rose to 44 basis points of total loans from 20 basis points at June 30. Net charge-offs were $23,000 for the quarter, while the provision for credit losses was $53,000.
The allowance for credit losses increased $317,000 to approximately $27 million, equal to 1.16% of total loans, compared with 1.15% in the preceding quarter. Garrido said the rise in nonperforming and classified loans was concentrated, while loss experience remained limited.
Fee Income and Expenses
Non-interest income was $2.7 million, which Anderson said was below management’s expectations. Client demand for swaps slowed amid elevated yields, and SBA gain-on-sale activity was lighter than planned. Wire fees, the company’s largest recurring fee category, rose to $645,000, supported by correspondent banking relationships.
Management said it expects non-interest income to move toward $3.5 million per quarter over time, although the timing will depend largely on SBA and swap activity. Non-interest income represented 12.8% of total revenue year to date.
Non-interest expense totaled $14.7 million, driven primarily by salaries and benefits. Full-time headcount increased to 222 from 216 as USCB added sales personnel and provided merit increases and performance-based incentives. The efficiency ratio was 54.62%, while non-interest expense represented 1.97% of average assets.
Anderson said fourth-quarter expenses should be approximately $15 million or slightly higher, reflecting a full quarter of recent hires, the new deposit team and incentives. For 2027, he said management expects expense growth in the mid- to high-single-digit range while continuing to target an efficiency ratio in the low 50% range over time.
The company’s total risk-based capital ratio increased to 14.07% from 13.88% in the prior quarter. On Oct. 19, USCB’s board declared a quarterly cash dividend of $0.125 per share, payable Dec. 4 to shareholders of record as of Nov. 16, 2026.
About USCB Financial (NASDAQ:USCB)
USCB Financial Corp. is the bank holding company for U.S. Century Bank, a community bank headquartered in South Florida. The bank provides financial products and services to individuals, businesses, professionals and nonprofit organizations in the region, with a particular focus on the Miami-Dade County market and surrounding South Florida communities.
U.S. Century Bank offers deposit accounts, commercial and residential real estate loans, commercial and industrial lending, consumer loans and small business financing.
