U.S. Century Bank Reports Second Quarter 2021 Results

U.S. Century Bank (the “Company”) (NASDAQ: USCB) today announced 2021 second quarter financial results for the quarter ended June 30, 2021.

“We are thrilled to have completed our initial public offering and to be trading publicly. This milestone will help support the Company’s growth strategy as part of our long-term strategic expansion plan,” said Luis de la Aguilera, President and Chief Executive Officer.

The Company reported net income of $4.1 million or $0.64 per diluted share of Class A common stock and $0.13 per diluted share of Class B common stock, for the quarter ended June 30, 2021, from net income of $1.4 million or $0.13 per diluted share of Class A common stock and $0.03 per diluted share of Class B common stock, for the quarter ended June 30, 2020.

Financial Highlights

• Completed the initial public offering (“IPO”) and issued 4,600,000 shares of Class A common stock, inclusive of the full exercise of the underwriters’ option to purchase an additional 600,000 shares. The securities were sold at a price to the public of $10.00 per share and began trading on the Nasdaq Global Market under the ticker symbol “USCB” on July 23, 2021. On July 27, 2021, the closing date of the IPO, the Company received total net proceeds of $42 million, after deducting the underwriting discount.

• Net interest income was $12.5 million for the quarter ended June 30, 2021, representing an increase of $1.6 million or 14.75% as compared to the second quarter in 2020. The increase was primarily driven by higher investment income and lower interest expense on deposits.

• Net interest margin (“NIM”) was 3.14% for the three months ended June 30, 2021, a decrease of 21 basis points from 3.35% for the immediately preceding quarter ended March 31, 2021, and a decrease of 14 basis points from 3.28% for the second quarter in 2020. The decreases in NIM were largely due to lower benchmark interest rates.

• The efficiency ratio for the three months ended June 30, 2021 was 62.00% as compared to 69.03% for the second quarter in 2020.

• Average deposits for the quarter ended June 30, 2021 increased by $88.5 million or 6.59% compared to the immediately preceding quarter ended March 31, 2021 and by $265.7 million or 22.78% compared to the second quarter of 2020.

• Average loans for the quarter ended June 30, 2021 increased by $16.7 million or 1.56% compared to the immediately preceding quarter ended March 31, 2021 and by $49.6 million or 4.78% compared to the second quarter of 2020.

• Annualized return on average assets for the quarter ended June 30, 2021 was 0.98%, compared to 0.41% for the second quarter in 2020.

• Annualized return on average stockholders’ equity for the quarter ended June 30, 2021 was 9.74%, compared to 3.55% for the second quarter in 2020.

• Since March 2020, the Company has participated in all three rounds of the Small Business Administration ("SBA") Paycheck Protection Program ("PPP"), originating $168.4 million of PPP loans through June 30, 2021. As of June 30, 2021, $82.3 million in PPP loans had been forgiven.

• On June 24, 2021, the Company purchased a yacht loan portfolio that is complementary to our business and stated strategy. The portfolio is tied to financed purchases of 24 vessels with an aggregate principal balance as of the date of purchase of $44.1 million.

• On April 26, 2021, the Company completed the repurchase of all outstanding shares of our Class E Partially Cumulative Perpetual Preferred Stock (“Class E Preferred Stock”), for an aggregate repurchase price of $7.6 million, which is equal to the aggregate liquidation preference of $7.5 million plus declared and unpaid dividends. As of the date of this press release, no shares of Class E Preferred Stock remain outstanding.

• Total risk-based capital ratio was 12.69% at June 30, 2021 compared to 14.14% for the second quarter in 2020.

• Allowance for loan losses to total loans was 1.30% at June 30, 2021 compared to 1.45% at June 30, 2020.

• Non-performing loans to total loans was less than 0.01% at June 30, 2021 compared to 0.53% for the second quarter in 2020.

• Annualized net charge offs to average loans for the quarter ended June 30, 2021 was 0.06%.

• Refer to the “Non-GAAP financial measures” Exhibits below for a reconciliation of the non-GAAP measures used.

Balance Sheet

Total assets were $1.7 billion at June 30, 2021, representing an increase of $33.6 million or 2.1% from the immediately preceding quarter ended March 31, 2021. The significant contributing factors to the overall increase included:

• Available-for-sale securities increased $54.5 million or 15.95% as excess liquidity was used to purchase investments.

• Total loans increased $41.1 million or 3.72% primarily due to the purchase of a yacht loan portfolio.

• Cash and equivalents declined $58.8 million primarily because of the purchase of investment securities and loans as mentioned previously.

Deposits totaled $1.4 billion at June 30, 2021, representing an increase of $34.5 million, or 2.5%, from the immediately preceding quarter ended March 31, 2021. The average cost of total deposits continued to decline, dropping by 8 basis points to 0.26% for the quarter ended June 30, 2021 from 0.34% for the immediately preceding quarter ended March 31, 2021, and 0.73% for the quarter ended June 30, 2020.

Asset Quality

Non-performing assets decreased by $0.7 million or 97.0% for the three months ended June 30, 2021 compared to the immediately preceding quarter ended March 31, 2021 and decreased $5.6 million or 99.6% from the second quarter ended June 30, 2020. For the three months ended June 30, 2021, non-performing assets to total assets was less than 0.01%, representing a decrease of nearly 0.04% or 97.1% from the immediately preceding quarter ended March 31, 2021.

The allowance for loan losses was $14.8 million at June 30, 2021, down from $15.0 million for the immediately preceding quarter ended March 31, 2021, and from $15.3 million for the quarter ended June 30, 2020.

Non-interest Income and Non-interest Expense

Non-interest income totaled $1.5 million for the three months ended June 30, 2021, representing an increase of approximately $0.6 million or 58.4% compared to the same period in 2020. The increase was primarily driven by higher service charges on deposits and gains on sale of loans held for sale.

Non-interest expense was $8.7 million for the three months ended June 30, 2021 compared to $8.2 million for the same period in 2020. The increase was primarily driven by higher employee headcount and professional fees.

About U.S. Century Bank

Established in 2002, U.S. Century Bank is one of the largest community banks headquartered in Miami, and one of the largest community banks in the state, with assets of $1.7 billion. U.S. Century is rated 5-star by BauerFinancial, the nation’s leading independent bank rating firm. Through its network of 11 branch locations and its online banking platform, U.S. Century Bank offers customers a wide range of financial products and services. U.S. Century Bank has received awards and accolades from numerous organizations for its philanthropic support and leadership, including the Beacon Council, Greater Miami Chamber of Commerce, South Florida Hispanic Chamber of Commerce and others. For more information or to find a U.S. Century branch near you, please call (305) 715-5200 or visit www.uscentury.com.

Forward-Looking Statements

Statements included in this earning release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “aim,” “plan,” “estimate,” “continue,” “may” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements. These forward-looking statements include statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth.

These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Potential risks and uncertainties include, but are not limited to:

• the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
• the COVID-19 pandemic and its impact on us, our employees, customers and third-party service providers, and the ultimate extent of the impacts of the pandemic and related government stimulus programs;
• our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry;
• the accuracy of our financial statement estimates and assumptions, including the estimates used for our credit loss reserve and deferred tax asset valuation allowance;
• the efficiency and effectiveness of our internal control environment;
• our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate;
• legislative or regulatory changes and changes in accounting principles, policies, practices or guidelines, including the effects of forthcoming CECL implementation;
• the effects of our lack of a diversified loan portfolio and concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real estate;
• the concentration of ownership of our Class A common stock;
• our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic growth as well as growth through other means, such as future acquisitions;
• inflation, interest rate, unemployment rate, market, and monetary fluctuations;
• increased competition and its effect on pricing of our products and services as well as our margins;
• the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, employee, or third-party fraud and security breaches; and
• other risks described from time to time in our filings with the FDIC.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. Therefore, you are cautioned not to place undue reliance on any forward-looking statements. Further, forward-looking statements included in this presentation are made only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so under the federal securities laws. You should also review the risk factors we describe in the reports we will file from time to time with the FDIC.

Non-GAAP Financial Measures

This earning release includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes certain operating performance measures. Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends. Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included in the exhibits to this earning release.

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