DEF: USCB Financial Holdings Sets Date for Virtual Annual Shareholder Meeting

USCB Financial Holdings will hold its annual shareholder meeting virtually on May 27, 2025, to elect directors and ratify the appointment of its independent auditor.

Summary

• USCB Financial Holdings will hold its Annual Meeting of Shareholders virtually on May 27, 2025, at 10:00 a.m. Eastern time.
• Shareholders of record as of April 7, 2025, are entitled to vote.
• The meeting will include the election of directors for a one-year term expiring in 2026 and the ratification of Crowe LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• The Board of Directors recommends voting FOR the election of the director nominees and FOR the ratification of Crowe LLP.
• The proxy statement is being mailed to shareholders starting on or about April 22, 2025.
• The company's 2024 Annual Report on Form 10-K is enclosed but is not part of the proxy solicitation materials.

Sentiment

Score: 6

Explanation: The document is primarily informational, outlining the details of the upcoming shareholder meeting and related corporate governance matters. While there are some potential concerns regarding related party transactions, the overall tone is neutral.

Positives

• The company is committed to sound corporate governance principles.
• The company has adopted a Code of Ethics and Business Conduct.
• The company has an insider trading policy in place.
• The company has a compensation recovery (clawback) policy.
• The company is providing a virtual meeting to allow more shareholders to attend.

Negatives

• The company has engaged in several related party transactions, specifically loan purchases from companies with ties to board members, which could raise conflict of interest concerns.
• Dr. Fernandez and Mr. Kafafian were late reporting transactions on Form 4.

Risks

• Potential conflicts of interest arising from related party transactions, particularly loan purchases from entities affiliated with board members.
• The risk that the company's compensation policies could incentivize excessive risk-taking.
• The risk that the company's directors may not fulfill their duties due to other commitments or conflicts of interest.
• The risk that the company's virtual meeting may not be accessible to all shareholders.

Future Outlook

The company plans to continue reviewing, evaluating, and modifying its compensation framework to ensure it remains competitive and achieves desired goals.

Management Comments

• On behalf of the Board of Directors and all of the employees of USCB Financial Holdings, I thank you for your continued interest and support.
• The Board views this arrangement as also providing an efficient nexus between our organization and the Board, enabling the Board to obtain information pertaining to operational matters expeditiously.

Industry Context

The move to a virtual annual meeting reflects a broader trend in corporate governance to leverage technology for increased accessibility and cost savings. The company's focus on attracting and retaining talent through competitive compensation and benefits packages aligns with industry best practices.

Comparison to Industry Standards

• The company targets overall base compensation levels that are at or slightly above the median for the markets in which it operates.
• The company aims to provide short-term incentive opportunities that are generally in line with those of its peers but allow for more substantial rewards for exceptional performance.
• The company's benefits packages meet or exceed median levels of coverage.
• The company's related party transactions, particularly loan purchases, are not uncommon in the banking industry, but require careful scrutiny to ensure they are conducted at arm's length and do not create conflicts of interest.
• The company's corporate governance practices, such as having a lead independent director and a compensation recovery policy, are consistent with best practices for publicly traded companies.

Related Party Transactions

• In early 2023, U.S. Century Bank purchased two loans aggregating approximately $10.0 million sourced through Auxilior Capital Partners, Inc. (Auxilior) for which Auxilior received fees in 2023 from U.S. Century Bank totaling approximately $285,000 which represented 2.8% of the aggregate principal amount of the loans purchased by U.S. Century Bank.
• Later in 2023, U.S. Century Bank also purchased from Auxilior a loan participation in a $38.0 million loan.
• U.S. Century Banks interest in the loan participation is $15.0 million.
• Auxilior received a fee of approximately $481,000 which represented 3.2% of the principal amount of the aggregate principal amount of the loan participation purchased by U.S. Century Bank.
• Late in 2023, U.S. Century Bank purchased from Auxilior an additional loan participation in a $30.0 million loan.
• U.S. Century Banks interest in the loan participation is $15.5 million.
• Auxilior received a fee of approximately $589,000 which represents 3.80% of the principal amount of the aggregate principal amount of the loan participation purchased by U.S. Century Bank.
• In the first quarter of 2024, U.S. Century Bank purchased from Auxilior two loans aggregating $7.9 million.
• Auxilior received a fee of approximately $306,000 which represents 3.86% of the principal amount of the loans purchased by U.S. Century Bank.
• In late 2024, U.S. Century Bank purchased a loan participation from Auxilior in a $14.0 million loan.
• U.S. Century Banks interest in the loan participation is $10.0 million.
• No fee was paid to Auxilior upon closing of the loan participation purchase.
• In the later part of 2023, U.S. Century Bank purchased a pool of loans totaling approximately $16.0 million originated by another insured financial institution.
• In connection with the purchase of the loan package, U.S. Century Bank paid fees to the other financial institution totaling approximately $216,000 which represented 1.35% of the aggregate principal amount of the loans purchased by U.S. Century Bank.
• In the later part of 2023, U.S. Century Bank participated in a loan originated by another insured financial institution.
• U.S. Century Banks aggregate interest in the loan participation is $4.2 million.
• In connection with the funding of the loan participation, U.S. Century Bank paid fees to the other financial institution totaling approximately $42,000 which represented 1% of the principal amount of the loan participations purchased by U.S. Century Bank.
• In addition, in the second quarter of 2024, U.S. Century Bank participated in an additional loan participation originated by this same insured financial institution.
• U.S. Century Banks aggregate interest in the loan participation is $5.6 million.
• In connection with the funding of the loan participation, U.S. Century Bank paid fees to the other financial institution totaling approximately $56,000 which represented 1% of the principal amount of the loan participations purchased by U.S. Century Bank.
• In late 2023, U.S. Century Bank purchased a package of loan participations originated by another insured financial institution.
• U.S. Century Banks aggregate interest in the 99 loan participations totaled $24.5 million.
• In connection with the purchase of the loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $736,000 which represented 3.0% of the aggregate principal amount of the loan participations purchased by U.S. Century Bank.
• In early 2024, U.S. Century Bank also purchased an additional loan package consisting of 98 loan participations originated by the same insured financial institution.
• U.S. Century Banks aggregate interest in the loan participations totaled $25.2 million.
• In connection with the purchase of the loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $757,000 which represented 3.0% of the aggregate principal amount of the 98 loan participations purchased by U.S. Century Bank.
• In mid-2024, U.S. Century Bank also purchased an additional loan package consisting of 81 loan participations originated by the same insured financial institution.
• U.S. Century Banks aggregate interest in the loan participations totaled $19.0 million.
• In connection with the purchase of the loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $743,000 which represented 4.0% of the aggregate principal amount of the 81 loan participations purchased by U.S. Century Bank.
• In the third quarter of 2024, U.S. Century Bank purchased a third loan package consisting of 65 loan participations originated by the same insured financial institution.
• U.S. Century Banks aggregate interest in the loan participations totaled $15.7 million.
• In connection with the purchase of these loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $626,000 which represented 4.0% of the aggregate principal amount of the 65 loan participations purchased by U.S. Century Bank.
• In the fourth quarter of 2024, U.S. Century Bank purchased a fourth loan package consisting of 26 loan participations originated by the same insured financial institution.
• U.S. Century Banks aggregate interest in the loan participations totaled $7.0 million.
• In connection with the purchase of these loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $280,000 which represented 4.0% of the aggregate principal amount of the 26 loan participations purchased by U.S. Century Bank.
• In the first quarter of 2025, U.S. Century Bank purchased a loan package consisting of 78 loan participations originated by the same financial institution.
• U.S. Century Banks aggregate interest in the loan participations totaled $20.0 million.
• In connection with the purchase of these loan participations, U.S. Century Bank paid fees to the other financial institution totaling approximately $800,000 which represented 4.0% of the aggregate principal amount of the 78 loan participations purchased by U.S. Century Bank.
• In the first quarter of 2025, U.S. Century Bank purchased a pool of loans totaling approximately $28.2 million originated by another insured financial institution.
• The loans were purchased at a discount to the aggregate principal balance of the loans.
• In connection with the purchase of the loan package, U.S. Century Bank did not pay any fees to the other financial institution in connection with the purchase.

Stakeholder Impact

• Shareholders are asked to vote on key corporate governance matters.
• Executive officers are subject to compensation policies and potential clawback provisions.
• Employees are covered by a Code of Ethics and Business Conduct and an insider trading policy.
• The company's financial performance and risk management practices impact its stakeholders, including shareholders, employees, customers, and creditors.

Next Steps

• Shareholders should review the proxy materials and vote on the proposals.
• The company will hold the Annual Meeting of Shareholders on May 27, 2025.
• The company will continue to monitor and manage its related party transactions to ensure compliance with applicable regulations and best practices.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Directors, Crowe LLP, Auditor, Corporate Governance, Executive Compensation, Related Party Transactions, USCB Financial Holdings, Shareholders