What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-24 compared with 2022-03-24 · 884 added, 822 removed, 2061 unchanged (45% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Changes in Stockholders’ Equity

3 unchanged sentences

USCB Financial Holdings, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

Shareholders and the Board of Directors of USCB Financial

Holdings, Inc.

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Stockholders and the Board of Directors of

USCB Financial Holdings, Inc.

Doral, Florida

1 unchanged sentence

balance sheets

comprehensive income, changes in stockholders’ equity,

and cash flows for the years then ended, and the

related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements

present fairly,

in all material respects, the financial

position of the Company as

of December 31, 2021 and

accounting principles generally accepted in the United

States of America.

Explanatory Paragraph – Financial Statement Consistency

the consolidated

the stockholders

exchanged their Class A

common shares of U.S.

Century Bank for shares of

USCB Financial Holdings, Inc.

1 share basis

during the year

ended December

Stockholders of U.S.

Bank became stockholders

of USCB Financial Holdings,

Inc., and USCB Financial

Holdings, Inc.

Century Bank.

The consolidated

financial statements

ended December

USCB Financial

Holdings, Inc.

The 2020 financial

Holdings, Inc.

Century Bank’s assets,

liabilities, and operations comprise substantially all

consolidated assets, liabilities, and operations.

Our opinion is not modified with respect to this matter.

comprehensive income

(loss), changes

in stockholders’

(collectively

"financial statements").

statements present fairly, in all material respects, the

financial position of the Company as

of December 31,

2022 and 2021,

and the results of its operations

and its cash flows for the

years then ended, in conformity

with accounting principles generally accepted in the United

States of America.

Basis for Opinion

15 unchanged sentences

independent with respect to

the Company in accordance

with the U.S.

federal securities laws

the Company in accordance with

securities laws

and the applicable rules and regulations of the Securities

6 unchanged sentences

financial statements are

free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to

material misstatement

financial statements,

performing procedures

to those risks.

Such procedures

of material misstatement, whether due to error or fraud.

and performing

procedures that

included examining,

reasonable basis for our opinion.

regarding the

and disclosures

estimates made by management, as well as evaluating the

overall presentation of the financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

/s/ Crowe LLP

2 unchanged sentences

March 24, 2023

Independent Member Crowe Global

USCB Financial Holdings, Inc.

7 unchanged sentences

Investment securities held to maturity (fair value $

, respectively)

Investment securities available for sale, at fair value

Federal Home Loan Bank stock, at cost

Loans held for investment, net of allowance of $

Loans held for investment, net of allowance

, respectively

6 unchanged sentences

Interest-bearing checking accounts

Time deposits over $250,000

Time deposits $250,000 or less

Time deposits

Total deposits

23 unchanged sentences

shares authorized;

issued and outstanding as of December 31, 2021

outstanding as of December 31, 2022 and 2021

Additional paid-in capital on common stock

3 unchanged sentences

Total liabilities and stockholders' equity

Class A common stock outstanding and additional

paid-in-capital for December 31, 2020 were adjusted

to reflect the 1 for 5 reverse stock split.

Note 13 "Stockholders' Equity" for further discussion

on the stock split.

The accompanying notes are an integral part of

these consolidated financial statements.

Independent Member Crowe Global

USCB Financial Holdings, Inc.

21 unchanged sentences

Non-interest income:

Gain on sale of securities available for sale, net

Bank owned life insurance income

Gain (loss) on sale of securities available for

Gain on sale of loans held for sale, net

8 unchanged sentences

Network and information technology services

Audit and tax services fees

Other operating

Total non-interest expense

Net income before income tax expense

Net income before income tax

Income tax expense

6 unchanged sentences

Net income (loss) per share, diluted

Class B common stock

Net income per share, basic

Net income per share, diluted

See Note 14 "Earnings per Share" for information

on the allocation of income available to common stockholders.

For the year ended December 31, 2020, the

common stock outstanding, weighted average

shares and net income per share for the Class A

common stock were adjusted to reflect the 1

for 5 reverse stock split that occurred in June of 2021.

on the allocation of income available to common

stockholders.

The accompanying notes are an integral part of

these consolidated financial statements.

Independent Member Crowe Global

USCB Financial Holdings, Inc.

4 unchanged sentences

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities

Unrealized loss on investment securities

Amortization of net unrealized gains on securities

transferred from available-for-sale to held-to-maturity

Reclassification adjustment for gain included in net

Total other comprehensive income (loss), net of tax

Total comprehensive income

Reclassification adjustment for (gain) loss included

in net income

Total other comprehensive loss, net of tax

Total comprehensive income (loss)

The accompanying notes are an integral part of

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Balance at January 1, 2022

Reverse stock split 1 for 5 Common A

( 15,557,626 )

Adjusted balance at January 1, 2021

Other comprehensive loss

Issuance of common stock - exercised options

Stock based compensation

Balance at December 31, 2022

Balance at January 1, 2021

Other comprehensive loss

Dividends - preferred stock

9 unchanged sentences

Balance at December 31, 2021

Balance at January 1, 2020

Other comprehensive income

Dividends - preferred stock

Stock based compensation

Exercise of stock options

Balance at December 31, 2020

Common stock shares, par value, and additional paid-in

capital for common stock for 2020 was adjusted

to reflect the 1 for 5 reverse stock split.

13 "Stockholders' Equity" for further details.

The accompanying notes are an integral part of

13 unchanged sentences

Stock based compensation

Gain on sale of available for sale securities

Loss (Gain) on sale of available for sale securities,

Gain on sale of loans held for sale

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Cash flows from financing activities:

Proceeds from issuance of Class A common stock, net

Proceeds from issuance of Class A common stock,

Cash dividends paid

15 unchanged sentences

Transfer of investment securities from available-for-sale to held-to-maturity

Transfer of premises and equipment to assets held for

Transfer of premises and equipment to assets held for sale

Lease liability arising from obtaining right-of-use assets

1 unchanged sentence

Exchange of Preferred D for Class A common

Exchange of Class B common stock for Class

A common stock

Exchange of Class B common stock for Class A

The accompanying notes are an integral part of

3 unchanged sentences

USCB Financial Holdings, Inc.

SUMMARY OF SIGNIFICANT ACCOUNTING

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

USCB Financial Holdings, Inc., a

Florida corporation incorporated

in 2021, is a bank holding

company with one wholly

in 2021, is a bank

holding company with one wholly

owned subsidiary,

20 unchanged sentences

the Company’s common stock, par

The Company’s

that will terminate

shareholders of

Company approved to amend the 2015 Option plan authorizing the issuance of an additional

shares of common

stock and extending

additional years,

terminating in 2030.

shares after being

split totaled

holding company

the shareholders

issuance of an additional

shares of common stock.

The Company’s

Consolidated Financial

Statements consist

Financial Holdings,

December 31, 2020.

owns a subsidiary,

Florida Peninsula

our clients title

insurance policies

transactions closed at the Bank.

Licensed in the State of Florida and approved by the Department of Insurance Regulation,

Florida Peninsula tittle LLC began operations in 2021.

Principles of Consolidation

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Class A voting

“Stockholders’ Equity” for further information about the IPO and

the exchange and redemption of shares.

“Stockholders’ Equity” for further information about the IPO

and the exchange and redemption of shares.

Risk and Uncertainties

Current Banking Environment

concerns regarding

the liquidity

These failures

underscore the

importance of

access to diverse sources of

The Company’s deposit

base includes a combination

commercial, and

government-related

organizations

commercial clients without a high level of industry concentration.

In response to

these events,

Department, Federal

Reserve, and FDIC

jointly announced the

certain securities at the

par value of the securities,

and at a borrowing

rate of ten basis

points over the one-year

institutions,

with advances

prepayment penalties.

Consolidated Financial

Statements, the Company has not accessed the BTFP.

Market conditions and external factors may unpredictably impact the competitive landscape for deposits

in the banking

Additionally,

the rising interest rate environment

has increased competition for

liquidity and the premium

liquidity is available

funding needs.

liquidity are sufficient

on the balance sheet date.

An unexpected influx

of withdrawals of

deposits could adversely

impact the Company's

rely on organic

operations, potentially

requiring greater

secondary sources

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

demands or to fund continuing operations.

These sources may include proceeds from FHLB advances, sales of

securities and loans, federal funds lines of credit from

correspondent banks, and out-of-market time deposits.

Such reliance on secondary funding sources could increase the Company's

overall cost of funding and thereby reduce

guarantee they

liquidity demands.

or discontinuing

capital expenditures, or other investments, or liquidating assets.

For further discussion of the Company's liquidity practices,

see page 59 and 62 of this Annual Report on Form

Use of Estimates

1 unchanged sentence

to make estimates and assumptions based

on available information that affect the amounts reported

in the financial statements and the disclosures provided.

on available information that affect the amounts

reported in the financial statements and the disclosures provided.

The coronavirus (“COVID-19”)

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is dependent upon the

willingness and ability

willingness and ability of

associates and customers to conduct banking and other financial transactions.

While we believe conditions have improved

we believe conditions have improved

as of December 31, 2022, if there is a resurgence in the virus, the Company could experience further adverse effects on its

of operations

pandemic will

future operations,

with its associates and customers

to understand their challenges, which

allows us to respond to

their needs and issues as

to understand their challenges, which allows

us to respond to their needs

and issues as

While there was

8 unchanged sentences

the potential

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

COVID-19 will

6 unchanged sentences

Statements of

cash and cash

equivalents include

cash on hand,

Cash Flows, cash

and cash equivalents

due from banks, and interest-bearing deposits in banks.

13 unchanged sentences

Debt securities

securities which

positive intent

ability to hold to

23 unchanged sentences

income (loss).

must be classified as trading and recorded at fair value

with changes in fair value included in earnings.

must be recorded at fair value with changes in fair value

included in earnings.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Purchase premiums and discounts are amortized or accreted over

1 unchanged sentence

held-to-maturity

considered in determining the estimated life of

the security.

considered in determining the estimated life of the

Such amortization and accretion are included in interest income

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balance net of charge-offs, deferred loan

fees, unearned

amortized, using the interest method or the straight-line

method, over the life of the related loan.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

non-accrual status as of

the date it becomes

90 days past due

and remains in non-accrual

90 days past due and

remains in non-accrual

status until it meets

4 unchanged sentences

the principal

more and remains

in non-accrual

non-accrual status

until it meets

principal and interest

12 unchanged sentences

or cost-recovery

method, under

collections are

cash collections

unpaid principal, which may change as conditions dictate.

The Company has determined that the entire balance of

a loan is contractually delinquent for all

classes if the minimum

The Company has determined that the entire balance of a

loan is contractually delinquent for all classes if the

payment is not received by

15 unchanged sentences

reflects management's

probable loan

losses inherent

probable loan losses

the portfolio

at the balance

Management uses a disciplined

process and methodology

to establish the ACL

each quarter.

determine the total

to establish the

ACL each quarter.

determine the total ACL,

estimates the

11 unchanged sentences

Other loans (secured and unsecured consumer loans)

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

borrower’s credit, capacity

6 unchanged sentences

status, monthly

payment of loan,

current debt obligations,

loan, current

debt obligations,

ratio and credit history.

The Company relies on appraisals in determining the value of the property.

The Company relies on appraisals in determining the

value of the property.

Risk is mitigated by this

7 unchanged sentences

The analysis may include

the capacity of the borrower,

income generated by property

the capacity of the

borrower, income

generated by property for

service, other

6 unchanged sentences

the property.

the underlying

securing the commercial real estate loans are diverse in

9 unchanged sentences

of repayment and

The Company mitigates the risk in the commercial portfo

lio through industry diversification.

The Company mitigates the risk in the commercial portfolio

through industry diversification.

Foreign Banks

4 unchanged sentences

life of less than one year.

The Company’s credit review

Company’s credit review

includes a credit analysis, peer comparison and current

8 unchanged sentences

The risk on these loans is mitigated by small loan balances.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

characteristics

management evaluates

the allowance

adequate level

on factors which, in

management's judgment, deserve

current recognition in estimating

credit losses.

factors include

management's judgment,

deserve current recognition in

estimating credit losses.

Such factors include

changes in prevailing economic conditions, historical loss experience,

7 unchanged sentences

of the loans as described above.

The loan segments are

primarily grouped by

The loan segments

are primarily grouped by

collateral type with similar

2 unchanged sentences

determined based on a ten year look back period.

The Company applies time

weights to consider various stages of a credit

The Company applies time weights to

consider various stages of a credit

environmental factors.

4 unchanged sentences

used to estimate

loss rate for

an adjusted loss

Management believes the

1 unchanged sentence

results in a loss

rate that is more consistent

with the behavior of

rate that is more

consistent with the behavior

loan portfolio in the normal course of business.

following are the factors used to adjust the historical loss

following are the factors used to adjust the historical

Loan quality review

7 unchanged sentences

New loan volumes

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Combined loan to value (“CLTV”)

17 unchanged sentences

the estimation

financial instruments

reserve for financial

with off-balance sheet risk.

11 unchanged sentences

considered by management

in determining impairment include payment status, collateral value, and the probability of

collecting scheduled principal and

in determining impairment include payment status, collateral value, and the probability of collecting

scheduled principal and

interest payments when due.

17 unchanged sentences

Relief, and Economic

Security Act (“CARES Act”)

was signed by

the President

Security Act (“CARES

Act”) was signed

by the President

of the United

6 unchanged sentences

modifications

COVID-19 related

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

considered a TDR if the loan was not more than 30 days past

2 unchanged sentences

executed March

COVID-19 national

legislation was

termination of

national emergency

Banking regulators issued similar guidance clarifying that a COVID-19

related modification should not be considered

a TDR if the borrower was current on payments at the time the

underlying loan modification program was implemented and

a TDR if the borrower was current on payments at the time the underlying loan modification program was implemented and

considered short-term.

4 unchanged sentences

pooled portfolios, management

has developed a

separate allowance for

has developed a separate

allowance for loans

are identified as

1 unchanged sentence

are excluded from

the general component

and a separate

component of the

reserve is provided under the accounting guidance for loan

1 unchanged sentence

in a TDR are also individually analyzed for estimated impairment.

The Company's charge-off policy is to review all impaired loans

on a quarterly basis in order to monitor the Company's

any restructurings.

The Company's charge-off policy

is to review all impaired loans on a quarterly basis in order to monitor

the Company's

restructurings.

collateral dependent,

be uncollectible,

to be uncollectible,

any shortfall

the collateral

the collateral relative

to the recorded

investment in the loan is charged off.

4 unchanged sentences

Concentrations of credit risk

(whether on or off-balance sheet) arising from financial instruments exist in relation to certain

groups of customers.

(whether on or off-balance sheet) arising from financial instruments exist in relation to

certain groups of customers.

concentration arises when

counterparties have

similar economic characteristics

counterparties have similar

economic characteristics

that would cause

4 unchanged sentences

or counterparty.

Most of the Company's business activity is

with customers located within its primary market area, which

is generally the

Most of the Company's business activity is with

customers located within its primary market area, which is

generally the

State of Florida.

1 unchanged sentence

Many of the Company's

loan customers are engaged

in real estate development.

Circumstances, which negatively

loan customers are

engaged in real estate

Circumstances,

which negatively impact

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

the South Florida real estate industry

or the South Florida economy, in general, could adversely impact

the Company's loan

or the South Florida economy, in general, could adversely impact the

Company's loan

At December 31,

7 unchanged sentences

concentration represented

%, respectively,

of the net loans outstanding.

At December 31,

concentration of

loans outstanding.

commercial real estate loan note with an outstanding balance of $

million collateralized by a 1

lien commercial property

located in New York

At December 31,

concentration of

loans outstanding

foreign banks

Honduras, and

2021 and 2020, respectively.

At various times during

the Company has maintained

deposits with other

financial institutions.

to the Company from

these transactions is solely

dependent upon daily balances

and the financial strength

of the respective

foreign banks located

Dominican Republic, Honduras,

and El Salvador.

At December 31, 2021,

also had a concentration of risk

with loans outstanding totaling $

million to foreign banks located in

Ecuador, Honduras,

December 31, 2022 and 2021, respectively.

At various times

during the year,

the Company has

maintained deposits with

other financial institutions.

to the Company

from these transactions is

solely dependent upon

daily balances and the

financial strength of the

Premises and Equipment, net

8 unchanged sentences

are amortized over the

remaining term of the

applicable leases or their

remaining term of

the applicable leases or their

useful lives, whichever

5 unchanged sentences

Shorter of life or term of lease

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

When items are retired or are

otherwise disposed of, the related costs

and accumulated depreciation and amortization

and accumulated depreciation and

amortization are

removed from the accounts and any resulting gains or losses

17 unchanged sentences

Subsequent write-downs are recognized as

a valuation allowance with the offset recorded in the Consolidated Statements of

Carrying costs are charged to

a valuation allowance with the offset recorded in the Consolidated Statements of Operations.

costs are charged to

other real estate owned expenses

6 unchanged sentences

life insurance

sheet date, which is typically

cash surrender value.

in cash surrender value are recorded

sheet date, which is typically cash

surrender value.

Changes in cash

surrender value are recorded

in non-interest income.

5 unchanged sentences

expense is the amount of matching contributions.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Income taxes are accounted for under the

1 unchanged sentence

assets and liabilities are recognized

tax consequences

to differences

3 unchanged sentences

carryforwards.

temporary differences are expected to be recovered or

The effect on deferred tax assets and liabilities

temporary differences are expected to be recovered

The effect on deferred tax assets and

liabilities of a change

in tax rates is recognized in income in the period that includes

9 unchanged sentences

considers taxable loss

carry-back availability, expectation of sufficient

taxable income, trends

in earnings, the

future reversal

carry-back availability, expectation of sufficient taxable

income, trends in

earnings, the future

of temporary differences, and available tax planning

6 unchanged sentences

and measurement

and penalties

tax liabilities, if any, would

be recorded in interest expense and other operating noninterest

expense, respectively.

and penalties on

tax liabilities, if any,

would be recorded in interest expense and other operating

noninterest expense, respectively.

Impairment of Long-Lived Assets

24 unchanged sentences

Consolidated Balance Sheets.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Transfer of Financial Assets

financial assets

Transfer of Financial

of financial assets

are accounted for

4 unchanged sentences

transferee obtains

(free of conditions

that constrain

it from taking

the transferred

maintain effective

conditions that

the transferred

agreement to repurchase them before their maturity or

the ability to unilaterally cause the holder to return specific assets.

the ability to unilaterally cause the holder to return specific

Comprehensive Income (Loss)

7 unchanged sentences

income on the date of transfer and

amortized over the remaining life of

each security.

amortized over the remaining life

of each security.

The amortization of the unrealized

1 unchanged sentence

is reported as a component of comprehensive income

See Note 2 “Investment Securities” for further discussion.

See Note 2 “Investment Securities” for further

Advertising Costs

5 unchanged sentences

Basic and diluted earnings per share are updated

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

to reflect the effect of stock splits as occurred.

4 unchanged sentences

Interest Income

Interest income is recognized as earned, based upon the principal

amount outstanding, on an accrual basis.

Interest income is recognized as earned, based upon the

principal amount outstanding, on an accrual basis.

Operating Segments

While the Company monitors

the revenue streams of

the various products

the revenue streams

of the various products

and services, operations

19 unchanged sentences

requires that compensation cost

for all stock

awards be calculated

for all stock awards

be calculated

and recognized

3 unchanged sentences

compensation cost

is recognized

a straight-line

9 unchanged sentences

reasonably estimated.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

of management, none of these actions, either individually or in the aggregate, is expected to have a material adverse effect

13 unchanged sentences

Fair value estimates

involve uncertainties and

matters of significant

involve uncertainties and matters

of significant

Changes in assumptions or in market conditions

1 unchanged sentence

Derivative Instruments

Derivative financial instruments are

carried at fair

value and reflect

the estimated amount that

would have been

Derivative financial instruments

are carried at

fair value and

reflect the estimated

amount that would

have been received

interest rate

floating-rate

customer with

agreement allowing

fixed interest

interest rate.

mitigate risk,

7 unchanged sentences

unrealized gain

other noninterest income.

other non-interest income.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Revenue from Contracts with Customers

contracts with customers

is recognized in

an amount that

Revenue from contracts

with customers is

recognized in an

reflects the consideration

6 unchanged sentences

and investment

accounting standard

update “Revenue

from Contracts

with Customers”.

securities are

excluded from

the accounting

standard update

“Revenue from

Contracts with

service charge

fees, consisting

monthly maintenance

of primarily monthly

maintenance fees,

interchange fees

other transaction-based fees, are the

most significant types of revenue within

the accounting standard update.

most significant types of revenue

within the accounting standard update.

recognized when the service provided by the

3 unchanged sentences

this standard that is received from sources other than deposit

service charges and fees in not material.

service charges and fees is not material.

Cash Flow Statement

The Company reports the net activity rather than gross activity in the Consolidated

Statements of Cash Flows.

The Company reports the net activity rather than gross activity in

the Consolidated Statements

of Cash Flows.

are reported for

19 unchanged sentences

on accounting for current expected

with a methodology

that reflects the

expected credit losses.

The Update is

intended to provide

with a methodology that

reflects the expected

credit losses.

Update is intended

to provide financial

decision-useful

retrospective

Early adoption is permitted for fiscal years beginning after December 15, 2019, including interim periods within those

years beginning

The Company adopted this

ASU on January 1, 2023.

To date, the Company executed a

detailed implementation plan

through the adoption date, implemented a

software solution to assist with the

CECL estimation process, and has completed

parallel run models, and finished a data gap analysis.

The company expects its allowance for credit losses to

increase in 2023 approximately $

commitments will

also increase

approximately $

be recognized

held-to-maturity

deemed immaterial.

The Company will

initially apply the impact of

the new guidance through

a cumulative-effect adjustment

income statement as charges or credits to earnings.

The disclosed estimates are subject to further refinement upon finalization of the Company’s review of the calculations,

assumptions, methodologies and judgments.

Internal controls over financial reporting relating

to these new processes have

been designed

being evaluated.

macroeconomic

first quarter

volatility in

the quarterly

provision for

credit losses when compared to the Company’s

historical results under the incurred loss model.

Troubled Debt Restructurings and

Vintage Disclosures

Restructurings

restructurings

Specifically,

restructuring recognition and measurement guidance,

creditors will evaluate all

loan modifications to determine if

restructurings

USCB FINANCIAL HOLDINGS, INC.

1 unchanged sentence

USCB Financial Holdings, Inc.

financial statements

will depend on

the composition

and investment

securities portfolio

as of January

general economic conditions,

and other factors that

are not known at

management is in the

evaluating the impact of

adoption of this ASU on

its consolidated financial statements,

management does believe that

ASU will lead to significant changes

in accounting policies and disclosures

related to, and the methods used

in estimating,

detailed implementation

date, implemented

software solution to assist with the CECL estimation process,

and has completed a data gap analysis.

incorporated in a

creditor’s estimate of

its allowance for

credit losses.

Additionally,

public business entities

are required to

disclose current-period gross write-offs

by year of origination for loan financing receivables and net investment

Reference Rate Reform

4 unchanged sentences

of this guidance

2021-01 which provides optional

guidance for a limited

period of time to

ease the burden in

accounting for (or

2021-01 which provides

optional guidance for

a limited period of

time to ease the

burden in accounting for

(or recognizing

of) reference

evaluating the

determined whether

LIBOR transition

whether LIBOR

transition and

ASU will have material effects on our business

3 unchanged sentences

tables present

of the amortized

cost, unrealized

or unrecognized

value of investment securities at the dates indicated (in

amortized cost,

unrealized or

unrecognized gains

value of investment securities at the dates indicated (in thousands):

December 31, 2022

Available-for-sale:

Government Agency - SBA

Government Agency

Collateralized mortgage obligations

5 unchanged sentences

Held-to-maturity:

Government Agency - SBA

Government Agency

3 unchanged sentences

Corporate bonds

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

December 31, 2021

Available-for-sale:

Government Agency -SBA

Government Agency

5 unchanged sentences

Corporate bonds

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Held-to-maturity:

Government Agency

Collateralized mortgage obligations

Mortgage-backed securities - Residential

Mortgage-backed securities - Commercial

Corporate bonds

ended December 31,

2021, there were

investment securities

4 unchanged sentences

these securities

unrealized gain

impact to net income.

unrealized loss

million which

was included in accumulated other comprehensive income

Transfers of debt securities into the HTM category from the AFS category are made at fair value at the date of transfer.

4 unchanged sentences

the carrying value of the held-to-maturity securities.

Such amounts are amortized

over the remaining life of the security.

of December 31,

on securities

Such amounts are

amortized over the remaining life of the security.

ended December 31,

amortization out

net unrealized

securities transferred

from AFS to HTM was $

thousand and $

thousand for year ended December 31, 2021.

The following

7 unchanged sentences

Proceeds from sales and call of securities

Net realized gains

Net realized gains (losses)

indicated (in thousands).

Actual maturities may

differ from contractual

maturities because borrowers

may have the right

Actual maturities may differ

from contractual maturities

because borrowers may have

call or prepay

obligations with or

without call or

prepayment penalties.

Securities not

single maturity date are

obligations with or without

call or prepayment penalties.

Securities not due

maturity date are

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Available-for-sale

5 unchanged sentences

Due after ten years

Government Agency - SBA

Government Agency

5 unchanged sentences

amount greater

stockholders’ equity

States Government

and Government

the collateralized

stockholders’

United States

Government and

Government Agencies.

All the collateralized

mortgage-backed

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Information pertaining

12 unchanged sentences

12 months or more

Government Agency - SBA

Government Agency

4 unchanged sentences

Bank subordinated debt securities

Corporate bonds

December 31, 2021

1 unchanged sentence

12 months or more

Government Agency - SBA

Government Agency

4 unchanged sentences

Bank subordinated debt securities

The unrealized

losses associated

investment securities

transferred from

HTM portfolio during

the third quarter

of 2021 represent

unrealized losses

since the date

of purchase, independent

impact associated with changes in the cost basis upon

transfer between portfolios.

The unrealized losses

associated with $

million of investment

securities transferred from

the AFS portfolio to the

HTM portfolio represent unrealized

losses since the date of

purchase, independent of the

impact associated with changes

in the cost basis upon transfer between portfolios.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The Company performs a review

of the investments that have

an unrealized loss to determine

whether there have been

an unrealized loss to determine whether

there have been

any changes in the

10 unchanged sentences

the security,

or if it is more

than not that it will be required to

sell the security before recovery

(iv) whether there have been any payment

(iv) whether there have been any

payment defaults and

(v) underlying guarantor of the securities.

The Company does not consider these

investments to be OTTI as the

decline in market value is attributable

interest rates

credit quality,

investments before

their amortized

required to sell the securities before maturity.

collateralized

contractual cash flows

for these securities

are guaranteed by

government agencies

The municipal bonds are of high credit

quality and the declines in fair value are not

due to credit quality.

the assessment of

these mitigating factors, management

believes that the

unrealized losses on these

debt security holdings

investment spreads

rate movements and

expects to recover the entire amortized cost basis of these securities.

At December 31, 2022, the

Company does not intend to

sell debt securities that are

in an unrealized loss position

it is not more than likely than not that the Company will be required to sell

these securities before recovery of the amortized

management does

not consider any

investment to be

other than temporarily

impaired at December

As of December 31, 2022, the Company maintains a master repurchase agreement with a public banking institution for

3 unchanged sentences

December 31, 2022, the

not have any securities pledged under this agreement.

t have any securities pledged under this agreement.

In 2018, the Company became a Qualified Public Depositor (“QPD”) with the State of Florida.

3 unchanged sentences

municipalities, and the

Company must also maintain a minimum amount of

pledged securities to be in the program.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

At December 31, 2021, the

Corporate Bonds with a

State of Florida.

These public deposits

are secured by securities

pledged to the

State of Florida

at a ratio of

average outstanding uninsured

The Company must also maintain a minimum

amount of pledged securities to be in the program.

At December 31, 2022,

the Company had

securities with a

fair value of

million pledged to the

of Florida under the public funds program.

The Company held

million pledged to

Florida under the public funds program.

held a total of $

million in public funds at December 31, 2022.

At December 31, 2020, the Company had

Corporate Bonds with a fair value of $

million pledged to the State of

million pledged

Florida under the public funds program.

The Company held

held a total of $

million in public funds at December 31, 2021.

15 unchanged sentences

of commercial real

estate and residential mortgage loans pledged as collateral on lines of credit with the FHLB

and the Federal Reserve Bank

At December 31, 2021 and

2020, the Company had one loan

million and $

estate and residential mortgage loans pledged as collateral on lines of credit with the FHLB and the

Federal Reserve Bank

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

At December 31,

2022 and 2021

loans and one

million, respectively,

8 unchanged sentences

These loans are

forgivable under specific criteria as determined by the SBA.

The Company had PPP loans of $

forgivable under specific criteria

as determined by the SBA.

Company had PPP loans of

million at December 31,

loans had deferred loan fees of $

million at December 31, 2021 and $

million at December 31, 2021, which are categorized as commercial

and industrial loans.

These PPP loans

had deferred loan fees of $

thousand at December 31, 2022 and $

million at December 31, 2021.

4 unchanged sentences

Company determines

historical loss

environmental factors that may cause estimated credit losses

for the loan portfolio to differ from historical

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

and Industrial

7 unchanged sentences

Ending Balance

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Allowance for credit losses and the outstanding balances in

29 unchanged sentences

periodically.

The Company's internally assigned credit risk grades are as follows:

– Loans indicate different levels of satisfactory

financial condition and performance.

The Company's internally assigned credit risk

grades are as follows:

– Loans indicate different levels of satisfactory financial

condition and performance.

Special Mention

9 unchanged sentences

capacity of the obligator or of the collateral pledged, if

Loans so classi

fied have a well-defined weakness or

Loans so classified

have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt.

2 unchanged sentences

not corrected.

– Loans classified as doubtful have all the weaknesses inherent

in those classified at substandard, with

the added characteristic that the weaknesses make collection

or liquidation in full on the basis of currently existing

– Loans classified as doubtful have all the weaknesses

inherent in those classified at substandard, with

the added characteristic that the weaknesses make

collection or liquidation in full on the basis of currently existing

facts, conditions, and values, highly questionable and improbable.

86 unchanged sentences

thousand, respectively,

had these loans performed in accordance with their original

had these loans performed in accordance with their

original terms.

There were no loans over 90 days past due and accruing

32 unchanged sentences

impaired loans

years ended December

December 31, 2022

thousand, respectively.

17 unchanged sentences

loans at December

2022 and 2021,

respectively.

thousand and $

Charge-offs on TDR loans for

ended December 31, 2022

thousand, respectively.

commitment to lend additional funds to these TDR

The Company did not have any new TDR loans for the year ended December 31, 2021.

For the year ended December

31, 2020, the Company had the following new TDR loans

(in thousands, except number of loans):

Recorded Investment Prior to Modification

Recorded Investment After Modification

Number of Loans

Total Modifications

Number of Loans

Total Modifications

Residential real estate

Commercial real estate

Commercial and industrial

Consumer and other

Modifications to

term, payment,

conversion of

interest only

combination to include more than one type of modification.

As of December 31, 2021 and 2020, there were no defaults on loans which were modified as a TDR within

CARES Act Modifications

modifications,

modifications

classification

Section 4013 of the CARES Act or under applicable interagency

guidance of the federal banking regulators.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

During the year ended December 31, 2020, the Company had modified

loans with outstanding balances of $

At December 31, 2020,

modified loans totaling $

thousand were classified as non-accrual and

loans totaling $

million were past due.

2022 and December 31, 2021.

During the year

ended December 31, 2022

and 2021, the

any new loans

to borrowers impacted

At December 31, 2022, there was

loan past due for $

thousand that was modified in 2020.

loan past due that was modified in 2021.

December 31, 2022, the

4 unchanged sentences

operating leases

premises with

expiration dates

with expiration

dates ranging

2026 to 2036, many of these leases have extension

17 unchanged sentences

that qualify,

meaning those with

terms under 12

meaning those

with terms under

ROU assets or lease liabilities are not to be recognized

6 unchanged sentences

of lease payments

In the Company’s

Consolidated Balance

reported under

any’s Consolidated

Balance Sheets,

other assets while lease liabilities are classified under

accrued interest and other liabilities.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

information available

at commencement

incremental borrowing

Company’s incremental

borrowing rate

advance rate matching or nearing the lease term.

10 unchanged sentences

Operating leases

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Future lease payment obligations and a reconciliation to lease

12 unchanged sentences

Premises and equipment, net

Depreciation and amortization

expense was $

million and $

million for the years

Depreciation and

amortization expense

ended December 31,

2020, respectively.

and 2021, respectively.

During 2021, the Company

million in assets due

to the sale of one

banking center and

million in assets

due to the sale of

one banking center

and relocation

banking center.

The depreciation

recognized as an immaterial loss.

The Company eliminated $

million in assets which were fully depreciated in 2020.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The Company’s provision

4 unchanged sentences

and 2021 (in thousands):

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The actual income

tax expense for the

years ended December 31, 2021

and 2020 differs from

the statutory tax expense

The actual income tax

expense for the years

ended December 31, 2022 and

2021 differs from the

statutory tax expense

for the year (computed by applying the

6 unchanged sentences

Bank owned life insurance

The following table presents

following table presents

the deferred tax assets

11 unchanged sentences

Deferred tax liability:

Unrealized gain on available for sale securities

Deferred loan cost

Lease right of use asset

2 unchanged sentences

Net deferred tax asset

The Company has approximately $

million of Federal and $

million of State net operating loss carryforwards

expiring in various amounts from 2031 to 2036.

Their utilization

is limited to future taxable earnings of the Company.

approximately

carryforwards

earnings of the Company.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

In assessing the

realizability of deferred

tax assets, management considered

whether it is

more likely than

not that some

tax assets, management

considered whether it

is more likely

than not that

realization of

upon the generation of

future taxable income

during the periods

in which those temporary

differences become deductible.

during the periods in

which those temporary differences

become deductible.

Management considers the scheduled reversal

5 unchanged sentences

The Company is generally no longer subject to U.S.

State examinations by tax authorities for years before 2018.

Federal or State

examinations by tax authorities for years before 2019.

any unrecognized

3 unchanged sentences

recorded as a result of tax uncertainties.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The following table presents deposits by type at December

4 unchanged sentences

Time deposits

approximately $

million and $

2 unchanged sentences

were (in thousands):

At December 31,

aggregate amount

deposits reclassified

as overdrafts

the aggregate

demand deposits

reclassified to

thousand and $

thousand, respectively.

Borrowed funds consist of fixed rate advances from the FHLB.

At December 31, 2021 and 2020, FHLB advances were

The following table presents

the fixed interest rates

and expected maturities

of the FHLB advances

at both December

million and at December 31, 2021 were $

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The following

table presents

interest rates

maturities of

2022 and 2021 (in thousands):

At December 31, 2022

Interest Rate

Maturity Date

March 27, 2025

July 18, 2025

July 30, 2024

August 17, 2023

January 13, 2023

At December 31, 2021

Interest Rate

Maturity Date

August 17, 2023

July 30, 2024

17 unchanged sentences

may contribute

eligible employees

thousand and $

2 unchanged sentences

the Consolidated

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Stock-Based Compensation

option balances,

weighted average

years ended December 31, 2021 and

2020 were adjusted to

reverse stock split on

Class A common stock.

Stock options are only exercisable

to Class A common stock.

See Note 13 “Stockholders’ Equity”

for further discussion on

authorized grants

weighted average

reverse stock

common stock.

options are only exercisable

to Class A common

“Stockholders’ Equity” for

further discussion on stock

authorized grants

provided that

7 unchanged sentences

shareholders of the Company approved to amend the

2015 Option plan authorizing the issuance of

an additional

2015 Option plan authorizing the issuance of an

shares of common stock.

2 unchanged sentences

2015 Option Plan.

At December 31,

2021, there were

shares available for grant under the 2015 Option Plan.

reverse stock split.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The Company recognizes compensation expense based

10 unchanged sentences

years ended December 31, 2022 and 2021.

Unrecognized compensation cost remaining

on stock-based compensation totaled

million and $

million for the

years ended December 31, 2021 and 2020.

Unrecognized compensation cost

remaining on stock-based

compensation totaled $

thousand and $

the years ended December 31, 2022 and 2021, respectively

Excess tax benefits

1 unchanged sentence

from tax deductions for

exercised options in

excess of the deferred

exercised options in excess

of the deferred

tax asset attributable to the compensation cost for such

7 unchanged sentences

Dividend yield

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The following table presents a summary of stock options

for the years ended December 31, 2021 and 2020:

The following table presents a summary of stock

options for the years ended December 31, 2022 and 2021:

Stock Options

10 unchanged sentences

Exercisable at December 31, 2021

Class A common stock outstanding and additional

paid-in-capital for December 31, 2020 were adjusted

to reflect the 1 for 5 reverse stock split.

Note 13 "Stockholders' Equity" for further discussion

on the stock split.

The aggregate intrinsic value in

2 unchanged sentences

value (the difference between

valuation of the Company’s stock and the exercise price, multiplied by

the number of options considered in-the-money) that

valuation of the Company’s stock and the exercise price, multiplied by the number of

options considered in-the-money) that

would have been received by the option holders had all option

6 unchanged sentences

, respectively.

restricted stock awards outstanding as of December

31, 2021 or 2022.

equity compensation plans of the Company that have

not been approved by the shareholders.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to

meet the financial

its customers

and to reduce

fluctuations in

interest rates.

These financial

financial needs

customers and

to reduce its

to fluctuations

instruments include

2 unchanged sentences

extend credit,

instruments involve,

degrees, elements

varying degrees,

interest rate

amount recognized in the Company’s Consolidated Balance Sheets.

The Company uses the

same credit policies in making

commitments and conditional obligations as it does for on-balance-sheet

The Company's exposure

to credit loss

of nonperformance by

the other party

to the financial

The Company uses

the same credit policies in making

commitments and conditional obligations as it does for

on-balance-sheet instruments.

The Company's

exposure to credit

event of nonperformance

financial instruments

for unused lines of credit, and standby letters of credit

7 unchanged sentences

established in the contract.

Commitments generally have

fixed expiration dates or other termination clauses.

Commitments generally have fixed

expiration dates or other termination clauses.

Unfunded lines of

1 unchanged sentence

credit lines are

commitments for possible

future extensions

commitments for

possible future extensions

These lines of

5 unchanged sentences

is committed.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

performance of a

8 unchanged sentences

The Company utilizes interest rate swap agreements

as part of its asset liability management strategy

to help manage

as part of its asset liability management

strategy to help manage

notional amount

19 unchanged sentences

offsetting derivatives

with third parties.

value of liability

on these derivatives

requires the Company

to provide the

counterparty with funds to

be held as collateral

which the Company reports as

be held as collateral which

the Company reports as

other assets under the Consolidated

While these derivatives represent economic hedges,

it does not qualify as hedges for accounting purposes.

While these derivatives represent economic

hedges, it does not qualify as hedges for accounting purposes.

The following table reflects the Company’s customer

related interest rate swaps for the dates indicated

(in thousands):

related interest rate swaps for the dates indicated (in

Balance Sheet Location

7 unchanged sentences

Other assets/Other liabilities

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Determination of Fair Value

3 unchanged sentences

with the fair

value measurements

accounting guidance, the

fair value of

value measurements accounting

guidance, the fair

financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market

determined based

market prices.

best determined

quoted market

many instances, there

are no quoted

market prices for the

Company's various financial

are no quoted market

prices for the Company's

various financial instruments.

market prices

8 unchanged sentences

a consistent definition

value, which focuses

of fair value,

which focuses on

exit price in

an orderly transaction

1 unchanged sentence

sale) between

market participants

under current

market conditions.

a significant

1 unchanged sentence

valuation technique or

valuation techniques may

be appropriate.

instances, determining

valuation techniques

such instances, determining

depends on the facts

and circumstances and

requires the use of

significant judgment.

value is a reasonable

and circumstances and requires

the use of significant judgment.

The fair value is

a reasonable point

within the range that is most representative of fair value under

current market conditions.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Fair Value Hierarchy

12 unchanged sentences

the reporting

at the measurement

the ability to

the measurement

and liabilities

11 unchanged sentences

observable for the

markets that are

are not active;

or other inputs

that are observable

by observable market data for substantially the full term of the

asset or liability.

by observable market data for substantially the full term

of the asset or liability.

unobservable inputs that

4 unchanged sentences

models, discounted

methodologies,

flow methodologies,

well as instruments for which determination of fair value

5 unchanged sentences

Investment securities:

When instruments are traded

in secondary markets and

quoted market prices do

not exist for

When instruments are

traded in secondary markets

and quoted market prices

do not exist for

such securities,

2 unchanged sentences

from independent

third-party broker-dealers.

third-party broker

Management reviews pricing methodologies provided by the vendors and third-party broker-dealers in order to determine if

2 unchanged sentences

party broker-dealers

are classified within

the hierarchy and

often involve using

quoted market

prices for similar

are classified

within Level 2

of the hierarchy

involve using quoted

market prices

securities, pricing models or discounted cash flow analyses

1 unchanged sentence

classified within Level 2 of the hierarchy.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The following table represents

4 unchanged sentences

Investment securities available for sale:

Government Agency - SBA

Government Agency

4 unchanged sentences

Bank subordinated debt securities

Corporate Bond

Corporate bonds

Derivative assets

2 unchanged sentences

Total liabilities at fair value

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Items Measured at Fair Value

11 unchanged sentences

respectively,

the allowance

2022 and 2021, respectively.

Loans applicable to write-downs, or impaired

loans, are estimated using the present

Loans applicable to write-downs, or

impaired loans, are estimated using

the present value of

estimates of changes in economic conditions are considered

a Level 3 valuation.

Other Real Estate:

estate owned are

3 unchanged sentences

less management's

estimate of the

carrying cost of

Appraisals generally

use the market

market approach

valuation technique

5 unchanged sentences

the value for changes in

market conditions subsequent

to the valuation date

when current appraisals

are not available.

market conditions subsequent to

the valuation date when

current appraisals are not

a consequence of the carrying cost or the

8 unchanged sentences

Impaired loans

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

The following table presents

4 unchanged sentences

2021 (in thousands):

Valuation Techniqu

Valuation Technique(s)

Unobservable Input(s)

21 unchanged sentences

basis at December 31, 2022 and 2021.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Items Not Measured at Fair Value

20 unchanged sentences

Interest-bearing deposits in banks

Investment securities held to maturity

Loans held for investment, net

7 unchanged sentences

Accrued interest payable

STOCKHOLDERS’ EQUITY

conversion rights.

rights, while

voting rights.

are convertible

On June 16, 2021, the Company effected a

reverse stock split of all the Class A common stock $

the effective

Company’s Class

combined into

fully paid share of Class A common stock.

Any fractional shares resulting from this reverse stock split

were rounded up

to one whole share.

The Company has adjusted the Class A

common stock, earnings per share and stock options adjusted

reverse stock split for all

periods here.

The Class B common

stock were not adjusted but

if sold or exchanged

would be converted at the

reverse stock split of 5 Class B common stock for

share of Class A common stock.

dividends declared by

Directors (the “Board”)

to include Class

B common stock

Operations, and Consolidated Statements of Changes

in Stockholders’ Equity.

USCB FINANCIAL HOLDINGS, INC.

1 unchanged sentence

USCB Financial Holdings, Inc.

completed the

Initial Public

Offering (“IPO”)

common stock,

received total

net proceeds of $

million after deducting underwriting discounts and expenses.

STOCKHOLDERS’ EQUITY

On June 16, 2021, the Bank

reverse stock split of all

the Class A common stock

par value per

As of the effective date of June 16, 2021,

each five shares of the Company’s

Class A common stock was combined

fully paid share of

Class A common

Any fractional

shares resulting from this

reverse stock split were

up to one whole share.

Bank has adjusted the Class

A common stock, earnings per

share and stock options adjusted

reverse stock

split for all

periods presented

Class B non-voting

was not adjusted

reverse stock

Class A common stock.

On July 27, 2021, the Bank completed the Initial Public Offering (“IPO”) of its Class A common stock, in which it issued

proceeds of $

million after deducting underwriting discounts and

outstanding Class

1 unchanged sentence

shares of Class A common stock.

In December 2021,

USCB Financial Holdings,

(the “Company”)

acquired all the

issued and outstanding

the Class A voting

common stock of

(the “Bank”), which are

the only issued and

outstanding shares of

the Bank’s capital

stock, in a share

exchange (the “Reorganization”)

effected under the

Florida Business Corporation

Each of the outstanding

shares of the

Bank’s common stock,

per share, formerly

was converted into and

exchanged for one newly issued

share of the Company’s common

stock, par value $

or operations

for activities

organization and the Reorganization.

In December 2021, the

Company acquired all

the issued and outstanding

shares of the Class

A voting common

“Reorganization”)

formerly held

converted into

and exchanged

the Company’s

completing the

company formation,

material assets

and had not conducted any business or operations except

for activities related to our organization and the

Reorganization.

Reorganization,

received securities

substantially

having substantially

same designations,

2 unchanged sentences

and restrictions,

previously owned of the Bank’s common stock.

previously owned of the Bank’s common

Preferred Stock

12 unchanged sentences

stockholders the ability to exchange

their shares for Class A

their shares for Class

common stock.

to exchange was voluntary

and the preferred stockholders

to exchange was voluntary and

the preferred stockholders

were given the option to

4 unchanged sentences

for shares of Class A common stock.

During the year ended December 31, 2021,

shares of Class C preferred stock

shares of Class

D preferred stock

converted into

shares of Class

A common stock.

The exchange of

preferred stock

stock converted

liquidation value

The remaining

unconverted shares

Class D preferred stock totaling

shares were subsequently redeemed at liquidation

The fair value of

38 unchanged sentences

Class D preferred shares

the Board while

the Class E preferred

set dividend payment

the Board while the

Class E preferred shares

dividend payment

date on the fifteenth of February,

2 unchanged sentences

the Board for the common

stock classes for the years

ended December 31, 2021 and

stock classes for the years ended

December 31, 2022 and

Additionally, there

3 unchanged sentences

is calculated by

dividing net income

(loss) available to

common stockholders by the

weighted-average

dividing net income (loss)

available to common

stockholders by the weighted-average

number of common shares outstanding for

2 unchanged sentences

Diluted EPS is

income (loss)

common stockholders

weighted-average

stockholders by

weighted-average number

shares outstanding for

4 unchanged sentences

the period determined using the treasury-stock method.

purposes of this calculation, common stock equivalents include

of this calculation, common stock equivalents include

common stock options and are only included in the calculation

of diluted EPS when their effect is dilutive.

allocated between Class A and

Class B common stock since

there was no issued and outstanding

Class B common stock

In calculating EPS for the

year ended December 31, 2020, net

income available to common stockholders was allocated

the income for

the period were

distributed to common

stockholders.

allocation was

shares outstanding

giving effect

Incorporation

stockholders be adjusted to give effect for Class A stock splits.

Therefore, the income allocated to Class B common shares

was calculated based on their

% per share equivalent to Class A common shares.

In calculating EPS for

the year ended

December 31, 2022 and 2021, net

income available to common stockholders

not allocated

between Class

outstanding Class

stock at year-end.

The following table

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earnings (loss)

ended December 31, 2021 and 2020 (in thousands, except

per share amounts):

ended December 31, 2022 and 2021 (in thousands, except per

share amounts):

Net income (loss) available to common shares before allocation

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Anti-dilutive stock options excluded from diluted EPS

Net income (loss) available to common shares

between Class A and Class B common stock was

allocated based on the weighted average

of shares outstanding.

The allocation also assumes

that Class B shares are converted to Class A which

is equivalent to

per share of Class B or

shares of Class A shares.

ended December 31, 2021,

the Company was

ended 2021, the

loss position after

adjusting for the

redemption of the Class C and Class D preferred

shares, making basic net loss per share

the same as diluted net loss per

share as the inclusion of all potential common shares outstanding

would have been antidilutive.

adjusting for

the exchange and

redemption of

preferred shares, making

basic net loss

per share the

same as diluted

inclusion of all potential common shares outstanding would

have been antidilutive.

See Note 13 “Stockholders’ Equity” for further discussion

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that involve quantitative

measures of their

assets, liabilities,

their assets, liabilities,

off-balance-sheet

1 unchanged sentence

weightings, and other factors.

Based on changes to the Federal Reserve’s definition of a “Small Bank

Holding Company” that increased the threshold

Based on changes to the Federal Reserve’s definition of a “Small Bank Holding

Company” that increased the threshold

to $3.0 billion in assets

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capital levels.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

subject to the

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buffer that is

the minimum requirements

for capital adequacy

to maintain the

required capital conservation

requirements for capital

adequacy purposes.

Failure to maintain

the required capital

conservation buffer

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

limit the ability of

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At December 31,

notification from

the regulatory

authorities categorized

2021, the most

recent notification

regulatory authorities

categorized the

well capitalized

2 unchanged sentences

meet statutorily

mandated capital

termination of deposit

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be categorized

capitalized, an institution

must maintain minimum

capitalized, an institution must

maintain minimum

total risk-based, Tier

3 unchanged sentences

notification that

management believes

believes have

Bank’s category.

include the capital conservation buffer previously

Actual and required

capital amounts

and ratios are

presented below for

December 31, 2022 and

thousands, except ratios).

The required amounts for capital adequacy

shown do not include the capital conservation buffer

previously discussed.

Minimum Capital

12 unchanged sentences

Leverage ratio

disclose on the statements of operations or statements

of cash flows.

Effective December 30, 2021, the Company acquired the Bank in a merger and

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exchanged for

par value common

stock, and the Bank

par value common stock,

became a subsidiary of

2 unchanged sentences

dividends that

Payment of dividends

dividends is generally

the Company’s

3 unchanged sentences

defined by state banking regulations.

However, for any dividend declaration, the Company must consider

additional factors

However, for any dividend declaration, the Company

must consider additional factors

such as the amount

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these factors would further limit the

amount of dividends which the Company could

amount of dividends which the Company

could declare.

bank regulators have

the authority to

prohibit banks from

paying dividends

prohibit banks

from paying dividends

such payment to

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Interest expense

Loan Purchases

During 2022, the Bank purchased $

million of loans from entities that are deemed to

be related parties.

paid those entities fees of $

PARENT COMPANY

1 unchanged sentence

Financial Holdings,

are presented

December 31, 2022

December 31, 2021

Cash and Cash Equivalents

Investment in bank subsidiary

3 unchanged sentences

liabilities and stockholders' equity

At December 31, 2021, there was no activity between the parent bank holding company and

its subsidiaries to disclose

on the statements of operations or statements of cash flows.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

December 31, 2022

December 31, 2021

Dividends from subsidiaries

Service fees from subsidiaries

Employee compensation and benefits

Income before income taxes and undistributed subsidiary income

Provision (benefit) for income taxes

Equity in undisbursed subsidiary income

The condensed cash flow is presented below for USCB

Financial Holdings, Inc.

at the dates indicated (in thousands):

December 31, 2022

December 31, 2021

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided

Equity in undistributed earnings of subsidiaries

Net cash provided by operating activities

Cash flows from investing activities:

Capital contributions to subsidiary

Net cash used in investing activities

Cash flows from financing activities:

Dividends paid

Proceeds from exercise of stock options

Repurchase of common stock

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

LOSS CONTINGENCIES

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and legal actions

in the ordinary

management, none

3 unchanged sentences

adverse effect

on the Company’s

Consolidated Financial Statements.

on the Company’s Consolidated Financial Statements.

SUBSEQUENT EVENTS

1 unchanged sentence

evaluated subsequent

Form 10-K was available to be issued.

Annual Report Form 10-K was available to be issued.

Share Repurchase Program

share repurchase

the repurchase

a discretionary

repurchases, privately negotiated

transactions, or

The repurchase

program will be funded from the Company’s

existing cash and cash equivalents or future cash flow.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

In February 2023 the

Company repurchased

shares of USCB Financial

Holdings Inc.

A common stock

Additionally,

repurchases were

market pursuant

Company’s publicly announced repurchase program.

USCB Financial Holdings, Inc.

Changes in and Disagreements with Accountants on

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data