What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-12 compared with 2022-11-10 · 1038 added, 1089 removed, 579 unchanged (79% of the section changed)

4 unchanged sentences

except share data)

September 30, 2022

March 31, 2023

December 31, 2022

1 unchanged sentence

Interest-bearing deposits in banks

Total cash and cash equivalents

Investment securities held to maturity (fair value $

Total cash and cash

Investment securities held to maturity, net of allowance

for credit losses of $

(fair value $

, respectively)

17 unchanged sentences

Total liabilities

Commitments and contingencies (See Notes 5

Commitments and contingencies (See Notes 5 and 10)

STOCKHOLDERS' EQUITY:

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of September 30, 2022

and December 31, 2021

issued and outstanding as of March 31, 2023 and December 31, 2022

Preferred stock - Class D;

per share liquidation preference;

issued and outstanding as of September 30, 2022

and December 31, 2021

issued and outstanding as of March 31, 2023 and December 31, 2022

Preferred stock - Class E;

per share liquidation preference;

issued and outstanding as of September 30, 2022

and December 31, 2021

issued and outstanding as of March 31, 2023 and December 31, 2022

Common stock - Class A Voting;

shares authorized;

issued and outstanding as of September 30, 2022

and December 31, 2021

as of March 31, 2023,

issued and outstanding as of December 31, 2022

Common stock - Class B Non-voting;

shares authorized;

outstanding as of September 30, 2022 and

December 31, 2021

outstanding as of March 31, 2023 and December 31, 2022

Additional paid-in capital on common stock

1 unchanged sentence

Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Total stockholders'

Total liabilities

and stockholders' equity

The accompanying notes are an integral part of these unaudited consolidated financial statements.

USCB Financial Holdings, Inc.

4 unchanged sentences

except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest income:

2 unchanged sentences

Interest-bearing deposits in financial institutions

Total interest income

Total interest

Interest expense:

2 unchanged sentences

Time deposits

Federal Home Loan Bank advances

Total interest expense

Net interest income before provision for

credit losses

Federal Home Loan Bank advances and other borrowings

Total interest

Net interest income before provision for credit losses

Provision for credit losses

Net interest income after provision for

credit losses

Net interest income after provision for credit losses

Non-interest income:

(Loss) gain on sale of securities available for

(Loss) gain on sale of securities available for sale, net

Gain on sale of loans held for sale, net

1 unchanged sentence

Other non-interest income

Total non-interest income

Total non-interest

Non-interest expense:

4 unchanged sentences

Other operating expense

Total non-interest expense

Total non-interest

Income before income tax expense

Income tax expense

Preferred stock dividend

Exchange and redemption of preferred shares

Net income (loss) available to common stockholders

Per share information:

Class A common stock

Net income (loss) per share, basic

Net income (loss) per share, diluted

Class B common stock

Net loss per share, basic

Net loss per share, diluted

For further details on the allocation of net

income available to common stockholders and per

share information, see Note 9 "Earnings per Share".

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Net income per share, basic

Net income per share, diluted

The accompanying notes are an integral part of these unaudited consolidated financial statements.

USCB Financial Holdings, Inc.

1 unchanged sentence

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Comprehensive Income

(Loss) - Unaudited

Consolidated Statements of Comprehensive Income (Loss) - Unaudited

(Dollars in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities

Amortization of net unrealized gains on securities

transferred from

available-for-sale to held-to-maturity

Reclassification adjustment for loss (gain) included in

Total other comprehensive income (loss), net of tax

Total comprehensive (loss) income

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Amortization of net unrealized (loss) gain on securities transferred from available-for-sale to held-to-maturity

Reclassification adjustment for loss (gain) included in net income

Total other comprehensive

income (loss), net of tax

Total comprehensive

income (loss)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

USCB Financial Holdings, Inc.

1 unchanged sentence

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Changes in Stockholders’

Equity - Unaudited

Consolidated Statements of Changes in Stockholders’ Equity - Unaudited

(Dollars in thousands,

except per share data)

Preferred Stock

Additional Paid-in

Capital on Common

Accumulated Deficit

Accumulated Other

Comprehensive

Income (Loss)

Stockholders'

Balance at July 1, 2022

Other comprehensive loss

Stock-based compensation

Balance at September 30, 2022

Balance at July 1, 2021

Total Stockholders'

Balance at December 31, 2022

Cumulative effect of adoption of accounting principle related to ASC 326

Adjusted beginning balance after cumulative effect adjustment

Other comprehensive income

Dividends - preferred stock

Issuance of Class A common stock,

net of offering

Exchange of preferred sock

( 11,109,025 )

Redemption of preferred stock

( 1,234,354 )

Repurchase of Class A common stock

Restricted stock issued

Stock based compensation

Balance at September 30, 2021

Preferred Stock

Additional Paid-

in Capital on

Comprehensive

Income (Loss)

Stockholders'

Balance at March 31, 2023

Balance at January 1, 2022

2 unchanged sentences

Stock-based compensation

Balance at September 30, 2022

Balance at January 1, 2021

Reverse stock split 1 for 5 Common A

( 15,557,626 )

Adjusted balance at January 1, 2021

Other comprehensive income

Dividends - preferred stock

Issuance of Class A common stock,

net of offering

Exchange of preferred sock

( 11,109,025 )

Redemption of preferred stock

( 1,241,854 )

Stock-based compensation

Balance at September 30, 2021

The accompanying notes are an integral

part of these unaudited consolidated financial

Balance at March 31, 2022

USCB Financial Holdings, Inc.

3 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Adjustments to reconcile net income

to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

Depreciation and amortization

Amortization of premiums on securities, net

(Accretion) Amortization of premiums on securities, net

Accretion of deferred loan fees, net

2 unchanged sentences

Gain on sale of loans held for sale

Increase in cash surrender value of bank owned

life insurance

Increase in cash surrender value of bank owned life insurance

Decrease in deferred tax assets

4 unchanged sentences

Cash flows from investing activities:

Purchase of investment securities held

Proceeds from maturities and pay-downs of investment

securities held to maturity

Purchase of investment securities available

Proceeds from maturities and pay-downs of investment

securities available for sale

Proceeds from sales of investment securities

available for sale

Purchase of investment securities held to maturity

Proceeds from maturities and pay-downs of investment securities held to maturity

Purchase of investment securities available for sale

Proceeds from maturities and pay-downs of investment securities available for sale

Proceeds from sales of investment securities available for sale

Net increase in loans held for investment

2 unchanged sentences

Proceeds from the sale of loans held for sale

Proceeds from the redemption of Federal

Home Loan Bank stock

Proceeds from the redemption of Federal Home Loan Bank stock

Purchase of Federal Home Loan Bank stock

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of Class A common

Dividends paid

Redemption of Preferred stock Class C

Redemption of Preferred stock Class D

Redemption of Preferred stock Class E

Proceeds from issuance of Class A common stock, net

Repurchase of Class A common stock

Net increase in deposits

3 unchanged sentences

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow

Supplemental disclosure of cash flow information:

Interest paid

Supplemental schedule of non-cash investing

and financing activities:

Transfer of loans held for investment to loans held

Transfer of investment securities from available-for-sale

to held-to-maturity

Transfer of premises and equipment to assets held

Lease liability arising from obtaining right-of-use

Exchange of Preferred stock Class C for

Class A common stock

Exchange of Preferred stock Class D for

Class A common stock

The accompanying notes are an integral

part of these unaudited consolidated financial

Supplemental schedule of non-cash investing and financing activities:

Transfer of loans held for investment to loans held for sale

The accompanying notes are an integral part of these unaudited consolidated financial statements.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

SUMMARY OF SIGNIFICANT ACCOUNTING

USCB Financial Holdings, Inc., a

Florida corporation incorporated

in 2021, is a bank holding

company with one wholly

owned subsidiary,

Century Bank (the

“Bank”), together referred to

as “the Company”.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USCB Financial Holdings, Inc., a Florida corporation incorporated in 2021, is a bank

holding company with one wholly

owned subsidiary, U.S.

Bank (the “Bank”), together referred to as “the Company”.

established in 2002,

state-chartered, non-member financial institution providing financial

services through its banking

state-chartered, non-member

financial institution

providing financial services

through its banking

centers located

in South Florida.

During the year ended December 31,

2021, the Bank completed an initial

public offering (“IPO”) and

its Class A voting

common shares began

trading on the

Market in July

2021, the Bank

exchanged all the

Shortly thereafter,

the Company acquired all issued and

outstanding shares of Class A voting

common stock of

in connection with

the reorganization

the holding company

For further information

on the IPO and the exchange and redemption of shares

see Note 8 “Stockholders’ Equity”.

The Company’s

Consolidated Financial

Statements consist

Financial Holdings,

September 30, 2022 and

December 31, 2021 and for

the three and

nine months ended

September 30, 2022 compared

Century Bank as of September 30, 2021

and for the three and nine months ended September

The Bank owns

a subsidiary,

Florida Peninsula Title

LLC, that offers

our clients title

insurance policies for

transactions closed at the Bank.

in the State of Florida and

approved by the Department of

Insurance Regulation,

Florida Peninsula Title LLC began operations in 2021.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to

Form 10-Q and

do not include all

the information and

footnotes required by U.S.

The accompanying unaudited consolidated financial

statements have been prepared in accordance

with instructions to

Form 10-Q and do not

include all the information and footnotes

required by U.S.

generally accepted accounting

periods presented

unaudited consolidated

financial statements

Form 10-K for the year ended December 31, 2021.

periods presented have

been included.

unaudited consolidated financial

statements should be

read in conjunction

consolidated financial

statements and

related notes

the Company’s

Annual Report

Form 10-K/A for the year ended December 31, 2022.

Principles of Consolidation

1 unchanged sentence

Use of Estimates

financial statements in conformity with U.S.

prepare financial statements in conformity with U.S.

management makes estimates and assumptions based

estimates and

assumptions affect

the financial

most significant

estimates impacting

the Company’s

consolidated financial

statements are

the allowance

most significant estimates

impacting the Company’s

consolidated financial statements

are the allowance

for credit losses

and income taxes.

Reclassifications

presentation.

Reclassifications had no impact on the net income

or stockholders’ equity of the Company.

Certain amounts in the

consolidated financial statements have

been reclassified to conform

to the current presentation.

Reclassifications had no impact on the net income or stockholders’ equity of the Company.

Recently Issued Accounting Standards

Issued and Not Yet Adopted

Adoption of New Accounting Standards

Measurement of Credit Losses on Financial Instruments

2016, the FASB issued

ASU 2016-13, Financial

Instruments - Credit

Losses (Topic 326);

Measurement of

Losses on Financial Instruments.

This accounting standard update (“ASU” or “Update”)

on accounting for current expected

with a methodology

that reflects the

Measurement of Credit Losses on Financial Instruments, as

amended, which replaces the incurred loss methodology with

loss methodology

current expected

(CECL) methodology.

receivables and

held-to-maturity debt

credit exposures

instruments) and

net investments

recognized by

in accordance

ASC 326 amended the accounting

for available-for-sale debt securities.

change is to require credit

write-down on

available-for-sale debt

securities, that

management does

intend to sell or believes that it is more likely than not they will be required to sell.

estimates the

allowance for

credit losses

using relevant

available information,

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

Historical credit losses provide

the basis for estimation of

expected credit losses.

The Update is

intended to provide

decision-useful

retrospective

Qualitative adjustments

are applied to the

expected credit

losses estimated

loan portfolio

limitations of

the quantitative

is used to aid management in the assessment of qualitative factor adjustments applied to expected credit losses.

regression analyses

included, and

where observed

credit losses

economic factors were used to determine suitable loss drivers

for modeling the lifetime rates of probability of default (PD).

fundamentally utilizes an expected discounted cash

flow (DCF) analysis for

loan portfolio segments.

The DCF analysis

instrument-level and

incorporates an

loan-specific

determine the lifetime

expected loss attributable

to each instrument.

An implicit "hypothetical

loss" is derived

for each period

helps establish

instrument is the difference between the sum of the present value of future cash

flows and the book balance of the loan at

the measurement date.

Management elected

the Remaining

Life (WARM) methodology

portfolio segments.

a long-term average loss rate is calculated

and applied on a quarterly basis

for the remaining life of the pool.

attrition-based

measurements based on the loan portfolio.

For loans collectively

billion of loan

receivables or

% were evaluated

under Discounted Cash

loan receivables

evaluated under

the Remaining

The remaining

million loan receivable of the total loan portfolio were individually evaluated.

Portfolio segments are the level at which loss assumptions are applied to a pool of loans based on the similarity of risk

characteristics inherent

included instruments,

collateral codes

Report codes.

currently segments the portfolio based on collateral codes for purpose of establishing reserves.

Each of these segments is

characteristics.

Company has established relationships between internal segmentation and

FFIEC Call Report codes for this purpose.

loss driver for each loan portfolio segment is derived from a

readily available and reasonable economic forecast, including

the Federal Reserve Bank projections of U.S.

civilian unemployment rate and the year-over-year real

Research Group

four quarters

straight-line basis to

the lookback period's

historical mean for

the economic indicator over

the expected life

The model incorporates qualitative factor adjustments in order to calibrate the model for risk

in each portfolio segment

be captured through

quantitative analysis.

Determinations

regarding qualitative adjustments

are reflective of

management's expectation

conditions differing

already captured

quantitative component

commitments, which

reported separately

credit losses within other liabilities.

The reserve is based

upon the same quantitative and

qualitative factors applied to the

collectively evaluated loan portfolio.

The impact of adoption of the ASU 2016-13 was an increase to the allowance for credit losses on loans receivables of

adjustment resulted in a decrease of $

3 million in retained earnings.

See “Allowance for Credit Losses” section in Note 3

for more information on the allowance of credit losses (”ACL”).

Trouble Debt Restructuring

Financial Accounting

Standards Board

(“FASB”) issued Accounting

Standards Update

(“ASU”) 2022-

02, Financial Instruments-Credit Losses (Topic

Troubled Debt

Restructurings (“TDR”) and Vintage

modifications, and

require disclosure

receivables within

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

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

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,

implementation

implementation of a software solution to assist

with the CECL implementation process and is developing

measurements in

stakeholders,

completed a data

and retained the

services of a

third-party consulting

firm to perform

an independent model

validation prior to adoption.

Reference Rate Reform

disclosures table (see

footnote 3 “Loans”).

Company adopted ASU

2022-02 effective January 1,

2023 on a prospective

The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.

Issued and Not Yet Adopted

Reference Rate Reform

on Financial Reporting.

Reference Rate Reform on

Financial Reporting.

In January 2021,

clarified the scope

of this guidance

2021-01 which provides optional

guidance for a limited

period of time to

ease the burden in

accounting for (or

clarified the scope of

this guidance with ASU

2021-01 which provides optional guidance for a

limited period of time to ease

the burden in accounting for (or

the effects of)

reference rate reform on

reference rate

financial reporting.

is effective from March 12,

is effective from

March 12, 2020

through December 31,

2 unchanged sentences

LIBOR transition

ASU will have a material effect on our business operations

and consolidated financial statements.

Trouble Debt Restructuring

Instruments—Credit

Restructurings and Vintage Disclosures.

This ASU eliminates the recognition and measurement guidance on troubled debt

restructurings for

creditors and

with existing

determine whether

modification results

modifications by

experiencing financial

retrospective

permitted for entities that have already adopted CECL.

The Company is in the process of reviewing this

ASU, as part of its

CECL implementation efforts,

whether it would

have a material

the Company’s consolidated financial

statements when adopted.

ASU will have a material effect on our business operations and consolidated financial statements.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

INVESTMENT SECURITIES

The following

tables present

of the amortized

cost, unrealized

or unrecognized

value of investment securities at the dates indicated (in

September 30, 2022

Measurement of Credit Losses on Financial Instruments, as

amended, which replaces the incurred loss methodology with

loss methodology

current expected

(CECL) methodology.

including loan receivables and

held-to-maturity debt securities.

addition, ASC 326 amended

the accounting for available-

for-sale debt securities.

such change is to

require credit losses to

be presented as an

allowance rather than as

down on available-for-sale debt

securities management does not

intend to sell or

believes that it is

more likely than not

will be required to sell.

CECL requires loss

reserve for securities

classified as

Held-to-Maturity (“HTM”).

reserve should

reflect historical

credit performance

projected economic

issued bonds in HTM the explicit guarantee of the US Government is sufficient to conclude that a credit loss reserve is not

reserve requirement

three primary

assets groups:

municipal bonds,

corporate bond,

and non-agency

securitizations.

ImpairmentStudio.

incorporates historical

Moody’s baseline economic

The solution uses

probability of default/loss given

default (“PD/LGD”) approach.

represents the likelihood a borrower will default.

Within the Moody’s model, this is determined using historical default data,

adjusted for the current economic environment.

LGD projects the expected loss if a borrower were to default.

mortgage-backed

these holdings.

The remaining

investment grade

corporate bonds.

reserve for these

holdings is determined

each quarter using

the model described

resulting amount of allowance was immaterial at March 31, 2023.

allowance for Available for Sale (“AFS”) securities that needed to be recorded as of March 31, 2023.

The following tables

present a summary of

the amortized cost,

unrealized or unrecognized gains

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

March 31, 2023

Available-for-sale:

31 unchanged sentences

Corporate bonds

quarter ended

September 30, 2022

ended December 31,

Company transferred,

million and $

million, respectively, of securities from available-for-sale (“AFS”) to held-to-maturity (“HTM”).

investment securities

amortized cost

respectively,

comprehensive

gains or losses were recognized to income at the transfer

Gains and losses on

the sale of securities are

recorded on the trade date

and are determined on a

specific identification

The following table presents the proceeds, realized

gross gains and realized gross losses on sales and

debt securities for the three and nine months ended September

30, 2022 and 2021 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

unrealized loss

net unrealized

in accumulated

comprehensive income (“AOCI”)

amortized over

the remaining

the securities.

the three months

amortization out

unrealized losses

on securities

transferred from

The unamortized net unrealized loss at March 31, 2023 was $

identification basis.

The following table presents

the proceeds, realized gross gains and

realized gross losses on sales and

calls of AFS debt securities for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended Mach 31,

Available-for-sale:

Proceeds from sale and call of securities

Net realized gain (loss)

Net realized (loss) gain

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

The amortized

by contractual

of investment

securities, by

contractual maturity,

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 the

call or prepay

obligations with or

without call or

prepayment penalties.

Securities not

single maturity date are

obligations with

or without call

or prepayment

a single maturity

date are shown

Available-for-sale

Held-to-maturity

September 30, 2022:

March 31, 2023:

Due within one year

6 unchanged sentences

Mortgage-backed securities - commercial

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

At September 30,

securities held

portfolio from

amount greater

10% of total stockholders’

equity other than the United States Government and

Government Agencies.

All the collateralized

mortgage-backed

September 30,

At March 31, 2023, there were no securities held in the portfolio from any one issuer in an amount greater than 10%

stockholders’

collateralized

mortgage obligations

and mortgage-backed

securities are

United States

sponsored entities.

The municipal

bonds are of high credit

quality and the declines in

fair value are not due

to credit quality.

security holdings are a

function of changes in

investment spreads and interest

rate movements and not

changes in credit

Management 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 and

it is not more than likely

than not that the Company will

be required to sell these securities

before recovery of the amortized

Therefore, management does

not consider any investment to

be other than temporarily

impaired at December

Pledged Securities

master repurchase

agreement with

banking institution

The Company maintains

repurchase agreement with

banking institution for

million fully

guaranteed with investment

securities upon withdrawal.

Any amounts borrowed

would be at a

variable interest rate

on prevailing rates

of September 30,

any securities

pledged under this agreement.

The Company is a Qualified

Public Depositor (“QPD”) with

the State of Florida.

a QPD, the Company has

authority to maintain public deposits from cities, municipalities, and

the State of Florida.

These public deposits are secured

by securities

the outstanding

uninsured deposits.

also maintain a minimum amount of pledged securities to be

in the public funds program.

As of September 30,

guaranteed with investment securities upon withdrawal.

amounts borrowed would be at a

variable interest rate based

on prevailing

is requested.

As of March 31,

2023, the Company

had a total of

million in deposits

under the public funds

any securities pledged

under this agreement.

The Company is a Qualified Public Depositor (“QPD”) with the State

As a QPD, the Company has the legal

authority to maintain public deposits from cities, municipalities, and the State of Florida.

These public deposits are secured

by securities pledged

of Florida at

outstanding uninsured deposits.

The Company must

also maintain a minimum amount of pledged securities to be in the public funds program.

March 31, 2023,

deposits under

funds program

The following table is a summary of the distribution of loans

held for investment by type (in thousands):

September 30, 2022

to the State of Florida for these

public funds were

corporate bonds with an aggregate fair

As of December 31,

2022, the Company had

million in deposits

under the public

funds program and

Reserve Board,

announced the

Bank Term Funding Program

offers loans of

banks, savings

associations, credit

other eligible depository

institutions pledging

and mortgage-backed

securities, and

other qualifying

These assets will be valued at par.

The Company had

borrowing under the BTFP program and had pledged

million in securities measured at par

to the Federal Reserve Bank of Atlanta for the BTFP program.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

Company adopted

retrospective methodology

allowance for credit losses (“ACL”) methodology that replaces its

previous allowance for loan losses methodology.

ACL section in this note for further information

regarding the Company’s ACL.

Prior periods balance for ACL

are presented

under legacy GAAP and may not be comparable to current period presentation.

The following table is a summary of the distribution of loans held for investment by type (in thousands):

March 31, 2023

December 31, 2022

7 unchanged sentences

Allowance for credit losses

At September 30,

December 31, 2021,

million and $

million respectively,

real estate and residential

mortgage loans pledged as

collateral for lines of

credit with the

respectively,

commercial real

residential mortgage

loans pledged

as collateral

Reserve Bank of Atlanta.

The Company was a participant

in the Small Business

Administration’s (“SBA”) Paycheck

Protection Program (“PPP”)

direct incentive

businesses to

the funds had to be used towards payroll cost, mortgage interest, rent, utilities and other costs related to COVID-19.

loans are forgivable under specific criteria as determined by the SBA.

The Company had PPP loans totaling $

September 30, 2022

December 31, 2021,

categorized as

commercial and

industrial loans.

These PPP loans had deferred loan fees of $

thousand at September 30, 2022 and $

million at December 31, 2021.

interest income

ended September 30, 2022

and 2021, respectively,

which is reported

under loans, including

fees, within the

The Company was a participant in the Small Business

Administration’s (“SBA”) Paycheck Protection Program (“PPP”)

were designed to

provide a direct

incentive for small

businesses to keep

their workers on

the funds had to be used towards payroll cost,

mortgage interest, rent, utilities and other costs related to

loans are forgivable under

specific criteria as determined

Company had PPP

loans totaling $

at March 31, 2023 and $

million at December 31, 2022, which are categorized as commercial and industrial loans.

The Company recognized $

thousand and $

million in PPP loan fees and interest income during the three months

respectively,

Statements of Operations.

characteristics

collateral type

Company determines

environmental factors that may cause estimated credit losses

for the loan portfolio to differ from historical

Allowance for Credit Losses

In general, the

Company utilizes the

Discounted Cash Flow

(DCF) method or

the Remaining Life

(WARM) methodology

to estimate the

quantitative portion of

loss driver analysis

(LDA) and discounted

cash flow analyses.

Management engaged

advisors and consultants with expertise

in CECL model development to

in development of a

loss driver analysis based

on regression models and

supportable forecast.

data obtained

from FFIEC Call Report filings is used

to inform regression analyses to quantify the impact

of reasonable and supportable

forecasts in projective models.

forecasts applied to regression models

to estimate probability of default

receivables use at

the following economic

civilian unemployment

rate (national), real

gross domestic

product growth

(national GDP)

methodology is

long-term average loss rate is calculated and

applied on a quarterly basis for the remaining

life of the pool.

Adjustments for

economic expectations are made through qualitative factors.

Qualitative factors used in the ACL methodology include:

Changes in lending policies, procedures, and strategies

Changes in international, national, regional, and local conditions

Changes in nature and volume of portfolio

Changes in the volume and severity of past due loans and other similar conditions

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

the allowance

September 30, 2022

as follows (in thousands):

and Industrial

Three Months Ended September 30, 2022

Beginning balance

Provision for credit losses

Ending Balance

Nine Months Ended September 30, 2022

Beginning balance

Provision for credit losses

Ending Balance

and Industrial

Three Months Ended September 30, 2021

Concentration risk

Changes in the value of underlying collateral

The effect of other external factors:

e.g., competition, legal, and regulatory requirements

Changes in lending management, among others

estimated under

methodology, and for

ended December 31, 2022, and prior periods, it was estimated under the incurred loss model.

Changes in the allowance

for credit losses for

the three months ended

March 31, 2023 and

were as follows (in

Three Months Ended March 31, 2023

Beginning balance

Cumulative effect of adoption of accounting

Provision for credit losses

Ending Balance

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Beginning balance

1 unchanged sentence

Ending Balance

(1) Impact of CECL adoption on January 1, 2023

(2) Provision for credit losses excludes $

thousand reduction due to unfunded commitments included in other liabilities.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

Allowance for

credit losses

outstanding balances

loan categories

September 30,

and December 31, 2021 are as follows (in thousands):

The ACL and the outstanding balances in the specified loan categories as of March 31,

2023 and December 31, 2022

are as follows (in thousands):

and Industrial

September 30, 2022:

March 31, 2023:

Allowance for credit losses:

13 unchanged sentences

Balances, end of period

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

Credit Quality Indicators

The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the

loan agreement based

on relevant information

which may include:

The Company grades loans based

on the estimated capability of

the borrower to repay the contractual

obligation of the

loan agreement based on

relevant information which may

current financial information

on the borrower,

experience, credit

documentation

other current

periodically.

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

– Loans indicate different levels of satisfactory

financial condition and performance.

– Loans indicate different levels of satisfactory financial condition and performance.

Special Mention

– Loans classified as special mention have a potential weakness

that deserves management’s

– Loans classified as special mention have a potential weakness that deserves management’s

close attention.

If left uncorrected, these potential weaknesses

may result in deterioration of the repayment

prospects for the loan or of the institution’s

credit position at some future date.

– Loans classified as substandard are inadequately protected

by the current net worth and paying

capacity of the obligator or of the collateral pledged, if

Loans so classified

have a well-defined weakness or

If left uncorrected, these potential weaknesses may result in deterioration of the repayment

prospects for the loan or of the institution’s credit position at some future date.

– Loans classified as substandard are inadequately protected by the current net worth and paying

capacity of the obligator or of the collateral pledged, if any.

Loans so classified have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the

institution will sustain some loss if the deficiencies are

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

institution will sustain some loss if the deficiencies are 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

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

– Loans classified as loss are considered uncollectible.

Loan credit exposures by internally assigned grades are

presented below for the periods indicated (in thousands):

As of September 30, 2022

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

Loan credit exposures by internally assigned grades are presented below for the periods indicated (in thousands):

As of March 31, 2023

Term Loans by Origination Year

Residential real estate

Home equity line of credit and other

1-4 family residential

Condo residential

Commercial real estate

Land and construction

Multi-family residential

Condo commercial

Commercial property

Commercial and industrial:

Commercial and

Foreign banks

Consumer and other loans

All outstanding PPP loans were internally graded

Consumer and other

Special Mention

USCB FINANCIAL HOLDINGS, INC.

12 unchanged sentences

Commercial property

Leasehold improvements

Commercial and industrial:

1 unchanged sentence

Consumer and other loans

All outstanding PPP loans were internally graded

The Company had charge offs totaling

thousand for the quarter ended as of

March 31, 2023 on loans that

originated within 2023.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

also considers the

performance of loans

also considers

the performance

evaluating the

6 unchanged sentences

accruing loans

of September 30,

and December 31, 2021 (in thousands):

As of September 30, 2022:

non-accruing loans

March 31, 2023

December 31, 2022 (in thousands):

As of March 31, 2023

Residential real estate:

7 unchanged sentences

Commercial property

Leasehold improvements

Commercial and industrial:

19 unchanged sentences

Consumer and other

interest income recognized

attributable to nonaccrual

loans outstanding during

the three months

September 30, 2022 and 2021.

Interest income on these loans for the three

months ended September 30, 2022 and 2021,

approximately

respectively,

original terms.

Impaired Loans

The following table includes

the unpaid principal balances

for impaired loans with

the associated allowance amount,

applicable, on the basis of impairment methodology at

the dates indicated (in thousands):

September 30, 2022

December 31, 2021

Impaired Loans with No Specific Allowance:

Nonaccrual Status

The following table

includes the amortized

cost basis of

loans on nonaccrual

status and loans

past due over

and still accruing as of March 31, 2023:

March 31, 2023

Loans With No

Days and Still

Residential real estate

Commercial real estate

Impaired Loans with Specific Allowance:

Residential real estate

Commercial and industrial

Consumer and other

Net investment balance is the unpaid principal balance

of the loan adjusted for the remaining net deferred loan

The Company did

t have loans in nonaccrual status as of December 31, 2022.

Accrued interest

receivable is

excluded from

interest income

attributable to nonaccrual loans outstanding during the three months

ended March 31, 2023 and 2022.

Interest income on

these loans for

the three months

ended March 31, 2023

and 2022, would

have been approximately

respectively, had these loans performed in accordance with their original terms.

Collateral-Dependent Loans

substantially through

collateral dependent

loans as of March 31, 2023 and as of December 31, 2022.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

The following

table presents

Three Months Ended September 30,

Nine Months Ended September 30,

Impaired Loans

The following table includes the unpaid principal balances for

impaired loans with the associated allowance amount, if

applicable, on the basis of impairment methodology as of December 31, 2022 (in thousands):

December 31, 2022

Impaired Loans with No Specific Allowance:

Residential real estate

Commercial real estate

Impaired Loans with Specific Allowance:

Residential real estate

Commercial and industrial

Consumer and other

September 30,

thousand and $

thousand, respectively.

September 30,

thousand and $

thousand, respectively.

Troubled Debt Restructuring

restructuring

Modifications

payment, conversion of

loan to interest

limited period of

combination to include

more than one

modification.

The following table presents performing and non-performing

TDR loans at the dates indicated (in thousands):

September 30, 2022

December 31, 2021

Accrual Status

Net investment balance is the unpaid principal balance of the loan adjusted for the remaining net deferred loan fees.

Three Months Ended March 31, 2022

Residential real estate

2 unchanged sentences

Consumer and other

The Company had allocated $

thousand and $

thousand of specific allowance for

TDR loans at September 30,

2021, respectively.

ended September

outstanding to

lend additional

TDR loan customers as of September 30, 2022.

quarter ended

September 30, 2022

were modified

ended September 30, 2022 and 2021.

Interest income recognized on impaired loans for the three months ended March 31, 2022 was $

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company did

t have new modifications to borrowers experiencing financial difficulties and

loan modifications

that subsequently defaulted during for the three months ended March 31, 2023.

The Company’s provision for income taxes is presented in the following table for the dates indicated (in thousands):

Three Months Ended March 31,

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

The Company’s provision for income taxes is presented

in the following table for the dates indicated (in thousands):

Nine Months Ended September 30,

The actual income tax expense for the nine months

ended September 30, 2022 and 2021 differs

from the statutory tax

period (computed

March 31, 2023

statutory tax

corporate tax

before provision for income taxes) as follows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Federal taxes at statutory rate

1 unchanged sentence

Bank owned life insurance

The Company’s deferred tax assets and deferred

tax liabilities as of the dates indicated were (in thousands):

September 30, 2022

The Company’s deferred tax assets and deferred tax liabilities as of the dates indicated were (in thousands):

March 31, 2023

December 31, 2022

9 unchanged sentences

Deferred tax liability:

Deferred loan cost

Lease right of use asset

5 unchanged sentences

carryforwards

expiring in various amounts between

2031 and 2036 and which are

limited to offset, to the

extent permitted, future taxable

expiring in various amounts between 2031 and 2036 and which are limited to offset, to the extent permitted, future

earnings of the Company.

In assessing the realizability of deferred tax assets, management considers

whether it is more likely than not that some

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

upon the generation of

future taxable income

during the periods

in which those temporary

differences become deductible.

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable

income, and tax planning

In assessing the realizability of

deferred tax assets, management considers

whether it is more likely

than not that some

realization of

upon the generation of future taxable

income during the periods in which

those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning

strategies in making this assessment.

The major tax

jurisdictions where the

Company files income

tax returns are

jurisdiction and

With few exceptions, the Company is no longer subject to U.S.

federal and state income tax examinations by tax

The major tax jurisdictions

where the Company files

income tax returns are

federal jurisdiction

and the State

With few exceptions,

the Company is no longer subject

federal and state income

tax examinations by tax

authorities for years before 2019.

For the three months ended

September 30, 2022 and

2021, the Company did

t have any unrecognized

as a result of

tax positions taken during a prior

period or during the current period.

For the three months ended March 31, 2023 and 2022, the Company did

t have any unrecognized tax benefits as a

tax positions

current period.

Additionally,

interest or penalties were

penalties were

recorded as a result of tax uncertainties.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2023 Form 10-Q

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

The Company is a party to

financial instruments with off-balance-sheet risk in

the normal course of business

meet the financial

its customers

and to reduce

fluctuations in

interest rates.

customers and to

reduce its own

exposure to fluctuations

in interest rates.

These financial

instruments include

unfunded commitments

commitments to

extend credit,

instruments include unfunded

commitments under lines

of credit, commitments

to extend credit,

standby and commercial

instruments involve,

degrees, elements

amount recognized in the Company’s Consolidated Balance Sheets.

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 instruments.

The Company's

exposure to credit

event of nonperformance

financial instruments

for unused lines of credit, and standby letters of credit

is represented by the contractual amount of these commitments.

September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

same credit policies in

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

The Company's exposure to

credit loss in the

event of nonperformance by

the other party to

the financial instruments

for unused lines of credit, and standby letters of credit is represented by the contractual amount of these commitments.

March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

December 31, 2022

1 unchanged sentence

Standby and commercial letters of credit

Commitments to

extend credit

are agreements

Commitments to extend

credit are agreements

a customer as

long as there

is no violation

of any condition

established in the contract.

Commitments generally have

fixed expiration dates or other termination clauses.

Unfunded lines of

credit and revolving

credit lines are

commitments for possible

future extensions

These lines of

credit are uncollateralized and

usually do not contain

a specified maturity date

and ultimately may

not be drawn upon to the total extent to which the Company

performance of a

Those letters of

primarily issued to

support public and

Commitments generally have fixed expiration dates or other termination clauses.

Unfunded lines of credit

and revolving credit lines

are commitments for possible

future extensions of credit

of credit are

uncollateralized and usually

do not contain

a specified maturity

date and ultimately

not be drawn upon to the total extent to which the Company committed.

performance of

primarily issued

private borrowing

arrangements.

Essentially all letters of credit have fixed maturity dates and since

many of them expire without being drawn

upon, they do not generally present a significant liquidity

risk to the Company.

The Company utilizes interest rate swap agreements

as part of its asset liability management strategy

to help manage

Essentially all letters of credit have fixed maturity

dates and since many of them expire without being drawn

upon, they do not generally present a significant liquidity risk to the Company.

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage

its interest rate risk exposure.

The notional amount of

the interest rate swaps

do not represent actual

the interest rate swaps do not represent actual

amounts exchanged

are determined

1 unchanged sentence

individual interest rate swap agreements.

The Company enters into interest rate swaps with its loan customers.

The Company enters into interest rate

swaps with its loan customers.

The Company had

interest rate swaps

September 30,

December 31, 2021,

respectively.

These interest

mature between

Company entered

December 31, 2022, respectively.

These interest rate

swaps mature between 2025

corresponding

Company to provide the counterparty

with funds to be held as collateral

which the Company reports as other

the Consolidated

Balance Sheets.

derivatives represent

economic hedges,

Company to provide the counterparty with funds to be held as collateral which the Company reports as other assets under

the Consolidated Balance

derivatives represent economic

hedges, they do

not qualify as

accounting purposes.

3 unchanged sentences

Q1 2023 Form 10-Q

The following table reflects the Company’s customer-related

interest rate swaps at the dates indicated (in thousands):

The following table reflects the Company’s customer-related interest rate swaps at the dates indicated (in thousands):

Balance Sheet Location

September 30, 2022:

March 31, 2023:

Derivatives not designated as hedging instruments:

6 unchanged sentences

Determination of Fair Value

and liabilities

determine fair value

In accordance

with the fair

value measurements

accounting guidance, the

fair value of

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

fair-value adjustments

liabilities and

determine fair value disclosures.

accordance with the fair value

measurements accounting guidance, the fair value

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.

many instances, there

are no quoted

market prices for the

Company's various financial

participants at

the measurement

best determined

quoted market

However, in many

instances, there are no quoted market

prices for the Company's various financial

market prices

2 unchanged sentences

present value

Those techniques are significantly affected by the assumptions used, including the discount rate and estimates

Those techniques are

significantly affected by the assumptions

used, including the discount

rate and estimates

of future cash flows.

Accordingly, the fair value estimates may not be realized in

an immediate settlement of the instrument.

value guidance provides

a consistent definition

value, which focuses

an orderly transaction

Accordingly, the fair value estimates may not

be realized in an

immediate settlement of the

value guidance

consistent definition

orderly transaction

forced liquidation

or distressed

1 unchanged sentence

market participants

measurement date

under current

1 unchanged sentence

a significant

or liability,

valuation technique or

valuation techniques may

valuation technique

multiple valuation

techniques may

be appropriate.

instances, determining

depends on the facts

and circumstances and

requires the use of

significant judgment.

value is a reasonable

within the range that is most representative of fair value under

current market conditions.

depends on the facts 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.

Fair Value Hierarchy

In accordance with

this guidance, the

Company groups its

financial assets

and financial liabilities

In accordance with this

guidance, the Company groups its

financial assets and financial liabilities

generally measured

levels, based

three levels,

and liabilities

reliability of

assumptions used to determine fair value.

active markets

for identical

liabilities that

the reporting

quoted prices in

active markets for

identical assets or

liabilities that the

entity has the

ability to access

at the measurement

and liabilities

generally include

equity securities that

are traded in

an active exchange

Valuations are obtained from

readily available pricing

sources for market transactions involving identical assets

or liabilities.

is based on inputs other

than quoted prices included

within Level 1 that are

assets and liabilities

generally include debt

equity securities

exchange market.

Valuations are obtained

available pricing

sources for market transactions involving identical assets or liabilities.

- Valuation is

based on inputs other than quoted prices included within Level 1 that are

observable for the

markets that are

quoted prices

in markets that

are not active;

or other inputs

that are observable

by observable market data for substantially the full term of the

asset or liability.

unobservable inputs that

are supported

no market activity

by observable market data for substantially the full term of the asset or liability.

is based on unobservable

inputs that are supported

by little or no

market activity and that

liabilities include

is determined

1 unchanged sentence

models, discounted

methodologies,

well as instruments for which determination of fair value

requires significant management judgment or estimation.

methodologies, or

similar techniques,

well as instruments for which determination of fair value requires significant management judgment or estimation.

categorization

4 unchanged sentences

Q1 2023 Form 10-Q

Items Measured at Fair Value

on a Recurring Basis

Items Measured at Fair Value on a Recurring Basis

AFS investment securities:

When instruments are traded in

secondary markets and quoted market

prices do not exist

for such securities,

management generally relies

on prices obtained

from independent vendors

or third-party broker-dealers.

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

observable market information is being utilized.

Securities measured with pricing provided by independent vendors or

party broker-dealers

are classified within

When instruments are

traded in secondary

markets and quoted

market prices do

securities, management

generally relies

obtained from

independent vendors

or third-party

broker-dealers.

Management reviews pricing methodologies provided

by the vendors and third-party broker-dealers

in order to determine if

observable market information is

being utilized.

Securities measured

with pricing provided by independent

vendors or third-

party broker-dealers are classified

within Level 2 of

the hierarchy and

often involve using

quoted market

prices for similar

securities, pricing models or discounted cash flow analyses

utilizing inputs observable in the market where available.

often involve using quoted

market prices for

securities, pricing models or discounted cash flow analyses utilizing inputs observable in the market where available.

classified within Level 2 of the hierarchy.

September 30, 2022 and December 31, 2021 for each

of the fair value hierarchy levels (in thousands):

September 30, 2022

March 31, 2023 and December 31, 2022 for each of the fair value hierarchy levels (in thousands):

March 31, 2023

December 31, 2022

11 unchanged sentences

Total liabilities at fair value

Items Measured at Fair Value

on a Non-recurring Basis

Impaired Loans:

At September 30, 2022

and December 31, 2021,

in accordance with

provisions of the

loan impairment

guidance, individual loans with

a carrying amount of approximately

million and $

million, respectively,

Items Measured at Fair Value on a Non-recurring Basis

Individually Evaluated Loans

and Impaired Loans:

ASC 326 eliminates

the current accounting

model for impaired

guidance, individual

carrying amount

approximately $

respectively,

an impairment

thousand, respectively,

the allowance

September 30,

respectively.

present value

appraised value

underlying collateral

discounted as

necessary due

management's estimates of changes in economic conditions

are considered a Level 3 valuation.

approximately $

million, resulting

impairment charge

thousand, which

allowance for

credit losses at

December 31, 2022.

subject to write-downs,

or impaired loans,

are estimated using

the present value

of expected cash flows

or the appraised value

of the underlying collateral

discounted as necessary due

to management's

estimates of changes in economic conditions are considered a Level 3 valuation.

the third-party

appraisals less

carrying cost of

carrying cost

estate owned.

Appraisals generally

use the market

valuation technique

market observable

market approach

valuation technique and

use market observable

data to formulate

the properties.

the appraiser

uses professional

the appraiser uses

professional judgment in

determining the

the value for changes in

market conditions subsequent

to the valuation date

when current appraisals

are not available.

a consequence of the carrying cost or the

third-party appraisal and adjustments therein, the fair values of the properties are

the value for changes in market conditions subsequent to the

valuation date when current appraisals are not available.

a consequence of the

carrying cost or the third-party

appraisal and adjustments therein,

the fair values of

the properties are

considered a Level 3 valuation.

3 unchanged sentences

Q1 2023 Form 10-Q

The following table represents the Company’s assets measured at

fair value on a non-recurring basis

at September 30,

2022 and December 31, 2021 for each of the fair value

hierarchy levels (in thousands):

September 30, 2022:

Impaired loans

The following

table represents

the Company’s assets

fair value on

a non-recurring

basis at March

and December 31, 2022 for each of the fair value hierarchy levels (in thousands):

March 31, 2023:

Individually evaluated loans

December 31, 2022:

Impaired loans

The following table presents

quantified information about

Level 3 fair value

measurements for assets measured

value on a non-recurring basis at September 30, 2022

and December 31, 2021 (in thousands):

The following table presents quantified information about Level 3

fair value measurements for assets measured at fair

value on a non-recurring basis at December 31, 2022 (in thousands):

Valuation Technique(s)

Unobservable Input(s)

September 30, 2022:

Residential real estate

Sales comparison approach

for differences between comparable sales

Commercial and industrial

Discounted cash flow

for differences in net operating income expectations

Consumer and other loans

Discounted cash flow

for differences in net operating income expectations

impaired loans

December 31, 2022:

9 unchanged sentences

impaired loans

non-recurring

September 30,

December 31, 2021.

financial liabilities measured at

fair value on a non-recurring

basis at March 31, 2023 and

USCB FINANCIAL HOLDINGS, INC.

3 unchanged sentences

Items Not Measured at Fair Value

The following table

presents the carrying

amounts and estimated

fair values of

financial instruments

not carried at fair

value as of September 30, 2022 and December 31, 2021 (in

The following table presents the

carrying amounts and estimated fair

values of financial instruments not

carried at fair

value as of December 31, 2022 (in thousands):

Fair Value Hierarchy

September 30, 2022:

March 31, 2023:

Financial Assets:

1 unchanged sentence

Interest-bearing deposits in banks

Investment securities held to maturity

Investment securities held to maturity, net

Loans held for investment, net

22 unchanged sentences

STOCKHOLDERS’ EQUITY

conversion rights.

rights, while

voting rights.

are convertible

In June 2021, the Bank effected a 1 for 5

reverse stock split of all the Class A common

the Bank’s Class

stock was combined

share of Class

Any fractional

resulting from

common stock, earnings per share and stock

options for this 1 for 5 reverse stock

split for all periods in 2021.

common stock was not adjusted but if sold or exchanged would be converted

at the 1 for 5 reverse stock split of

“Board”) to include

Class B common

stock would also

be paid as if

the Class B common

stock had converted.

reverse stock

split resulted

in adjustments

to Consolidated

Balance Sheets,

Consolidated Statements

of Operations,

Consolidated Statements of Changes in Stockholders’

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

In July 2021,

the Bank completed

common stock, in

which it issued

deducting underwriting discounts and expenses.

In December 2021,

the Bank entered

into agreements with

shareholders to exchange

all outstanding shares

five shares of

Class B common

shares of Class A common stock.

In December 2021, the

Company acquired all

the issued and outstanding

shares of the Class

A voting common

of the Bank, which at

the time were the only issued

and outstanding shares of the Bank’s capital stock,

Bank completed

public offering

common stock,

shares of Class A common stock at a

The Bank received total net proceeds of

million after deducting underwriting discounts and expenses.

In December 2021, the Company acquired all

the issued and outstanding shares of the

Class A voting common stock

of the Bank, which

at the time were

the only issued and

outstanding shares of

the Bank’s capital stock,

in a share exchange

(the “Reorganization”)

effected under

Business Corporation

of the outstanding

Class A common stock, par value $

per share, formerly held by its shareholders was converted into and exchanged for

(the “Reorganization”) effected under the Florida Business Corporation Act.

Each outstanding share of the

Bank’s Class A

common stock,

formerly held

shareholders was

converted into

and exchanged

Company’s wholly owned subsidiary.

Reorganization,

Reorganization, each

shareholder of

received securities

substantially

having substantially

same designations,

powers, preferences,

qualifications,

and restrictions,

previously owned of the Bank’s common stock.

Preferred Stock

In April 2021,

authorized and

repurchase all

outstanding shares

the liquidation

million along

with declared

shareholders approved the repurchase which the Bank

completed in April 2021.

common stock.

to exchange was voluntary

and the preferred stockholders

were given the option to

exchange ratio for the

shares of Class A

common stock issued in

the preferred stock exchange transaction

was based upon

the IPO price 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 an aggregate of

shares of Class A common stock.

The exchange of the Class

C and Class D preferred shares had

a total liquidation value of $

The remaining unconverted shares of

C preferred stock

D preferred stock

shares were subsequently

redeemed at their

The fair value of consideration

on the preferred stock

exchange and redemption of

the Class C and

Class D preferred

September 30,

outstanding dividends to be paid.

rights, powers,

preferences, qualifications,

limitations and

restrictions, as

the shareholder

held in the Bank, and

the Company’s then current shareholders

owned the same percentages of the

Company’s common

stock as they previously owned of the Bank’s common stock.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

The following dividend amounts were paid on the preferred shares for the three

and nine months ended September 30,

2022 and 2021 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Preferred stock - Class C:

Non-voting, Non-cumulative, Perpetual:

per share liquidation preference;

dividend rate of

% of liquidation preference paid quarterly.

dividend of $

Preferred stock - Class D:

Non-voting, Non-cumulative, Perpetual:

per share liquidation preference;

dividend rate of

% of par value paid quarterly.

Quarterly dividend of

Preferred stock - Class E:

Non-voting, Partially Cumulative,

per share liquidation preference;

annual dividend rate of

% of liquidation preference paid quarterly.

Quarterly dividend of $

dividends paid

Declaration of dividends by the Board is required before dividend payments are made.

The Company issued

shares of Class A common stock to employees and

directors as restricted stock awards

pursuant to the Company’s 2015 equity incentive plan in March 2023.

weighted average price per share of $

The aggregate purchase price for these transactions was approximately

repurchase under this program.

Shares of the

Company’s Class A

common stock issued

and outstanding as

2023 and December

, respectively.

Declaration of dividends by the Board is

required before dividend payments are made.

dividends were approved by

the Board for

the common stock classes

for the three

months ended September 30, 2022

the Board for the common stock classes for the three months ended

March 31, 2023 and 2022.

Additionally, there were

dividends declared and unpaid as of September 30,

2022 and 2021.

dividends declared and unpaid as of March 31, 2023 and 2022.

significantly

September 30,

capitalized” guidelines as of December 31, 2022 and

March 31, 2023.

At March 31, 2023, the total

risk-based capital ratios

for the Company and the Bank were

%, respectively.

1 unchanged sentence

participating

is calculated by

dividing net income

(loss) available to

common stockholders by the

calculated by

income (loss)

common stockholders

weighted-average

number of common shares outstanding for

the period, without consideration for common

stock equivalents.

number of common shares outstanding for the period, without consideration for common stock equivalents.

Diluted EPS is

1 unchanged sentence

common stockholders

weighted-average

shares outstanding for

the period and

the weighted-average number

of dilutive common

stock equivalents outstanding

the period determined using the treasury-stock method.

purposes 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.

September 30,

stockholders was

not allocated between

Class B common

issued and outstanding

shares of Class B common stock as of September 30, 2022.

September 30,

stockholders was allocated as if all the income for

the period were distributed to common stockholders.

The allocation was

outstanding shares per

common share class to

common shares outstanding during

each period giving

effect for the 1 for

5 reverse stock split.

The Company’s Articles

of Incorporation require that

the distribution of net

stockholders be

A stock splits.

Therefore, the

income allocated

common shares was calculated based on their

% per share equivalent to Class A common shares.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

weighted-average number

shares outstanding for the period

and the weighted-average number of

dilutive common stock equivalents outstanding for

the period determined

using the treasury-stock

of this calculation,

common stock equivalents

common stock options and are only included in the calculation of diluted EPS when their effect is dilutive.

The following table reflects the calculation

of net income available to common stockholders

for the three months ended

March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Preferred stock dividends

Exchange and redemption of preferred shares

Net income (loss) available to common stockholders

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2022 Form 10-Q

The following table reflects the calculation of basic and diluted earnings per common share class for the three and nine

months ended September 30, 2022 and 2021 (in thousands,

except per share amounts):

Three Months Ended September 30,

Net income (loss) available to common shares before allocation

% allocated on weighted avg.

shares outstanding

Net income (loss) available to common shares after allocation

Weighted average shares outstanding

Earnings (loss) per share, basic

Net income (loss) available to common shares before allocation

% allocated on weighted avg.

shares outstanding

Net income (loss) available to common shares after allocation

Weighted average shares outstanding for basic EPS

Dilutive effects of assumed exercises of stock options

Weighted avg.

shares including dilutive potential common shares

Earnings (loss) per share, diluted

Anti-dilutive stock options excluded from diluted EPS

Net loss available to common shares between Class

A and Class B common stock was allocated based

on the weighted average number of shares

The allocation also assumes that

Class B shares had converted to Class

A shares which is equivalent to

per share of Class B or

shares of Class A shares.

Net income available to common stockholders

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2023 Form 10-Q

Nine Months Ended September 30,

Net income (loss) available to common shares before allocation

% allocated on weighted avg.

shares outstanding

Net income (loss) available to common shares after allocation

The following table reflects the calculation of basic and diluted

earnings per common share class for the three months

ended March 31, 2023 and 2022 (in thousands, except per share amounts):

Three Months Ended March 31,

Net income available to common shares

Weighted average shares outstanding

Earnings (loss) per share, basic

Net income (loss) available to common shares before allocation

% allocated on weighted avg.

shares outstanding

Net income (loss) available to common shares after allocation

Earnings per share, basic

Net income available to common shares

Weighted average shares outstanding for basic EPS

2 unchanged sentences

shares including dilutive potential common shares

Earnings (loss) per share, diluted

Earnings per share, diluted

Anti-dilutive stock options excluded from diluted EPS

Net loss available to common shares between Class

A and Class B common stock was allocated based

on the weighted average number of shares

The allocation also assumes that

Class B shares had converted to Class

A shares which is equivalent to

per share of Class B or

shares of Class A shares.

See Note 8 “Stockholders’ Equity” for further discussion

of the reverse stock split effected in 2021.

LOSS CONTINGENCIES

Loss contingencies,

including claims

and legal actions

management, none

actions, either

individually or

in the aggregate,

adverse effect

Loss contingencies, including

claims and legal

actions may arise

in the ordinary

course of business.

In the opinion

management, none of

these actions, either

individually or in

the aggregate, is

expected to have

a material adverse

on the Company’s Consolidated Financial Statements.

2 unchanged sentences

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-Q

Item 1. Financial Statements