What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-11 · 600 added, 630 removed, 1223 unchanged (50% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

Total cash and cash equivalents

Investment securities held to maturity, net of allowance for credit losses of $

, respectively (fair

Investment securities held to maturity, net of allowance of $

, respectively (fair value $

, respectively)

1 unchanged sentence

Federal Home Loan Bank stock, at cost

Loans held for investment, net of allowance

Loans held for investment, net of allowance of $

, respectively

17 unchanged sentences

per share liquidation preference;

issued and outstanding as of June 30, 2023

issued and outstanding as of September 30, 2023

and December 31, 2022

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of June 30, 2023

issued and outstanding as of September 30, 2023

and December 31, 2022

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of June 30, 2023

issued and outstanding as of September 30, 2023

and December 31, 2022

1 unchanged sentence

shares authorized;

as of June 30, 2023,

as of September 30, 2023,

issued and outstanding as of December 31,

1 unchanged sentence

shares authorized;

outstanding as of June 30, 2023 and December

outstanding as of September 30, 2023 and

December 31, 2022

Additional paid-in capital on common stock

11 unchanged sentences

except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Interest income:

15 unchanged sentences

Non-interest income:

(Loss) gain on sale of securities available

for sale, net

(Loss) gain on sale of securities available for

Gain on sale of loans held for sale, net

22 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Other comprehensive income (loss):

3 unchanged sentences

available-for-sale to held-to-maturity

Reclassification adjustment for loss (gain) included

in net income

Reclassification adjustment for loss included in net

Unrealized gain on cash flow hedge

Total other comprehensive income (loss), net of tax

Total other comprehensive loss, net of tax

Total comprehensive income (loss)

14 unchanged sentences

Stockholders'

Balance at April 1, 2023

Cumulative tax effect of adoption of accounting

principle related to ASC 326

Adjusted beginning balance after cumulative

effect adjustment

Balance at July 1, 2023

Other comprehensive loss

Repurchase of Class A common stock

Restricted stock issued

Restricted stock forfeiture

Stock-based compensation

Balance at June 30, 2023

Balance at April 1, 2022

Balance at September 30, 2023

Balance at July 1, 2022

Other comprehensive loss

Stock-based compensation

Balance at June 30, 2022

Balance at September 30, 2022

Additional Paid-in

Capital on Common

Accumulated Deficit

Accumulated Other

9 unchanged sentences

Restricted stock issued

Restricted stock forfeiture

Stock-based compensation

Balance at June 30, 2023

Balance at September 30, 2023

Balance at January 1, 2022

2 unchanged sentences

Stock-based compensation

Balance at June 30, 2022

Balance at September 30, 2022

The accompanying notes are an integral

5 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization

(Accretion) amortization of premiums on

securities, net

(Accretion) amortization of premiums on securities,

Accretion of deferred loan fees, net

4 unchanged sentences

life insurance

Bank owned life insurance enhancement

Decrease in deferred tax assets

16 unchanged sentences

Proceeds from the sale of loans held for sale

Proceeds from the redemption of Federal Home

Loan Bank stock

Purchase of Bank owned life insurance

Proceeds from the redemption of Federal

Home Loan Bank stock

Purchase of Federal Home Loan Bank stock

15 unchanged sentences

Transfer of loans held for investment to loans held

Transfer of investment securities from available-for-sale

to held-to-maturity

Lease liability arising from obtaining right-of-use

5 unchanged sentences

Q3 2023 Form 10-Q

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,

Century Bank (the

“Bank”), together referred to

as “the Company”.

established in 2002,

state-chartered, non-member financial institution providing financial

services through its banking

centers located

in South Florida.

owns a subsidiary,

SUMMARY OF SIGNIFICANT ACCOUNTING

USCB Financial Holdings,

a Florida corporation

incorporated in 2021,

holding company with

wholly owned subsidiary,

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

The Bank, established in

2002, is a Florida state-chartered,

non-member financial institution providing

financial services through its

banking centers

located in South Florida.

Florida Peninsula

our clients title

insurance policies

title insurance

transactions closed at the Bank.

15 unchanged sentences

Use of Estimates

prepare financial statements in conformity with U.S.

financial statements in conformity with U.S.

management makes estimates and assumptions based

and assumptions

estimates and

assumptions affect

the financial

7 unchanged sentences

Reclassifications

Certain amounts in the consolidated financial statements have been reclassified to conform to

the current presentation.

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’

2 unchanged sentences

Measurement of Credit Losses on Financial Instruments

Measurement of Credit Losses

on Financial Instruments,

as amended, which replaces

the incurred loss methodology

loss methodology

current expected credit

Company adopted

Accounting Standard

Update (“ASU”)

2016-13 Financial

incurred loss methodology with an expected loss

methodology that is referred to as the

current expected credit loss (CECL)

The measurement

held-to-maturity

ASC 326 amended

the accounting for

available-for-sale debt securities.

One such change

is to require credit

write-down on

available-for-sale

debt securities,

that management

intend to sell or believes that it is more likely than not they

will be required to sell.

credit losses

CECL methodology

is applicable

amortized cost,

including loan

receivables and

held-to-maturity debt

to off-balance

guarantees, and other similar

instruments) and net investments

in leases recognized by

a lessor in accordance

842 on leases.

ASC 326 amended the accounting

for available-for-sale debt securities.

One such change is to

require credit losses to be presented as an allowance

rather than as a write-down on available-for-sale debt

securities that

management does not intend to sell or believes that

it is more likely than not they will not be required to sell.

estimates the

10 unchanged sentences

expected credit

losses estimated for

potential limitations of

the quantitative

is used to aid management in the assessment of

qualitative factor adjustments applied to expected credit

where observed

losses estimated

loan portfolio

limitations of

the quantitative model.

is used to aid management in the assessment of qualitative

factor adjustments applied to expected credit losses.

economic factors were used

19 unchanged sentences

between the sum of the present

value of future cash flows and

the book balance of

value of future cash flows

and the book balance of

the measurement date.

Management elected the

Remaining Life (WARM)

methodology for five

portfolio segments.

each of these

a long-term average

loss rate is calculated

and applied on a

quarterly basis for

the remaining life of

attrition-based

measurements based on the loan portfolio.

long-term average

is calculated

quarterly basis

remaining life

management implemented a software solution

that uses an attrition-based

calculation that performs quarterly, cohort-based

attrition measurements based on the loan portfolio.

At adoption of

2 unchanged sentences

evaluated under DCF

loan receivables

were collectively

million loan receivables of the total loan portfolio

were individually evaluated.

million of loan receivables of the total loan portfolio were individually

Portfolio segments are the level at which loss assumptions

2 unchanged sentences

the included instruments,

collateral codes and

relying on collateral

Report codes.

currently segments

the portfolio based on collateral codes for purpose

of establishing reserves.

Each of these segments

currently segments the portfolio based on collateral codes

for purpose of establishing reserves.

Each of these

characteristics.

3 unchanged sentences

portfolio segment is derived

from a readily available

and reasonable economic

forecast, including

from a readily available and

reasonable economic forecast, including

the Federal Reserve Bank

6 unchanged sentences

to the lookback

period's historical mean

economic indicator

over the expected

period's historical

indicator over

The model incorporates qualitative

8 unchanged sentences

reflective of

those already

credit losses within

13 unchanged sentences

million in accumulated deficit.

See “Allowance for Credit Losses”

section in Note 3 for more

information on ACL.

See “Allowance for Credit

section in Note 3 for more information on the ACL.

Trouble Debt Restructuring

Financial Accounting Standards

Board (“FASB”) issued Accounting

Standards Update (“ASU”)

02, Financial Instruments

-Credit Losses (Topic

Debt Restructurings

(“TDR”) and Vintage

standard addresses the following:

1) eliminates the accounting guidance for TDRs, requires an entity to determine whether

a modification

In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-02, Financial Instruments-Credit

Losses (Topic 326):

Debt Restructurings (“TDR”) and Vintage Disclosures.

The standard addresses the following:

1) eliminates

the accounting

TDRs, require

modification results

a continuation

existing loan,

disclosures related

to modifications,

vintage disclosures

modifications,

disclosure of

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

(see note 3).

The Company adopted

ASU 2022-02 effective January

1, 2023 on a prospective basis.

The adoption of ASU

2022-02 did not have a material impact on the Company’s

consolidated financial statements.

Issued and Not Yet

material impact on the Company’s consolidated financial

Issued and Not Yet Adopted

Reference Rate Reform

10 unchanged sentences

(or recognizing

the effects of) reference

rate reform on

the effects of)

reference rate reform on

financial reporting.

2 unchanged sentences

evaluating the

whether LIBOR

transition and

determined whether

LIBOR transition

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.

Q2 2023 Form 10-Q

INVESTMENT SECURITIES

24 unchanged sentences

credit performance

economic forecast.

Government bonds

issued bonds in HTM the explicit guarantee

of the US Government is sufficient

to conclude that a credit loss reserve is

reserve requirement

three primary

assets groups:

to conclude that a credit loss reserve

requirement is for

three primary assets

municipal bonds,

corporate bond,

corporate bonds,

and non-agency

3 unchanged sentences

economic forecast.

The solution uses

probability of

uses probability of

default/loss given

11 unchanged sentences

Credit ratings

maturity securities held by the Company were rated investment

are monitored by the

Company on at

least a quarterly

September 30, 2023

and December 31,

2022, all held-

to-maturity securities held by the Company were rated investment

mortgage-backed

these holdings.

The remaining

investment grade

corporate bonds.

1 unchanged sentence

determined each quarter using the model described above.

the portion of the HTM

exposed to non-government

credit risk the Company

utilized the PD/LGD methodology

thousand ACL as of

June 30, 2023.

value for debt securities

classified as HTM represents

amortized cost

the portion of the HTM exposed to non-government

credit risk, the Company utilized the PD/LGD

methodology to estimate

thousand ACL as of September 30, 2023.

The book value for debt securities classified as HTM represents amortized

cost less ACL.

The Company determined that

an ACL on its debt

securities available for sale

as of June 30, 2023

an ACL on its

debt securities available for

sale as of September 30,

2023 and December

31, 2022 was not required.

The following

tables present

amortized cost,

unrealized or

unrecognized gains

value of investment securities at the dates indicated (in

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

June 30, 2023

The following

tables present

of the amortized

cost, unrealized

or unrecognized

value of investment securities at the dates indicated (in

September 30, 2023

Available-for-sale:

29 unchanged sentences

Corporate bonds

investment securities

amortized cost

respectively,

comprehensive income

(“AOCI”) is being

amortized over the

remaining life of

the securities.

the three and

ended June 30,

comprehensive income (“AOCI”) is being amortized over the remaining life of the securities.

the three and nine months

ended September 30,

2023, total amortization

for net unrealized

losses on securities

transferred from

thousand and $

out of AOCI for

net unrealized losses

on securities transferred

thousand, respectively.

The unamortized net unrealized

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 and six months

ended June 30, 2023 and 2022 (in thousands):

The unamortized

net unrealized

September 30,

securities transferred from AFS

to HTM during

the nine months

ended September 30,

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

Three Months Ended June 30,

Six Months Ended June 30,

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 and nine months

ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Available-for-sale:

1 unchanged sentence

Net realized (loss) gain

amortized cost

The amortized

by contractual

indicated (in thousands).

Actual maturities may differ

from contractual maturities

because borrowers may have

Actual maturities may

differ from contractual

maturities because borrowers

may have the right

call or prepay

obligations with or without

call or prepayment penalties.

Securities not due

maturity date are shown

obligations with or

without call or

prepayment penalties.

Securities not

single maturity date are

Available-for-sale

Held-to-maturity

June 30, 2023:

September 30, 2023:

Due within one year

6 unchanged sentences

Mortgage-backed securities - commercial

At June 30, 2023,

there were no

securities held in

the portfolio from

any one issuer in

an amount greater

total stockholders’

equity other than

the United States

Government and Government

Agency securities.

At September 30,

securities held

portfolio from

stockholders’

collateralized

mortgage obligations and mortgage-backed securities are issued by United States sponsored entities

at June 30, 2023 and

December 31, 2022.

mortgage-backed

September 30, 2023 and December 31, 2022.

Information pertaining

9 unchanged sentences

dates (in thousands):

June 30, 2023

September 30, 2023

Less than 12 months

21 unchanged sentences

Corporate bonds

As of June 30, 2023, the unrealized losses associated

million of investment securities transferred from

associated with changes in the cost basis of the securities

upon transfer between portfolios.

September 30,

the unrealized

of investment

impact associated with changes in the cost basis of the

securities upon transfer between portfolios.

other-than-temporary-impairment

2 unchanged sentences

through a permanent write-down.

When evaluating AFS

debt securities

When evaluating AFS debt

evaluated whether

10 unchanged sentences

concluded that no allowance was required on AFS securities.

30, 2023, the

Company had $

million of unrealized

losses on mortgage-backed securities

and collateralized

combination of factors, including relative changes in

interest rates since the time of purchase.

mortgage-backed

collateralized

attributable to a combination of factors, including relative changes

in interest rates since the time of purchase.

attributable to a combination of factors, including relative

changes in interest rates since the time of purchase.

collateralized

attributable to a combination of factors, including relative

changes in interest rates since the time of purchase.

The contractual

sponsored entities.

The municipal bonds are of high credit quality and the declines in fair value

are not due to credit quality.

The municipal bonds are of high credit quality and the declines in fair

value are not due to credit quality.

security holdings are

4 unchanged sentences

and not changes

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

securities that

unrealized loss position

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 June 30,

expects to recover the entire amortized cost basis of these

At September 30, 2023, 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 September

Pledged Securities

8 unchanged sentences

variable interest rate

on prevailing rates at the time funding is requested.

As of June 30, 2023, the Company did

t have 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.

on prevailing rates

of September 30,

any securities

pledged under this agreement.

The Bank is a Qualified Public Depository

(“QPD”) with the State of Florida.

As a QPD, the Bank has the legal

municipalities,

maintain a minimum amount of pledged securities to be in the

public funds program.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

As of June 30, 2023,

the Company had a

million in deposits under the

public funds program and pledged

September 30,

pledged to the State

of Florida for these public

bonds with an aggregate fair

December 31, 2022, the

deposits under the

public funds program

to the State of Florida for these public funds were

bonds with an aggregate fair value of $

As of December

the Company had

million in deposits

under the public

funds program

Reserve Board, on

March 12, 2023,

announced the creation

new Bank Term Funding Program

The BTFP offers loans

length to banks,

savings associations, credit

unions, and other

eligible depository

corporate bonds with an aggregate fair value of $

Federal Reserve

2023, announced

Funding Program

savings associations,

mortgage-backed

These assets will be valued at par.

securities measured at par to the Federal Reserve Bank

of Atlanta for the BTFP program.

securities, and other qualifying assets as collateral.

assets will be valued at par.

The Company had

borrowing under the BTFP

program as of September

30, 2023, and had

in securities measured at par to the Federal Reserve

Bank of Atlanta for the BTFP program.

retrospective

7 unchanged sentences

loans held for investment by type (in thousands):

June 30, 2023

September 30, 2023

December 31, 2022

7 unchanged sentences

Allowance for credit losses

respectively,

At September 30, 2023

and December 31, 2022,

the Company had

million and $

million, respectively,

commercial real estate

9 unchanged sentences

businesses to

the funds had to be used towards payroll cost, mortgage

interest, rent, utilities and other costs related to COVID-19.

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

2 unchanged sentences

PPP loans totaling $

at June 30, 2023 and $

million at December 31, 2022, which are categorized as

commercial and industrial loans.

at September 30, 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

respectively,

during the nine

ended September 30, 2023

and 2022, respectively,

which is reported

under loans, including

fees, within the

Statements of Operations.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

Allowance for Credit Losses

4 unchanged sentences

the quantitative

portion of the

analysis (LDA)

5 unchanged sentences

CECL model development

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

in development of

8 unchanged sentences

to quantify the impact

of reasonable and supportable

of reasonable and

forecasts in projective

Economic forecasts

applied to regression

5 unchanged sentences

product growth

methodology is

long-term average loss rate is calculated and applied on a quarterly basis for the remaining life of the pool.

1 unchanged sentence

economic expectations are made through qualitative factors

Qualitative factors used in the ACL methodology include:

Qualitative factors (“Q-Factors”) used in the ACL methodology

Changes in lending policies, procedures, and strategies

1 unchanged sentence

Changes in nature and volume of portfolio

Changes in the volume and severity of past due loans

and other similar conditions

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

Concentration risk

1 unchanged sentence

The effect of other external factors:

e.g., competition,

legal, and regulatory requirements

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

Changes in lending management, among others

ACL for the three

and six months ended

June 30 2023, was

estimated under the CECL

methodology, and for all periods

in 2022, it was estimated under the incurred loss model.

Changes in the allowance for credit losses for the three

and six months ended June 30 2023 and 2022

were as follows

(in thousands):

Three Months Ended June 30, 2023

and nine months

ended September 30,

2023, was estimated

under the CECL

all periods in 2022, it was estimated under the incurred

Changes in the

allowance for credit

losses for the

three and nine

months ended September

as follows (in thousands):

Three Months Ended September 30, 2023

Beginning balance

1 unchanged sentence

Ending Balance

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Beginning balance

3 unchanged sentences

(1) Provision for credit losses excludes $

thousand expense due to unfunded commitments included in other liabilities and $

thousand expense due to investment securities held to maturity.

thousand release due to unfunded commitments included in other liabilities and $

thousand release due to investment securities held to maturity.

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

7 unchanged sentences

and Industrial

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Beginning balance

1 unchanged sentence

Ending Balance

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Beginning balance

1 unchanged sentence

Ending Balance

impact of adoption of the ASU 2016-13 on loan receivables, a $

thousand increase in the ACL for loan receivables due

to loan growth and to net charge-offs.

originated in

September 30,

related to loans.

thousand was related to loans originated

in 2023 and $

thousand of charge offs was related to

originated in 2015.

were originated

respectively.

thousand of charge offs related to loans that

were originated in 2022.

improvements in unemployment and a slower real GDP growth.

Fannie Mae HPI forecast reflected important improvement

in national housing prices over the next four quarters.

The Company continued

to adjust the HPI index effect on 1-4 Family

loan portfolio with a qualitative

factor because Florida

housing prices are performing

better than national levels.

were reviewed and updated;

maximum loss calculations are based on refreshed stress test and risk statuses were

based on portfolio and external developments during the third

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

CECL methodology,

million compared

incurred loss

The increase of

composed of $

million impact of

of the ASU 2016-13 on loan receivables, $

thousand increase on ACL for loan receivables due to loan growth, and $

thousand decrease due to net charge offs

offs totaling

charge offs related to loans were originated in 2015

thousand related to loans were originated in 2023.

The Company had

the six months

ended June 30

2023 on loans.

of charge offs related to loans were originated

in 2015 and $

thousand related to loans were originated in 2023.

unemployment and

forecast reflected

deterioration in

national housing

lesser extent than

forecasts published

in first quarter

to adjust the

HPI index effect

Family loan portfolio with a qualitative factor because Florida

housing prices are performing better than national levels.

outstanding balances

specified loan

categories as

December 31, 2022

the outstanding balances

in the specified

loan categories

as of September

2022 are as follows (in thousands):

and Industrial

June 30, 2023:

September 30, 2023:

Allowance for credit losses:

22 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

6 unchanged sentences

credit position at some future date.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

– Loans classified as substandard are inadequately protected

7 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.

– Loans classified as loss are considered uncollectible.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

Loan credit exposures by internally assigned grades are

presented below for the periods indicated (in thousands):

As of June 30, 2023

As of September 30, 2023

Term Loans by Origination Year

33 unchanged sentences

payment performance

December 31, 2022 (in thousands):

As of June 30, 2023

The following

tables include

accruing loans

of September 30,

and December 31, 2022 (in thousands):

As of September 30, 2023

Residential real estate:

29 unchanged sentences

Consumer and other

Nonaccrual Status

The following

table includes

the amortized cost

loans on nonaccrual

and still accruing as of June 30 2023:

June 30, 2023

Non-accrual Status

The following table

includes the amortized

cost basis of

loans on non-accrual

status and loans

past due over

and still accruing as of September 30, 2023 (in thousands):

September 30, 2023

Loans With No

10 unchanged sentences

interest income

attributable to

nonaccrual loans

outstanding during

June 30, 2023

attributable to non-accrual

loans outstanding during

the three months

ended September 30, 2023 and

Interest income

been approximately

on these loans for

the three months

ended September 30,

2023 and 2022,

would have been

approximately $

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

Interest income on these

ended September

approximately

thousand, respectively,

1 unchanged sentence

original terms.

Collateral-Dependent Loans

substantially through

collateral dependent

loans as of June 30 2023 and as of December 31, 2022.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

Collateral-Dependent Loans

substantially through

collateral dependent

loans as of September 30, 2023, or as of December 31,

Impaired Loans

3 unchanged sentences

the associated allowance amount,

applicable, on the basis of impairment methodology as of

December 31, 2022 (in thousands):

applicable, on the basis of impairment methodology as of December

31, 2022 (in thousands):

December 31, 2022

12 unchanged sentences

balance on impaired

loans for the

periods indicated (in

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

the periods indicated

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Residential real estate

2 unchanged sentences

Consumer and other

Interest income recognized on impaired loans for the three months ended June 30,

thousand and for the

six months ended June 30, 2022 was $

Interest income recognized on impaired loans for

the three months ended September 30, 2022

for the nine months ended September 30, 2022 was $

Loan Modifications to Borrowers Experiencing Financial

The following table present newly restructured

loans, by type of modification,

which occurred during the quarter ended

June 30, 2023:

The following

table present

newly restructured

modification, which

occurred during

ended September 30, 2023 (in thousands):

Recorded Investment Prior to Modification

8 unchanged sentences

Consumer and other

new modifications

experiencing financial

difficulties for

the three and

ended June 30, 2023.

loan modifications that subsequently defaulted for

the three and six

months ended June 30, 2023.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

The Company’s provision for income taxes is

presented in the following table for the dates indicated

(in thousands):

Six Months Ended June 30,

The actual income tax

expense for the six

months ended June 30, 2023 and

2022 differs from the statutory

The Company had

new modifications and

new modifications to

borrowers experiencing financial

difficulties for

respectively.

modifications

subsequently defaulted during the three and nine months

ended September 30, 2023.

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, 2023 and 2022 differs

from the statutory tax

period (computed

federal corporate

income before provision

for income taxes) as follows (in thousands):

Six Months Ended June 30,

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

Nine Months Ended September 30,

Federal taxes at statutory rate

3 unchanged sentences

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

June 30, 2023

September 30, 2023

December 31, 2022

6 unchanged sentences

Equity compensation

CECL Adoption

Deferred tax assets:

6 unchanged sentences

Net deferred tax assets

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

approximately

5 unchanged sentences

earnings of the Company.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

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.

during the periods

in which those temporary

differences become deductible.

Management considers the scheduled reversal

10 unchanged sentences

authorities for years before 2019.

For the three and six months ended June

30, 2023 and 2022, the Company did

t have any unrecognized tax benefits

as a result of

tax positions taken during a prior

period or during the current period.

For the three and nine months ended September 30, 2023 and 2022, the Company

t have any unrecognized tax

Additionally,

interest or penalties were

recorded as a result of tax uncertainties.

penalties were recorded as a result of tax uncertainties.

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

financial needs

customers and

to reduce its

to fluctuations

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

instruments include

2 unchanged sentences

extend credit,

varying degrees,

interest rate

instruments involve,

degrees, elements

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 uses the

same credit policies in making

commitments and conditional obligations as it does for on-balance

sheet instruments.

The Company's

4 unchanged sentences

is represented by the contractual amount of these commitments.

June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023

September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023

December 31, 2022

5 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

12 unchanged sentences

many of them expire without being drawn

upon, they do not generally present a significant liquidity risk

to the Company.

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

The notional amount of

the interest rate swaps

do not represent actual

amounts exchanged

as part of its asset-liability management strategy to help

its interest rate

risk exposure.

amount of the interest

rate swaps does not

represent actual amounts exchanged

are determined

2 unchanged sentences

Interest Rate Swaps Designated as a Cash Flow Hedge

30, 2023, the

interest rate swap

agreements with a notional

aggregate amount of $

designated as

agreements have

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

years, the weighted average fixed

As of September 30,

2023, the Company

interest rate swap agreements

with a notional aggregate

million that were designated as cash flow hedges of certificates of deposit.

The interest rate swap agreements have an

compound SOFR being received.

The Company had

cash flow hedges outstanding on December 31,

corresponding recognition

in other comprehensive

income (loss)

and subsequently reclassified

to earnings when

losses are realized.

Interest Rate Swaps Designated as Fair Value

As of September 30, 2023,

the Company had four interest

rate swap agreements with a

notional aggregate amount of

years, the weighted average fixed rate paid

%, with the weighted average 3-month compound SOFR

being received.

The Company had

cash flow hedges at December 31, 2022.

corresponding recognition in other comprehensive

income and subsequently reclassified to

earnings when gains or losses

are realized.

Interest Rate Swaps

2 unchanged sentences

interest rate swaps

September 30,

December 31, 2022,

15 unchanged sentences

Balance Sheet Location

June 30, 2023:

September 30, 2023:

Derivatives designated as hedging instruments:

12 unchanged sentences

with the fair

value measurements accounting

guidance, 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

between market

best determined

quoted market

determined based

market prices.

many instances, there

are no quoted market

prices for the Company's

various financial instruments.

are no quoted

market prices for the

Company's various financial

market prices

8 unchanged sentences

a consistent definition

of fair value,

which focuses on

exit price in

value, which focuses

an orderly transaction

1 unchanged sentence

sale) between

market participants

under current

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

market conditions.

a significant

1 unchanged sentence

valuation technique or

valuation techniques

such instances, determining

valuation techniques may

be appropriate.

instances, determining

depends on the facts

and circumstances and requires

the use of significant judgment.

The fair value is

a reasonable point

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.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

Fair Value Hierarchy

12 unchanged sentences

the reporting

the ability to

the measurement

at the measurement

and liabilities

11 unchanged sentences

observable for the

are not active;

markets that are

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

flow methodologies,

methodologies,

well as instruments for which determination of fair value

5 unchanged sentences

AFS investment securities:

When instruments are traded in secondary

markets and quoted market prices

When instruments are traded in

secondary markets and quoted market

prices do not exist

for such securities,

1 unchanged sentence

on prices obtained

from independent vendors or

third-party broker-dealers.

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

2 unchanged sentences

party broker-dealers

are classified

within Level 2

of the hierarchy

are classified within

the hierarchy

involve using quoted

3 unchanged sentences

classified within Level 2 of the hierarchy.

June 30, 2023 and December 31, 2022 for each of

the fair value hierarchy levels (in thousands):

June 30, 2023

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

September 30, 2023 and December 31, 2022 for each

of the fair value hierarchy levels (in thousands):

September 30, 2023

December 31, 2022

11 unchanged sentences

Total liabilities at fair value

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

Items Measured at Fair Value

12 unchanged sentences

or impaired loans, are

estimated using the present value

estimated using the present

of expected cash

2 unchanged sentences

collateral discounted

as necessary due

to management's

estimates of changes in economic conditions are considered

a Level 3 valuation.

due to management's

estimates of changes in economic conditions and are

considered a Level 3 valuation.

the third-party

appraisals less

estimate of the

carrying cost of

Appraisals generally

market approach

use the market

valuation technique

11 unchanged sentences

considered a Level 3 valuation.

The following table represents the Company’s assets measured at fair value on a non-recurring basis at June 30, 2023

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

levels (in thousands):

June 30, 2023:

The following table represents the Company’s assets measured at

fair value on a non-recurring basis at

September 30,

2023 and December 31, 2022 for each of the fair value

hierarchy levels (in thousands):

September 30, 2023:

Individually evaluated loans

5 unchanged sentences

measurements for assets measured

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

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

Valuation Technique(s)

11 unchanged sentences

impaired loans

financial liabilities measured

at fair value on a

non-recurring basis at June

30, 2023 and December

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

non-recurring

September 30,

December 31, 2022.

Items Not Measured at Fair Value

3 unchanged sentences

fair values of

financial instruments not

carried at fair

value as of June 30, 2023 and December 31, 2022 (in

financial instruments

not carried at fair

value as of September 30, 2023 and December 31, 2022

(in thousands):

Fair Value Hierarchy

June 30, 2023:

September 30, 2023:

Financial Assets:

26 unchanged sentences

STOCKHOLDERS’ EQUITY

completed the

initial public

common stock,

Bank completed

public offering

shares of Class A

2 unchanged sentences

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

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

the Florida Business Corporation

Each outstanding share

of the Bank’s Class

its shareholders

In December 2021,

the Company acquired

all the issued

and outstanding shares

A common stock

Bank, which at the time were

the only issued and outstanding shares

of the Bank’s capital stock,

in a share exchange (the

“Reorganization”)

common stock,

formerly held

Shareholders was

converted into

1 unchanged sentence

Company’s wholly owned subsidiary.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

Reorganization,

received securities

having substantially

substantially

same designations,

2 unchanged sentences

and restrictions,

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2023 Form 10-Q

held in the Bank,

12 unchanged sentences

stock awards issued during the quarter

ended June 30, 2023 nor during the three and six months

ended June 30, 2022.

During the second quarter

of 2023, the Company

shares of Class A common stock

at a weighted

average price per share of $

The aggregate purchase price for these

transactions was approximately $

including transaction

publicly announced repurchase

As of June 30, 2023,

shares remained authorized

for repurchase under

this program.

ended September 30, 2023 nor during the three and nine

months ended September 30, 2022.

ended September

approximately

pursuant to the Company’s publicly announced repurchase program.

shares were repurchased during the three months

Shares of the Company’s Class A common stock issued and outstanding as

of June 30, 2023 and December 31, 2022

of September 30, 2023 and December 31,

, respectively.

1 unchanged sentence

dividends were approved by

the Board for the

classes for the three

months ended June 30,

the Board for

the common stock classes

for the three

months ended September 30, 2023

Additionally, there were

dividends declared and unpaid as of September 30,

2023 and 2022.

Additionally,

dividends declared and unpaid as of June 30, 2023 and 2022.

“well-capitalized”

guidelines as

guidelines as of September 30, 2023

and December 31, 2022.

June 30, 2023, the

total risk-based

capital ratios

and the Bank were

At September 30, 2023, the

total risk-based capital ratios for

the Company and the Bank were

%, respectively.

2 unchanged sentences

is calculated by

dividing net income (loss)

available to common

stockholders by the weighted-average

dividing net income

(loss) available to

common shareholders by

the weighted-average

number of common shares outstanding for

2 unchanged sentences

Diluted EPS is

stockholders by

weighted-average number

income (loss)

shares outstanding for

4 unchanged sentences

the period determined using the treasury-stock method.

of this calculation, common stock equivalents include

purposes 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

and six months

ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Net income available to common stockholders

months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income available to common shareholders

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q3 2023 Form 10-Q

The following table reflects

the calculation of basic

and diluted earnings per

common share class

for the three

months ended June 30, 2023 and 2022 (in thousands,

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

months ended September 30, 2023 and 2022 (in thousands,

except per share amounts):

Three Months Ended June 30,

Three Months Ended September 30,

Net income available to common shares

17 unchanged sentences

common stock for each of the periods presented.

Six Months Ended June 30,

Net income (loss) available to common shares

Nine Months Ended September 30,

Net income available to common shares

Weighted average shares outstanding

9 unchanged sentences

restricted stock awards that are participating securities

because the amounts that would be allocated

because the amounts that would be allocated are

not material to net income per share of common

11 unchanged sentences

and legal actions

in the ordinary

management, none

3 unchanged sentences

is expected to

have a material

adverse effect

material adverse

on the Company’s Consolidated Financial Statements.

SUBSEQUENT EVENTS

Management has evaluated subsequent events from July 1, 2023

through August 11, 2023, which is the date this Form

10-Q was available to be issued.

As previously

disclosed, on

July 13, 2023,

individual shareholders

complaint against

(“The Plaintiffs”)

filed a complaint

board members

naming the Bank

alleging the named

directors did not

have the authority

to approve the exchange

Bank’s initial

public offering

breached their

fiduciary duties.

The Plaintiffs claim this exchange was not

permitted by the Bank’s Articles of Incorporation.

The Company believes

allegations in the lawsuit are legally

and factually without merit, and the

Company intends to vigorously defend

allegations in

Despite the Company’s

lawsuit lacks

without naming

named directors

authority to approve the exchange of

preferred stock in July 2021 as

part of the Bank’s initial public

offering and that further,

such action breached

their fiduciary duties.

The Plaintiffs

were successful,

claim this exchange

was not permitted

by the Bank’s

Incorporation.

Company intends to vigorously defend against the allegations in

Despite the Company’s belief the lawsuit lacks

merit, if the plaintiffs were successful, the Court

could award substantial compensatory damages.

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