USCB filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. 
Management's Discussion and Analysis of Financial Condition 
and Results of Operations 

 
 The 
following 
discussion 
and 
analysis 
is 
designed 
to 
provide 
a 
better 
understanding 
of 
the 
consolidated 
financial 
 condition 
and 
results 
of 
operations 
of the 
Company 
and the 
Bank, 
its wholly 
owned 
subsidiary, 
for 
the quarter 
and nine 
 months ended 
September 30, 2023. This 
discussion and analysis 
is best 
read in 
conjunction with 
the unaudited consolidated 
 financial statements 
and related 
footnotes included 
in this Quarterly 
Report on 
Form 10-Q 
(“Form 10-Q”) 
and the 
audited 
 consolidated 
financial 
statements 
and 
related footnotes 
included in 
the Annual 
Report 
on Form 
10-K/A (“2022 
Form 10-
 K/A”) filed with the Securities and Exchange Commission (“SEC”) 
for the year ended December 31, 2022. 
 This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause 
 actual results to differ materially 
from management's expectations. Factors that could cause 
such differences are discussed 
 in the sections entitled "Forward-Looking Statements" 
and Item 1A “Risk Factors" below and in the 2022 Form 10-K/A filed 
 with the SEC which is available at the SEC’s website www.sec.gov. 
 Throughout 
this 
document, 
references 
to 
“we,” 
“us,” 
“our,” 
and 
“the 
Company” 
generally 
refer 
to 
USCB 
Financial 
 Holdings, Inc. 
 Forward-Looking Statements 
 This Form 10-Q contains 
statements that are 
not historical in 
nature and are 
intended to be, and 
are hereby identified 
 as, forward-looking statements for 
purposes of the safe 
harbor provided by Section 
21E of the Securities 
Exchange Act of 
 1934, 
as 
amended 
(Exchange 
Act”). 
The 
words 
“may,” 
“will,” 
“anticipate,” 
“should,” 
“would,” 
“believe,” 
“contemplate,” 
 “expect,” “aim,” “plan,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are 
 intended 
to 
identify 
forward-looking 
statements. 
These 
forward-looking 
statements 
include, 
but 
are 
not 
limited 
to, 

 statements 
related 
to 
our 
projected 
growth, 
anticipated 
future 
financial 
performance, 
and 
management’s 
long-term 
 performance goals, as well as statements relating 
to the anticipated effects on results 
of operations and financial condition 
 from expected 
developments or events, 
or business 
and growth 
strategies, including anticipated 
internal growth and 
balance 
 sheet restructuring. 

 These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ 
 materially from those anticipated in such statements. 
Potential risks and uncertainties include, but are not 
limited to: 
 •
 
the strength of the United States economy in general and the strength of the local economies in which we conduct operations; 
 •
 
our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry; 
 •
 
the accuracy of our financial statement estimates and assumptions, including the estimates 
used for our credit loss reserve and 
 deferred tax asset valuation allowance; 
 •
 
the efficiency and effectiveness of our internal control procedures and processes; 
 •
 
our ability 
to comply 
with the 
extensive laws 
and regulations 
to which 
we are 
subject, including 
the laws 
for each 
jurisdiction 
 where we operate; 
 •
 
adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; 
 •
 
deposit attrition and the level of our uninsured deposits; 
 •
 
legislative or regulatory changes and changes in 
accounting principles, policies, practices or guidelines, including 
the on-going 
 effects of the implementation of the Current Expected Credit Losses (“CECL”) standard; 
 •
 
the 
lack 
of 
a 
significantly 
diversified 
loan 
portfolio 
and 
the 
concentration 
in 
the 
South 
Florida 
market, 
including 
the 
risks 
of 
 geographic, depositor, 
and industry 
concentrations, including 
our concentration 
in loans 
secured by 
real estate, 
in particular, 
 commercial real estate; 
 •
 
the effects of climate change; 
 •
 
the concentration of ownership of our common stock; 
 •
 
fluctuations in the price of our common stock; 
 •
 
our ability to 
fund or access 
the capital markets 
at attractive rates 
and terms and 
manage our growth, 
both organic growth 
as 
 well as growth through other means, such as future acquisitions; 
 •
 
inflation, interest rate, unemployment rate, market and monetary fluctuations; 
 •
 
impacts of international hostilities and geopolitical events; 
 •
 
increased 
competition 
and its 
effect 
on 
the pricing 
of 
our products 
and services 
as 
well as 
our interest 
rate spread 
and net 
 interest margin; 
 •
 
the loss of key employees; 
 •
 
the effectiveness of 
our risk management strategies, 
including operational risks, 
including, but not limited 
to, client, employee, 
 or third-party fraud and security breaches; and 
 •
 
other risks 
described in 
this Form 
10-Q, the 
2022 Form 
10-K/A and 
other filings 
we make 
with the 
Securities and 
Exchange 
 Commission (“SEC”). 
 

 All 
forward-looking 
statements 
are 
necessarily 
only 
estimates 
of 
future 
results, 
and 
there 
can 
be 
no 
assurance 
that 
 actual results will 
not differ 
materially from expectations. 
Therefore, you are 
cautioned not to 
place undue reliance 
on any 

 
 
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 33 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 forward-looking statements. 
Further, 
forward-looking statements 
included in 
this Form 
10-Q are 
made only 
as of the 
date 
 hereof, and we undertake 
no obligation to update 
or revise any forward-looking 
statement to reflect events 
or circumstances 
 after the date on which the statements are made or to reflect the occurrence of unanticipated 
events, unless required to do 
 so under the federal securities laws. You should also review the risk factors described in the reports the Company has filed 
 or will file with the SEC. 
 Overview 
 The Company 
reported net 
income of 
$3.8 million 
or $0.19 
per diluted 
share of 
common stock 
for the 
three 
months 
 ended 
September 30, 
2023 
compared 
to 
$5.6 
million 
or 
$0.28 
per 
diluted 
share 
of 
common 
stock 
for 
the 
three 
months 
 ended September 
30, 2022. 
Net income 
for the 
nine months 
ended September 
30, 2023 
was $13.8 
million or 
$0.70 per 
 diluted share of common stock 
compared to $15.7 million 
or $0.78 per diluted 
share of common stock 
for the same period 
 in 2022. 
 No shares 
were repurchased 
during the 
third 
quarter 2023. 
Year-to-date, the 
Company 
has repurchased 
577,603 of 
 Class A 
common stock shares at 
a weighted average price 
per share of 
$9.77. These repurchases were 
made through open 
 market purchases pursuant to 
the Company’s publicly announced repurchase 
program. As of 
September 30, 2023, 172,397 
 shares remained authorized for repurchase under this 
program. 
 In evaluating our financial 
performance, the Company 
considers the level of 
and trends in net 
interest income, the 
net 
 interest margin, the cost of deposits, levels 
and composition of non-interest income and non-interest expense, performance 
 ratios, asset quality ratios, regulatory capital ratios, and any 
significant event or transaction. 
 Unless 
otherwise 
stated, 
all 
period 
comparisons 
in 
the 
bullet 
points 
below 
are 
calculated 
for 
the 
quarter 
ended 
 September 30, 2023 compared 
to the quarter 
ended September 30, 2022 
and to 
December 31, 2022, 
and annualized where 
 appropriate: 
 •
 
Net interest income 
for the three 
months ended September 
30, 2023 decreased 
$2.8 million or 
16.4% to $14.0 million 
from $16.8 
 million 
for 
the 
quarter 
ended 
September 30, 
2022. 
Net 
interest 
income 
for 
the 
nine 
months 
ended 
in 
September 
30, 
2023 
 decreased $2.6 million or 5.6% to $44.2 million compared to the same period ended September 30, 2022. 
 •
 
Net interest margin 
(“NIM”) was 2.60% 
for the three 
months ended September 
30, 2023 compared 
to 3.47% for 
the three months 
 ended September 30, 2022. 
NIM was 2.84% for 
the nine months ended 
in September 30, 2023 
compared to 3.36% for 
the same 
 period in 2022. 

 •
 
Total assets were $2.2 billion at September 30, 
2023, representing an increase of $207.1 million or 10.2% 
from September 30, 
 2022 and an increase of $158.8 million or 10.2% annualized from December 31, 2022. 
 

 •
 
Total loans were 
$1.7 billion at 
September 30, 2023, 
representing an increase 
of $245.0 million 
or 17.1% from 
September 30, 
 2022 and an increase of $169.2 million or 15.0% annualized from December 31, 2022. 
 •
 
Total deposits were $1.9 billion at September 30, 2023, representing an increase of $124.3 million or 6.9% from September 30, 
 2022 and an increase of $91.6 million or 6.7% annualized from December 31, 2022. 

 •
 
Annualized return on average assets for the quarter ended September 30, 2023 was 0.67% compared to 1.09% for the quarter 
 ended September 30, 2022. 

 •
 
Annualized return on average stockholders’ equity for the quarter 
ended September 30, 2023 was 8.19% compared 
to 11.90% 
 for quarter ended September 30, 2022. 

 •
 
The ACL to total loans was 
1.16% at both 
September 30, 2023 and December 
31, 2022. ACL was calculated under 
the CECL 
 methodology for three and nine months ended September 30, 2023 and the incurred loss methodology for all periods in 2022. 
 •
 
Non-performing loans to total loans was 0.03% at September 30, 2023 compared to 0.00% at December 31, 2022. 

 •
 
At September 30, 2023, 
the total risk-based 
capital ratios for 
the Company and 
the Bank were 
13.10% and 13.06%, 
respectively. 
 •
 
Tangible book value 
per common share 
(a non-GAAP financial 
measurement) of $9.36 
as of September 
30, 2023 was 
negatively 
 affected by 
$2.62 due 
to accumulated 
comprehensive loss 
of $51.2 
million at 
September 30, 
2023. At 
September 30, 
2022, 
 tangible 
book 
value 
of 
$8.87 
per 
common 
share 
was 
negatively 
affected 
by 
$2.26 
due 
to 
$45.2 
million 
accumulated 
other 
 comprehensive loss. 
See “Reconciliation and Management Explanation for Non-GAAP Financial Measures” for a reconciliation 
 of this non-GAAP financial measure. 
 

 
 
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 34 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Critical Accounting Policies and Estimates 
 The 
consolidated 
financial 
statements 
are 
prepared 
based 
on 
the 
application 
of 
U.S. 
GAAP, 
the 
most 
significant 
of 
 which are 
described in 
Note 1 
“Summary of 
Significant Accounting Policies” 
in the 
Company’s 2022 Form 
10-K/A. To prepare 
 financial statements 
in conformity 
with US 
GAAP, 
management makes 
estimates, assumptions, 
and judgments 
based on 
 available information. These estimates, 
assumptions, and judgments affect 
the amounts reported in 
the financial statements 
 and accompanying notes. These estimates, assumptions, 
and judgments are based on information available as of the date 
 of the financial statements and, 
as this information changes, actual results 
could differ from the estimates, assumptions and 
 judgments reflected 
in the 
financial statements. 
In particular, 
management 
has identified 
accounting 
policies that, 
due to 
 the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements. 
 Management has presented the application of these policies 
to the Audit and Risk Committee of our Board of 
Directors. 

 Allowance for Credit Losses 
 On 
January 
1, 
2023, 
the 
Company 
adopted 
ASU 
2016-13 
Financial 
Instruments 
- 
Credit 
Losses 
(Topic 
326): 
 Measurement of Credit Losses 
on Financial Instruments, 
as amended, which replaces 
the incurred loss methodology 
with 
 an 
expected 
loss 
methodology 
that 
is 
referred 
to 
as 
the 
current 
expected 
credit 
loss 
(CECL) 
methodology. 
See 
Note 
1 
 “Summary of Significant Accounting Policies” in Item 1 
of Part I of this 
Form 10-Q for more information on the 
adoption ASC 
 326 and the allowance for credit losses. 

 Our ACL 
included residential 
loans. To 
assess the 
potential impact 
of changes 
in qualitative 
factors related 
to these 
 loans, 
management 
performed 
a sensitivity 
analysis. 
The Company 
evaluated 
the 
impact 
of the 
HPI 
used 
in calculating 
 expected losses on the residential loan segment. As of September 30, 2023, for every 100 basis points increase in the HPI 
 index, the forecast reduces 
reserves 
by approximately $217 
thousand and about 1 
basis point to 
the reserve coverage ratio, 
 everything else being 
constant. This 
sensitivity analysis provides 
a hypothetical result 
to assess the 
sensitivity of the 
ACL 
 and does not represent a change in management’s 
judgement. 
 Income Taxes 
 Deferred tax 
assets and 
liabilities are 
recognized for 
the future 
tax consequences 
attributable to 
differences 
between 
 the financial statement carrying amounts of 
existing assets and liabilities and their 
respective tax bases and operating loss 
 and tax credit carryforwards. Deferred tax 
assets and liabilities are measured 
using enacted tax rates expected 
to apply to 
 taxable income 
in the 
years in 
which those 
temporary differences 
are expected 
to be 
recovered or 
settled. The 
effect 
on 
 deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment 
 date. 

 Management is required to assess whether a valuation allowance should be established on the net deferred tax assets 
 based on the 
consideration of 
all available evidence 
using a more 
likely than not 
standard. In its 
evaluation, management 
 considers taxable loss 
carry-back availability, expectation of sufficient 
taxable income, trends 
in earnings, the 
future reversal 
 of temporary differences, and available tax planning 
strategies. 
 The Company recognizes positions taken 
or expected to be 
taken in a tax 
return in accordance with existing accounting 
 guidance on 
income taxes 
which prescribes 
a recognition threshold 
and measurement 
process. Interest 
and penalties 
on 
 tax liabilities, if any, would 
be recorded in interest expense and other operating non-interest 
expense, respectively. 
 Non-GAAP Financial Measures 
 This Form 10-Q 
includes financial information determined by 
methods other than in 
accordance with generally accepted 
 accounting principles (“GAAP”). This financial information 
includes certain operating performance measures. 
Management 
 has included these non-GAAP measures because it believes these 
measures may provide useful supplemental information 
 for evaluating the Company’s underlying performance trends. Further, management uses these measures in 
managing and 
 evaluating 
the 
Company’s 
business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
operations 
and 
performance. 
 Operating performance measures 
should be viewed in 
addition to, and not 
as an alternative to 
or substitute for, 
measures 
 determined in accordance with GAAP, 
and are not necessarily comparable to non-GAAP measures that may 
be presented 
 by other companies. To the extent applicable, reconciliations of these 
non-GAAP measures to the most 
directly comparable 
 GAAP 
measures 
can 
be 
found 
in 
the 
section 
“Reconciliation 
and 
Management 
Explanation 
of 
Non-GAAP 
Financial 
 Measures” included in this Form 10-Q.

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 35 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Segment Reporting 
 Management monitors the revenue streams for all its various 
products and services. The identifiable segments are not 
 material 
and 
operations 
are 
managed 
and 
financial 
performance 
is 
evaluated 
on 
an 
overall 
Company-wide 
basis. 
 Accordingly, all 
the financial service 
operations are 
considered by management 
to be 
aggregated in one 
reportable operating 
 segment.
 Results of Operations 
 General 
 The following 
tables present 
selected balance 
sheet, income 
statement, and 
profitability ratios 
for the 
dates indicated 
 (in thousands, except ratios): 
 September 30, 2023
 December 31, 2022
 Consolidated Balance Sheets:
 Total 
assets
 $
 2,244,602
 $
 2,085,834
 Total 
loans 
 (1)
 $
 1,676,520
 $
 1,507,338
 Total 
deposits
 $
 1,920,922
 $
 1,829,281
 Total 
stockholders' equity
 $
 182,884
 $
 182,428
 (1) 
Loan amounts include deferred fees/costs. 
 Three Months Ended September 30,
 Nine Months Ended September 30,
 2023
 2022
 2023
 2022
 Consolidated Statements of Operations:
 Net interest income before provision for credit losses
 $
 14,022
 $
 16,774
 $
 44,192
 $
 46,795
 Total 
non-interest income
 $
 2,161
 $
 1,789
 $
 6,077
 $
 5,351
 Total 
non-interest expense
 $
 10,461
 $
 10,132
 $
 31,089
 $
 29,295
 Net income 

 $
 3,819
 $
 5,558
 $
 13,824
 $
 15,707
 Profitability:
 Efficiency ratio
 64.64%
 54.58%
 61.85%
 56.18%
 Net interest margin 
 2.60%
 3.47%
 2.84%
 3.36%
 The Company’s results 
of operations 
depend substantially on 
net interest income 
and non-interest income. 
Other factors 
 contributing to 
the results 
of operations 
include our 
provision for 
credit losses, 
the level 
of non-interest 
expense, and 
the 
 provision for income taxes. 
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 Net income decreased 
to $3.8 million 
for the three 
months ended September 
30, 2023 from 
$5.6 million for 
the same 
 period in 2022 mainly due to higher weighted average 
deposit costs. 

 Nine months ended September 30, 2023 compared to nine 
months ended September 30, 2022 

 Net income decreased to $13.8 million for the nine months ended September 30, 
2023 from $15.7 million for the same 
 period in 2022. The main drivers of the variance of net income was a $25.1 million increase in 
interest expense mainly due 
 to increases in the cost of deposits partially offset by a $22.5 million increase in interest income generated from higher loan 
 yields and a larger loan portfolio. 

 Net Interest Income 
 Net interest income 
is the difference 
between interest 
earned on interest-earning 
assets and interest 
paid on interest-
 bearing liabilities 
and is 
the primary 
driver of 
core earnings. 
Interest income 
is generated 
from interest 
and dividends 
on 
 interest-earning 
assets, 
including 
loans, 
investment 
securities 
and 
other 
short-term 
investments. 
Interest 
expense 
is 
 incurred 
from 
interest 
paid 
on 
interest-bearing 
liabilities, 
including 
interest-bearing 
deposits, 
FHLB 
advances 
and 
other 
 borrowings. 
 To evaluate net 
interest income, we 
measure and monitor 
(i) yields on 
loans and other 
interest-earning assets, (ii) 
the 
 costs of deposits 
and other funding 
sources, (iii) net 
interest spread, and 
(iv) net interest margin. 
Net interest spread is 
equal 
 to the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest 

 
 
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 36 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 margin is 
equal to 
the annualized 
net interest 
income 
divided by 
average interest 
-earning assets. 
Because 
non-interest-
 bearing sources of funds, such as non-interest-bearing deposits 
and stockholders’ equity, also fund 
interest-earning assets, 
 net interest margin includes the indirect benefit of these 
non-interest-bearing funding sources. 
 Changes 
in 
market 
interest 
rates 
and 
interest 
rates 
we 
earn 
on 
interest-earning 
assets 
or 
pay 
on 
interest-bearing 
 liabilities, as well 
as the volume 
and types of 
interest-earning assets and interest-bearing 
and non-interest-bearing liabilities, 
 are usually the 
largest drivers 
of periodic changes 
in net interest 
spread, net interest 
margin and net 
interest income. 
Our 
 asset liability committee (ALCO) has in 
place asset-liability management techniques to manage major factors that 
affect net 
 interest income and net interest margin. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 37 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 The following 
table contains 
information related 
to average 
balances, average 
yields earned 
on assets, 
and average 
 costs of liabilities for the periods indicated (dollars in 
thousands): 
 Three Months Ended September 30, 
 2023 
 2022 
 Average 
 (1)
 Balance 
 Interest 
 Yield/Rate 
 (2)
 Average 
 (1)
 Balance 
 Interest 
 Yield/Rate 
 (2)
 Assets 
 Interest-earning assets: 
 Loans 
 (3)
 $ 
 1,610,864 
 $ 
 22,523 
 5.55% 
 $ 
 1,398,761 
 $ 
 15,954 
 4.53% 
 Investment securities 
 (4)
 445,828 
 2,833 
 2.52% 
 450,514 
 2,201 
 1.94% 
 Other interest-earnings assets 
 83,479 
 1,026 
 4.88% 
 70,540 
 322 
 1.81% 
 Total interest-earning assets 
 2,140,171 
 26,382 
 4.89% 
 1,919,815 
 18,477 
 3.82% 
 Non-interest-earning assets 
 110,087 
 

 

 106,976 
 

 

 Total assets 
 $ 
 2,250,258 
 $ 
 2,026,791 
 Liabilities and stockholders' equity 
 

 

 

 

 

 

 Interest-bearing liabilities: 
 Interest-bearing checking 
 $ 
 52,080 
 331 
 2.52% 
 $ 
 66,585 
 19 
 0.11% 
 Saving and money market deposits 
 1,011,164 
 8,779 
 3.44% 
 823,521 
 1,141 
 0.55% 
 Time deposits 
 290,272 
 2,565 
 3.51% 
 217,023 
 363 
 0.66% 
 Total interest-bearing deposits 
 1,353,516 
 11,675 
 3.42% 
 1,107,129 
 1,523 
 0.55% 
 FHLB advances and other borrowings 
 85,326 
 685 
 3.19% 
 43,935 
 180 
 1.63% 
 Total interest-bearing liabilities 
 1,438,842 
 12,360 
 3.41% 
 1,151,064 
 1,703 
 0.59% 
 Non-interest-bearing demand deposits 
 587,917 
 

 

 655,853 
 

 

 Other non-interest-bearing liabilities 
 38,598 
 34,586 
 Total liabilities 
 2,065,357 
 

 

 1,841,503 
 

 

 Stockholders' equity 
 184,901 
 185,288 
 Total liabilities and stockholders' equity 
 $ 
 2,250,258 
 

 

 $ 
 2,026,791 
 

 

 Net interest income 
 $ 
 14,022 
 $ 
 16,774 
 Net interest spread 
 (5)
 1.48% 
 3.23% 
 Net interest margin 
 (6)
 2.60% 
 3.47% 
 (1) 
Average balances - Daily average balances are used 
to calculate yields/rates. 
 (2) 
Annualized. 
 (3) 
Average loan balances include non-accrual loans. Interest income 
on loans includes accretion of deferred loan 
fees, net of deferred loan costs. 
 (4) 
At fair value except for securities held to maturity. This amount includes 
FHLB stock. 
 (5) 
Net interest spread is the weighted average 
yield on total interest-earning assets minus the weighted 
average rate on total interest-bearing liabilities. 
 (6) 
Net interest margin is the ratio of net interest 
income to average total interest-earning assets. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 38 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Nine Months Ended September 30, 
 2023 
 2022 
 Average 
 Balance 
 (1)
 Interest 
 Yield/Rate 
 (2)
 Average 
 Balance 
 (1)
 Interest 
 Yield/Rate 
 (2)
 Assets 
 Interest-earning assets: 
 Loans 
 (3)
 $ 
 1,576,074 
 $ 
 63,081 
 5.35 
 % 
 $ 
 1,302,909 
 $ 
 42,989 
 4.41 
 % 
 Investment securities 
 (4)
 430,118 
 7,501 
 2.33 
 % 
 484,489 
 7,040 
 1.94 
 % 
 Other interest-earnings assets 
 71,514 
 2,459 
 4.60 
 % 
 76,655 
 474 
 0.83 
 % 
 Total interest-earning assets 
 2,077,706 
 73,041 
 4.70 
 % 
 1,864,053 
 50,503 
 3.62 
 % 
 Non-interest earning assets 
 107,443 
 105,914 
 Total assets 
 $ 
 2,185,149 
 $ 
 1,969,967 
 Liabilities and stockholders' equity 
 Interest-bearing liabilities: 
 Interest-bearing checking 
 $ 
 54,554 
 574 
 1.41 
 % 
 $ 
 65,798 
 52 
 0.11 
 % 
 Money market and savings accounts 
 949,858 
 20,532 
 2.89 
 % 
 780,564 
 2,307 
 0.40 
 % 
 Time deposits 
 264,241 
 5,767 
 2.92 
 % 
 221,504 
 893 
 0.54 
 % 
 Total interest-bearing deposits 
 1,268,653 
 26,873 
 2.83 
 % 
 1,067,866 
 3,252 
 0.30 
 % 
 Borrowings and repurchase agreements 
 80,087 
 1,976 
 3.30 
 % 
 38,788 
 456 
 1.57 
 % 
 Total interest-bearing liabilities 
 1,348,740 
 28,849 
 2.87 
 % 
 1,106,654 
 3,708 
 0.45 
 % 
 Non-interest bearing demand deposits 
 617,741 
 642,396 
 Other non-interest-bearing liabilities 
 34,492 
 29,608 
 Total liabilities 
 2,000,973 
 1,778,658 
 Stockholders' equity 
 184,176 
 191,309 
 Total liabilities and stockholders' equity 
 $ 
 2,185,149 
 $ 
 1,969,967 
 Net interest income 
 $ 
 44,192 
 $ 
 46,795 
 Net interest spread 
 (5)
 1.83 
 % 
 3.17 
 % 
 Net interest margin 
 (6)
 2.84 
 % 
 3.36 
 % 
 (1) 
Average balances - Daily average balances are used 
to calculate yields/rates. 
 (2) 
Annualized. 
 (3) 
Average loan balances include non-accrual loans. Interest income 
on loans includes accretion of deferred loan fees, 
net of deferred loan costs. 
 (4) 
At fair value except for securities held to maturity. Includes FHLB stock. 
 (5) 
Net interest spread is the weighted average 
yield on total interest-earning assets minus the weighted 
average rate on total interest-bearing 
 liabilities. 
 (6) 
Net interest margin is the ratio of net interest 
income to average total interest-earning assets. 
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 Net interest income before the provision 
for credit losses was $14.0 
million for the three months 
ended September 30, 
 2023, a 
decrease 
of 
$2.8 
million 
or 
16.4%, 
from 
$16.8 
million 
for the 
same 
period in 
2022. The 
decrease 
was 
primarily 
 attributable 
to 
the 
$10.7 
million 
increase 
in 
interest 
expense, 
which 
was 
a 
result 
to 
the 
prevailing 
market 
interest 
rate 
 conditions which offset the increase in interest income. 
 Net interest margin was 2.60% 
for the quarter ended September 30, 2023 and 3.47% for the same period in 2022. The 
 increase in loan yields as well as yields on other interest 
-earning assets was offset by higher deposit and borrowing 
costs. 

 Nine months ended September 30, 2023 compared to nine 
months ended September 30, 2022 
 Net interest income 
before the provision 
for credit losses 
was $44.2 million 
for the nine 
months ended September 
30, 
 2023, 
a 
decrease 
of 
$2.6 
million 
or 
5.6%, 
from 
$46.8 
million 
for 
the 
same 
period 
in 
2022. 
The 
decrease 
was 
primarily 
 attributable 
to 
the 
$25.1 
million 
increase 
in 
interest 
expense, 
which 
was 
a 
result 
to 
the 
prevailing 
market 
interest 
rate 
 conditions which partially offset by the increase in interest 
income. 
 Net interest margin 
decreased to 2.84% 
for the nine 
months ended September 
30, 2023 from 
3.36% for the 
same period 
 in 2022. Overall interest-bearing asset yields grew but 
were outpaced by the increase in the cost of funds. 

 Provision for Credit Losses 
 The provision 
for credit 
losses represents 
a charge 
to earnings 
necessary to 
maintain an 
allowance for 
credit losses 
 that, in 
management's evaluation, 
is adequate 
to provide 
coverage for 
all expected 
credit losses. 
The provision 
for credit 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 39 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 losses is impacted 
by variations in 
the size and 
composition of our 
loan and debt 
securities portfolio, recent 
historical and 
 projected future economic conditions, our internal assessment of the credit quality of the loan and debt 
securities portfolios 
 and net charge-offs. 
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 The provision 
for credit 
loss was 
$653 thousand 
for the 
three months 
ended September 30, 
2023 compared 
to $910 
 thousand for the 
same period in 
2022. Growth in 
the loan portfolio 
was the primary 
driver of the 
provision expense during 
 the three 
months ended 
September 30, 2023 
period. 
The decrease 
in provision 
for credit 
losses in 
the 2023 
period compared 
 to the September 30, 2022 quarter was due to greater loan 
growth in third quarter 2022. 

 Nine months ended September 30, 2023 compared to nine 
months ended September 30, 2022 
 The provision 
for credit 
loss 
was 
$892 thousand 
for the 
nine 
months 
ended 
September 
30, 
2023 compared 
to 
$1.6 
 million 
for 
the 
same 
period 
in 
2022. 
Decrease 
of 
$723 
thousand 
due 
to 
higher 
loan 
growth 
in 
the 
nine 
months 
ended 
 September 30, 
2022. The ACL 
as a 
percentage 
of total 
loans was 
1.16% at 
September 
30, 2023 
and at 
September 30, 
 2022. 
 ACL for the three 
and nine months 
ended September 30, 
2023, was estimated 
under the CECL methodology, 
and for 
 all periods 
in 2022, 
it was 
estimated under 
the incurred 
loss model 
. 
See “Allowance 
for Credit 
Losses” 
below for 
further 
 discussion on how the ACL is calculated. 

 Non-Interest Income 
 Our services and products generate service charges and fees, mainly from our depository 
accounts. We also generate 
 income from gain on sale of loans though our swap and SBA 
programs. In addition, we own and are beneficiaries of the life 
 insurance policies on some of our 
employees and generate income from 
the increase in the cash surrender 
value of these 
 policies. 
 The following table presents the components of non-interest 
income for the dates indicated (in thousands): 
 Three Months Ended September 30,
 Nine Months Ended September 30,
 2023
 2022
 2023
 2022
 Service fees
 $
 1,329
 $
 934
 $
 3,707
 $
 2,917
 Gain (loss) on sale of securities available for sale, net
 (955)
 (558)
 (976)
 (540)
 Gain on sale of loans held for sale, net
 255
 330
 696
 686
 Loan settlement
 -
 -
 -
 161
 Other non-interest income
 1,532
 1,083
 2,650
 2,127
 Total 
non-interest income
 $
 2,161
 $
 1,789
 $
 6,077
 $
 5,351
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 Non-interest income for the three months ended September 30, 2023 increased $372 thousand or 20.8%, compared to 
 the same period in 2022. 
This increase was primarily driven by growth in service fees from a larger deposit portfolio and an 
 increase in 
wire and 
treasury 
management 
fees. 
A strategic 
restructuring 
of 
bank 
owned 
life insurance 
increased 
other 
 income 
by 
$982 
thousand. 
However, 
there 
was 
a 
$955 
thousand 
securities 
loss 
experienced 
during 
the 
period. 
The 
 Company sold $7.7 million in lower-yielding securities to reinvest 
the funds in higher-return investments. 

 Nine months ended September 30, 2023 compared to the 
nine months ended September 30, 2022 
 Non-interest income for the nine months 
ended September 30, 2023 increased $726 
thousand or 13.6%, compared to 
 the same 
period in 
2022. This increase 
was primarily 
driven by 
an increase 
in service 
fees from 
a larger 
deposit portfolio 
 and an 
increase in 
wire and 
treasury management 
fees. A strategic restructuring 
of bank 
owned life 
insurance increased 
 other income by 
$982 thousand 
experienced during 
the period. However, 
there was a 
$976 thousand securities 
loss. The 
 Company sold 
$16.4 million 
in lower-yielding 
securities 
to reinvest 
the funds 
in higher-return 
investments. For 
the period 
 ended September 30, 2022, the Company recognized $161 thousand interest 
recovery from a prior lending customer of the 
 Bank. This payment reflected the final payment and settlement of 
lien judgements against the customer. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 40 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Non-Interest Expense 
 The following table presents the components of non-interest 
expense for the dates indicated (in thousands):
 Three Months Ended September 30,
 Nine Months Ended September 30,
 2023
 2022
 2023
 2022
 Salaries and employee benefits
 $
 6,066
 $
 6,075
 $
 18,325
 $
 17,863
 Occupancy
 1,350
 1,281
 3,968
 3,802
 Regulatory assessment and fees
 365
 269
 1,041
 708
 Consulting and legal fees
 513
 604
 1,257
 1,519
 Network and information technology services
 481
 488
 1,464
 1,323
 Other operating
 1,686
 1,415
 5,034
 4,080
 Total 
non-interest expense
 $
 10,461
 $
 10,132
 $
 31,089
 $
 29,295
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 Non-interest expense for the three months ended September 30, 2023 increased $329 thousand or 3.2%, compared to 
 the same 
period in 
2022. The increase 
was primarily 
driven by 
an increase 
in the audit 
and tax 
services, legal 
expenses, 
 FDIC deposit insurance assessment, 
and was partially offset by a decrease in the professional 
fees. 

 Nine months ended September 30, 2023 compared to 
the nine months ended September 30, 2022 
 Non-interest expense for the nine months ended September 30, 
2023 increased $1.8 million or 6.1%, compared to 
the 
 same period in 
2022. The increase 
was primarily driven 
by higher salaries 
and employee benefits 
expense due to 
new hires, 
 increased salary compensation and seasonal payroll taxes as well as increases in the FDIC deposit insurance assessment 
 rate, and audit and tax services expense. 

 Provision for Income Tax 
 Fluctuations in the effective tax rate reflect the effect of the differences in the inclusion or deductibility of certain income 
 and expenses for 
income tax purposes. 
Therefore, future 
decisions on the 
investments we choose 
will affect our 
effective 
 tax rate. 
The cash 
surrender value 
of bank-owned 
life insurance 
policies covering 
key employees, 
purchasing municipal 
 bonds, and overall levels of taxable income will be important 
elements in determining our effective tax rate. 
 Three months ended September 30, 2023 compared to the 
three months ended September 30, 2022 

 Income tax 
expense for 
the quarter 
ended September 
30, 2023 
was $1.3 
million as 
compared to 
$2.0 million 
for the 
 same period in 2022. 
The effective tax rate 
for the three months ended 
September 30, 2023 was 24.7% compared to 
26.1% 
 for the same period in 2022. 

 Nine months ended September 30, 2023 compared to the 
nine months ended September 30, 2022 
 Income tax expense for the nine months ended September 30, 2023 decreased to $4.5 million from $5.5 million for 
the 
 same period 
in 2022. 
The Company’s 
effective tax 
rate was 
24.4% for 
the 2023 
period compared 
to 26.0% 
for the 
same 
 period in 2022. 

 For 
a 
further 
discussion 
of 
income 
taxes, 
see 
Note 
4 
“Income 
Taxes” 
to 
the 
unaudited 
Consolidated 
Financial 
 Statements in Item 1 of Part I of this Form 10-Q. 
 Analysis of Financial Condition 
 Total 
assets at 
September 30, 2023 
were $2.2 
billion, an 
increase of 
$158.8 million, 
or 10.2% 
annualized, 
over total 
 assets of 
$2.1 billion 
at December 
31, 2022. 
Total 
loans, 
net of 
unearned 
fees/cost, 
increased 
$169.2 
million, 
or 15.0% 
 annualized, to $1.7 billion at September 30, 2023 compared to $1.5 billion at December 31, 2022. Total 
deposits increased 
 by $91.6 million, 
or 6.7% annualized, to $1.9 billion at September 30, 2023 
compared to December 31, 2022. 
 Investment Securities 
 The investment portfolio 
is used and 
managed to provide 
liquidity through cash 
flows, marketability 
and, if necessary, 
 collateral for 
borrowings. The 
investment portfolio 
is also 
used as 
a tool 
to manage 
interest rate 
risk and 
the Company’s 
 capital 
market 
risk 
exposure. 
The 
philosophy 
of 
the 
portfolio 
is 
to 
maximize 
the 
Company’s 
profitability 
taking 
into 

 
 
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 41 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 consideration the Company’s 
risk appetite and 
tolerance, manage 
the asset composition 
and diversification, 
and maintain 
 adequate risk-based capital ratios. 
 The investment portfolio 
is managed in accordance 
with the Board approved 
Asset and Liability 
Management (“ALM”) 
 policy, 
which 
includes 
investment 
guidelines. 
Such 
policy 
is 
reviewed 
at 
least 
annually 
or 
more 
frequently 
if 
deemed 
 necessary, 
depending on 
market conditions 
and/or unexpected 
events. The investment 
portfolio composition 
is subject to 
 change depending on the funding and liquidity needs of the Company, and the interest risk management objective directed 
 by the Asset-Liability 
Comittee (“ALCO”). The 
portfolio of investments 
also can be 
used to modify 
the duration of 
the balance 
 sheet. The allocation 
of cash into 
securities takes into 
consideration anticipated future 
cash flows (uses 
and sources) and 
 all available sources of credit. 
 Our investment portfolio consists 
primarily of securities issued 
by U.S. government-sponsored agencies, 
U.S. 
agency 
 mortgage-backed securities, 
collateralized mortgage 
obligation securities, 
municipal securities, 
and other 
debt securities, 
 all with varying contractual maturities and coupons. Due to the optionality embedded in these securities, the final maturities 
 do not necessarily represent 
the expected life of 
the portfolio. Some 
of these securities will 
be called or paid 
down prior to 
 maturity 
depending on 
capital market 
conditions 
and 
expectations. 
The 
investment 
portfolio 
is regularly 
reviewed by 
the 
 Chief Financial 
Officer, 
Treasurer, 
and the 
ALCO of 
the Company 
to ensure 
an appropriate 
risk and 
return profile 
as well 
 as for adherence to the investment policy. 
 ASC Topic 
326 amended 
the 
existing 
other-than-temporary-impairment 
guidance 
for AFS 
securities, 
requiring 
credit 
 losses to be recorded as 
an allowance rather than 
through a permanent write-down. 
When evaluating AFS debt 
securities 
 under ASC Topic 
326, the Company has evaluated 
whether the decline in fair value 
is attributable to credit losses 
or other 
 factors 
like 
interest 
rate 
risk, 
using 
both 
quantitative 
and 
qualitative 
analyses, 
including 
company 
performance 
analysis, 
 review of credit 
ratings, remaining 
payment terms, 
prepayment speeds 
and analysis 
of macro-economic 
conditions. Each 
 investment is expected 
to recover 
its price depreciations 
over its holding 
period as 
it moves to 
maturity and the 
Company 
 has 
the 
intent 
and 
ability 
to 
hold 
these 
securities 
to 
maturity 
if 
necessary. 
As 
a 
result 
of 
this 
evaluation, 
the 
Company 
 concluded that no allowance was required on AFS securities. 
 AFS and 
HTM investment 
securities de 
creased $2.9 
million, or 
0.9% annualized, 
to $415.9 million 
at September 
30, 
 2023 from $418.8 million at December 31, 
2022. Investment securities increased due 
to reinvestment of payments received 
 and investment of excess 
in cash balances into 
high credit quality investments 
to increase the Company’s 
profitability and 
 modify the 
Company’s balance sheet 
duration according to 
the ALM policy. As 
of September 30, 2023, 
investment securities 
 with a market value of $107.7 million 
were pledged to secure public deposits 
and the BTFP. 
The investment portfolio does 
 not have any tax-exempt securities. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 42 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 The 
following 
table 
presents 
the 
amortized 
cost 
and 
fair 
value 
of 
investment 
securities 
for 
the 
dates 
indicated 
(in 
 thousands): 
 September 30, 2023
 December 31, 2022
 Available-for-sale:
 Amortized 
 Cost
 Fair Value
 Amortized 
 Cost
 Fair Value
 U.S. Government Agency
 $
 9,913
 $
 8,025
 $
 10,177
 $
 8,655
 Collateralized mortgage obligations
 105,547
 78,571
 118,951
 95,541
 Mortgage-backed securities - residential
 66,024
 51,157
 73,838
 60,879
 Mortgage-backed securities - commercial
 48,010
 40,564
 32,244
 27,954
 Municipal securities
 25,024
 18,116
 25,084
 18,483
 Bank subordinated debt securities
 24,417
 22,176
 15,964
 14,919
 Corporate bonds
 -
 -
 4,037
 3,709
 $
 278,935
 $
 218,609
 $
 280,295
 $
 230,140
 Held-to-maturity:
 U.S. Government Agency
 $
 44,087
 $
 37,049
 $
 44,914
 $
 39,062
 U.S. Treasury
 19,934
 19,906
 9,841
 9,828
 Collateralized mortgage obligations
 64,094
 53,786
 68,727
 60,925
 Mortgage-backed securities - residential
 44,302
 38,214
 42,685
 38,483
 Mortgage-backed securities - commercial
 15,467
 13,884
 11,442
 10,777
 Corporate bonds
 9,443
 8,455
 11,090
 10,013
 $
 197,327
 $
 171,294
 $
 188,699
 $
 169,088
 Allowance for credit losses - securities held-to-maturity
 (16)
 Securities held-to maturity, net of allowance for credit losses
 $
 197,311
 The following 
table shows 
the weighted 
average yields, 
categorized by 
contractual maturity, 
for investment 
securities 
 as of September 30, 2023 (in thousands, 
except ratios): 

 Within 1 year 
 After 1 year through 
 5 years 
 After 5 years through 
 10 years 
 After 10 years 
 Total 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Available-for-sale: 
 U.S. Government Agency 
 $ 
 - 
 0.00% 
 $ 
 - 
 0.00% 
 $ 
 1,983 
 3.17% 
 $ 
 6,042 
 1.53% 
 $ 
 8,025 
 1.93% 
 Collateralized mortgage obligations 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 78,571 
 1.39% 
 78,571 
 1.39% 
 MBS - residential 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 51,157 
 1.62% 
 51,157 
 1.62% 
 MBS - commercial 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 40,564 
 2.58% 
 40,564 
 2.58% 
 Municipal securities 

 - 
 0.00% 
 - 
 0.00% 
 2,720 
 1.69% 
 15,396 
 1.75% 
 18,116 
 1.74% 
 Bank subordinated debt securities 
 - 
 0.00% 
 5,977 
 5.75% 
 16,199 
 4.88% 
 - 
 0.00% 
 22,176 
 5.12% 
 Corporate bonds 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 $ 
 - 
 $ 
 5,977 
 $ 
 20,902 
 $ 
 191,730 
 $ 
 218,609 
 2.09% 
 Held-to-maturity: 
 U.S. Government Agency 
 $ 
 - 
 0.00% 
 $ 
 7,921 
 1.02% 
 $ 
 20,141 
 1.38% 
 $ 
 16,025 
 2.01% 
 $ 
 44,087 
 1.54% 
 U.S. Treasury 
 19,934 
 5.20% 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 19,934 
 5.20% 
 Collateralized mortgage obligations 
 - 
 0.00% 
 - 
 0.00% 
 - 
 0.00% 
 64,094 
 1.66% 
 64,094 
 1.66% 
 MBS - residential 
 - 
 0.00% 
 4,468 
 1.85% 
 5,925 
 1.75% 
 33,909 
 2.40% 
 44,302 
 2.26% 
 MBS - commercial 
 - 
 0.00% 
 - 
 0.00% 
 3,076 
 1.62% 
 12,391 
 2.60% 
 15,467 
 2.40% 
 Corporate bonds 
 - 
 0.00% 
 9,443 
 2.80% 
 - 
 0.00% 
 - 
 0.00% 
 9,443 
 2.80% 
 $ 
 19,934 
 $ 
 21,832 
 $ 
 29,142 
 $ 
 126,419 
 $ 
 197,327 
 2.24% 
 Loans 
 Loans are the 
largest category of 
interest-earning assets 
on the unaudited 
Consolidated Balance 
Sheets, and usually 
 provide 
higher 
yields 
than 
the 
remainder 
of 
the 
interest-earning 
assets. 
Higher 
yields 
typically 
carry 
inherent 
credit 
and 
 liquidity risks in comparison to lower 
yield assets. The Company manages 
and mitigates such risks in accordance 
with the 
 credit and ALM policies, risk tolerance and balance sheet 
composition. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 43 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 The following table shows the loan portfolio composition 
as of the dates indicated (in thousands): 
 September 30, 2023
 December 31, 2022
 Total
 Percent of 
 Total
 Total
 Percent of 
 Total
 Residential Real Estate
 $
 188,880
 11.3
 %
 $
 185,636
 12.3
 %
 Commercial Real Estate
 1,005,280
 60.0
 %
 970,410
 64.4
 %
 Commercial and Industrial
 212,975
 12.7
 %
 126,984
 8.4
 %
 Foreign Banks
 94,640
 5.7
 %
 93,769
 6.2
 %
 Consumer and Other 
 173,096
 10.3
 %
 130,429
 8.7
 %
 Total 
gross loans
 1,674,871
 100.0
 %
 1,507,228
 100.0
 %
 Plus: Deferred fees (cost)
 1,649
 

 110
 Total 
loans net of deferred fees (cost)
 1,676,520
 1,507,338
 Less: Allowance for credit losses
 19,493
 17,487
 Total 
net loans
 $
 1,657,027
 $
 1,489,851
 Total 
loans, 
net 
of 
unearned 
fees/cost, 
increased 
by 
$169.2 million, 
or 
15.0% 
annualized 
to 
$1.7 
billion, 
at 
 September 30, 2023 
compared to 
December 31, 
2022. The 
commercial 
and industrial, 
and to 
a lesser 
extent, consumer 
 and other and commercial real estate loan segments had the 
most significant growth. 

 Our 
loan 
portfolio 
continues 
to 
grow, 
with 
commercial 
real 
estate 
lending 
as 
the 
primary 
focus 
which 
represented 
 approximately 60.0% 
of the 
total gross 
loan portfolio 
as of 
September 30, 2023. 
Our loan 
growth strategy 
since inception 
 has been reflective of the market in which we operate and of our 
strategic plan as approved by the Board. 
 Most of the 
commercial real estate 
exposure represents 
loans to commercial 
businesses secured 
by owner-occupied 
 real estate. 
The growth 
experienced in 
recent years 
is primarily 
due to 
implementation of 
our relationship-based 
banking 
 model and 
the success 
of our 
relationship managers 
in competing 
for new 
business 
in a 
highly competitive 
metropolitan 
 area. Many 
of our 
larger loan 
clients have 
long-term relationships 
with members 
of our 
senior management 
team or 
our 
 relationship managers that date back to former institutions. 

 From a 
liquidity perspective, 
our loan 
portfolio provides 
us with 
additional 
liquidity due 
to repayments 
or unexpected 
 prepayments. 
The 
following 
table 
shows 
maturities 
and 
sensitivity 
to 
interest 
rate 
changes 
for 
the 
loan 
portfolio 
at 
 September 30, 2023 (in thousands): 
 Due in 1 year or 
 less
 Due in 1 to 5 
 years
 Due after 5 to 15 
 years
 Due after 15 
 years
 Total
 Residential Real Estate
 $
 9,513
 $
 23,902
 $
 81,777
 $
 73,688
 $
 188,880
 Commercial Real Estate
 85,013
 164,387
 747,779
 8,101
 1,005,280
 Commercial and Industrial
 5,348
 53,234
 114,106
 40,287
 212,975
 Foreign Banks
 94,640
 -
 -
 -
 94,640
 Consumer and Other
 1,634
 3,080
 10,223
 158,159
 173,096
 Total 
gross loans
 $
 196,148
 $
 244,603
 $
 953,885
 $
 280,235
 $
 1,674,871
 Interest rate sensitivity:
 Fixed interest rates
 $
 174,725
 $
 144,198
 $
 193,366
 $
 170,370
 $
 682,659
 Floating or adjustable rates
 21,423
 100,405
 760,519
 109,865
 992,212
 Total 
gross loans
 $
 196,148
 $
 244,603
 $
 953,885
 $
 280,235
 $
 1,674,871
 The information 
presented 
in the 
table above 
is based 
upon the 
contractual 
maturities of 
the individual 
loans, which 
 may be 
subject to 
renewal at 
their contractual 
maturity. 
Renewals will 
depend on 
approval by 
our credit 
department and 
 balance sheet 
composition at the 
time of 
the analysis, 
as well 
as any 
modification of terms 
at the 
loan’s maturity. Additionally, 
 maturity 
concentrations, 
loan 
duration, 
prepayment 
speeds 
and 
other 
interest 
rate 
sensitivity 
measures 
are 
discussed, 
 reviewed, and analyzed by the ALCO. Decisions on term 
/rate modifications are discussed as well. 

 As of September 30, 
2023, approximately 59% 
of the loans have 
adjustable/variable rates and 
41% of the 
loans have 
 fixed rates. 
The adjustable/variable 
rate loans 
re-price to 
different benchmarks 
and tenors 
in different 
periods of 
time. By 
 contractual characteristics, there are no 
material concentrations on anniversary repricing. Additionally, it is 
important to note 
 that most 
of our 
loans have 
interest rate 
floors. This 
embedded option 
protects the 
Company from 
a decrease 
in interest 
 rates below the floor and positions us to gain in the scenario 
of higher interest rates. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 44 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Asset Quality 

 Our asset quality grading 
analysis estimates the capability of 
the borrower to repay 
the contractual obligation of 
the loan 
 agreement as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly 
 graded loans. Internal credit 
risk grades are reviewed 
at least once a 
year, and 
more frequently as 
needed. Internal credit 
 risk ratings 
may change 
based on 
management’s 
assessment of 
the results 
from the 
annual review, 
portfolio monitoring, 
 and other developments observed with borrowers. 

 The internal credit risk grades used by the Company to 
assess the credit worthiness of a loan are shown below: 
 Pass 
 – 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 
 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. 

 Substandard 
 – 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. 

 Doubtful
 
– 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. 

 Loss 
 – Loans classified as loss are considered uncollectible. 
 Loan credit exposures by internally assigned grades are 
as follows for the dates indicated (in thousands): 

 September 30, 2023
 Pass
 Special Mention
 Substandard
 Doubtful
 Total
 Residential Real Estate
 $
 188,880
 $
 -
 $
 -
 $
 -
 $
 188,880
 Commercial Real Estate
 1,002,765
 -
 2,515
 -
 1,005,280
 Commercial and Industrial
 210,991
 -
 1,984
 -
 212,975
 Foreign Banks
 94,640
 -
 -
 -
 94,640
 Consumer and Other 
 173,096
 -
 -
 -
 173,096
 $
 1,670,372
 $
 -
 $
 4,499
 $
 -
 $
 1,674,871
 December 31, 2022
 Pass
 Special Mention
 Substandard
 Doubtful
 Total
 Residential Real Estate
 $
 185,636
 $
 -
 $
 -
 $
 -
 $
 185,636
 Commercial Real Estate
 967,465
 -
 2,945
 -
 970,410
 Commercial and Industrial
 126,177
 -
 807
 -
 126,984
 Foreign Banks
 93,769
 -
 -
 -
 93,769
 Consumer and Other 
 130,233
 -
 196
 -
 130,429
 $
 1,503,280
 $
 -
 $
 3,948
 $
 -
 $
 1,507,228

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 45 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Non-Performing Assets 
 The following table presents non-performing assets as 
of the dates shown (in thousands, 
except ratios): 
 September 30, 2023
 December 31, 2022
 Total 
non-performing loans
 $
 479
 $
 -
 Other real estate owned
 -
 -
 Total 
non-performing assets
 $
 479
 $
 -
 Asset quality ratios: 
 (1)
 Allowance for credit losses to total loans
 1.16%
 1.16%
 Allowance for credit losses to non-performing loans
 4070%
 - %
 Non-performing loans to total loans
 0.03%
 - %
 (1) 
 ACL was calculated under CECL methodology for 2023, and incurred loss methodology for 2022
 Non-performing 
assets 
include 
all 
loans 
categorized 
as 
non-accrual 
or 
restructured, 
impaired 
securities, 
other 
real 
 estate 
owned 
(“OREO”) 
and 
other 
repossessed 
assets. 
Problem 
loans 
for 
which 
the 
collection 
or 
liquidation 
in 
full 
is 
 reasonably uncertain are 
placed on a non-accrual 
status. This determination 
is based on current 
existing facts concerning 
 collateral values and the paying capacity of the borrower. 
When the collection of the full contractual balance is unlikely, 
the 
 loan is placed on non-accrual to avoid overstating the 
Company’s income for a loan with increased credit 
risk. 

 If the 
principal or 
interest on 
a commercial 
loan becomes 
due and 
unpaid for 
90 days 
or more, 
the loan 
is placed 
on 
 non-accrual status as of 
the date it becomes 
90 days past due 
and remains in non-accrual 
status until it meets 
the criteria 
 for restoration to accrual status. 
Residential loans, on 
the other hand, are placed 
on non-accrual status when 
the principal 
 or interest 
becomes due 
and unpaid 
for 120 
days or 
more and remains 
in non-accrual 
status until 
it meets 
the criteria 
for 
 restoration 
to 
accrual 
status. 
Restoring 
a 
loan 
to 
accrual 
status 
is 
possible 
when 
the 
borrower 
resumes 
payment 
of 
all 
 principal and interest 
payments for a period 
of six months 
and the Company 
has a documented 
expectation of repayment 
 of the remaining contractual principal and interest or the 
loan becomes secured and in the process of collection. 
 The 
Company 
may 
grant 
a 
loan 
concession 
to 
a 
borrower 
experiencing 
financial 
difficulties. 
This 
determination 
is 
 performed 
during 
the 
annual 
review 
process 
or 
whenever 
problems 
surface 
regarding 
the 
client’s 
ability 
to 
repay 
in 
 accordance with 
the original 
terms of 
the loan 
or line 
of credit. 
The concessions 
are given 
to the 
debtor in 
various forms, 
 including interest rate 
reductions, principal forgiveness, extension 
of maturity date, 
waiver, or deferral of 
payments and other 
 concessions intended to minimize potential losses. 
 For further discussion on non-performing loans 
and borrowers experiencing financial difficulties, 
see Note 3 “Loans” to 
 the unaudited Consolidated Financial Statements in Item 
1 of Part 1 this Form 10-Q. 
 Allowance for Credit Losses 
 On January 1, 
2023, the Company 
adopted FASB 
ASU 2016-13, 
which introduced the 
current expected 
credit losses 
 (CECL) 
methodology 
and 
required 
us to 
estimate 
all expected 
credit 
losses over 
the remaining 
life of 
our loan 
portfolio. 
 Accordingly, 
the 
ACL 
represents 
an 
amount 
that, 
in 
management's 
evaluation, 
is 
adequate 
to 
provide 
coverage 
for 
all 
 expected future credit losses on outstanding loans. Additionally, 
qualitative adjustments are made to the ACL when, based 
 on 
management’s 
judgment, 
there 
are 
factors 
impacting 
the 
allowance 
estimate 
not 
considered 
by 
the 
quantitative 
 calculations. 
See 
Note 
3 “Loans” 
in Item 
1 
of 
Part 1 
of this 
Form 
10-Q 
for 
more 
information 
on 
the 
allowance 
for credit 
 losses. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 46 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 The following table presents ACL and net charge-offs to average loans by 
type for the periods indicated (in thousands): 
 Residential
 Real Estate
 Commercial
 Real Estate
 Commercial
 and Industrial
 Foreign 

 Banks
 Consumer 
 and Other
 Total
 Three Months Ended September 30, 2023
 

 

 

 

 

 

 Beginning balance
 $
 2,673
 $
 10,183
 $
 2,500
 $
 677
 $
 2,782
 $
 18,815
 Provision for credit losses 
 (1)
 (162)
 (84)
 738
 73
 108
 673
 Recoveries
 -
 -
 8
 -
 -
 8
 Charge-offs
 -
 -
 -
 -
 (3)
 (3)
 Ending Balance 
 $
 2,511
 $
 10,099
 $
 3,246
 $
 750
 $
 2,887
 $
 19,493
 Average loans
 $
 183,643
 $
 992,171
 $
 179,127
 $
 87,847
 $
 168,076
 $
 1,610,864
 Net charge-offs to average loans
 -
 -
 -0.02%
 -
 0.01%
 0.00%
 Nine Months Ended September 30, 2023
 Beginning balance
 $
 1,352
 $
 10,143
 $
 4,163
 $
 720
 $
 1,109
 $
 17,487
 Cumulative effect of adoption of accounting 
 principle 
 (2)
 1,238
 1,105
 (2,158)
 23
 858
 1,066
 Provision for credit losses 
 (3)
 (89)
 (1,149)
 1,181
 7
 965
 915
 Recoveries
 10
 -
 60
 -
 3
 73
 Charge-offs
 -
 -
 -
 -
 (48)
 (48)
 Ending Balance 
 $
 2,511
 $
 10,099
 $
 3,246
 $
 750
 $
 2,887
 $
 19,493
 Average loans
 $
 186,918
 $
 980,244
 $
 164,466
 $
 90,597
 $
 153,849
 $
 1,576,074
 Net charge-offs to average loans
 -0.01%
 -
 -0.05%
 -
 0.04%
 0.00%
 (1) Provision for credit losses excludes $17 thousand release due to unfunded commitments included in other liabilities and $3 
 thousand release due to investment securities held to maturity.
 (2) Impact of CECL adoption on January 1, 2023.
 (3) Provision for credit losses excludes $39 thousand release due to unfunded commitments included in other liabilities and $16 
 thousand expense due to investment securities held to maturity.
 Residential
 Real Estate
 Commercial
 Real Estate
 Commercial
 and Industrial
 Foreign 

 Banks
 Consumer 
 and Other
 Total
 Three Months Ended September 30, 2022
 

 

 

 

 

 

 Beginning balance
 $
 2,366
 $
 9,290
 $
 2,671
 $
 651
 $
 808
 $
 15,786
 Provision for credit losses
 (1,009)
 695
 1,126
 74
 24
 910
 Recoveries
 1
 -
 -
 -
 -
 1
 Charge-offs
 -
 -
 (88)
 -
 (5)
 (93)
 Ending Balance 
 $
 1,358
 $
 9,985
 $
 3,709
 $
 725
 $
 827
 $
 16,604
 Average loans
 $
 190,757
 $
 887,000
 $
 119,993
 $
 94,628
 $
 106,382
 $
 1,398,761
 Net charge-offs to average loans
 -
 -
 0.29%
 -
 0.02%
 0.03%
 Nine Months Ended September 30, 2022
 Beginning balance
 $
 2,498
 $
 8,758
 $
 2,775
 $
 457
 $
 569
 $
 15,057
 Provision for credit losses
 (1,157)
 1,227
 1,011
 268
 266
 1,615
 Recoveries
 33
 -
 11
 -
 3
 47
 Charge-offs
 (16)
 -
 (88)
 -
 (11)
 (115)
 Ending Balance 
 $
 1,358
 $
 9,985
 $
 3,709
 $
 725
 $
 827
 $
 16,604
 

 Average loans
 $
 195,863
 $
 809,411
 $
 128,625
 $
 77,237
 $
 91,773
 $
 1,302,909
 Net charge-offs to average loans
 -0.02%
 0.00%
 0.12%
 0.00%
 0.02%
 0.01%
 

 Bank-Owned Life Insurance 
 As of September 30, 
2023, the combined 
cash surrender 
value of all 
bank-owned life 
insurance (“BOLI”) 
policies was 
 $51.4 
million. 
Changes 
in 
cash 
surrender 
value 
are 
recorded 
to 
non-interest 
income 
in 
the 
unaudited 
Consolidated 
 Statements of Operations. The Company had BOLI policies with five insurance carriers. The Company is the beneficiary of 
 these policies. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 47 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 During the 
third quarter 
of 2023, 
the Company 
restructured its 
BOLI, cancelling 
a $7.1 
million policy 
by surrendering 
 $4.2 million of the value and transferring the remaining $2.9 million to a new BOLI 
policy. The new BOLI policy 
was funded 
 with an additional 
$11.1 
million for 
a total of 
$14.1 million. 
This new 
BOLI policy 
received a cash 
surrender enhancement 
 from the new insurance carrier of $981 thousand. 
 Deposits 
 Customer deposits are the 
primary funding source for 
the Bank’s growth. 
Through our network of 
banking centers, we 
 offer a competitive array of deposit 
accounts and treasury management services designed 
to meet our customers’ business 
 needs. 
Our 
primary 
deposit 
customers 
are 
small-to-medium 
sized 
businesses 
(“SMBs”), 
and 
the 
personal 
business 
of 
 owners and operators of these SMBs, as well as the retail/consumer 
relationships of the employees of these businesses. 

 The following table 
presents the daily 
average balance and 
average rate paid 
on deposits by 
category for 
the periods 
 presented (in thousands, except ratios): 
 Three Months Ended September 30,
 2023
 2022
 Average Balance
 Average Rate 
 Paid
 Average Balance
 Average Rate 
 Paid
 Non-interest-bearing checking
 $
 587,917
 0.00%
 $
 655,853
 0.00%
 Interest-bearing checking
 52,080
 2.52%
 66,585
 0.11%
 Money market and savings deposits
 1,011,164
 3.44%
 823,521
 0.55%
 Time deposits
 290,272
 3.51%
 217,023
 0.66%
 Total
 $
 1,941,433
 2.39%
 $
 1,762,982
 0.34%
 The Company 
has a 
granular deposit 
portfolio with 
outstanding balances 
comprised of 
49% in 
commercial 
deposits, 
 37% 
personal 
deposits, 
11% 
public 
funds 
which 
are 
partially 
collateralized 
and 
3% 
brokered 
deposits. 
During 
the 
nine 
 months ended September 
30, 2023, the 
Company acquired $50 
million in brokered 
deposits to boost 
liquidity. The Company 
 has 
approximately 
20 
thousand 
deposit 
accounts 
with 
the 
majority 
in 
personal 
accounts, 
approximately 
13 
thousand 
or 
 63.8%. The 
estimated average 
account size 
of our 
deposit portfolio 
is approximately 
$95 
thousand 
as of 
September 30, 
 2023. The 
Company also offers 
Insured Cash 
Sweep (“ICS”) and 
Certificate of
 Deposit Account Registry Service 
(“CDARS”) 
 deposit products to fully insure our clients. 

 The 
uninsured 
deposits 
are 
estimated 
based 
on 
the 
FDIC 
deposit 
insurance 
limit 
of 
$250 
thousand 
for 
all 
deposit 
 accounts at the Company 
per account holder. 
The total estimated 
amount of uninsured deposits 
is 53% at 
September 30, 
 2023. 

 The following table shows scheduled maturities of uninsured 
time deposits as of September 30, 2023 (in thousands): 
 September 30, 2023
 Three months or less
 $
 18,563
 Over three through six months
 32,457
 Over six though twelve months
 28,769
 Over twelve months
 2,566
 $
 82,355
 

 Other Liabilities 
 The Company collects from commercial and residential loan 
customers funds which are held in escrow for future 
 payment of real estate taxes and insurance. These escrow 
funds are disbursed by the Company directly to the 
insurance 
 companies and taxing authority of the borrower. 
Escrow funds are recorded as other liabilities. 

 As of September 30, 2023 escrow balances totaled $16.7 million 
compared to $3.5 million at December 31, 2022. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 48 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Borrowings 
 As a member 
of the FHLB, 
we are eligible 
to obtain 
advances with 
various terms 
and conditions. 
This accessibility 
of 
 additional funding allows us to efficiently and timely meet both expected 
and unexpected outgoing cash flows and collateral 
 needs without adversely affecting either daily operations 
or the financial condition of the Company. 
 As of September 30, 2023, 
we had $102.0 million 
of fixed and variable rate 
advances outstanding from 
the FHLB with 
 a weighted average rate of 3.66%. 
Maturity dates for the advances range 
between 2023 to 2028 detailed 
in the table below. 

 The following table presents the FHLB advances as of 
September 30, 2023 (in thousands): 
 Interest Rate
 Type of Rate
 Maturity Date
 Amount
 5.57%
 Variable
 December 22, 2023
 $
 20,000
 1.04%
 Fixed
 July 30, 2024
 5,000
 2.05%
 Fixed
 March 27, 2025
 10,000
 1.07%
 Fixed
 July 18, 2025
 6,000
 3.76%
 Fixed
 January 24, 2028
 11,000
 3.77%
 Fixed
 April 25, 2028
 50,000
 $
 102,000
 We have 
also established 
Federal Funds 
lines of 
credit with 
our upstream 
correspondent 
banks, 
the BTFP, 
and the 
 FRB Atlanta 
Discount Window 
to manage 
temporary fluctuations 
in our 
daily cash 
balances. As 
of September 
30, 2023, 
 there were no outstanding balances with any of these 
liquidity sources.
 Off-Balance Sheet Arrangements 
 We engage 
in various financial 
transactions in 
our operations 
that, under GAAP, 
may not be 
included on 
the balance 
 sheet. To 
meet the financing needs 
of our customers we may 
include commitments to extend 
credit and standby letters 
of 
 credit. To 
a varying 
degree, such 
commitments involve 
elements of 
credit, market, 
and interest 
rate risk 
in excess 
of the 
 amount recognized 
in the 
balance sheet. 
We use 
more conservative 
credit and 
collateral policies 
in making 
these credit 
 commitments than 
we do 
for on-balance 
sheet items. 
We are 
not aware 
of any accounting 
loss to 
be incurred 
by funding 
 these commitments; 
however, 
we 
maintain 
an 
allowance 
for 
off-balance 
sheet 
credit 
risk 
which 
is recorded 
under 
other 
 liabilities on the unaudited Consolidated Balance Sheets. 
 Since commitments associated with letters of 
credit and commitments to extend 
credit may expire unused, the 
amounts 
 shown 
do 
not 
necessarily 
reflect 
actual 
future 
cash 
funding 
requirements. 
The 
following 
table 
presents 
lending 
related 
 commitments outstanding as of the dates indicated (in thousands 
): 
 September 30, 2023
 December 31, 2022
 Commitments to grant loans and unfunded lines of credit
 $
 100,661
 $
 95,461
 Standby and commercial letters of credit
 6,490
 4,320
 Total
 $
 107,151
 $
 99,781
 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition 
 established 
in 
the 
contract, 
for 
a 
specific 
purpose. 
Commitments 
generally 
have 
variable 
interest 
rates, 
fixed 
expiration 
 dates or 
other 
termination 
clauses 
and 
may require 
payment 
of 
a fee. 
Since many 
of the 
commitments 
are 
expected to 
 expire without being 
fully drawn, the 
total commitment 
amounts disclosed 
above do not 
necessarily represent 
future cash 
 requirements. 
 Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change 
 in credit risk in our portfolio. Lines 
of credit generally have variable interest 
rates. The maximum potential amount 
of future 
 payments we could 
be required to 
make is represented 
by the contractual 
amount of the 
commitment, less 
the amount of 
 any advances made. 
 Letters of credit are 
conditional commitments issued 
by us to guarantee 
the performance of a 
client to a third 
party. 
In 
 the event of nonperformance by 
the client in accordance with the 
terms of the agreement with the 
third party, 
we would be 
 required to fund 
the commitment. 
If the commitment 
is funded, we 
would be entitled 
to seek recovery 
from the client 
from 
 the underlying collateral, 
which can include 
commercial real estate, 
physical plant and 
property, inventory, receivables, cash 
 or marketable securities. 

 
 
 Table of Contents 
 

 

 49 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 

 Asset and Liability Management Committee 
 Members 
of 
senior 
management 
and 
our 
Board 
make 
up 
the 
asset 
and 
liability 
management 
committee, 
or 
ALCO. 
 Senior management 
is responsible 
for ensuring 
that Board 
approved strategies 
and policies 
for managing 
and mitigating 
 risks are appropriately executed within the designated lines of 
authority and responsibility in a timely manner. 
 ALCO 
oversees 
the 
establishment, 
approval, 
implementation, 
and 
review 
of 
interest 
rate 
risk, 
management, 
and 
 mitigation strategies, ALM related policies, ALCO procedures 
and risk tolerances and appetite. 
 While some degree of 
IRR (“Interest Rate 
Risk”) is inherent to 
the banking business, we 
believe our ALCO implemented 
 sound risk management practices to identify, 
quantify, 
monitor, and limit IRR exposures. 
 When assessing 
the scope 
of IRR 
exposure 
and 
impact on 
the consolidated 
balance sheet, 
cash 
flows and 
income 
 statement, 
management 
considers 
both 
earnings 
and 
economic 
impacts. 
Asset 
price 
variations, 
deposit 
volatility 
and 
 reduced earnings or outright losses could adversely affect 
the Company’s liquidity, 
performance, and capital adequacy. 
 Income simulations 
are used 
to assess 
the impact 
of changing 
rates on 
earnings under 
different rates 
scenarios and 
 time horizons. 
These simulations 
utilize both 
instantaneous and 
parallel changes 
in the 
level of 
interest rates, 
as well 
as 
 non-parallel changes such as 
changing slopes (flat and steepening) 
and twists of the yield curve. 
Static simulation models 
 are based on current exposures and assume a constant balance sheet with no new growth. Dynamic simulation analysis is 
 also utilized to have a more comprehensive assessment on IRR. This 
simulation relies on detailed assumptions outlined in 
 our 
budget 
and 
strategic 
plan, 
and 
in 
assumptions 
regarding 
changes 
in 
existing 
lines 
of 
business, 
new 
business, 
 management strategies and client expected behavior. 
 To 
have 
a 
more 
complete 
picture 
of 
IRR, 
the 
Company 
also 
evaluates 
the 
economic 
value 
of 
equity 
(“EVE”). 
This 
 assessment 
allows 
us 
to 
measure 
the 
degree 
to 
which 
the 
economic 
values 
will 
change 
under 
different 
interest 
rate 
 scenarios (parallel and non-parallel). The economic value approach focuses on a longer-term time horizon and captures all 
 future cash flows expected 
from existing assets and 
liabilities. The economic value 
model utilizes a static 
approach in that 
 the analysis 
does not 
incorporate new 
business; rather, 
the analysis 
shows a 
snapshot in 
time of 
the risk 
inherent in 
the 
 balance sheet.
 Market and Interest Rate Risk Management 
 According to our 
ALCO model, as of 
September 30, 2023, 
we had an asset 
sensitive balance sheet 
both for year one 
 and two 
modeling, 
using the 
static modeling. 
Asset sensitivity 
indicates 
that 
our assets 
generally reprice 
faster 
than our 
 liabilities, which results in a favorable impact to net interest income when market interest rates 
increase. Liability sensitivity 
 indicates that our 
liabilities generally reprice faster 
than our assets, 
which results in 
a favorable impact 
to net interest 
income 
 when market interest rates decrease. 
Many assumptions are used 
to calculate the impact of interest 
rate variations on our 
 net interest income, 
such as asset 
prepayment speeds, non-maturity 
deposit price sensitivity, 
pricing correlations, deposit 
 truncations and decay rates, and key interest rate drivers. 
 Because of the inherent use 
of these estimates and 
assumptions in the model, 
our actual results may, 
and most likely 
 will, differ from static measures results. 
In addition, static measures like EVE 
do not include actions that management 
may 
 undertake to manage the risks in response to anticipated changes in interest rates or client deposit behavior. As part of our 
 ALM strategy 
and 
policy, 
management 
has the 
ability 
to modify 
the 
balance sheet 
to 
either increase 
asset 
duration 
and 
 decrease liability 
duration to reduce 
asset sensitivity, 
or to decrease 
asset duration and 
increase liability duration 
in order 
 to increase asset sensitivity. 
 According to our 
model, as of September 
30, 2023, our balance 
sheet is asset 
sensitive for both year 
one and two 
under 
 interest static rate 
scenarios (an increase 
or decrease of 
400 basis points). 
This means than 
if rates increase the 
NIM will 
 increase and if rates decrease the NIM will decrease. Additionally, utilizing an EVE approach, we analyze the risk to capital 
 from 
the 
effects 
of 
various 
interest 
rate 
scenarios 
through 
a 
long-term 
discounted 
cash 
flow 
model. 
This 
measures 
the 
 difference 
between 
the 
economic 
value 
of 
our 
assets 
and 
the 
economic 
value 
of 
our 
liabilities, 
which 
is 
a 
proxy 
for 
our 
 liquidation value. 
According to 
our balance 
sheet composition, 
and as 
expected, our 
model stipulates 
that an 
increase in 
 interest rates will have a 
negative impact on the EVE and 
lower rates, a positive impact. 
Results and analysis are presented 
 quarterly to the ALCO, and strategies are reviewed and refined. 

 
 
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 50 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Liquidity 
 Liquidity is defined 
as a Company’s 
capacity to meet 
its cash and 
collateral obligations at 
a reasonable cost. 
Maintaining 
 an adequate level of liquidity depends on the Company’s ability to 
efficiently meet both expected and unexpected cash flow 
 and collateral needs without adversely affecting 
either daily operations or the financial condition of the 
Company. 
 Liquidity risk 
is the 
risk that 
we will 
be unable 
to meet 
our short-term 
and long-term 
obligations as 
they become 
due 
 because of an inability 
to liquidate assets or 
obtain relatively adequate funding. The 
Company’s obligations, and the funding 
 sources 
used 
to 
meet 
them, 
depend 
significantly 
on 
our 
business 
mix, 
balance 
sheet 
structure 
and 
composition, 
credit 
 quality of our assets and the cash flow profiles of our on- 
and off-balance sheet obligations. 
 In managing 
inflows and 
outflows, 
management 
regularly 
monitors situations 
that can 
give rise 
to increased 
liquidity 
 risk. These 
include funding 
mismatches, market 
constraints on 
the ability 
to convert 
assets (particularly 
investments) into 
 cash or in accessing sources of funds (i.e., market liquidity), 
and contingent liquidity events. 
 Changes in macroeconomic conditions, as well as exposure 
to credit, market, operational, legal and reputational 
risks, 
 such as 
cybersecurity risk, 
could have 
an unexpected 
impact on 
the Company’s 
liquidity risk 
profile and 
are factored 
into 
 the assessment of liquidity and the ALM framework. 
 Management has established 
a comprehensive and 
holistic management process for 
identifying, measuring, monitoring 
 and 
mitigating 
liquidity 
risk. 
Due 
to 
its 
critical 
importance 
to 
the 
viability 
of 
the 
Company, 
liquidity 
risk 
management 
is 
 integrated into our risk management processes, Contingency 
Funding Plan and ALM policy. 
 Critical elements of our liquidity 
risk management include: effective corporate governance consisting of 
oversight by the 
 Board and active 
involvement of senior 
management; appropriate strategies, policies, 
procedures, and limits 
used to identify 
 and mitigate liquidity risk; comprehensive liquidity risk measurement and 
monitoring systems (including assessments of the 
 current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and 
business 
 activities of 
the Company; 
active management 
of intraday 
liquidity and 
collateral; an 
appropriately diverse 
mix of 
existing 
 and 
potential 
future 
funding 
sources; 
adequate 
levels 
of 
highly 
liquid 
marketable 
securities 
free 
of 
legal, 
regulatory, 
or 
 operational 
impediments, 
that 
can 
be 
used 
to 
meet 
liquidity 
needs 
in 
stressful 
situations; 
comprehensive 
contingency 
 funding plans 
that sufficiently address 
potential adverse liquidity 
events and emergency 
cash flow 
requirements; and internal 
 controls 
and 
internal 
audit 
processes 
sufficient 
to 
determine 
the 
adequacy 
of 
the 
institution’s 
liquidity 
risk 
management 
 process. 
 We 
expect 
funds 
to 
be 
available 
from 
several 
basic 
banking 
activity 
sources, 
including 
the 
core 
deposit 
base, 
the 
 repayment and maturity of loans and investment security 
cash flows. Other potential funding sources include 
federal funds 
 purchased, brokered 
certificates of 
deposit, listing 
services certificates 
of deposit, 
the Bank 
Term 
Funding Program, 
FRB 
 Atlanta discount 
window, 
and borrowings 
from the 
FHLB. Accordingly, 
we believe 
our liquidity 
resources are 
adequate to 
 fund loans and meet other cash needs as necessary. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 51 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Capital Adequacy 
 As of 
September 30, 
2023, the 
Bank was 
well capitalized 
under the 
FDIC’s 
prompt corrective 
action framework. 
We 
 also follow the capital conservation buffer framework, and 
as of September 30, 2023, we exceeded the 
capital conversation 
 buffer in 
all capital ratios, 
according to 
our actual ratios. 
The following table 
presents the capital 
ratios for 
the Bank at 
the 
 dates indicated (in thousands, 
except ratios). 
 Actual
 Minimum Capital 
 Requirements 
 To be Well Capitalized 
 Under Prompt Corrective 
 Action Provisions
 Amount
 Ratio
 Amount
 Ratio
 Amount
 Ratio
 September 30, 2023
 Total 
risk-based capital
 $
 230,801
 13.06
 %
 $
 141,327
 8.00
 %
 $
 176,659
 10.00
 %
 Tier 1 risk-based capital
 $
 210,815
 11.93
 %
 $
 105,995
 6.00
 %
 $
 141,327
 8.00
 %
 Common equity tier 1 capital
 $
 210,815
 11.93
 %
 $
 79,496
 4.50
 %
 $
 114,828
 6.50
 %
 Leverage ratio
 $
 210,815
 9.24
 %
 $
 91,310
 4.00
 %
 $
 114,138
 5.00
 %
 December 31, 2022:
 Total 
risk-based capital
 $
 216,693
 13.58
 %
 $
 127,616
 8.00
 %
 $
 159,520
 10.00
 %
 Tier 1 risk-based capital
 $
 198,909
 12.47
 %
 $
 95,712
 6.00
 %
 $
 127,616
 8.00
 %
 Common equity tier 1 capital
 $
 198,909
 12.47
 %
 $
 71,784
 4.50
 %
 $
 103,688
 6.50
 %
 Leverage ratio
 $
 198,909
 9.56
 %
 $
 83,210
 4.00
 %
 $
 104,012
 5.00
 %
 The Company is 
not subject to 
regulatory capital ratios 
imposed by Basel 
III on bank 
holding companies because 
the 
 Company is deemed to be a small bank holding company. 
 

 Impact of Inflation 
 Our 
Consolidated 
Financial 
Statements 
and 
related 
notes 
have 
been 
prepared 
in 
accordance 
with 
U.S. 
GAAP, 
 which require the measurement of financial 
position and operating results in terms 
of historical dollars, without considering 
 the changes in the 
relative purchasing power 
of money over time 
due to inflation. The 
impact of inflation is 
reflected in the 
 increased cost of operations. 
Unlike most industrial companies, 
nearly all our assets and 
liabilities are monetary in 
nature. 
 As a result, 
interest rates have a 
greater impact on our 
performance than do the 
effects of general levels 
of inflation. Periods 
 of high inflation 
are often accompanied 
by relatively higher 
interest rates, and 
periods of low 
inflation are accompanied 
by 
 relatively lower interest rates. 
As market interest rates 
rise or fall in relation 
to the rates earned 
on loans and investments, 
 the 
value 
of 
these 
assets 
decreases 
or 
increases 
respectively. 
Inflation 
can 
also 
impact 
core 
non-interest 
expenses 
 associated with delivering the Company’s servi 
ces. 
 Recently Issued Accounting Pronouncements
 

 Recently issued accounting 
pronouncements are discussed 
in Note 1 “Summary 
of Significant Accounting Policies” 
to 
 the unaudited Consolidated Financial Statements in this 
Form 10-Q.

 
 
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 52 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Reconciliation and Management Explanation of Non 
-GAAP Financial Measures 
 Management 
has 
included 
these 
non-GAAP 
measures 
because 
it 
believes 
these 
measures 
may 
provide 
useful 
 supplemental information 
for evaluating 
the Company’s 
underlying performance 
trends. Further, 
management uses 
these 
 measures 
in 
managing 
and 
evaluating 
the 
Company’s 
business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
 operations and performance. 
Operating performance 
measures should be 
viewed in addition 
to, and not 
as an alternative 
 to or 
substitute 
for, 
measures 
determined 
in 
accordance 
with 
GAAP, 
and 
are 
not 
necessarily 
comparable 
to non-GAAP 
 measures that may be presented by other 
companies. The following table reconciles the non-GAAP financial measurement 
 of operating net income available to common stockholders for the periods presented (in thousands, 
except per share data):

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 53 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 USCB FINANCIAL HOLDINGS, INC.
 NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 (Dollars in thousands)
 As of or For the Three Months Ended
 9/30/2023
 6/30/2023
 3/31/2023
 12/31/2022
 9/30/2022
 Pre-tax pre-provision ("PTPP") income:
 (1)
 Net income
 $
 3,819
 $
 4,196
 $
 5,809
 $
 4,434
 $
 5,558
 Plus: Provision for income taxes
 1,250
 1,333
 1,881
 1,415
 1,963
 Plus: Provision for credit losses
 653
 38
 201
 880
 910
 PTPP income
 $
 5,722
 $
 5,567
 $
 7,891
 $
 6,729
 $
 8,431
 PTPP return on average assets:
 (1)
 

 

 PTPP income
 $
 5,722
 $
 5,567
 $
 7,891
 $
 6,729
 $
 8,431
 Average assets
 $
 2,250,258
 $
 2,183,542
 $
 2,120,218
 $
 2,051,867
 $
 2,026,791
 PTPP return on average assets 
 (2)
 1.01%
 1.02%
 1.51%
 1.30%
 1.65%
 

 

 Operating net income:
 (1)
 Net income
 $
 3,819
 $
 4,196
 $
 5,809
 $
 4,434
 $
 5,558
 Less: Net gains (losses) on sale of securities
 (955)
 -
 (21)
 (1,989)
 (558)
 Less: Tax effect on sale of securities
 242
 -
 5
 504
 141
 Operating net income
 $
 4,532
 $
 4,196
 $
 5,825
 $
 5,919
 $
 5,975
 

 

 Operating PTPP income:
 (1)
 PTPP income
 $
 5,722
 $
 5,567
 $
 7,891
 $
 6,729
 $
 8,431
 Less: Net gains (losses) on sale of securities
 (955)
 -
 (21)
 (1,989)
 (558)
 Operating PTPP income
 $
 6,677
 $
 5,567
 $
 7,912
 $
 8,718
 $
 8,989
 Operating PTPP return on average assets:
 (1)
 

 

 Operating PTPP income
 $
 6,677
 $
 5,567
 $
 7,912
 $
 8,718
 $
 8,989
 Average assets
 $
 2,250,258
 $
 2,183,542
 $
 2,120,218
 $
 2,051,867
 $
 2,026,791
 Operating PTPP return on average assets 
 (2)
 1.18%
 1.02%
 1.51%
 1.69%
 1.76%
 

 

 Operating return on average assets:
 (1)
 Operating net income
 $
 4,532
 $
 4,196
 $
 5,825
 $
 5,919
 $
 5,975
 Average assets
 $
 2,250,258
 $
 2,183,542
 $
 2,120,218
 $
 2,051,867
 $
 2,026,791
 Operating return on average assets 
 (2)
 0.80%
 0.77%
 1.11%
 1.14%
 1.17%
 Operating return on average equity:
 (1)
 Operating net income
 $
 4,532
 $
 4,196
 $
 5,825
 $
 5,919
 $
 5,975
 Average equity
 $
 184,901
 $
 184,238
 $
 183,371
 $
 177,556
 $
 185,288
 Operating return on average equity 
 (2)
 9.72%
 9.13%
 12.88%
 13.23%
 12.79%
 Operating Revenue:
 (1)
 
Net interest income
 $
 14,022
 $
 14,173
 $
 15,997
 $
 16,866
 $
 16,774
 
Plus: Non-interest income
 2,161
 1,846
 2,070
 (123)
 1,789
 
Less: Net gains (losses) on sale of 
securities
 (955)
 -
 (21)
 (1,989)
 (558)
 
Operating revenue
 $
 17,138
 $
 16,019
 $
 18,088
 $
 18,732
 $
 19,121
 

 Operating Efficiency Ratio:
 (1)
 
Total non-interest expense
 $
 10,461
 $
 10,452
 $
 10,176
 $
 10,014
 $
 10,132
 
Operating revenue
 $
 17,138
 $
 16,019
 $
 18,088
 $
 18,732
 $
 19,121
 
Operating efficiency ratio
 61.04%
 65.25%
 56.26%
 53.46%
 52.99%
 (1) 
The Company believes these non-GAAP measurements 
are key indicators of the ongoing earnings 
power of the Company.
 (2) 
Annualized.
 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 54 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 USCB FINANCIAL HOLDINGS, INC.
 NON-GAAP FINANCIAL MEASURES (UNAUDITED)
 (Dollars in thousands, except per share data)
 As of or For the Three Months Ended
 9/30/2023
 6/30/2023
 3/31/2023
 12/31/2022
 9/30/2022
 Tangible book value per common share (at period-end):
 (1)
 Total stockholders' equity
 $
 182,884
 $
 183,685
 $
 183,858
 $
 182,428
 $
 177,417
 Less: Intangible assets
 -
 -
 -
 -
 -
 Tangible stockholders' equity
 $
 182,884
 $
 183,685
 $
 183,858
 $
 182,428
 $
 177,417
 Total shares issued and outstanding (at period-end):
 Total common shares issued and outstanding
 19,544,777
 19,622,380
 19,622,380
 20,000,753
 20,000,753
 Tangible book value per common share
 (2)
 $
 9.36
 $
 9.40
 $
 9.37
 $
 9.12
 $
 8.87
 Operating diluted net income per common share:
 (1)
 Operating net income
 $
 4,532
 $
 4,196
 $
 5,825
 $
 5,919
 $
 5,975
 Total weighted average diluted shares of common stock
 19,611,897
 19,639,682
 19,940,606
 20,172,438
 20,148,208
 Operating diluted net income per common share:
 $
 0.23
 $
 0.21
 $
 0.29
 $
 0.29
 $
 0.30
 Tangible Common Equity/Tangible Assets
 (1)
 
Tangible stockholders' equity
 $
 182,884
 $
 183,685
 $
 183,858
 $
 182,428
 $
 177,417
 
Tangible assets
 $
 2,244,602
 $
 2,225,914
 

 $
 2,163,821
 $
 2,085,834
 $
 2,037,453
 Tangible Common Equity/Tangible 
Assets
 8.15%
 8.25%
 8.50%
 8.75%
 8.71%
 (1) 
The Company believes these non-GAAP measurements 
are key indicators of the ongoing earnings 
power of the Company.
 (2) 
Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise 
of outstanding stock options.

 
 
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 55 
USCB Financial Holdings, Inc. 
Q3 2023 Form 10-Q 
 Item 3. 
Quantitative and Qualitative Disclosures About Market Risk 
 
 As a smaller reporting company, 
we are not required to provide the information required 
by this item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
USCB FINANCIAL HOLDINGS, INC. 10-Q

Item 2. Management’s Discussion and Analysis
