What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-22 compared with 2023-03-24 · 952 added, 860 removed, 911 unchanged (67% of the section changed)

1 unchanged sentence

and Results of Operations

financial condition and results of operations of the Company and the

Bank, its wholly owned subsidiary, for the years ended

December 31, 2022

This discussion

conjunction with

the Consolidated

Statements and related footnotes

of our Company presented

in Item 8 “Financial

Statements and Supplementary

financial condition and results of operations of the Company and

the Bank, its wholly owned subsidiary, for the years ended

Statements and related

footnotes of the Company

presented in Item

8 “Financial Statements

and Supplementary Data”

this Annual Report on Form

6 unchanged sentences

Statements" and Item 1A “Risk Factors" of this Annual Report.

In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,”

“us,”, and “our” refer to

In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,” “us,”, and “our” refer to

the Company and the Bank, as

3 unchanged sentences

the terms refer only to the Bank.

Forward-Looking Statements

USCB Financial Holdings, Inc.

CAUTIONARY NOTE REGARDING FORWARD

-LOOKING STATEMENTS

hereby identified as, forward-looking

2 unchanged sentences

Section 21E of the Securities

“anticipate,”

“may,” “will,” “anticipate,” “could,”

“should,” “would,” “believe,”

“contemplate,”

6 unchanged sentences

operations and financial

condition from

expected developments

condition from expected

or events, or business and growth strategies, including

3 unchanged sentences

Potential risks and uncertainties include, but are not

local economies

our employees,

and third-party

ultimate extent of the impact of the pandemic and related

government stimulus programs;

the strength of the United States economy

in general and the strength of the local

economies in which we conduct

our ability to successfully manage interest rate risk, credit

risk, liquidity risk, and other risks inherent to our

our financial

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 environment;

the efficiency and effectiveness of our

internal control environment;

extensive laws

and regulations

subject, including

jurisdiction where we operate;

legislative or

regulatory changes

banking industry;

deposit attrition and the level of our uninsured deposits;

legislative or regulatory

changes and changes

in accounting

principles, policies,

guidelines, including

effects of the implementation of the Current Expected

Credit Losses (“CECL”) standard on January 1, 2023;

the effects of our lack of a diversified loan portfolio and concentration in the South Florida market, including the risks of

geographic, depositor, and

industry concentrations, including our concentration in loans

secured by real estate;

effects of climate change;

practices or guidelines,

the on-going effects of the implementation of CECL;

the lack of a significantly diversified loan portfolio and concentration in the South Florida market, including the risks

of geographic, depositor,

and industry concentrations,

including our concentration

in loans secured by

in particular, commercial real estate;

the effects of climate change;

the concentration of ownership of our common stock;

fluctuations in the price of our Class A common

at attractive

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 potential monetary fluctuations;

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 margin;

effectiveness

employee, or third-party fraud and security breaches;

other risks described in this Annual Report and other

filings we make with the SEC.

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 cybersecurity breaches;

other risks described in this Annual Report on Form 10-K

and other filings we make with the SEC.

forward-looking

actual results will

materially from

expectations.

you are cautioned

undue reliance on

materially from expectations.

Therefore, you are

cautioned not to

place undue reliance

forward-looking

1 unchanged sentence

Annual Report

events or circumstances after the date on which the statement is made or to reflect the

occurrence of unanticipated events,

unless required to do

so under the federal

securities laws.

should also review

the risk factors

described herein and in

USCB Financial Holdings, Inc.

the reports the Company filed or will file with the SEC and, for periods

prior to the completion of the bank holding company

reorganization in December 2021, the Bank filed with the FDIC

events or circumstances after the date on which the statement is made or to

reflect the occurrence of unanticipated events,

unless required to do so under

the federal securities laws.

should also review the risk

factors described in this Annual

Report on Form 10-K

and in the reports the

Company filed or will file

with the SEC and, for

periods prior to the completion

of the bank holding company reorganization, the Bank

filed with the FDIC.

Non-GAAP Financial Measures

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as an alternative

USCB Financial Holdings, Inc.

reconciliations

6 unchanged sentences

$20.1 million for the year ended December 31,

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

The following significant highlights are of note for the

year ended December 31, 2022:

income before

provision for

credit losses

totaled $63.7 million,

deposits, growth

and composition

loan portfolio,

composition of

non-interest income

and non-interest

quality ratios,

The following significant highlights are of note for the year

ended December 31, 2023:

compared to $63.7 million for the year ended December

Net interest margin (“NIM”) was 3.38% for the year ended

December 31, 2022 and 3.26% for the year ended 2021.

The yield on earning assets increased to 3.78% for 2022, compared

to 3.52% for 2021.

December 31, 2022.

of interest-bearing

December 31, 2021 as a result of the increase in market

interest rates.

December 31, 2022.

The weighted average cost of interest-bearing liabilities increased to 3.07% for the year ended December 31, 2023

from 0.66% in December 31, 2022 as a result of the increase

in market interest rates.

Return on average assets for the year ended December

31, 2023 was 0.75% compared to 1.01% in 2022.

Return on average

stockholders’

equity for the

year ended December 31,

10.73% compared to

Nonperforming assets was $0.0 for the year ended December

31, 2022 compared to $1.2 million at December

Return on average stockholders’ equity for the year ended December 31, 2023 was 8.99% compared to 10.73% in

Nonperforming assets was $468 thousand at December

31, 2023 compared to $0 at December 31, 2022.

The Company maintained its strong capital position.

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a total risk-based capital ratio of

a tier 1 risk-based capital ratio of

12.53%, a common equity tier 1 capital

our regulatory

ratios exceeded the thresholds to be well-capitalized under the

applicable bank regulatory requirements.

The Company became the parent bank

holding company of the Bank effective

December 30, 2021.

Each share of

of the Company trade under ticker symbol “USCB” on the Nasdaq

Stock Market.

12.65%, a tier 1 risk-based

capital ratio of 11.48%, a common

equity tier 1 capital

capital ratios exceeded the thresholds to be well-capitalized

under the applicable bank regulatory requirements.

During the year

ended December 31,

2023, the Company

repurchased 669,920 shares

of Class A common stock

approximately

purchases pursuant to the Company’s publicly announced

repurchase program.

As of December 31, 2023, 80,080

shares remained authorized for repurchase under this

Instruments - Credit Losses (Topic 326) to calculate the ACL.

The Company brought in $50 million of brokered CDs at a weighted average rate of 4.98%

to boost liquidity during

the second quarter of 2023.

The CDs renewed in Q1 2024 at weighted

interest swap

with a notional

fix interest rate funding.

The Company executed four fair

value interest swaps with a

notional value of $200 million

to manage exposure to

interest rate risk by reducing the loan portfolio duration.

USCB Financial Holdings, Inc.

19 unchanged sentences

the application

Allowance for Credit Losses

risk committee

Allowance for Credit Losses - Loans

The allowance for credit

3 unchanged sentences

to earnings in the

provision for credit

is affected by

the following:

charge-offs of loans

that decrease

a provision for

credit losses.

amount of the

affected by the

(i) charge-offs

of loans that

the allowance;

6 unchanged sentences

Management considers the policies related to

most critical

financial statement

presentation.

includes activity

calculated in accordance with Accounting Standards Codification (“ASC”)

310, Receivables, and ASC 450, Contingencies.

Throughout the year,

management estimates the probable

incurred losses in the loan portfolio

to determine if the ACL

is adequate to absorb such losses.

consists of specific and general components.

The specific component relates

to loans that are

individually classified as

a loan review program

to evaluate the credit

risk in the loan

been identified

quarterly basis

specific reserve is

general component covers

non-impaired loans

on industry and

historical loan

loss experience,

volume, growth

and composition

loan portfolio,

the evaluation

loan portfolio

process, general

conditions both

affect the borrower’s ability to pay,

value of collateral and other qualitative relevant risk factors.

Based on a review

estimates, we

adjust the ACL

level determined by

management to be

credit losses

are inherently

subjective as they involve an exercise of judgment.

Appropriations

modifications executed

between March 1,

termination of

emergency declared by President Trump and (ii) January 1, 2022, on loans

that were current as of December 31, 2019,

Additionally,

under guidance from the federal banking agencies,

other short-term modifications made on a good

current prior

Restructurings

modifications

insignificant.

The Company’s charge-off

policy is to continuously review all impaired loans to monitor the Company’s ability

to collect them in full at the applicable maturity date and/or in

accordance with terms of any restructurings.

are collateral dependent,

be uncollectible, any

shortfall in the

fair value of

the collateral relative

to the recorded

in the loan is charged off.

The amount charged-off

conforms to the amount necessary to comply with GAAP.

the ACL as the most critical to the financial statement presentation.

Measurement of Credit Losses on Financial Instruments, as amended.

This update replaces the incurred

loss methodology

amortized cost,

including loan

receivables and

held-to-maturity debt

to off-balance

guarantees, and similar instruments), as

well as net investments in leases

recognized by lessors in accordance

842 on leases.

Under CECL, the Company estimates the allowance for credit losses by utilizing pertinent available data, sourced both

internally and

current conditions,

and reasonable

and supportable

The estimation's

quantitative aspect

the statistical

correlation between

the anticipated

indicator and the

historical loss

experience implied

selected group

The Company conducted

analyses using

itself, where

observed credit

losses and chosen

economic indicators

were utilized to identify

appropriate drivers for

modeling the lifetime

probability of default (“PD”)

rate (“LGD”) is assigned to each pool

of loans for each period based on

these PD outcomes.

primarily employs

discounted cash

segments within

loan-specific

segment-specific

ascertain the lifetime expected

loss associated with each

An implicit "hypothetical

loss" is determined for

period of the DCF,

aiding in establishing the

present value of future

cash flows for each

The reserve allocated

particular loan represents the disparity

between the sum of the

present value of future cash

flows and the book balance

the loan at the measurement date.

Management opted for the Remaining Life (“WARM”) methodology for five segments within the loan portfolio.

Qualitative assessments

are conducted

to adjust for

economic expectations.

estimate the remaining

life, management

employed a software solution utilizing an attrition-based calculation.

This software conducts quarterly cohort-based attrition

measurements based on the loan portfolio.

similarity of

risk characteristics inherent

included instruments, based

on collateral

FFIEC Call Report

the Company segments

the portfolio based on

collateral codes to establish

characteristics.

established connections between

internal segmentation and

FFIEC Call Report

codes for this purpose.

The loss driver

USCB Financial Holdings, Inc.

Reserve Bank projections

civilian unemployment

rate and year-over-year

real GDP growth.

For the residential

loan segment, House Price

Index (“HPI”) projections published

by Fannie Mae’s

Economic and Strategic Research

are utilized for

the forecast.

Forecasts are

applied for the

first four quarters

of the credit

loss estimate and

then linearly revert

to the historical mean of the economic indicator over the expected

life of the loans.

The model integrates qualitative

factor adjustments to

fine-tune risk calibration

for each portfolio

segment, addressing

aspects that quantitative analysis may

not fully capture.

Decisions concerning

qualitative adjustments reflect management's

anticipation of loss conditions deviating from those already accounted

for in the quantitative aspect of the model.

included residential

potential impact

in qualitative

factors related

a sensitivity

in calculating

expected losses on the residential loan segment.

As of December 31, 2023, for every

100 basis points increase in the HPI

index, the forecast reduces

reserves by approximately $150

thousand and about 1

basis point to

the reserve coverage ratio,

everything else being

sensitivity analysis provides

a hypothetical result

to assess the

sensitivity of the

and does not represent a change in management’s

As of December

qualitative factors

in our commercial

largest segment

evaluated the

qualitative factors

allowance for credit losses.

This sensitivity analysis

provides a hypothetical result

to assess the sensitivity

of the ACL and

does not represent a change in management’s judgement.

The Company calculates a reserve for unfunded commitments, distinct from

the allowance for credit losses reported in

other liabilities.

is determined

quantitative and

qualitative factors

those applied

collectively evaluated loan portfolio.

liabilities are

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and tax credit carryforwards.

tax assets and liabilities are measured

using enacted tax rates expected to

assets and liabilities are measured

using enacted tax rates expected

taxable income

7 unchanged sentences

considers taxable loss

carry-back availability, expectation of sufficient taxable

income, trends in

earnings, the future

carry-back availability, expectation of sufficient

taxable income, trends

in earnings, the

future reversal

of temporary differences, and available tax planning

USCB Financial Holdings, Inc.

The Company recognizes positions taken

5 unchanged sentences

and measurement

and penalties on

tax liabilities, if any,

would be recorded in interest expense and other operating

non-interest expense, respectively.

Other than temporary impairment

subordination, duration, the Company's ability to hold the debt security, and the ability of the issuers to pay all amounts

internal review procedures

and the fair values

provided by the pricing

services, we believe that

the fair values provided

consistent with

the principles

times validate the

observed prices using

the observed prices

for similar securities

to determine the

fair value of

its securities.

Changes in the fair values, as

a result of deteriorating economic conditions

and credit spread changes, should only

principal and interest

payments from

its securities portfolio,

risk that losses

would be realized

need to sell securities to obtain liquidity.

and penalties

tax liabilities, if any, would

be recorded in interest expense and other operating non-interest

expense, respectively.

Segment Reporting

Management monitors the revenue streams for

all its various products and services.

The identifiable segments

Management monitors the revenue streams for all its various

products and services.

The identifiable segments are not

Accordingly, all

1 unchanged sentence

operations are

considered by

management to be

considered by management

aggregated in one

reportable operating

USCB Financial Holdings, Inc.

Results of Operations

The following

tables present

selected balance

sheet, income

statement, and

profitability ratios

dates indicated

(in thousands, except ratios):

The following tables

present selected balance sheet, income statement, and profitability ratios for the dates and for the

periods indicated (in thousands, except ratios):

As of December 31,

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non-interest expense

Net income (loss) available to common stockholders

Net income available to common stockholders

Profitability:

2 unchanged sentences

The Company’s results

of operations depend

substantially on net

interest income and

non-interest income.

of operations

depend substantially on

net interest income

and non-interest income.

Other factors

contributing to the

5 unchanged sentences

income taxes.

USCB Financial Holdings, Inc.

December 31, 2023

4 unchanged sentences

December 31, 2023

$1.00 compared

loss per diluted

period in 2021

diluted share

year ended 2021 was

attributable to the one-time

reduction in net income

available to common stockholders

reflecting the

remaining outstanding

preferred shares,

liquidation value

that exceeded

one-time reduction

net income available

to common stockholders

of $89.6 million.

At December 31, 2022,

there were no

issued and outstanding

preferred shares.

compared to adjusted net income per diluted share (non-GAAP) for the same period in 2021 of $1.81.

Adjusted net income

$89.6 million

exchange and redemption of the

preferred shares.

a reconciliation of non-GAAP

to GAAP measures refer

to section below “Reconciliation and Management Explanatio

of Non-GAAP Financial Measures”.

$0.84 compared to net income per diluted share for the

same period in 2022 of $1.00.

Net Interest Income

the difference

between interest

interest-earning

interest incurred

bearing liabilities

interest-bearing liabilities and

primary driver of

core earnings.

generated from

income is generated

from interest and

interest-earning

13 unchanged sentences

Net interest spread is

to the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities.

the annualized

average interest

to the difference

between the weighted

average yields

earned on interest

-earning assets

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 benefit of these non-interest-bearing

interest rates and

and the weighted

average rates

interest-bearing

interest margin

interest-earning

non-interest-bearing

stockholders’ equity, also fund

interest-earning assets, net interest margin includes

the benefit of these

non-interest-bearing

interest rates

2 unchanged sentences

liabilities, as well

as the volume and

types of interest-earning

assets and interest-bearing and

non-interest-bearing liabilities,

as the volume

interest-earning assets and interest-bearing

and non-interest-bearing liabilities,

are usually the

4 unchanged sentences

and net interest

ALCO has in place

asset-liability management techniques

to manage major

factors that affect

net interest income

interest margin.

Asset-Liability Committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect

net interest income and net interest margin.

USCB Financial Holdings, Inc.

24 unchanged sentences

Net interest margin

Average balances - Daily average balances are used

to calculate yields/rates.

Average loan balances include non-accrual loans.

4 unchanged sentences

This amount includes

Net interest spread is the average yield on

total interest-earning assets minus the average

rate on total interest-bearing liabilities.

Net interest spread is the weighted average

yield on total interest-earning assets minus the weighted

average rate on total interest-bearing liabilities.

Net interest margin is the ratio of net interest

income to total interest-earning assets.

Net interest income before the provision

for credit losses was $63.7

million for the year ended December

increase of $11.2 million

or 21.3%, from

$52.5 million for the

year ended December 31,

This increase

was primarily

attributable to higher income from a larger loan portfolio and

higher yield on earning assets.

Included with loan interest income are PPP fees totaling $1.6 million and $4.5 million for the

year ended December 31,

2022 and 2021, respectively.

PPP loan fees are fully recognized upon forgiveness.

As of December 31, 2022, we had

million of PPP loans remaining in our portfolio.

interest margin

December 31, 2022

overall and individual

yields for interest-bearing

assets and interest

-bearing liabilities

both increased in

2022 compared to

2021 due primarily to increases

in market rates of interest.

income to average total interest-earning assets.

income before

the provision

$58.6 million for

ended December 31,

$5.1 million or

$63.7 million for

ended December 31,

attributable to higher

cost of funds

due to the interest

The increase in

weighted average rates

paid on cost of

funds was greater than the increase in weighted average yields

earned on interest-earning assets.

interest margin was

the year ended

December 31, 2023 and

year ended 2022.

and individual

interest-earning assets

and interest-bearing

liabilities both

greater increase

when compared

funds was primarily

Provision for Credit Losses

ACL represents

losses incurred

loan portfolio.

The ACL is increased

provision for

credit losses

determination of

and corresponding

provision for

ACL represents expected

credit losses

non-performing

considers statistical trends and economic conditions and other

applicable factors.

the measurement

adequate ACL that

decreased by charge-offs, net

of recoveries on prior

loan charge-offs.

multiple credit quality metrics

our determination

corresponding

credit metrics

credit quality

risk inherent

loan portfolio,

non-performing loans

offs levels, considers statistical trends and economic conditions

and other applicable factors.

Provision for credit loss for

the year ended December 31, 2023,

was $2.4 million compared to

$2.5 million in provision

expense for the same period in 2022.

The ACL as a percentage of total loans was 1.18% at December 31, 2023 compared

to 1.16% at December 31, 2022.

USCB Financial Holdings, Inc.

Provision for credit loss

for the year ended

December 31, 2022, was

$2.5 million compared to

a net reduction of

thousand in provision

the same period

primary driver of

the increase was

as a percentage of total loans was 1.16%

at December 31, 2022 compared to 1.27% at December

See “Allowance

further discussion on

calculated for

Losses” below

discussion on

was calculated for

Non-Interest Income

5 unchanged sentences

and products generate service charges and fees, mainly from our depository accounts.

We also generate income from gain

SBA programs.

we own insurance

on several employees

income reflecting the increase in the cash surrender value

generate income from gain

on sale of loans though our swap and SBA programs.

In addition, we own life insurance policies on several employees and

generate income reflecting 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):

income for the periods indicated (in thousands):

Years Ended December 31,

1 unchanged sentence

Gain on sale of loans held for sale, net

Gain on sale of premises and equipment, net

Loan settlement

2 unchanged sentences

Non-interest income

December 31, 2022

million compared

period in 2021.

This decrease was primarily driven by $2.5

million loss on sale of securities in 2022 and one-time items that

generated income in 2021 but not in 2022.

One-time items in 2021 include a $2.5 million interest recovery related to a prior

lending customer

owned building

restructuring

lower-yielding

available-for-sale

currently yielding higher than the securities that were sold.

primarily driven by

million increase in

service fees, consisting

mainly of wire

Additionally, in

both 2023 and 2022, the

Company executed a portfolio restructuring strategy

which resulted in the sale

of lower-yielding available-for-sale securities at a loss in

order to better position our securities portfolio.

The loss on the sale

reinvested in securities and loans yielding higher than the

securities that were sold.

Non-Interest Expense

The following table presents the components of non-interest

expense for the dates indicated (in thousands):

expense for the periods indicated (in thousands):

Years Ended December 31,

5 unchanged sentences

non-interest expense

Non-interest expense for

the year ended

Non-interest expense

December 31, 2023

increased $2.5 million

or 10.2%, compared

primarily due

employee benefit

$2.5 million for

December 31, 2022,

period in 2022.

The headcount

equivalent employees

operating expenses

increased $436

$403 thousand

respectively, during

2022 compared

The increase in salaries and employee

benefits, consulting and legal fees,

and other operating costs has

us to support recent growth

and has provided us

with the necessary technology and

required professionals to execute

growth strategy.

USCB Financial Holdings, Inc.

The increase is

primarily due to other operating expense specially in

the categories of internet banking fees,

promotional expense, audit

service fees, and

insurance expense due

activity and fees,

which increased

$1.1 million or 19.7%.

Regulatory assessment and fees increased by $523 thousand

or 56.2% compared to the year ended

Salaries and benefits increased by $486 thousand or 2.0%

due to increase in full time employees to 196 from 191

in salaries and

employee benefits

and other operating

enabled us to

support recent

and has provided us with the necessary technology and

required professionals to execute our growth strategy.

Provision for Income Tax

4 unchanged sentences

Changes in the

cash surrender

value of bank-owned

life insurance policies

for key employees,

purchasing municipal

cash surrender value

of bank-owned life

insurance policies for

key employees, purchasing

bonds, and overall taxable income will be important elements

1 unchanged sentence

$5.3 million,

to $6.6 million

ended December 31, 2022.

The effective

tax rate for the year

ended December 31, 2022 was 25.6%

and for the year

effective tax rate for

the year ended December 31, 2023

was 24.1% and for the

December 31, 2022 was 25.6%.

USCB Financial Holdings, Inc.

For a further discussion

on income taxes, see

Note 6 “Income Taxes”

to the Consolidated Financial

Note 6 “Income Taxes” to

the Consolidated Financial

Statements in this

11 unchanged sentences

rate-volume are proportionately allocated between rate and volume

variance (in thousands).

Years Ended 2023 vs.

18 unchanged sentences

At fair value except for securities held to maturity.

This amount includes FHLB

This amount includes

Both average yields on

interest earning assets

and average rates

paid on interest

bearing liabilities increased

as a compared to 2021, reflecting the changes in the

macro interest rate environment.

interest-earning assets and

average rates paid on

interest-bearing liabilities increased

as a compared to 2022, reflecting the changes in the macro

interest rate environment.

However, the average rates paid on

interest-bearing liabilities increased to a greater degree than

yields on interest-earning assets.

Analysis of Financial Condition

2 unchanged sentences

Total loans increased $273.5

$317.3 million,

December 31, 2022 compared

deferred fees.

Total deposits

increased by $238.9 million, or 15.0%, to $1.8 billion at December 31, 2022 compared to $1.6

billion at December 31, 2021.

at December 31,

2023 compared

to $1.5 billion

at December 31,

deposits increased

by $107.9 million,

$1.9 billion at

2023 compared to $1.8 billion at December 31, 2022.

Investment Securities

11 unchanged sentences

to maximize the Company’s profitability,

consideration the Company’s risk appetite and tolerance, manage the assets composition

and diversification, and maintain

consideration the

Company’s risk

tolerance, manage

composition and

diversification, and

adequate risk-based capital ratios.

USCB Financial Holdings, Inc.

investment guideline,

more frequently

conditions and/or

portfolio composition

subject to change

depending on the

funding and liquidity

Company, and the interest risk

management objective

directed by the ALCO.

The portfolio of investments can be used to modify the duration of

the balance sheet.

The allocation

securities takes

into consideration

anticipated future cash

and sources) and

all available sources

deemed necessary,

The investment

objectives directed by the ALCO.

The portfolio of investments can be used to modify the duration of the balance sheet.

allocation of cash into securities takes into consideration anticipated

future cash flows (uses and sources) and all available

sources of credit.

government-sponsored

4 unchanged sentences

debt securities,

USCB Financial Holdings, Inc.

all with varying contractual maturities and coupons.

8 unchanged sentences

The investment portfolio is regularly reviewed by the Chief Financial Officer,

an appropriate

return profile

investment policy.

Treasurer, and/or the ALCO of the Company to ensure an appropriate risk and return profile as

well as for adherence to the

Company’s investment policy.

As of December 31, 2023, the investment portfolio consisted of available-for-sale

(“AFS”) and held-to-maturity (“HTM”)

amortized cost basis

and fair value

amount of $74.4

million and $63.8

million, respectively.

securities had a total net unrealized loss of $10.6 million.

The transfer of the debt securities

from the AFS to HTM category

was made at fair value at the date of transfer.

The unrealized gain or loss at the date of transfer is retained

in accumulated

other comprehensive income (loss)

and in the carrying value

of the HTM securities.

Such amounts are amortized

remaining life

net income on

There were no

securities transferred

from AFS to HTM in 2023.

The book value of the AFS securities is adjusted quarterly for

unrealized gain or loss as a valuation allowance, and any

gain or loss is reported on an after-tax basis as a component of other comprehensive income (loss) in stockholders’ equity.

CECL requires

a loss reserve

for securities

classified as

Held-to-Maturity (HTM).

The reserve should

reflect historical

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

requirement is for

three primary assets

municipal bonds,

corporate bonds, and

securitizations.

ImpairmentStudio.

Moody’s baseline

economic forecast.

uses probability

of default/loss

given default (“PD/LGD”)

represents the likelihood a borrower will

Within the Moody’s model,

this is determined using historical

default data,

adjusted for the current economic environment.

the expected loss if a borrower were to default.

monitors the credit

quality of HTM

securities through the

credit ratings.

ratings are monitored

by the Company

a quarterly basis.

As of December

31, 2022, the investment portfolio consisted of available-for-sale (“AFS”) and held-to-maturity

debt securities.

During the third quarter of 2022, there were 26 investment securities that was

transferred from AFS to HTM

with an amortized cost basis and fair value amount

of $74.4 million and $63.8 million, respectively.

On the date of transfer,

these securities

unrealized loss

securities from

The unrealized

accumulated other

comprehensive income

over the remaining life of the security.

There was no impact to net income on the date of transfer.

The book value of the AFS securities is adjusted monthly

for unrealized gain or loss as a valuation allowance,

comprehensive

stockholders’

Periodically,

circumstances

indicate that

an unrealized

an other-than-temporary

basis (“OTTI”).

impairment is

be permanent,

would be made

considering many

factors, including

duration of the impairment, the severity

of the event, our intent and

ability to hold the security for

a period of time sufficient

value, recent

events specific

credit events,

debt securities,

deterioration

unrealized loss

the write-down

under line item

“Gain (loss) on

sale of securities

available-for-sale, net” of

the Consolidated Statements

of Operations.

has classified

Statements in this Annual Report on Form 10-K.

AFS and HTM investment securities

in aggregate decreased $105.4 million or 20.1%

to $418.8 million at December 31,

December 31, 2022,

all HTM securities

by the Company were rated investment grade.

At year ended

December 31, 2023,

HTM securities included $165.6

million of U.S.

Government and U.S.

Agency issued

mortgage-backed

explicit and/or

holds no reserves

remaining portion

in investment

For the portion of the HTM

exposed to non-government credit risk,

the Company utilized the PD/LGD

to estimate a $8 thousand ACL as of December 31,

The book value for debt securities classified

as HTM represents

amortized cost less ACL.

investment securities

decreased $14.5 million

to $404.3 million

at December 31,

2023 from $418.8

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As of December

31, 2022, securities with a

market value of $49.0 million

pledged to secure

public deposits.

As of December

31, 2022, the

tax-exempt securities

31, 2023, securities with

a market value of $86.9

pledged to secure public deposits and $132.1 million pledged in securities measured at par to the Federal Reserve Bank of

USCB Financial Holdings, Inc.

15 unchanged sentences

Corporate bonds

Allowance for credit losses - securities held-to-maturity

Securities held-to maturity, net of allowance for credit losses

The following

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as of December 31, 2023 (in thousands, except ratios):

Within 1 year

After 1 year through 5

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Bank subordinated debt securities

Corporate bonds

Held-to-maturity:

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Consumer and Other

Unearned income

loans net of unearned income

Deferred cost

loans net of deferred cost

Allowance for credit losses

al gross loans increased by $315.6 million or 26.5% at December

gross loans increased

by $271.4 million

December 31, 2023

compared to December

most significant

most significant growth

commercial and

industrial and

commercial real

residential real estate and commercial and industrial loan pools.

and other loans increased primarily as result of

decreased primarily because of continuing PPP loan forgiveness

inception has been reflective of the market in which we

operate and of our strategic plan as approved by the

estate loan pools.

loans increased primarily as result of organic growth from our yacht lending business vertical created in January 2022.

increase as a percentage to

we do not expect any

significant changes over the

foreseeable future in

the composition of our loan portfolio.

Commercial real estate continues to be the main category of our portfolio, reflective of

the market in which we operate.

implementation

relationship-based

metropolitan area.

larger loan clients have lengthy

relationships with members of our senior

management team

or our relationship managers that date back to former

institutions.

business in a highly competitive metropolitan area.

our larger loan clients have lengthy relationships with members

of our senior management team or our relationship managers

that date back to former institutions.

liquidity perspective,

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The information

contractual maturities

maturities of

the individual

their contractual

Renewals will

department and

balance sheet

composition at the

any modification of

the loan’s maturity.

the analysis,

modification of terms

loan’s maturity.

Additionally,

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different benchmarks

and tenors in different

periods of time.

and tenors in

different periods

contractual characteristics, there are no

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important to note

USCB Financial Holdings, Inc.

interest rate

1 unchanged sentence

rates and positions us to gain in the scenario of higher interest

USCB Financial Holdings, Inc.

December 31, 2023, the

commercial real estate

portfolio was $1.0

billion or 58.8%

total gross loans

17% of outstanding balances are

characterized as owner occupied and

83% are characterized as non-owner

retail sector was $285.7 million or 33% of the $868.1 million

non-owner occupied CRE portfolio.

investment by loan type (in thousands):

December 31, 2023

Average Loan Size

Hotels/Motels

Construction/Land

(1) Loan-to-value is calculated based on the real estate value at the time of origination, renewal, or update, whichever is more recent.

The following table is a summary of non-owner occupied commercial real estate loans held for investment by collateral

geographical location (in thousands):

December 31, 2023

South Florida

Rest of Florida

Outside Florida

Hotels/Motels

Construction/Land

(1) Miami-Dade, Broward, and West Palm Beach counties

(2) All other Florida counties

(3) Within the U.S.

As of December

non-owner occupied

CRE portfolio

within South Florida,

an outstanding

$79.4 million

outside Florida.

CRE loans outside Florida were:

$69.7 million in New York,

$7.1 million in Georgia,

and $2.6 million in New Jersey.

Asset Quality

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analysis estimates the capability of

the borrower to

repay the contractual obligation of

the borrower to repay

the contractual obligation of

agreement as scheduled or at all.

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assess the credit worthiness of a loan are shown below:

– Loans indicate different levels of satisfactory financial

condition and performance.

– Loans indicate different levels of satisfactory

financial condition and performance.

USCB Financial Holdings, Inc.

Special Mention

15 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.

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Consumer and Other

USCB Financial Holdings, Inc.

Non-Performing Assets

1 unchanged sentence

of December 31, 2023 and 2022 (in thousands, except

Non-accrual loans, less non-accrual TDR loans

Non-accrual TDRs

Loans past due over 90 days and still accruing

non-performing loans

5 unchanged sentences

Non-performing loans to total loans

(1) ACL was calculated under CECL methodology for 2023, and incurred loss methodology for 2022

Non-performing

assets include

categorized as

non-accrual or

restructured,

impaired securities,

restructurings

liquidation in full is reasonably uncertain

are placed on a non-accrual status.

determination is based on current existing

facts concerning

collateral values and

capacity of the

When the collection

full contractual balance

on non-accrual

overstating the

with increased

as non-accrual

or restructured,

other repossessed assets.

Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on

determination

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.

non-accrual status as of

the date it becomes

90 days past due and

remains in non-accrual

90 days past due

and remains in non-accrual

status until it meets

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the principal

non-accrual status

until it meets

more and remains

in non-accrual

USCB Financial Holdings, Inc.

principal and interest

6 unchanged sentences

loan becomes secured and in the process of collection.

a debtor that

is experiencing financial

difficulties and

the Company grants

a concession.

difficulties.

determination

is performed during the annual review process or whenever problems

are surfacing regarding the client’s ability to repay in

performed during

review process

surfacing regarding

accordance with

interest rates

for non-troubled

troubled debt

restructuring.

potential losses.

The following tables present performing and non-performing

TDRs for the dates indicated (in thousands):

December 31, 2022

Residential Real Estate

Commercial Real Estate

Commercial and Industrial

Consumer and Other

December 31, 2021

Residential Real Estate

Commercial Real Estate

Commercial and Industrial

Consumer and Other

The Company had allocated $294 thousand and $360 thousand of specific allowances

for TDR loans at December 31,

2022 and 2021, respectively.

There was no commitment to lend additional funds to

these TDR customers.

USCB Financial Holdings, Inc.

Charge-offs on TDR loans for the years ended December 31,

2022 and 2021 were $0 and $18 thousand, respectively.

loans at December

prior 12 months

have any new TDR loans for the year ended December

There were no TDRs or modifications due to COVID-19

as of December 31, 2022.

The concessions

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.

discussion on

4 unchanged sentences

Allowance for Credit Losses

characteristics and management

evaluates the ACL on

each segment and on

a regular basis to maintain

the allowance at

changes in the composition and size of the loan portfolio and

the overall credit worthiness of the borrowers.

On January 1,

2023, the Company

adopted FASB ASU 2016-13, which

introduced the CECL methodology

expected credit

the remaining

represents an

outstanding loans as of the

measurement date.

Additionally,

qualitative adjustments

are made to the

ACL when, based

on management’s

judgment, there are

impacting the allowance estimate not considered by the

quantitative calculations.

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.

information on the allowance for credit losses.

The following table presents ACL and net charge-offs to average loans by

3 unchanged sentences

Beginning balance

Cumulative effect of adoption of

accounting principle

Provision for credit losses

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Average loans

Net charge-offs to average loans

Net charge-offs (recoveries) to

average loans

December 31, 2022:

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Average loans

Net charge-offs to average loans

Net charge-offs (recoveries) to

average loans

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

(2) Provision for credit losses excludes $144 thousand release for unfunded commitments included in other liabilities and $8 thousand

provision for investment securities held to maturity.

USCB Financial Holdings, Inc.

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five insurance

is the beneficiary

the beneficiary

of these policies.

8 unchanged sentences

deposit customers

are SMBs, and

the personal business

of owners and

and the personal

business of owners

and operators

of these SMBs,

well as the retail/consumer relationships of the employees

4 unchanged sentences

of our deposits;

funding sources are core deposits.

In addition to our banking centers network,

we developed business verticals to diversify

our portfolio in different specialty industries and

we offer public fund deposit products

to municipalities and public agencies

in our geographical footprint.

funding sources

have developed

diversify our portfolio in

different specialty

industries and we offer

public fund deposit

products to municipalities

agencies in our geographical footprint.

Furthermore, our

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of our business

ability to offer correspondent services to banks

in Central America and the Caribbean.

ability to offer correspondent services to banks in

Central America and the Caribbean.

December 31, 2023 and 2022 (in thousands, except ratios):

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Time deposits

tal average deposits for the year ended December 31, 2022 was $1.7 billion,

average deposits for the

year ended December 31, 2023

was $1.9 billion,

an increase of $159.3 million

over total average

deposits of $1.5 billion

same period in

on demand deposits

resulted in an

in average balances of $98.3 million,

or 18.0%, in non-interest bearing demand deposits and an increase of $183.6 million,

or 29.6%, in saving and money market deposits

when comparing the average balances for the

years ended December 31,

2022 and 2021.

$250 thousand

$897.8 million

average deposits

of $1.7 billion

savings deposits which increased

by $160.3 million,

Non-interest-bearing demand

deposits decreased by $37.9

moving deposits

bearing accounts

due to increases in the interest rate market.

USCB Financial Holdings, Inc.

respectively.

well-diversified

depositors only

total portfolio.

Our public funds

of total deposits and

are partially collateralized.

The estimated average account

$250 thousand

deposits with

$250 thousand

totaled $122.9

$119.4 million at December

31, 2022 and 2021, respectively.

estimated uninsured

at December 31,

As of December 31, 2023, 45%

of our deposits are estimated to be

FDIC-insured.

Our public funds are 13.9% of total

deposits and are partially collateralized.

Brokered deposits are 2.6% of total deposits and are FDIC-insured.

The estimated

average account size

of our deposit

portfolio is $97

Time deposits with

balances of $250

thousand or more

respectively.

diversified deposit base.

Our top 15 depositors only hold 20%

of our total portfolio.

Critical elements of our liquidity

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oversight by the

active involvement

appropriate strategies,

policies, procedures,

Board and ALCO and

involvement by senior management;

appropriate strategies, policies,

procedures, and limits

comprehensive

complexity and business activities of the Company;

active management of intraday liquidity and collateral;

an appropriately

and potential

future funding

highly liquid

marketable securities

legal, regulatory, or operational impediments, that

to meet liquidity

needs in stressful

complexity and business

activities of the

management of intraday

liquidity and collateral;

an appropriately diverse

comprehensive

6 unchanged sentences

purchased, brokered

certificates of

deposit, listing

certificates of

and borrowings

listing certificates

borrowings from

Accordingly, our liquidity resources were at sufficient levels to

16 unchanged sentences

of the Company.

Outstanding fixed-rate advances from the FHLB were at $46.0 million and $36.0 million, as of December 31, 2022, and

December 31, 2021,

Outstanding fixed-rate

advances from

$183.0 million

and December 31,

2022, respectively.

2 unchanged sentences

FHLB advances at

December 31, 2022

Most of the advances are due in 2023.

USCB Financial Holdings, Inc.

7 unchanged sentences

July 30, 2024

August 17, 2023

January 24, 2028

April 25, 2028

December 26, 2024

At December 31, 2022

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Maturity Date

August 17, 2023

July 30, 2024

March 27, 2025

March 28, 2025

April 17, 2025

July 18, 2025

July 30, 2024

August 17, 2023

January 13, 2023

correspondent

1 unchanged sentence

cash balances.

As of December 31,

2022, there were no

December 31, 2023, there were no

outstanding balances under the Fed

line of credit.

line of credit and the BTFP.

Off-Balance Sheet Arrangements

7 unchanged sentences

credit and standby letters

involve elements

commitments involve

credit, market,

amount recognized

balance sheet.

conservative credit

and collateral

more conservative

collateral policies

commitments as we

2 unchanged sentences

incurred by funding

we maintain an allowance for

off-balance sheet credit risk

which is recorded under other

we maintain an allowance

for off-balance sheet

credit risk which is

recorded under other liabilities

on the Consolidated Balance Sheets.

4 unchanged sentences

reflect the actual

future cash funding

requirements.

future cash funding requirements

The following table

5 unchanged sentences

Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition

the commitments

expire without being

6 unchanged sentences

in credit risk in our portfolio.

of credit generally have variable interest

The maximum potential amount

Lines of credit

generally have variable interest rates.

maximum potential number of future

payments we could

2 unchanged sentences

by the contractual

the commitment,

less the amount

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

the event of nonperformance by the

client in accordance with the terms

of the agreement with the third party,

conditional commitments issued

by us to guarantee

the performance of a

client to a third

the event of nonperformance by

the client in accordance with the

terms of the agreement with the

required to fund

3 unchanged sentences

would be entitled

recovery from

the client from

to seek recovery

from the client

the underlying collateral,

6 unchanged sentences

Asset and Liability Management Committee

The asset and liability management committee of our Company,

or ALCO, consists of members of senior management

The asset and liability management committee of our Company, or ALCO, consists of members of senior management

and our Board.

17 unchanged sentences

measure, monitor and mitigate IRR exposures.

When assessing

the consolidated

balance sheet,

When assessing the scope

of IRR exposure and

impact on the consolidated

balance sheet, cash flows

and statement

of operations,

management considers

both earnings

variations, deposits

volatility and

reduced earnings or outright losses could adversely affect

15 unchanged sentences

no new growth.

Dynamic simulation analysis is

Dynamic simulation analysis

utilized to have a

16 unchanged sentences

Market and Interest Rate Risk Management

According to our ALCO model, as of December 31, 2022, we were a

liability sensitive bank for year one modeling and

asset sensitive for year two 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

market interest

rates decrease.

Many assumptions

rate variations

correlations,

truncations and decay rates, and key interest rate drivers.

According to our ALCO model, as

of December 31, 2023, we were

a slightly asset sensitive/neutral bank

modeling and asset sensitive for year two modeling.

Asset sensitivity indicates that

our assets generally reprice faster than

sensitivity indicates

liabilities generally

reprice faster

which results

interest income

interest rates

assumptions are

calculate the

interest rate

correlations, deposit truncations and decay rates, and

key interest rate drivers.

Because of the inherent use

4 unchanged sentences

will, differ from static measures results.

In addition, static measures like

EVEs 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

balance sheet

either increase

addition, static measures like the economic value

of equity (“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.

our ALM strategy and policy,

management has the ability to modify the balance sheet to either

decrease asset

decrease liability

duration to reduce

asset sensitivity,

or to decrease

asset duration and

increase liability duration

to increase asset sensitivity.

According to our model, as of December 31, 2022, the NIM will remain fairly stable for static rate scenarios (-400

will decrease

scenario to 3.20%

balance sheet

sensitivity to

interest rates.

According to our model, as of

end of 2023, the NIM will

remain fairly stable for static rate

scenarios (-400 basis points:

+400 basis points).

static forecast for year one,

the estimated NIM will increase

from 2.81% base case scenario

2.86% under a +400-basis

points scenario.

Additionally, utilizing an economic

value of equity, or EVE,

we analyze the

risk to capital

various interest rate

scenarios through

discounted cash flow

difference between

our liabilities,

Additionally,

utilizing an EVE approach,

we analyze the risk

to capital from the

interest rate

long-term discounted

the difference

between the economic

assets and the

economic value of

our liabilities, which is

our liquidation value.

According to our

balance sheet composition,

and as expected,

our model stipulates

that an increase

rates will have

a negative impact

Results and analysis

are presented quarterly

the ALCO, and strategies are reviewed and refined.

Additionally, in the last couple of quarters we

have been reducing our asset

sensitivity by extending asset duration.

has reduced our

NII volatility

for the first

and second year

in the analysis

maintain the NII

in accordance

with ALCO expectations.

sheet composition,

expected, our

model stipulates

interest rates

have a negative impact on

Results and analysis are

presented quarterly to the ALCO, and

strategies are reviewed

Additionally, in the last year we have been reducing our asset sensitivity by extending asset duration.

This has reduced

our NII volatility for the first and

second year in the analysis and has helped us

to maintain the NII in accordance with ALCO

expectations.

USCB Financial Holdings, Inc.

2 unchanged sentences

obligations at

an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and

unexpected cash flow

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

either daily operations or the financial condition of the

Liquidity risk

2 unchanged sentences

obligations as

because of an inability to

liquidate assets or obtain adequate funding on

acceptable terms.

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.

regularly monitors

situations that

include funding

mismatches, market

because of an

inability to liquidate

assets or obtain

adequate funding on

acceptable terms in

a timely matter.

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, interest rate

environment and the cash flow

profiles of our on- and

sheet obligations.

liquidity risk.

These include

funding mismatches, market

constraints on

assets (particularly

investments) into

accessing sources

of funds (i.e.,

market liquidity),

and contingent

assets (particularly investments)

into cash or in

accessing sources of

funds (i.e., market

liquidity), and contingent

liquidity events.

presents to the

ALCO, on a quarterly basis, liquidity stress tests foll

owing the scenarios described in the Bank’s

contingency funding plan.

Changes in macroeconomic conditions or exposure

to credit, market, operational, legal

and reputational risks, including

cybersecurity risk could also affect the Company

’s liquidity risk profile unexpectedly

and are considered in the assessment

of liquidity and ALM framework.

quarterly basis, liquidity

stress tests following

the scenarios

the Company’s contingency

macroeconomic

deterioration,

risks, including cybersecurity risk and

social media events could

also affect the Company’s liquidity risk

profile unexpectedly

and are considered in the assessment of liquidity and ALM

Management has established

2 unchanged sentences

identifying, measuring, monitoring

integrated into our risk management processes and ALM

integrated into our risk management processes, Contingency

Funding Plan and ALM policy.

Critical elements of our liquidity

2 unchanged sentences

oversight by the

active involvement

appropriate strategies,

policies, procedures,

comprehensive

complexity and business activities of the Company;

active management of intraday liquidity and collateral;

an appropriately

and potential

future funding

highly liquid

marketable securities

legal, regulatory, or operational impediments, that

to meet liquidity

needs in stressful

Board and ALCO and

involvement by senior management;

strategies, policies, procedures,

and limits used to

comprehensive

requirements;

institution’s

liquidity risk management process.

current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and

liquidity and

funding sources;

adequate levels of highly liquid marketable securities free

of legal, regulatory, or operational impediments,

liquidity needs

in stressful situations;

comprehensive contingency

funding plans

that sufficiently

address potential adverse

liquidity events and

emergency cash

flow requirements;

internal controls and

internal audit

processes sufficient to determine the adequacy

of the institution’s liquidity risk management

repayment and maturity of loans and investment security

2 unchanged sentences

purchased, brokered

certificates of

deposit, listing

certificates of

and borrowings

listing certificates

borrowings from

Accordingly, our liquidity resources were at sufficient levels to

1 unchanged sentence

cash needs as necessary.

At December 31, 2023,

the Company had $224.8

million in available liquidity

on balance sheet, including

$187.7 million in

unpledged securities available to

use as collateral and

$37.1 million in

had an additional $395.0

million in off balance sheet liquidity,

excluding access to brokered deposits and other off balance

sheet sources of funding.

USCB Financial Holdings, Inc.

1 unchanged sentence

Additionally,

we follow the capital

conservation buffer

we follow the

capital conservation buffer

framework, and according

1 unchanged sentence

the Bank exceeds

capital conversation buffer

in all capital ratios

capital conversation

all capital ratios

as of December 31,

following table presents

the capital ratios

both the Bank and the Company at December 31, 2022

and 2021 (in thousands,

except ratios):

is not subject

to regulatory

requirements because it is deemed by the Federal Reserve

to be a small bank holding company.

Minimum Capital

To be Well Capitalized

Under Prompt Corrective

Action Provisions

To be Well Capitalized Under

Prompt Corrective Action

December 31, 2023

12 unchanged sentences

notes have been

accordance with

accordance with U.S.

measurement of

23 unchanged sentences

on loans and investments,

respectively.

associated with delivering the Company’s

the value of these assets decreases or increases respectively.

Recently Issued Accounting Pronouncements

8 unchanged sentences

-GAAP Financial Measures

Management has included

non-GAAP measures set

forth below because

it believes these

measures may provide

supplemental information

8 unchanged sentences

as an alternative

Company believes

indicators of

the earnings power

indicators of the

earnings power

of the Company.

7 unchanged sentences

Pre-Tax Pre-Provision ("PTPP") income:

Net income (GAAP)

Provision for income taxes

Provision for (recovery of) credit losses

PTPP Return on Average Assets:

Average assets

PTPP return on average assets

Operating net income:

Net income (GAAP)

Net gain (loss) on sale of securities

on sale of securities

effect on sale of securities

Operating net income

2 unchanged sentences

Operating PTPP Income

Operating PTPP Return on Average Assets:

Operating PTPP income

Average assets

Operating PTPP Return on average assets

Operating Return on Average Assets:

Operating net income

Average assets

Operating return on average assets

USCB Financial Holdings, Inc.

Years Ended December 31,

Adjusted Net Income Available to Common Stockholders:

Net income (GAAP)

Preferred dividends

Exchange and redemption of preferred shares

Net income (loss) available to common stockholders (GAAP)

Exchange and redemption of preferred shares

Adjusted net income available to common stock (non-GAAP)

Weighted average shares outstanding:

Class A common stock

Net income (loss) per diluted share (GAAP)

Exchange and redemption of preferred shares

Adjusted net income available to common stockholders per diluted share (non-GAAP)

(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.

Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company,

we are not required to provide the information required by

we are not required to provide the information required

by this item.

USCB Financial Holdings, Inc.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis