What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-22 compared with 2023-03-24 · 1470 added, 1339 removed, 1606 unchanged (64% of the section changed)

18 unchanged sentences

balance sheets

USCB Financial

comprehensive income

4 unchanged sentences

statements present fairly, in all material respects, the

financial position of the Company as

of December 31,

2022 and 2021,

and the results of its operations

and its cash flows for the

years then ended, in conformity

financial position of the Company

as of December 31,

2023 and 2022, and the results

of its operations and its cash

flows for the years then ended, in conformity

with accounting principles generally accepted in the United

States of America.

Explanatory Paragraph - Change in Accounting Principle

As discussed in Note 1 to the financial

statements, the Company has changed its method of accounting for

credit losses effective January 1, 2023 due to the adoption

of ASU 2016-13 Financial Instruments – Credit

retrospective

accordance with previously applicable generally accepted accounting

Basis for Opinion

15 unchanged sentences

independent with respect to

the Company in accordance with

securities laws

the Company in accordance

with the U.S.

federal securities laws

and the applicable rules and regulations of the Securities

6 unchanged sentences

financial statements are

of material misstatement, whether due to error or fraud.

and performing

procedures that

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

statements, whether

performing procedures

included examining,

9 unchanged sentences

March 22, 2024

Independent Member Crowe Global

USCB Financial Holdings, Inc.

6 unchanged sentences

Total cash and cash equivalents

Investment securities held to maturity (fair value $

Investment securities held to maturity net allowance of

and $0, respectively (fair value $

, respectively)

1 unchanged sentence

Federal Home Loan Bank stock, at cost

Loans held for investment, net of allowance

Loans held for investment, net of allowance of

, respectively

12 unchanged sentences

Total liabilities

Commitments and contingencies (See Note 10

Commitments and contingencies (See Notes 10

STOCKHOLDERS' EQUITY:

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of December 31,

2022 and 2021

0 issued and 0 outstanding as of

December 31, 2023 and 2022

Preferred stock - Class D;

per share liquidation preference;

issued and outstanding as of December 31,

2022 and 2021

0 issued and 0 outstanding as of

December 31, 2023 and 2022

Preferred stock - Class E;

per share liquidation preference;

issued and outstanding as of December 31,

2022 and 2021

0 issued and 0 outstanding as of

December 31, 2023 and 2022

Common stock - Class A Voting;

4 unchanged sentences

shares authorized;

0 issued and 0

outstanding as of December 31, 2023 and 2022

6 unchanged sentences

these consolidated financial statements.

Independent Member Crowe Global

USCB Financial Holdings, Inc.

22 unchanged sentences

Bank owned life insurance income

Gain (loss) on sale of securities available for

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

Gain on sale of loans held for sale, net

Gain on sale of premises and equipment,

Loan settlement

9 unchanged sentences

Total non-interest expense

Net income before income tax

Net income before income tax expense

Income tax expense

Preferred stock dividend

Exchange and redemption of preferred shares

Net income (loss) available to common stockholders

Net income available to common stockholders

Per share information:

Class A common stock

Net income (loss) per share, basic

Net income (loss) per share, diluted

See Note 14 "Earnings per Share" for information

on the allocation of income available to common

stockholders.

Net income per share, basic

Net income per share, diluted

The accompanying notes are an integral part of

these consolidated financial statements.

Independent Member Crowe Global

USCB Financial Holdings, Inc.

4 unchanged sentences

Other comprehensive income (loss):

Unrealized loss on investment securities

Unrealized gain (loss) on investment securities

Amortization of net unrealized gains on securities

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

Reclassification adjustment for (gain) loss included

in net income

Total other comprehensive loss, net of tax

Reclassification adjustment on sale of available

for sale securities for loss included in net income

Unrealized gain on cash flow hedge

Total other comprehensive income (loss), net of tax

Total comprehensive income (loss)

6 unchanged sentences

except per share data)

Preferred Stock

Additional Paid-

in Capital on

Additional Paid-in

Comprehensive

2 unchanged sentences

Balance at January 1, 2023

Other comprehensive loss

Issuance of common stock - exercised options

After tax cumulative effect of adoption of accounting principle

Adjusted beginning balance after cumulative effect adjustment

Other comprehensive income

Repurchase of Class A common stock

Restricted stock issued

Restricted stock forfeiture

Exercise of stock options

Stock-based compensation

2 unchanged sentences

Other comprehensive loss

Dividends - preferred stock

Issuance of Class A common stock, net of

offering costs of $

Exchange of preferred stock

( 11,109,025 )

Redemption of preferred stock

( 1,241,854 )

Exchange of Class B to Class A common stock

( 4,896,840 )

Issuance of common stock - exercised options

Stock-based compensation

12 unchanged sentences

Depreciation and amortization

Amortization of premiums on securities, net

(Accretion) amortization of premiums on securities,

Accretion of deferred loan fees, net

Stock-based compensation

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

Loss on sale of available for sale securities

Gain on sale of loans held for sale

Gain on sale of premises and equipment, net

Increase in cash surrender value of bank owned

13 unchanged sentences

Proceeds from sales of investment securities available

Proceeds from call of investment securities available

Net increase in loans held for investment

1 unchanged sentence

Additions to premises and equipment

Proceeds from the sale of loans held for

Proceeds from the sale of property

Proceeds from the sale of loans held for sale

Purchase of Bank owned life insurance, net

Proceeds from the redemption of Federal Home

1 unchanged sentence

Purchase of Federal Home Loan Bank stock

Purchase of bank owned life insurance

Net cash used in investment activities

7 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of Class A common stock,

Cash dividends paid

Redemption of Preferred stock Class C

Redemption of Preferred stock Class D

Redemption of Preferred stock Class E

Proceeds from exercise of Class A common stock

Repurchase of Class A common stock

Net increase in deposits

3 unchanged sentences

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

4 unchanged sentences

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

Transfer of premises and equipment to assets held for sale

Lease liability arising from obtaining right-of-use assets

Exchange of Preferred C for Class A common

Exchange of Preferred D for Class A common

Exchange of Class B common stock for Class A

Lease liability arising from obtaining right-of-use asset

The accompanying notes are an integral part of

3 unchanged sentences

USCB Financial Holdings, Inc.

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING

USCB Financial Holdings, Inc., a

Florida corporation incorporated

in 2021, is a bank

holding company with one wholly

in 2021, is a bank holding

company with one wholly

owned subsidiary,

11 unchanged sentences

and outstanding shares of the Class

stock of the Bank.

Each of the outstanding shares of

the Bank’s common stock, par value $

per share, formerly held by

its shareholders were

converted into and exchanged

for one newly

issued share of

the Company’s common stock, par

owns a subsidiary,

in connection

reorganization of the

company structure.

common stock,

formerly held

stockholders were

converted into

exchanged for one newly issued share of the Company’s

Class A common stock, par value $

Florida Peninsula

our clients title

insurance policies

title insurance

transactions closed at the Bank.

7 unchanged sentences

financial statements

been prepared in accordance with U.S.

Generally Accepted

Accounting Principles ("GAAP").

Initial Public Offering and Exchange and Redemption

On July 27, 2021,

the Company completed

an initial public

offering (the “IPO”)

and its Class

A voting common

began trading

ticker symbol

outstanding preferred shares.

In December 2021,

the Company reached

agreements with the

Class B common

shareholders to receive

Class A voting

“Stockholders’ Equity” for further information about the IPO

and the exchange and redemption of shares.

been prepared in accordance with GAAP.

Risk and Uncertainties

Current Banking Environment

Banking Environment

Industry events

transpiring early

including bank

failures, have

uncertainty and

concerns regarding

the liquidity

These failures

underscore the

importance of

access to diverse sources of

The Company’s deposit

base includes a combination

commercial, and

liquidity positions

banking sector.

The Company’s

a combination

funds deposits.

The Company’s

largest depositors

government-related

organizations

organizations and

commercial clients without a high level of industry concentration.

In response to

these events,

Department, Federal

Reserve, and FDIC

jointly announced the

certain securities at the

par value of the securities,

and at a borrowing

rate of ten basis

points over the one-year

institutions,

with advances

prepayment penalties.

Consolidated Financial

Statements, the Company has not accessed the BTFP.

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

in the banking

Department, the

Federal Reserve

jointly announced

Funding Program

liquidity by allowing institutions to pledge

certain securities at the par value

of the securities, and at a

borrowing rate of ten

depository institutions, with

advances having a

term of up to

no prepayment penalties.

In January 2024,

million in the

draws in 2023.

No further draws

were permitted

after March 11,

All advances must be paid by January 2025.

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

Additionally,

the rising interest rate environment

has increased competition for

liquidity and the premium

liquidity is available

funding needs.

liquidity are sufficient

on the balance sheet date.

liquidity and the premium at

which liquidity is available to

meet funding needs.

believes its sources of liquidity

are sufficient to meet its needs as of the balance sheet

An unexpected influx

6 unchanged sentences

secondary sources

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

demands or to fund continuing operations.

These sources may include proceeds from FHLB advances, sales of

securities and loans, federal funds lines of credit from

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

securities and loans, federal funds lines of credit from correspondent

banks, and out-of-market time deposits.

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

1 unchanged sentence

guarantee they

liquidity demands.

may necessitate

or discontinuing

capital expenditures, or other investments, or liquidating assets.

For further discussion of the Company's liquidity practices,

see page 59 and 62 of this Annual Report on Form

Use of Estimates

In preparing the consolidated financial statements, management is required

to make estimates and assumptions based

on available information that affect the amounts

reported in the financial statements and the disclosures provided.

The coronavirus (“COVID-19”)

pandemic has negatively

affected many of

the Company’s

clients and could

their ability to fulfill

their financial obligations.

The Company’s business

is dependent upon the

willingness and ability of

associates and customers to conduct banking and other financial transactions.

we believe conditions have improved

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

future operations,

with its associates and customers

to understand their challenges, which allows

us to respond to their needs

and issues as

While there was

material impact to

the Company’s Consolidated Financial

Statements as of

the year ended

December 31, 2022,

future increases

allowance for

credit losses

the potential

COVID-19 will

the estimates

controlled and

applied consistently

These estimates

and assumptions,

materially affect

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

the reported amounts of

certain assets, liabilities, revenues

and expenses, are based

on information available as

financial statements,

Actual results could differ from those estimates.

information over

estimates and

could materially affect amounts reported in subsequent

financial statements.

Cash and Cash Equivalents

1 unchanged sentence

Statements of

Cash Flows, cash

and cash equivalents

cash and cash

equivalents include

cash on hand,

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

Restricted Cash

The Company may

be required to

maintain funds at

other banks to

satisfy a loan

participation agreement.

reports restricted cash within cash and cash equivalents.

The Company may be required to maintain

funds at other banks to satisfy

the terms of a loan participation agreement.

The Company reports restricted cash

within cash and cash equivalents.

At the years ended December

31, 2023 and 2022

the company had $

in restricted cash.

Interest-Bearing Deposits in Other Financial Institutions

4 unchanged sentences

Debt securities

securities which

positive intent

ability to hold to

25 unchanged sentences

included in earnings.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Purchase premiums and discounts are amortized or accreted over

1 unchanged sentence

held-to-maturity

considered in determining the estimated life of the

considered in determining the estimated life of

the security.

Such amortization and accretion are included in interest income

2 unchanged sentences

Dividend and interest

income are recognized when

income are recognized

on the sale of securities are recorded on trade date and are determined

on a specific identification basis.

available-for-sale

other-than-temporary

management considers several factors in their analysis including

(i) severity and duration of the

impairment, (ii) credit rating

of security including any downgrade, (iii) intent to sell the security, or if it is more likely than not that it will be required to sell

Measurement of Credit Losses

on Financial Instruments,

as amended, which replaces

the incurred loss methodology

loss methodology

referred to as

The measurement

credit losses

under the CECL methodology

is applicable to financial

assets measured at amortized

cost, including loan receivables

held-to-maturity debt

addition, ASC

the accounting

for available-for-sale

debt securities.

such change is

to require credit

presented as an

allowance rather than

as a write-down

on available-for-sale

debt securities management does not intend to sell or

believes that it is more likely than not they will be required

CECL requires a loss reserve for securities

classified as HTM.

The reserve should reflect

historical credit performance

as well as the impact

of projected economic forecast.

Government bonds

Agency issued bonds

the explicit and/or

implicit guarantee of the

US Government is sufficient to

conclude that a

credit loss reserve is

not required.

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.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Federal Home Loan Bank (FHLB) Stock

12 unchanged sentences

ultimate recovery

respectively,

stock amounted

million, respectively,

impairment deemed

cash and stock dividends are reported as interest income.

2 unchanged sentences

balance net of charge-offs, deferred loan

Interest income

amortized, using the interest method or the straight-line

2 unchanged sentences

the date it becomes

90 days past due and

remains in non-accrual

status until it meets

90 days past due

and remains in non

-accrual status until it

meets the criteria

for restoration to accrual status.

3 unchanged sentences

the principal

non-accrual status

until it meets

more and remains

in non-accrual

principal and interest

12 unchanged sentences

or cost-recovery

cash collections

method, under

collections are

unpaid principal, which may change as conditions dictate.

The Company has determined that the entire balance of a

loan is contractually delinquent for all classes if the

The Company has determined that the entire balance of

a loan is contractually delinquent for all

classes if the minimum

payment is not received by

14 unchanged sentences

are credited to the ACL.

reflects management's

probable loan losses

the portfolio

at the balance

Management uses a disciplined

process and methodology

to establish the

ACL each quarter.

determine the total ACL,

to establish the ACL

each quarter.

determine the total

estimates the

11 unchanged sentences

Other loans (secured and unsecured consumer loans)

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

borrower’s credit, capacity

4 unchanged sentences

an analysis of

income, employment

status, monthly

loan, current

debt obligations,

current income,

employment status, monthly

obligations, monthly debt

ratio and credit history.

The Company relies on appraisals in determining the

value of the property.

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

Risk is mitigated by this

5 unchanged sentences

multifamily housing.

worthiness of the borrower.

The analysis may include

the capacity of the

borrower, income

generated by property for

service, other

repayment, sensitivity

fluctuations in

market conditions

Underwriting of commercial real estate loans will analyze the key market and business factors to arrive at a decision on the

credit worthiness of the borrower.

The analysis may include the capacity of the borrower,

income generated by property for

debt service,

of repayment,

to fluctuations

including vacancy

rates in geographic location and loan to value.

Land and construction analysis will include the time to develop, sell or lease

rental rates in geographic

location and loan

and construction loan

analysis will include

sell or lease

the property.

the underlying

securing the commercial real estate loans are diverse in

type, location, and loan structure.

Appraisals are used

to determine the

underlying collateral.

Risk is mitigated

properties securing the commercial real estate loans

are diverse in type, location, and loan structure.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

inventory, and receivables.

10 unchanged sentences

Foreign banks

international correspondent

banking institutions

international

correspondent

Latin America.

1 unchanged sentence

life of less than one year.

Company’s credit review

The Company’s

credit review

includes a credit analysis, peer comparison and current

1 unchanged sentence

Annual re-evaluation of the risk rating of the

borrower and country and a review of authorized

signer within the Company.

The risk is mitigated as these loans are short

term, have limited exposure, and are geographically dispersed.

collateralized

borrower and country where the borrower is

located and a review by the authorized signer

within the Company.

mitigated as these loans are short term, have limited exposure,

and are geographically dispersed.

Other loans are secured and

unsecured consumer loans including

yacht loans, personal loans, overdrafts

account collateralized loans.

Repayment of these loans are primarily from the personal income of the borrowers.

underwritten based on the credit worthiness of the borrower.

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

provide the basis for estimation of expected credit losses.

Qualitative adjustments are applied to the expected credit losses

management in the assessment of qualitative factor adjustments

applied to expected credit losses.

economic factors were used

to determine suitable

loss drivers for modeling

the lifetime rates of

probability of default (PD).

fundamentally utilizes

discounted cash

analysis for loan

portfolio segments.

instrument-level

loan-specific

segment-implied

determine the lifetime expected

loss attributable to each

An implicit "hypothetical

loss" is derived

for each period

helps establish

instrument is the difference

between the sum of the present

value of future cash flows

and the book balance of

the measurement date.

long-term average

is calculated

quarterly basis

remaining life

management implemented a software

solution that uses an

attrition-based calculation that performs quarterly, cohort-based

attrition measurements based on the loan portfolio.

Portfolio segments are the level at which loss assumptions

are applied to a pool of loans based on the similarity

characteristics inherent in the

included instruments, relying on

collateral codes and FFIEC

Call Report codes.

currently segments the

portfolio based on

collateral codes for

purpose of establishing

these segments

characteristics.

management evaluates

on factors which, in

management's judgment,

deserve current recognition in

estimating credit losses.

Such factors include

changes in prevailing economic conditions, historical loss experience,

delinquency trends, changes in the composition and

size of the loan portfolio and the overall credit worthiness

of the borrowers.

specific components.

The following

management determines

the general component for the ACL account for each segment

of the loans as described above.

The loan segments

are primarily grouped by

collateral type with similar

risk characteristics and

a historical loss

determined based on a ten year look back period.

The Company applies time weights to

consider various stages of a credit

environmental factors.

estimate the impact of

non-recurrent losses, management

has developed a statistical

tracks historical non-recurring

used to estimate

an adjusted loss

Management believes the

effect of these losses

results in a loss

rate that is more

consistent with the behavior

loan portfolio in the normal course of business.

following are the factors used to adjust the historical

Loan quality review

Lending and credit management /staff expertise

and practices

Economic and business conditions

Lending and credit underwriting policies and procedures

Problem loan levels and trends

Collateral concentrations

Large obligor concentration

New loan volumes

Company has established relationships between internal segmentation and FFIEC

Call Report codes for this purpose.

loss driver for each loan

portfolio segment is derived

from a readily available and

reasonable economic forecast, including

the Federal Reserve Bank

projections of U.S.

unemployment rate and the

year-over-year real GDP

utilized for the

are applied to

the first four

quarters of the

credit loss estimate

and revert on

line basis to the lookback period's historical mean for the

economic indicator over the expected life of loans.

The model incorporates qualitative

factor adjustments in order to

calibrate the model for risk

in each portfolio segment

not be captured

through quantitative

Determinations

regarding qualitative

adjustments are

reflective of

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

• Changes in lending policies, procedures, and strategies

• Changes in international, national, regional, and local conditions

USCB FINANCIAL HOLDINGS, INC.

1 unchanged sentence

USCB Financial Holdings, Inc.

Combined loan to value (“CLTV”)

qualitative adjustment for substandard accrual loan segment

Changes in these factors could

result in material adjustments to the

The losses the Company may

ultimately incur

could differ materially from the amounts estimated

in arriving at the ACL.

estimates probable

losses related

instruments with

sheet risk, such as letters

of credit and unfunded loan

commitments, and records these estimates

in other liabilities on the

experience and

pertinent information is

reviewed, resulting in

the estimation

reserve for financial

with off-balance sheet risk.

A loan is considered

impaired when, based

on current information

and events, it

is probable that

the Company will

scheduled payments

the contractual

agreement or when the loan

is designated as a Troubled

Debt Restructuring (“TDR”).

considered by management

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

scheduled principal and

interest payments when due.

Loans that experience insignificant

payment delays and payment

shortfalls generally are not

classified as impaired.

Impairment is measured on a loan by loan basis by either the present value

of expected future cash

flows discounted at the loan's effective

interest rate, the loan's obtainable

fair value, or the fair value of

the collateral, if the

investment in the loan (outstanding principal balance plus accrued interest, net of previous charge-offs, and net of deferred

loan fees or cost), impairment is recognized through an allowance

estimate or a charge-off to the ACL.

difficulties,

insignificant period of time to the borrower that would not

otherwise be granted, the loan is classified as a TDR.

2020, the Coronavirus Aid,

Relief, and Economic

Security Act (“CARES

Act”) was signed

by the President

of the United

provisions which

encourage financial

institutions to

prudently work

borrowers impacted

these provisions,

modifications

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

due as of December 31, 2019.

The deferral would need to be

executed March

termination of

national emergency

Banking regulators issued similar guidance clarifying that a COVID-19

related modification should not be considered

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

considered short-term.

See Note 3 “Loans” for additional disclosures

of loans that were modified and not considered TDR.

In addition to the

allowance for the

pooled portfolios, management

has developed a separate

allowance for loans

are identified as

impaired through a

are excluded from

component of the

reserve is provided under the accounting guidance for loan

Residential loans whose terms have been modified

in a TDR are also individually analyzed for estimated impairment.

The Company's charge-off policy

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

the Company's

restructurings.

collateral dependent,

to be uncollectible,

any shortfall

the collateral relative

to the recorded

investment in the loan is charged off.

• Changes in nature and volume of portfolio

• Changes in the volume and severity of past due loans

and other similar conditions

• Concentration risk

• Changes in the value of underlying collateral

• The effect of other external factors:

e.g., competition,

legal, and regulatory requirements

• Changes in lending management, among others

credit losses within

other liabilities.

reserve is based

upon the same

quantitative and qualitative

factors applied to

collectively evaluated loan portfolio.

Concentration of Credit Risks

3 unchanged sentences

Concentrations of credit risk

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

certain groups of customers.

concentration arises when

counterparties have similar

economic characteristics

that would cause

their ability

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

groups of customers.

concentration arises

when a number

of counterparties

have similar economic

characteristics that would

cause their ability

to meet contractual obligations to be similarly affected by changes in economic or other conditions.

2 unchanged sentences

or counterparty.

Most of the Company's business activity is with

customers located within its primary market area, which is

generally the

Most of the Company's business activity is

with customers located within its primary market area, which

is generally the

State of Florida.

The Company's loan portfolio is concentrated largely in real estate and commercial loans in South Florida.

Many of the Company's

loan customers are

engaged in real estate

Company's loan

customers are engaged

in real estate

Circumstances

which negatively impact

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

which negatively

the South Florida real estate industry

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

Company's loan

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

the Company's loan

At December 31,

7 unchanged sentences

concentration represented

loans outstanding.

commercial real estate loan note with an outstanding balance of $

outstanding, respectively.

periods ended

2023 and December 31, 2022, the largest commercial real estate loan note

outside Florida was

commercial real estate

loan with an outstanding balance of $

million collateralized by a 1

lien commercial property

located in New York

At December 31,

concentration of

loans outstanding

foreign banks located

Dominican Republic, Honduras,

and El Salvador.

lien commercial property located in New York

At December 31, 2023,

also had a concentration of risk

the Company had

a concentration of

risk with loans

outstanding totaling $

million to foreign

banks located in Ecuador, Dominican Republic, Honduras, and El Salvador.

At December 31, 2022, the Company also had

a concentration of risk

with loans outstanding totaling

million to foreign banks located in

Ecuador, Honduras,

December 31, 2022 and 2021, respectively.

At various times

during the year,

the Company has

maintained deposits with

other financial institutions.

to the Company

from these transactions is

solely dependent upon

daily balances and the

financial strength of the

million to foreign banks

located in Ecuador,

Honduras, and El

2023 and 2022, respectively.

At various times during

the Company has maintained

deposits with other

financial institutions.

to the Company from

these transactions is solely

dependent upon daily balances

and the financial strength

of the respective

Premises and Equipment, net

8 unchanged sentences

are amortized over the

remaining term of

the applicable leases or their

remaining term of the

applicable leases or their

useful lives, whichever

7 unchanged sentences

otherwise disposed of, the related costs

and accumulated depreciation and

amortization are

and accumulated depreciation and amortization

removed from the accounts and any resulting gains or losses

are credited or charged to income.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Other Real Estate Owned

Other real estate

owned (“OREO”)

consists of real

estate property

acquired through,

OREO consists of real estate

property acquired through, or

in lieu of, foreclosure that

are held for sale and are

less estimated

selling costs

of foreclosure,

held for sale and are initially recorded at

the fair value of the property less estimated selling

costs at the date of foreclosure,

establishing a

to foreclosure,

valuations are

periodically performed

by management

assets are carried at the lower of carrying amount or fair value less cost to sell.

Subsequent write-downs are recognized as

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

costs are charged to

other real estate owned expenses

in the accompanying Consolidated

Statements of Operation.

or losses on sale of

consideration

financing has been arranged.

Subsequent to

foreclosure, valuations

are periodically performed

by management and

the assets are

carried at the

lower of carrying

Subsequent write-downs

are recognized

valuation allowance

recognized when

consideration has

been exchanged,

conditions have

and permanent

financing has

been arranged.

Bank Owned Life Insurance

life insurance

sheet date, which is typically cash

surrender value.

Changes in cash

surrender value are recorded

in non-interest income.

At December 31, 2022, the Company maintained BOLI policies with

five insurance carriers with a combined cash surrender

beneficiary of these policies.

BOLI is carried at

the amount that could

be realized under the

contract at the balance sheet

date, which is typically

These policies cover certain present and former executives

and officers, the Company is the beneficiary

of these policies.

Employee 401(k) Plan

1 unchanged sentence

expense is the amount of matching contributions.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Income taxes are accounted for under the

1 unchanged sentence

assets and liabilities are recognized

tax consequences

to differences

17 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

6 unchanged sentences

and measurement

and penalties on

tax liabilities, if any,

would be recorded in interest expense and other operating

noninterest expense, respectively.

and penalties

tax liabilities, if any, would

be recorded in interest expense and other operating noninterest

expense, respectively.

Impairment of Long-Lived Assets

24 unchanged sentences

Consolidated Balance Sheets.

Transfer of Financial

of financial assets

Transfer of Financial Assets

financial assets

are accounted for

4 unchanged sentences

transferee obtains

conditions that

(free of conditions

that constrain

it from taking

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

the transferred

maintain effective

the transferred

agreement to repurchase them before their maturity or

the ability to unilaterally cause the holder to return specific

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

Comprehensive Income (Loss)

3 unchanged sentences

the stockholders’

comprehensive

equity section of the Consolidated

Balance Sheets, such items,

along with net income, are

components of comprehensive

income (loss).

Additionally,

available-for-sale to held-to-maturity are recorded to accumulated other comprehensive

income on the date of transfer and

amortized over the remaining life

of each security.

The amortization of the unrealized

gain or loss on transferred securities

is reported as a component of comprehensive income

See Note 2 “Investment Securities” for further

any unrealized

investment securities

from available-for-sale

held-to-maturity are recorded to

accumulated other comprehensive income (loss)

of transfer and amortized

the remaining life of each security.

The amortization

of the unrealized gain or loss on transferred securities is reported as a

component of comprehensive income (loss).

See Note 2 “Investment

Securities” for further discussion.

Advertising Costs

3 unchanged sentences

common stockholders

additional potential common shares issuable under vested stock options.

Basic and diluted earnings per share are updated

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

to reflect the effect of stock splits as occurred.

See Note 14 “Earnings Per Share” for additional information on earnings per

common share.

See Note 13 “Stockholders’ Equity” for further

discussion on stock splits.

additional potential

common shares

issuable under

unvested restricted

additional information

“Stockholders’ Equity”

for further discussion

Interest Income

Interest income is recognized as earned, based upon the

principal amount outstanding, on an accrual basis.

Interest income is recognized as earned, based upon the principal

amount outstanding, on an accrual basis.

Operating Segments

While the Company monitors

the revenue streams

of the various products

the revenue streams of

the various products

and services, operations

7 unchanged sentences

Stock-Based Compensation

Stock based compensation accounting guidance requires

that the compensation cost relating to share-based payment

Stock-based compensation accounting guidance requires that the compensation

cost relating to share-based payment

transactions be recognized in the accompanying Consolidated

8 unchanged sentences

requires that compensation cost

for all stock awards

be calculated

for all stock

awards be calculated

and recognized

18 unchanged sentences

See Note 18 “Loss Contingencies” for further details.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Dividend Restrictions

Company or by the Company to the shareholders.

Company or by the Company to the stockholders.

Fair Value Measurements

8 unchanged sentences

Fair value estimates

involve uncertainties and matters

of significant

involve uncertainties and

matters of significant

Changes in assumptions or in market conditions

1 unchanged sentence

Derivative Instruments

Derivative financial instruments

are carried at

fair value and

reflect the estimated

amount that would

have been received

interest rate

floating-rate

agreement allowing

interest rate.

Derivative financial instruments are

carried at fair

value and reflect

the estimated amount that

would have been

Rate Swaps Designated as Cash Flow Hedges

corresponding recognition

in other comprehensive

income (loss)

and subsequently reclassified

to earnings when

losses are realized.

As of December 31, 2023 the cash

flow hedge was effective.

Interest Rate Swaps Designated as Fair Value

corresponding recognition in the assets being hedged.

Interest Rate Swaps

The Company enters into interest rate swaps

agreements to provide commercial loan clients

the ability to swap from a

variable interest rate to a fixed rate.

enters into a floating-rate loan with a customer with

a separately issued

swap agreement allowing

the customer to convert

floating payments on

the loan into a

fixed interest rate.

mitigate risk,

Company will enter into a matching agreement with a

third party to offset the exposure on the

customer agreement.

the Company enters into a matching agreement with

a third party to offset the exposure on

the customer agreement.

not considered

4 unchanged sentences

other non-interest income.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

asset-liability

manage its interest

rate risk exposure.

The notional amount

of the interest

rate swaps does

not represent actual

exchanged by the parties.

The amounts exchanged are determined

by reference to the

notional amount and the

of the individual interest rate swap agreements.

Revenue from Contracts with Customers

Revenue from contracts

with customers is

recognized in an

contracts with customers

is recognized in

an amount that

reflects the consideration

6 unchanged sentences

and investment

securities are

excluded from

the accounting

standard update

“Revenue from

Contracts with

accounting standard

update “Revenue

from Contracts

with Customers”.

service charge

fees, consisting

of primarily monthly

maintenance fees,

monthly maintenance

interchange fees

other transaction-based fees, are the

most significant types of revenue

within the accounting standard update.

other transaction-based fees, are the most

significant types of revenue within

the accounting standard update.

recognized when the service provided by the

5 unchanged sentences

Cash Flow Statement

The Company reports the net activity rather than gross activity in

the Consolidated Statements

of Cash Flows.

are reported for

for investment, accrued

interest receivable, deferred

tax asset, other

assets, customer

deposits, accrued interest payable, other liabilities, and proceeds

from issuance of Class A common shares.

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

Statements of Cash Flows.

customer deposits, accrued interest payable, other liabilities, and

proceeds from the issuance of Class A common shares.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements

USCB Financial Holdings, Inc.

Reclassifications

2 unchanged sentences

or stockholders’ equity of the Company.

Recently Issued Accounting Standards – Not Yet

Measurement of Credit Losses on Financial Instruments

2016, the FASB issued

ASU 2016-13, Financial

Instruments - Credit

Losses (Topic 326);

Measurement of

Losses on Financial Instruments.

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

on accounting for current expected

with a methodology that

reflects the expected

credit losses.

Update is intended

to provide financial

decision-useful

retrospective

years beginning

The Company adopted this

ASU on January 1, 2023.

To date, the Company executed a

detailed implementation plan

through the adoption date, implemented a

software solution to assist with the

CECL estimation process, and has completed

parallel run models, and finished a data gap analysis.

The company expects its allowance for credit losses to

increase in 2023 approximately $

commitments will

also increase

approximately $

be recognized

held-to-maturity

deemed immaterial.

The Company will

initially apply the impact of

the new guidance through

a cumulative-effect adjustment

income statement as charges or credits to earnings.

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

assumptions, methodologies and judgments.

Internal controls over financial reporting relating

to these new processes have

been designed

being evaluated.

macroeconomic

first quarter

volatility in

the quarterly

provision for

credit losses when compared to the Company’s

historical results under the incurred loss model.

Troubled Debt Restructurings and

Vintage Disclosures

Restructurings

restructurings

Specifically,

restructuring recognition and measurement guidance,

creditors will evaluate all

loan modifications to determine if

restructurings

Recently Issued Accounting Standards

Issued and Adopted

Guidance on Accounting for Credit Losses on Financial Instruments

On January 1, 2023, the Company implemented Accounting Standard Update (“ASU”)

Financial Instruments -

Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended.

This update replaces the

financial assets

amortized cost,

including loan

receivables and

held-to-maturity debt

also applies to off-balance sheet credit

exposures not accounted for as insurance

(e.g., loan commitments, standby letters

instruments),

accordance with Topic 842 on leases.

Furthermore, ASC 326 amended the accounting treatment for available-for-sale debt

the requirement for

credit losses to

as an allowance

rather than as

down on available-for-sale debt securities that management does not intend to

sell or believes it is more likely than

will not need

for securities

classified as

held-to-maturity (HTM).

reflect historical credit performance as well as the impact

of projected economic

loan receivables

were collectively

evaluated under

the Discounted

Flow (“DCF)” method

million of loan

receivables were collectively

evaluated under the

Remaining Life

The remaining $

million of loan receivables of the total loan portfolio

were individually evaluated.

The impact of

adoption of the

ASU 2016-13 in

January 1, 2023,

was an increase

loans receivables of

unfunded commitments

adjustment resulted in

a increase of

million in accumulated

The following

table reflects the

impact of adopting

CECL on the Company’s consolidated balance sheet

(in thousands):

January 1, 2023

As Reported Under ASC

Pre - ASC 326 Adoption

Impact of ASC 326

Allowance for credit losses

Deferred tax asset, net

Reserve for unfunded credit commitments

Stockholder's Equity

Retained earnings

See “Allowance for Credit Losses” section in Note 3 for

more information on the ACL.

Guidance on Accounting for Trouble

Debt Restructuring and Vintage Disclosures

In March 2022, the

FASB issued ASU 2022-02, which eliminates creditor accounting guidance for

TDRs for entities that

have adopted ASU 2016-13, Financial Instruments

-Credit Losses (Topic

326) and enhances Vintage Disclosures

eliminates Subtopic

310-40 guidance

loan refinancing

and restructuring

Subtopic 310-20

when evaluating

modifications granted

experiencing financial

difficulty to determine

whether the modification is

considered a continuation

of an existing loan

or a new loan.

disclosure component of

the ASU requires

entities to disclose

current-period gross write-offs by

origination year for

USCB FINANCIAL HOLDINGS, INC.

1 unchanged sentence

USCB Financial Holdings, Inc.

incorporated in a

creditor’s estimate of

its allowance for

credit losses.

Additionally,

public business entities

are required to

disclose current-period gross write-offs

by year of origination for loan financing receivables and net investment

Reference Rate Reform

receivables and investment leases within the scope of Subtopic 326-20.

The Company adopted ASU 2022-02 concurrently

with the adoption of ASU 2016-13.

Issued and Not Yet

Guidance on Reference Rate Reform

Reference Rate Reform

11 unchanged sentences

evaluating the

whether LIBOR

transition and

determined whether

LIBOR transition

ASU will have material effects on our business

3 unchanged sentences

tables present

amortized cost,

unrealized or

unrecognized gains

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

of the amortized

cost, unrealized

or unrecognized

value of investment securities at the dates indicated (in

December 31, 2023

6 unchanged sentences

Bank subordinated debt securities

Corporate bonds

Held-to-maturity:

4 unchanged sentences

Corporate bonds

Allowance for credit losses - securities held-to-maturity

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

USCB FINANCIAL HOLDINGS, INC.

16 unchanged sentences

Corporate bonds

For the year ended December 31, 2023, there were

investment securities that were transferred from

ended December 31,

investment securities

that were transferred

from available-for-

held-to-maturity

transferred from

with an amortized cost basis and fair value amount

million and $

million, respectively.

these securities

unrealized loss

million which

was included in accumulated other comprehensive income

On the date of transfer,

these securities had a total net unrealized loss of $

million which was included in AOCI.

Transfers of debt securities into the HTM category from the AFS category are 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

(“AOCI”) and in

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

Such amounts are

amortized over the remaining life of the security.

ended December 31,

amortization out

net unrealized

securities transferred

from AFS to HTM was $

thousand and $

thousand for year ended December 31, 2021.

held-to-maturity

There was no impact to net income.

are amortized over the remaining life of the security.

transferred from

these securities,

net unrealized losses retained in AOCI was $

million at December 31, 2023 and $

million at December 31, 2022.

The following

9 unchanged sentences

indicated (in thousands).

Actual maturities may differ

from contractual maturities

because borrowers may have

Actual maturities may

differ from contractual

maturities because borrowers

may have the right

call or prepay

obligations with or without

call or prepayment penalties.

Securities not due

maturity date are

obligations with or

without call or

prepayment penalties.

Securities not

single maturity date are

USCB FINANCIAL HOLDINGS, INC.

16 unchanged sentences

stockholders’

United States

Government and

Government Agencies.

All the collateralized

mortgage-backed

collateralized

obligations and mortgage-backed securities are issued

sponsored entities at December 31, 2023 and

Information pertaining

24 unchanged sentences

Collateralized mortgage obligations

Mortgage-backed securities -

Mortgage-backed securities - residential

Mortgage-backed securities -

1 unchanged sentence

Bank subordinated debt securities

The unrealized losses

associated with $

million of investment

securities transferred from

the AFS portfolio to the

HTM portfolio represent unrealized

losses since the date of

purchase, independent of the

impact associated with changes

in the cost basis upon transfer between portfolios.

Corporate bonds

portfolio to the HTM portfolio represent unrealized losses since the date of purchase, independent of the impact associated

with changes in the cost basis upon transfer between portfolios.

USCB FINANCIAL HOLDINGS, INC.

1 unchanged sentence

USCB Financial Holdings, Inc.

The Company performs a review

of the investments that have

an unrealized loss to determine whether

there have been

any changes in the

economic circumstance of the security

issuer to indicate that

the unrealized loss is

impaired on an other-

than-temporary (“OTTI”) basis.

Management considers several factors in their analysis including (i) severity and duration of

the impairment, (ii) credit

rating of the security

including any downgrade,

(iii) intent to sell

the security,

or if it is more

than not that it will be required to

sell the security before recovery

(iv) whether there have been any

payment defaults and

(v) underlying guarantor of the securities.

collateralized

contractual cash flows

for these securities

are guaranteed by

Measurement of Credit Losses

on Financial Instruments,

as amended, which replaces

the incurred loss methodology

loss methodology

The measurement

credit losses

methodology is applicable

to financial assets

measured at amortized

cost, including loan

receivables and

held-to-maturity

debt securities.

In addition, ASC 326 amended the accou

nting for available-for-sale debt securities.

available-for-sale

management does not intend to sell or believes that

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

CECL requires a loss reserve for securities

classified as HTM.

The reserve should reflect

historical credit performance

as well as the impact

of projected economic forecast.

Government bonds

Agency issued bonds

the explicit guarantee of the US Government is sufficient

to conclude that a credit loss reserve is not required.

securitizations.

Company calculates quarterly the loss reserve

utilizing Moody’s ImpairmentStudio.

The CECL measurement for investment

solution uses

probability of

given default

represents the

borrower will

is determined

using historical

default data,

economic environment.

LGD projects the expected loss

if a borrower were to default.

The Company monitors

quality of held

securities through

credit ratings.

Credit ratings

are monitored by the Company on at least a quarterly basis.

December 31, 2023 and December 31, 2022, all held-to-

maturity securities held by the Company were rated investment

At December 31, 2023, HTM securities

million of U.S.

Government and

Agency issued bonds and

mortgage-backed

corporate bonds.

The required reserve for these

holdings is determined each quarter using the model described above.

the portion of the HTM exposed to non-government

credit risk, the Company utilized the PD/LGD

methodology to estimate

thousand ACL as

of December 31,

value for debt

securities classified as

HTM represents amortized

cost less ACL.

mortgage-backed

collateralized mortgage

obligations of

What changed 10-K

Item 8. Financial Statements and Supplementary Data