USCB filing — read by section

Item 7. Management’s Discussion and Analysis

Item 7. 
Management's Discussion and Analysis of Financial Condition 
and Results of Operations 

 
 Management’s 
discussion 
and 
analysis 
of 
financial 
condition 
and 
results 
of 
operations 
analyzes 
the 
consolidated 
 financial condition and results of operations of the Company and 
the Bank, its wholly owned subsidiary, for the years ended 
 December 
31, 2023 
and 
2022. This 
discussion 
and 
analysis 
is best 
read 
in 
conjunction 
with 
the 
Consolidated 
Financial 
 Statements and related 
footnotes of the Company 
presented in Item 
8 “Financial Statements 
and Supplementary Data” 
of 
 this Annual Report on Form 
10-K. In addition to 
historical information, this 
discussion contains forward-looking 
statements 
 that 
involve 
risks, 
uncertainties 
and 
assumptions 
that 
could 
cause 
actual 
results 
to 
differ 
materially 
from 
management's 
 expectations. 
Factors 
that 
could 
cause 
such 
differences 
are 
discussed 
in 
the 
sections 
entitled 
"Forward-Looking 
 Statements" and Item 1A “Risk Factors" 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 
 the Company and the Bank, as 
the contest dictates. However, if 
the discussion relates to a period 
before the Effective Date, 
 the terms refer only to the Bank. 

 
 
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 51 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 CAUTIONARY NOTE REGARDING FORWARD 
-LOOKING STATEMENTS 
 This 
Annual 
Report 
on 
Form 
10-K 
contains 
statements 
that 
are 
not 
historical 
in 
nature 
are 
intended 
to 
be, 
and 
are 
 hereby identified as, forward-looking 
statements for purposes of 
the safe harbor provided by 
Section 21E of the Securities 
 Exchange Act 
of 1934, 
as amended. 
The words 
“may,” “will,” “anticipate,” “could,” 
“should,” “would,” “believe,” 
“contemplate,” 
 “expect,” “aim,” “plan,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are 
 intended 
to 
identify 
forward-looking 
statements. 
These 
forward-looking 
statements 
include 
statements 
related 
to 
our 
 projected 
growth, 
anticipated 
future 
financial 
performance, 
and 
management’s 
long-term 
performance 
goals, 
as 
well 
as 
 statements relating to 
the anticipated effects 
on results of 
operations and financial 
condition from expected 
developments 
 or events, or business and growth strategies, including 
anticipated internal growth. 
 These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ 
 materially from those anticipated in such statements. 
Potential risks and uncertainties include, but are not 
limited to: 
 •
 
the strength of the United States economy 
in general and the strength of the local 
economies in which we conduct 
 operations; 
 •
 
our ability to successfully manage interest rate risk, credit 
risk, liquidity risk, and other risks inherent to our industry; 
 •
 
the accuracy of our financial statement estimates and assumptions, including the estimates used for our credit loss 
 reserve and deferred tax asset valuation allowance; 
 •
 
the efficiency and effectiveness of our 
internal control environment; 
 •
 
our ability 
to comply 
with the 
extensive laws 
and regulations 
to which 
we are 
subject, including 
the laws 
for each 
 jurisdiction where we operate; 
 •
 
adverse 
changes 
or 
conditions 
in 
the 
capital 
and 
financial 
markets, 
including 
actual 
or 
potential 
stresses 
in 
the 
 banking industry; 
 •
 
deposit attrition and the level of our uninsured deposits; 
 •
 
legislative or regulatory 
changes and changes 
in accounting 
principles, policies, 
practices or guidelines, 
including 
 the on-going effects of the implementation of 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 
real estate, 
 in particular, commercial real estate; 
 •
 
the effects of climate change; 
 •
 
the concentration of ownership of our common stock; 
 •
 
fluctuations in the price of our common stock; 
 •
 
our ability to fund or access the capital markets at attractive 
rates and terms and manage our growth, both organic 
 growth as well as growth through other means, such as 
future acquisitions; 
 •
 
inflation, interest rate, unemployment rate, market, and monetary 
fluctuations; 
 •
 
impacts of international hostilities and geopolitical events; 
 •
 
increased 
competition 
and 
its 
effect 
on 
the 
pricing 
of 
our 
products 
and 
services 
as 
well 
as 
our 
net 
interest 
rate 
 spread and net interest margin; 
 •
 
the loss of key employees; 

 •
 
the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, 
 employee, or third-party fraud and cybersecurity breaches; 
and 

 •
 
other risks described in this Annual Report on Form 10-K 
and other filings we make with the SEC. 
 All 
forward-looking 
statements 
are 
necessarily 
only 
estimates 
of 
future 
results, 
and 
there 
can 
be 
no 
assurance 
that 
 actual results will 
not differ 
materially from expectations. 
Therefore, you are 
cautioned not to 
place undue reliance 
on any 
 forward-looking 
statements. 
Further, 
forward-looking 
statements 
included in 
this 
Annual Report 
on Form 
10-K are 
made 
 only 
as of 
the 
date 
hereof, 
and 
we 
undertake 
no 
obligation 
to 
update 
or 
revise 
any forward 
-looking 
statement 
to reflect 
 events or circumstances after the date on which the statement is made or to 
reflect the occurrence of unanticipated events, 
 unless required to do so under 
the federal securities laws. You 
should also review the risk 
factors described in 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 
 This Annual Report on Form 10-K includes 
financial information determined by methods 
other than in accordance with 
 generally 
accepted 
accounting 
principles 
(“GAAP”). 
This 
financial 
information 
includes 
certain 
operating 
performance 
 measures. Management has included these non-GAAP 
measures because it believes these measures may 
provide useful 
 supplemental information 
for evaluating 
the Company’s 
underlying performance 
trends. Further, 
management uses 
these 
 measures 
in 
managing 
and 
evaluating 
the 
Company’s 
business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
 operations and performance. 
Operating performance 
measures should be 
viewed in addition 
to, and not 
as an alternative 

 
 
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 52 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 to or 
substitute 
for, 
measures 
determined 
in 
accordance 
with 
GAAP, 
and 
are 
not 
necessarily 
comparable 
to non-GAAP 
 measures 
that 
may 
be 
presented 
by 
other 
companies. 
To 
the 
extent 
applicable, 
reconciliations 
of 
these 
non-GAAP 
 measures to the most directly 
comparable GAAP measures can be found 
in the ‘Non-GAAP Reconciliation Tables’ included 
 in this annual report.
 Overview 
 For the year ended December 31, 2023, the Company reported net income of 
$16.5 million compared with net income 
 of 
$20.1 million for the year ended December 31, 
2022. 

 In 
evaluating 
our 
financial 
performance, 
we 
consider 
the 
level 
of 
and 
trends 
in 
net 
interest 
income, 
the 
net 
interest 
 margin, the 
cost of 
deposits, growth 
and composition 
of our 
loan portfolio, 
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, 2023: 
 •
 
Net 
interest 
income 
before 
provision 
for 
credit 
losses 
totaled 
$58.6 
million, 
a 
decrease 
of 
$5.1 
million 
or 
8.0%, 
 compared to $63.7 million for the year ended December 
31, 2022. 

 •
 
Net 
interest 
margin 
(“NIM”) 
was 
2.79% 
for 
the 
year 
ended 
December 31, 
2023 
and 
3.38% 
for 
the 
year 
ended 
 December 31, 2022. 

 •
 
Total 
assets 
grew 
to 
$2.3 
billion 
at 
December 
31, 
2023, 
an 
increase 
of 
$253.3 
million 
or 
12.1%, 
compared 
to 
 December 31, 2022. 
 •
 
Total 
loans 
grew 
to 
$1.8 
billion 
at 
December 
31, 
2023, 
an 
increase 
of 
$273.5 
million 
or 
18.1%, 
compared 
to 
 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, 2023 was 8.99% compared to 10.73% in 
 2022. 
 •
 
Nonperforming assets was $468 thousand at December 
31, 2023 compared to $0 at December 31, 2022. 

 •
 
The Company maintained its strong capital position. As of December 31, 2023, the Bank was well-capitalized, with 
 a total risk-based capital ratio of 
12.65%, a tier 1 risk-based 
capital ratio of 11.48%, a common 
equity tier 1 capital 
 ratio of 
11.48%, and 
a leverage 
ratio of 
9.17%. As 
of December 
31, 2023 
and 2022, 
all of 
the Bank’s 
regulatory 
 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 
 at 
a 
weighted 
average 
price 
per 
share 
of 
$11.28. 
The 
aggregate 
purchase 
price 
for 
these 
transactions 
was 
 approximately 
$7.6 
million, 
including 
transaction 
costs. 
These 
repurchases 
were 
made 
through 
open 
market 
 purchases pursuant to the Company’s publicly announced 
repurchase program. As of December 31, 2023, 80,080 
 shares remained authorized for repurchase under this 
program. 
 •
 
On 
January 
1, 
2023, 
the 
Company 
implemented 
Accounting 
Standard 
Update 
(“ASU”) 
2016-13 
Financial 
 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 
average rate 
of 5.13%. 
 •
 
The Company 
executed two 
cash flows 
interest swap 
with a notional 
value of 
$50 million 
to manage 
exposure to 
 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. 

 
 
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 53 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 

 Critical Accounting Policies and Estimates 
 The 
consolidated 
financial 
statements 
are 
prepared 
based 
on 
the 
application 
of 
U.S. 
GAAP, 
the 
most 
significant 
of 
 which are described 
in Note 1 “Summary 
of Significant Accounting 
Policies” to our 
Consolidated Financial Statements. 
To 
 prepare financial statements in conformity with GAAP, 
management makes estimates, assumptions, 
and judgments based 
 on 
available 
information. 
These 
estimates, 
assumptions, 
and 
judgments 
affect 
the 
amounts 
reported 
in 
the 
financial 
 statements and accompanying notes. These estimates, assumptions, and judgments are based on 
information available as 
 of 
the 
date 
of 
the 
financial 
statements 
and, 
as 
this 
information 
changes, 
actual 
results 
could 
differ 
from 
the 
estimates, 
 assumptions 
and 
judgments 
reflected 
in 
the 
financial 
statements. 
In 
particular, 
management 
has 
identified 
accounting 
 policies that, due to 
the estimates, assumptions 
and judgments inherent 
in those policies, are 
critical in understanding 
our 
 financial statements. 
Management 
has presented 
the application 
of these 
policies 
to the 
audit and 
risk committee 
of our 
 Board. 

 Allowance for Credit Losses - Loans 
 The allowance for credit 
losses (“ACL”) is 
a valuation allowance that 
is established through charges 
to earnings in the 
 form of 
a provision for 
credit losses. The 
amount of the 
ACL is 
affected by the 
following: (i) charge-offs 
of loans that 
decrease 
 the allowance; 
(ii) subsequent 
recoveries on 
loans previously 
charged off 
that increase 
the allowance; 
and (iii) 
provisions 
 for credit losses charged to income that increase or decrease the allowance. Management considers the policies related to 
 the ACL as the most critical to the financial statement presentation. 

 On 
January 
1, 
2023, 
the 
Company 
implemented 
ASU 
2016-13 
Financial 
Instruments 
- 
Credit 
Losses 
(Topic 
326): 
 Measurement of Credit Losses on Financial Instruments, as amended. This update replaces the incurred 
loss methodology 
 with 
the 
CECL 
methodology. 
The 
CECL 
methodology 
measures 
expected 
credit 
losses 
and 
applies 
to 
financial 
assets 
 measured at 
amortized cost, 
including loan 
receivables and 
held-to-maturity debt 
securities. It 
also applies 
to off-balance 
 sheet 
credit 
exposures 
not 
accounted 
for 
as 
insurance 
(e.g., 
loan 
commitments, 
standby 
letters 
of 
credit, 
financial 
 guarantees, and similar instruments), as 
well as net investments in leases 
recognized by lessors in accordance 
with Topic 
 842 on leases. 
 Under CECL, the Company estimates the allowance for credit losses by utilizing pertinent available data, sourced both 
 internally and 
externally, 
relating to 
past events, 
current conditions, 
and reasonable 
and supportable 
forecasts. Historical 
 credit 
losses 
provide 
the 
foundation 
for 
estimation 
of 
expected 
credit 
losses. 
Qualitative 
adjustments 
are 
applied 
to 
the 
 estimated 
expected 
credit 
losses 
for 
the 
loan 
portfolio 
to 
account 
for 
potential 
constraints 
of 
the 
quantitative 
model. 
 Management 
employs 
a 
scorecard 
to 
facilitate 
the 
evaluation 
of 
qualitative 
factor 
adjustments 
made 
to 
expected 
credit 
 losses. 
 The estimation's 
quantitative aspect 
relies on 
the statistical 
correlation between 
the anticipated 
value of 
an economic 
 indicator and the 
historical loss 
experience implied 
within a 
selected group 
of peers. 
The Company conducted 
regression 
 analyses using 
peer data, 
inclusive of 
the Company 
itself, where 
observed credit 
losses and chosen 
economic indicators 
 were utilized to identify 
appropriate drivers for 
modeling the lifetime 
probability of default (“PD”) 
rates. A loss given 
default 
 rate (“LGD”) is assigned to each pool 
of loans for each period based on 
these PD outcomes. The model 
primarily employs 
 an expected 
discounted cash 
flow (“DCF”) 
analysis for 
segments within 
the loan 
portfolio. This 
DCF analysis 
operates at 
 the 
individual 
instrument 
level 
and 
incorporates 
various 
loan-specific 
data 
points 
and 
segment-specific 
assumptions 
to 
 ascertain the lifetime expected 
loss associated with each 
instrument. An implicit "hypothetical 
loss" is determined for 
each 
 period of the DCF, 
aiding in establishing the 
present value of future 
cash flows for each 
period. The reserve allocated 
to a 
 particular loan represents the disparity 
between the sum of the 
present value of future cash 
flows and the book balance 
of 
 the loan at the measurement date. 
 Management opted for the Remaining Life (“WARM”) methodology for five segments within the loan portfolio. For each 
 segment, 
a 
long-term 
average 
loss 
rate 
is 
computed 
and 
applied 
quarterly 
throughout 
the 
remaining 
life 
of 
the 
pool. 
 Qualitative assessments 
are conducted 
to adjust for 
economic expectations. 
To 
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. 
 Portfolio 
segments 
represent 
the 
level 
at 
which 
loss 
assumptions 
are 
applied 
to 
a 
pool of 
loans, 
determined 
by 
the 
 similarity of 
risk characteristics inherent 
in the 
included instruments, based 
on collateral 
codes and 
FFIEC Call Report 
codes. 
 Currently, 
the Company segments 
the portfolio based on 
collateral codes to establish 
reserves. Each segment 
is linked to 
 regression 
models 
(Loss 
Driver 
Analyses) 
using 
peer 
data 
for 
loans 
with 
similar 
risk 
characteristics. 
The 
Company 
has 
 established connections between 
internal segmentation and 
FFIEC Call Report 
codes for this purpose. 
The loss driver 
for 

 
 
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 54 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 each 
loan 
portfolio 
segment 
is 
derived 
from 
a 
readily 
available 
and 
reasonable 
economic 
forecast, 
including 
Federal 
 Reserve Bank projections 
of the U.S. 
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 
Group 
 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. 
 Our ACL 
included residential 
loans. To 
assess the 
potential impact 
of changes 
in qualitative 
factors related 
to these 
 loans, 
management 
performed 
a sensitivity 
analysis. 
The Company 
evaluated 
the 
impact 
of the 
HPI 
used 
in calculating 
 expected losses on the residential loan segment. 
As of 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 
constant. This 
sensitivity analysis provides 
a hypothetical result 
to assess the 
sensitivity of the 
ACL 
 and does not represent a change in management’s 
judgement. 
 As of December 
31, 2023, 
we stress 
tested two 
qualitative factors 
in our commercial 
real estate 
loan pool, 
as it’s 
the 
 largest segment 
in our 
portfolio. We 
evaluated the 
impact of 
a change 
in the 
qualitative factors 
from no 
risk to 
maximum 
 loss 
to measure 
the 
sensitivity 
of the 
qualitative 
factors. 
The change 
resulted 
in 
a $6.1 
million 
or 
32.6% 
increase 
in the 
 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. 
This reserve 
is determined 
using both 
quantitative and 
qualitative factors 
identical to 
those applied 
to the 
 collectively evaluated loan portfolio. 
 Income Taxes 
 Deferred tax 
assets and 
liabilities are 
recognized for 
the future 
tax consequences 
attributable to 
differences 
between 
 the financial statement carrying amounts of 
existing assets and liabilities and their 
respective tax bases and operating loss 
 and tax credit carryforwards. Deferred tax 
assets and liabilities are measured 
using enacted tax rates expected 
to apply to 
 taxable income 
in the 
years in 
which those 
temporary differences 
are expected 
to be 
recovered or 
settled. The 
effect 
on 
 deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment 
 date. 

 Management is required to assess whether a valuation allowance should be established on the net deferred tax assets 
 based on the 
consideration of 
all available evidence 
using a more 
likely than not 
standard. In its 
evaluation, management 
 considers taxable loss 
carry-back availability, expectation of sufficient 
taxable income, trends 
in earnings, the 
future reversal 
 of temporary differences, and available tax planning 
strategies. 
 The Company recognizes positions taken 
or expected to be 
taken in a tax 
return in accordance with existing accounting 
 guidance on 
income taxes 
which prescribes 
a recognition threshold 
and measurement 
process. Interest 
and penalties 
on 
 tax liabilities, if any, would 
be recorded in interest expense and other operating non-interest 
expense, respectively. 
 Segment Reporting 
 Management monitors the revenue streams for all its various 
products and services. The identifiable segments are not 
 material 
and 
operations 
are 
managed 
and 
financial 
performance 
is 
evaluated 
on 
an 
overall 
Company-wide 
basis. 
 Accordingly, all 
the financial service 
operations are 
considered by management 
to be 
aggregated in one 
reportable operating 
 segment.

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 55 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Results of Operations 
 General 
 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, 
 2023 
 2022 
 Consolidated Balance Sheets: 
 Total 
assets 
 $ 
 2,339,093 
 $ 
 2,085,834 
 Total 
loans 
 (1)
 $ 
 1,780,827 
 $ 
 1,507,338 
 Total 
deposits 
 $ 
 1,937,139 
 $ 
 1,829,281 
 Total 
stockholders' equity 
 $ 
 191,968 
 $ 
 182,428 
 (1) 
Loan amounts include deferred fees/costs.
 Years Ended December 31, 
 2023 
 2022 
 Consolidated Statements of Operations: 
 Net interest income before provision for credit losses 
 $ 
 58,568 
 $ 
 63,661 
 Total 
non-interest income 
 $ 
 7,403 
 $ 
 5,228 
 Total 
non-interest expense 
 $ 
 41,808 
 $ 
 39,309 
 Net income 

 $ 
 16,545 
 $ 
 20,141 
 Net income available to common stockholders 
 $ 
 16,545 
 $ 
 20,141 
 Profitability: 
 Efficiency ratio 
 63.37% 
 57.06% 
 Net interest margin 

 2.79% 
 3.38% 
 The Company’s results 
of operations 
depend substantially on 
net interest income 
and non-interest income. 
Other factors 
 contributing to the 
results of operations 
include our provision 
for credit losses, 
non-interest expense, and 
the provision for 
 income taxes. 
 Net income 
for the 
year ended 
December 31, 2023 
was $16.5 million 
, 
compared with 
net income 
of $20.1 million 
for 
 the same 
period in 
2022. The Company 
reported net 
income per 
diluted share 
for the 
year ended 
December 31, 2023 
of 
 $0.84 compared to net income per diluted share for the 
same period in 2022 of $1.00. 

 Net Interest Income 
 Net 
interest 
income 
is 
the 
difference 
between 
interest 
earned 
on 
interest-earning 
assets 
and 
interest 
incurred 
on 
 interest-bearing liabilities and 
is the 
primary driver of 
core earnings. Interest 
income is generated 
from interest and 
dividends 
 on 
interest-earning 
assets, 
including 
loans, 
investment 
securities 
and 
other 
short-term 
investments. 
Interest 
expense 
is 
 incurred 
from 
interest 
paid 
on 
interest-bearing 
liabilities, 
including 
interest-bearing 
deposits, 
FHLB 
advances 
and 
other 
 borrowings. 
 To evaluate net 
interest income, we 
measure and monitor 
(i) yields on 
loans and other 
interest-earning assets, (ii) 
the 
 costs of deposits 
and other funding 
sources, (iii) net 
interest spread, and 
(iv) net interest margin. 
Net interest spread is 
equal 
 to the difference 
between the weighted 
average yields 
earned on interest 
-earning assets 
and the weighted 
average rates 
 paid on 
interest-bearing 
liabilities. Net 
interest margin 
is equal 
to the 
annualized 
net interest 
income 
divided by 
average 
 interest-earning 
assets. 
Because 
non-interest-bearing 
sources 
of 
funds, 
such 
as 
non-interest-bearing 
deposits 
and 
 stockholders’ equity, also fund 
interest-earning assets, net interest margin includes 
the benefit of these 
non-interest-bearing 
 sources. 
 Changes in 
the market 
interest rates 
and interest 
rates we 
earn on 
interest-earning assets 
or pay on 
interest-bearing 
 liabilities, as well 
as the volume 
and types of 
interest-earning assets and interest-bearing 
and non-interest-bearing liabilities, 
 are usually the 
largest drivers of 
periodic changes in 
net interest spread, 
net interest margin 
and net interest 
income. The 
 Asset-Liability Committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect 
 net interest income and net interest margin. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 56 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The following table contains information related 
to average balance sheet, average yields 
on assets, and average costs 
 of liabilities for the periods indicated (in thousands): 
 Years Ended December 31, 
 2023 
 2022 
 Average 
 Balance
 
(1)
 Interest 
 Yield/Rate 
 Average 
 Balance
 
(1)
 Interest 
 Yield/Rate 
 Assets 
 Interest-earning assets: 
 Loans 
 (2)
 $ 
 1,606,960 
 $ 
 87,884 
 5.47 
 % 
 $ 
 1,341,693 
 $ 
 60,825 
 4.53 
 % 
 Investment securities 
 (3)
 423,749 
 10,012 
 2.36 
 % 
 470,508 
 9,346 
 1.99 
 % 
 Other interest earnings assets 
 65,986 
 3,121 
 4.73 
 % 
 70,873 
 929 
 1.31 
 % 
 Total 
interest-earning assets 
 2,096,695 
 101,017 
 4.82 
 % 
 1,883,074 
 71,100 
 3.78 
 % 
 Non-interest earning assets 
 109,541 
 

 

 107,536 
 

 Total 
assets 
 $ 
 2,206,236 
 

 

 $ 
 1,990,610 
 

 Liabilities and stockholders' equity 
 

 

 

 

 

 Interest-bearing liabilities: 
 

 

 

 

 

 Interest-bearing demand deposits 
 $ 
 53,324 
 901 
 1.69 
 % 
 $ 
 64,835 
 86 
 0.13 
 % 
 Saving and money market deposits 
 963,708 
 29,658 
 3.08 
 % 
 803,426 
 5,173 
 0.64 
 % 
 Time deposits 
 268,715 
 8,500 
 3.16 
 % 
 220,319 
 1,509 
 0.68 
 % 
 Total 
interest-bearing deposits 
 1,285,747 
 39,059 
 3.04 
 % 
 1,088,580 
 6,768 
 0.62 
 % 
 Borrowings and repurchase agreements 
 94,936 
 3,390 
 3.57 
 % 
 38,463 
 671 
 1.74 
 % 
 Total 
interest-bearing liabilities 
 1,380,683 
 42,449 
 3.07 
 % 
 1,127,043 
 7,439 
 0.66 
 % 
 Non-interest bearing demand deposits 
 607,506 
 

 

 645,366 
 

 

 Other non-interest-bearing liabilities 
 34,010 
 

 

 30,449 
 

 

 Total 
liabilities 
 2,022,199 
 

 

 1,802,858 
 

 

 Stockholders' equity 
 184,038 
 

 

 187,752 
 

 

 Total 
liabilities and stockholders' equity 
 $ 
 2,206,236 
 

 

 $ 
 1,990,610 
 

 

 Net interest income 
 $ 
 58,568 
 

 $ 
 63,661 
 

 Net interest spread 
 (4)
 

 1.74 
 % 
 3.12 
 % 
 Net interest margin 
 (5)
 

 

 2.79 
 % 
 3.38 
 % 
 (1) 
Average balances - Daily average balances are used 
to calculate yields/rates.
 (2) 
Average loan balances include non-accrual loans. Interest income 
on loans includes accretion of deferred 
loan fees, net of deferred loan costs.
 (3) 
At fair value except for securities held to maturity. This amount includes 
FHLB stock.
 (4) 
Net interest spread is the weighted average 
yield on total interest-earning assets minus the weighted 
average rate on total interest-bearing liabilities.
 (5) 
Net interest margin is the ratio of net interest 
income to average total interest-earning assets.
 Net interest 
income before 
the provision 
for credit 
losses was 
$58.6 million for 
the year 
ended December 31, 
2023, a 
 decrease of 
$5.1 million or 
8.0%, from 
$63.7 million for 
the year 
ended December 31, 
2022. This 
decrease was 
primarily 
 attributable to higher 
cost of funds 
due to the interest 
rate market. 
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. 

 The net 
interest margin was 
2.79% for 
the year ended 
December 31, 2023 and 
3.38% 
for the 
year ended 2022. 
Although 
 the overall 
and individual 
yields for 
interest-earning assets 
and interest-bearing 
liabilities both 
increased in 
2023, cost 
of 
 funds had a 
greater increase 
when compared 
to 2022. The 
increase in 
our cost of 
funds was primarily 
due to the 
interest 
 rate market. 
 Provision for Credit Losses 
 ACL represents expected 
credit losses 
in our 
portfolio as 
the measurement 
date. We 
maintain an 
adequate ACL that 
 can 
mitigate 
expected 
credit 
losses 
in 
the 
loan 
portfolio. 
The ACL 
is 
increased 
by 
the 
provision 
for 
credit 
losses 
and 
is 
 decreased by charge-offs, net 
of recoveries on prior 
loan charge-offs. There are 
multiple credit quality metrics 
that we use 
 to base 
our determination 
of the 
amount 
of the 
ACL and 
corresponding 
provision 
for credit 
losses. These 
credit metrics 
 evaluate the 
credit quality 
and level 
of credit 
risk inherent 
in our 
loan portfolio, 
assess 
non-performing loans 
and charge-
 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. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 57 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 See “Allowance 
for Credit 
Losses” below 
for further 
discussion on 
how the 
ACL 
was calculated for 
the periods 
presented. 

 Non-Interest Income 
 Net interest income 
and other types of 
recurring non-interest 
income are generated 
from our operations. 
Our services 
 and products generate service charges and fees, mainly from our depository accounts. We also 
generate income from gain 
 on sale of loans though our swap and SBA programs. In addition, we own 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 periods indicated (in thousands): 
 Years Ended December 31, 
 2023 
 2022 
 Service fees 
 $ 
 5,055 
 $ 
 4,010 
 Gain (loss) on sale of securities available for sale, net 
 (1,859) 
 (2,529) 
 Gain on sale of loans held for sale, net 
 801 
 891 
 Loan settlement 
 - 
 161 
 Other non-interest income 
 3,406 
 2,695 
 Total 
non-interest income 
 $ 
 7,403 
 $ 
 5,228 
 Non-interest income 
for the 
year ended 
December 31, 
2023 was 
$7.4 
million compared 
to $5.2 
million for 
the same 
 period in 
2022. This 
increase was 
primarily driven by 
a $1.0 
million increase in 
service fees, consisting 
mainly of wire 
transfer 
 fees. 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 
 of 
securities 
for 
2023 
was 
$1.9 
million 
and 
$2.5 
million 
for 
2022. 
Proceeds 
from 
the 
sale 
transactions 
were 
primarily 
 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 periods indicated (in thousands):
 Years Ended December 31, 
 2023 
 2022 
 Salaries and employee benefits 
 $ 
 24,429 
 $ 
 23,943 
 Occupancy 
 5,230 
 5,058 
 Regulatory assessment and fees 
 1,453 
 930 
 Consulting and legal fees 
 1,899 
 1,890 
 Network and information technology services 
 2,016 
 1,806 
 Other operating 
 6,781 
 5,682 
 Total 
non-interest expense 
 $ 
 41,808 
 $ 
 39,309 
 Non-interest expense 
for the 
year ended 
December 31, 2023 
increased $2.5 million 
or 6.4%, 
compared to 
the same 
 period in 2022. The increase is 
primarily due to other operating expense specially in 
the categories of internet banking fees, 
 promotional expense, audit 
and tax 
service fees, and 
insurance expense due 
to increased 
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 
 2022. Salaries and benefits increased by $486 thousand or 2.0% 
due to increase in full time employees to 196 from 191 
in 
 2022. The increase 
in salaries and 
employee benefits 
and other operating 
costs has 
enabled us to 
support recent 
growth 
 and has provided us with the necessary technology and 
required professionals to execute our growth strategy. 

 Provision for Income Tax 
 Fluctuations in the effective tax rate reflect the effect of the differences in the inclusion or deductibility of certain income 
 and expense for income tax purposes. 
Therefore, future decisions on the investments we 
choose will affect our effective tax 
 rate. Changes in the 
cash surrender value 
of bank-owned life 
insurance policies for 
key employees, purchasing 
municipal 
 bonds, and overall taxable income will be important elements 
in determining our effective tax rate. 
 Income tax 
expense for 
the year 
ended 
December 31, 
2023 was 
$5.3 million, 
compared 
to $6.9 
million 
for the 
year 
 ended December 31, 2022. The 
effective tax rate for 
the year ended December 31, 2023 
was 24.1% and for the 
year ended 
 December 31, 2022 was 25.6%. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 58 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 For a further discussion 
on income taxes, see 
Note 6 “Income Taxes” to 
the Consolidated Financial 
Statements in this 
 Annual Report on Form 10-K. 
 Rate/Volume Analysis 
 The 
table 
below 
sets 
forth 
information 
regarding 
changes 
in 
interest 
income 
and 
interest 
expense 
for 
the 
periods 
 indicated (in thousands). 
For each category of 
interest-earning assets and interest-bearing liabilities, 
information is provided 
 on changes attributable to (i) changes in rate (changes in rate multiplied by old volume); (ii) changes in volume (changes in 
 volume multiplied by old rate); and (iii) changes in rate-volume (change in 
rate multiplied by change in volume). Changes in 
 rate-volume are proportionately allocated between rate and volume 
variance (in thousands). 
 Years Ended 2023 vs. 2022 
 Years Ended 2022 vs. 2021 
 Increase (decrease) due to change in 
 Increase (decrease) due to change in 
 Volume 
 Rate 
 Net 
 Change 
 Volume 
 Rate 
 Net 
 Change 
 Interest-earning assets: 
 Loans 
 (1)
 $ 
 12,026 
 $ 
 15,033 
 $ 
 27,059 
 $ 
 9,847 
 $ 
 2,248 
 $ 
 12,095 
 Investment securities 
 (2)
 (929) 
 1,595 
 666 
 1,306 
 154 
 1,460 
 Other interest earnings assets 
 (64) 
 2,256 
 2,192 
 (25) 
 848 
 823 
 Total increase (decrease) in interest income 
 $ 
 11,033 
 $ 
 18,884 
 $ 
 29,917 
 $ 
 11,128 
 $ 
 3,250 
 $ 
 14,378 
 Interest-bearing liabilities: 
 Interest-bearing demand deposits 
 $ 
 (15) 
 $ 
 830 
 $ 
 815 
 $ 
 14 
 $ 
 13 
 $ 
 27 
 Saving and money market deposits 
 1,032 
 23,453 
 24,485 
 617 
 2,474 
 3,091 
 Time deposits 
 331 
 6,660 
 6,991 
 (96) 
 74 
 (22) 
 Borrowings and repurchase agreements 
 985 
 1,734 
 2,719 
 38 
 79 
 117 
 Total increase (decrease) in interest expense 
 2,333 
 32,677 
 35,010 
 572 
 2,641 
 3,213 
 Increase (decrease) in net interest income 
 $ 
 8,700 
 $ 
 (13,793) 
 $ 
 (5,093) 
 $ 
 10,556 
 $ 
 609 
 $ 
 11,165 
 (1) 
Average loan balances include non-accrual loans. Interest income 
on loans includes accretion of deferred 
loan fees, net of deferred loan costs.
 (2) 
At fair value except for securities held to maturity. This amount includes 
FHLB stock.
 Both average yields on 
interest-earning assets and 
average rates paid on 
interest-bearing liabilities increased 
in 2023 
 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 
 Total 
assets at December 31, 2023, were $2.3 billion, an increase of $253.3 million, or 12.1%, over total assets of $2.1 
 billion at 
December 31, 2022. 
Total loans increased $273.5 
million, or 
18.1%, to 
$1.8 billion 
at December 31, 
2023 compared 
 to $1.5 billion 
at December 31, 
2022. 
Total 
deposits increased 
by $107.9 million, 
or 5.9%, to 
$1.9 billion at 
December 31, 
 2023 compared to $1.8 billion at December 31, 2022. 
 Investment Securities 
 The investment portfolio 
is used and 
managed to provide 
liquidity through cash 
flows, marketability 
and, if necessary, 
 collateral for 
borrowings. The 
investment portfolio 
is also 
used as 
a tool 
to manage 
interest rate 
risk and 
the Company’s 
 capital market risk exposure. The 
operating philosophy of the portfolio is 
to maximize the Company’s profitability, 
taking into 
 consideration the 
Company’s risk 
appetite and 
tolerance, manage 
it’s asset 
composition and 
diversification, and 
maintain 
 adequate risk-based capital ratios. 
 The 
investment 
portfolio 
is 
managed 
in 
accordance 
with 
the 
Asset 
and 
Liability 
Management 
(“ALM”) 
policy, 
which 
 includes an 
investment guideline, 
approved by 
the Board. 
Such policy 
is reviewed 
at least 
annually or 
more frequently 
if 
 deemed necessary, 
depending on 
market 
conditions 
and/or 
unexpected 
events. 
The investment 
portfolio 
composition 
is 
 subject 
to 
change 
depending 
on 
the 
funding 
and 
liquidity 
needs 
of 
the 
Company, 
and 
the 
interest 
risk 
management 
 objectives directed by the ALCO. The portfolio of investments can be used to modify the duration of the balance sheet. 
The 
 allocation of cash into securities takes into consideration anticipated 
future cash flows (uses and sources) and all available 
 sources of credit. 
 Our 
investment 
portfolio 
consists 
primarily 
of 
securities 
issued 
by 
U.S. 
government-sponsored 
agencies, 
agency 
 mortgage-backed securities, 
collateralized mortgage 
obligation securities, 
municipal securities, 
and other 
debt securities, 

 
 
 Table of Contents 
 

 

 59 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 all with varying contractual maturities and coupons. Due to the optionality embedded in these securities, the final maturities 
 do not 
necessarily represent the 
expected life of 
the portfolio. Some 
of these 
securities will be 
called or paid 
down depending 
 on capital market conditions and expectations. The investment portfolio is regularly reviewed by the Chief Financial Officer, 
 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”) 
 debt 
securities. 
During 
the 
third 
quarter 
of 
2022, 
26 
investment 
securities 
were 
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 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 
over the 
 remaining life 
of the 
security. There was no 
impact to 
net income on 
the date of 
transfer. 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 
as well 
as the 
impact of 
projected 
economic forecast. 
For U.S. 
Government bonds 
and 
U.S. Agency 
 issued bonds in HTM the explicit guarantee 
of the US Government is sufficient 
to conclude that a credit loss reserve 
is not 
 required. The reserve 
requirement is for 
three primary assets 
groups: municipal bonds, 
corporate bonds, and 
non-agency 
 securitizations. 
The 
Company 
calculates 
quarterly 
the 
loss 
reserve 
utilizing 
Moody’s 
ImpairmentStudio. 
The 
CECL 
 measurement 
for 
investment 
securities 
incorporates 
historical 
data, 
containing 
defaults 
and 
recoveries 
information, 
and 
 Moody’s baseline 
economic forecast. 
The solution 
uses probability 
of default/loss 
given default (“PD/LGD”) 
approach. PD 
 represents the likelihood a borrower will 
default. Within the Moody’s model, 
this is determined using historical 
default data, 
 adjusted for the current economic environment. LGD projects 
the expected loss if a borrower were to default. 
 The Company 
monitors the credit 
quality of HTM 
securities through the 
use of 
credit ratings. Credit 
ratings are monitored 
 by the Company 
on at least 
a quarterly basis. 
As of December 
31, 2023 and 
December 31, 2022, 
all HTM securities 
held 
 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 
 bonds and 
mortgage-backed 
securities. 
Because 
of the 
explicit and/or 
implicit 
guarantee 
on these 
bonds, 
the 
Company 
 holds no reserves 
on these 
holdings. The 
remaining portion 
of the HTM 
portfolio is 
made up of 
$9.4 million 
in investment 
 grade 
corporate 
bonds. 
The 
required 
reserve 
for 
these 
holdings 
is 
determined 
each 
quarter 
using 
the 
model 
described 
 above. For the portion of the HTM 
exposed to non-government credit risk, 
the Company utilized the PD/LGD 
methodology 
 to estimate a $8 thousand ACL as of December 31, 
2023. The book value for debt securities classified 
as HTM represents 
 amortized cost less ACL. 
 AFS and HTM 
investment securities 
in aggregate 
decreased $14.5 million 
or 3.5% 
to $404.3 million 
at December 31, 
 2023 from $418.8 
million at 
December 31, 2022. 
Investment securities 
decreased over the 
past year as 
repayments from 
 securities were 
allocated to 
fund loan 
growth. 
Management reinvested 
the repayments 
of securities 
and income 
from the 
 sale of securities into higher 
yielding loans. As of December 
31, 2023, securities with 
a market value of $86.9 
million were 
 pledged to secure public deposits and $132.1 million pledged in securities measured at par to the Federal Reserve Bank of 
 Atlanta 
for 
the 
BTFP 
program. 
As 
of 
December 31, 
2023, 
the 
Company 
did 
not 
have 
any 
tax-exempt 
securities 
in 
the 
 portfolio. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 60 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The 
following 
table 
presents 
the 
amortized 
cost 
and 
fair 
value 
of 
investment 
securities 
for 
the 
dates 
indicated 
(in 
 thousands): 
 December 31, 2023
 December 31, 2022
 Available-for-sale:
 Amortized 
 Cost
 Fair Value
 Amortized 
 Cost
 Fair Value
 U.S. Government Agency
 $
 9,664
 $
 8,173
 $
 10,177
 $
 8,655
 Collateralized mortgage obligations
 103,645
 80,606
 118,951
 95,541
 Mortgage-backed securities - residential
 63,795
 52,187
 73,838
 60,879
 Mortgage-backed securities - commercial
 49,212
 42,764
 32,244
 27,954
 Municipal securities
 25,005
 19,338
 25,084
 18,483
 Bank subordinated debt securities
 28,106
 26,261
 15,964
 14,919
 Corporate bonds
 
- 

 
- 

 4,037
 3,709
 $
 279,427
 $
 229,329
 $
 280,295
 $
 230,140
 Held-to-maturity:
 U.S. Government Agency
 $
 43,626
 $
 38,306
 $
 44,914
 $
 39,062
 U.S. Treasury
 
- 

 
- 

 9,841
 9,828
 Collateralized mortgage obligations
 62,735
 54,752
 68,727
 60,925
 Mortgage-backed securities - Residential
 43,784
 39,599
 42,685
 38,483
 Mortgage-backed securities - Commercial
 15,439
 14,182
 11,442
 10,777
 Corporate bonds
 9,398
 8,671
 11,090
 10,013
 $
 174,982
 $
 155,510
 $
 188,699
 $
 169,088
 Allowance for credit losses - securities held-to-maturity
 (8)
 Securities held-to maturity, net of allowance for credit losses
 $
 174,974
 The following 
table shows 
the weighted 
average yields, 
categorized by 
contractual maturity, 
for investment 
securities 
 as of December 31, 2023 (in thousands, except ratios): 

 After 1 year through 5 
 years 
 After 5 years through 
 10 years 
 After 10 years 
 Total 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Available-for-sale: 
 U.S. Government Agency 
 $ 
 - 
 - 
 $ 
 2,364 
 

 3.16% 
 $ 
 7,300 
 

 2.13% 
 $ 
 9,664 
 2.39% 
 Collateralized mortgage obligations 
 - 
 - 
 - 
 - 
 103,645 
 1.41% 
 103,645 
 1.41% 
 MBS - residential 
 - 
 - 
 - 
 - 
 63,795 
 1.87% 
 63,795 
 1.87% 
 MBS - commercial 
 - 
 - 
 - 
 - 
 49,212 
 2.67% 
 49,212 
 2.67% 
 Municipal securities 

 - 
 - 
 6,720 
 1.66% 
 18,285 
 1.77% 
 25,005 
 1.74% 
 Bank subordinated debt securities 
 2,710 
 8.75% 
 25,396 
 5.15% 
 - 
 - 
 28,106 
 5.50% 
 $ 
 2,710 
 8.75% 
 $ 
 34,480 
 4.33% 
 $ 
 242,237 
 1.83% 
 $ 
 279,427 
 2.21% 
 Held-to-maturity: 
 U.S. Government Agency 

 $ 
 7,927 
 1.02% 
 $ 
 20,153 
 1.46% 
 $ 
 15,546 
 1.84% 
 $ 
 43,626 
 1.52% 
 Collateralized mortgage obligations 
 - 
 - 
 - 
 - 
 62,735 
 1.66% 
 62,735 
 1.66% 
 MBS - residential 
 4,439 
 1.85% 
 5,916 
 1.74% 
 33,429 
 2.40% 
 43,784 
 2.26% 
 MBS - commercial 
 3,072 
 1.62% 
 - 
 - 
 12,367 
 2.61% 
 15,439 
 2.42% 
 Corporate bonds 
 9,398 
 2.80% 
 - 
 - 
 - 
 - 
 9,398 
 2.80% 
 $ 
 24,836 
 1.92% 
 $ 
 26,069 
 1.52% 
 $ 
 124,077 
 1.98% 
 $ 
 174,982 
 1.90% 
 Loans 
 Loans are 
the largest 
category of 
interest-earning assets 
on the 
Consolidated 
Balance Sheets, 
and usually 
provides 
 higher yields than the remainder of the Company’s 
interest-earning assets. Higher yields typically carry 
inherent credit and 
 liquidity risks in 
comparison to lower 
yielding assets. The 
Company manages and 
mitigates such risks 
in accordance with 
 the credit and ALM policies, risk tolerance and balance 
sheet composition. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 61 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The following table shows the loan portfolio composition 
as of the dates indicated (in thousands): 
 December 31, 2023
 December 31, 2022
 Total
 Percent of 
 Total
 Total
 Percent of 
 Total
 Residential Real Estate
 $
 204,419
 11.5
 %
 $
 185,636
 12.3
 %
 Commercial Real Estate
 1,047,593
 58.8
 %
 970,410
 64.4
 %
 Commercial and Industrial
 219,757
 12.4
 %
 126,984
 8.4
 %
 Foreign Banks
 114,945
 6.5
 %
 93,769
 6.2
 %
 Consumer and Other 
 191,930
 10.8
 %
 130,429
 8.7
 %
 Total 
gross loans
 1,778,644
 100.0
 %
 1,507,228
 100.0
 %
 Plus: Deferred cost
 2,183
 110
 Total 
loans net of deferred cost
 1,780,827
 1,507,338
 Less: Allowance for credit losses
 21,084
 17,487
 Total 
net loans
 $
 1,759,743
 $
 1,489,851
 Total 
gross loans increased 
by $271.4 million 
or 18.0% at 
December 31, 2023 
compared to December 
31, 2022. The 
 most significant growth 
was in the 
commercial and 
industrial and 
commercial real 
estate loan pools. 
Consumer and 
other 
 loans increased primarily as result of organic growth from our yacht lending business vertical created in January 2022. Our 
 loan 
portfolio 
continues 
to 
diversify 
as 
commercial 
and 
industrial 
and 
consumer 
loans, 
mostly 
yacht 
loans, 
continue 
to 
 increase as a percentage to 
total loans. However, 
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. 
 The 
growth 
experienced 
over 
the 
last 
couple 
of 
years 
is 
primarily 
due 
to 
implementation 
of 
our 
relationship-based 
 banking 
model, 
our 
diversified 
business 
verticals, 
and 
the 
success 
of 
our 
relationship 
managers 
in 
competing 
for 
new 
 business in a highly competitive metropolitan area. Many of 
our larger loan clients have lengthy relationships with members 
 of our senior management team or our relationship managers 
that date back to former institutions. 

 From a 
liquidity perspective, 
our loan 
portfolio provides 
us with 
additional 
liquidity due 
to repayments 
or unexpected 
 prepayments. 
The 
following 
table 
shows 
maturities 
and 
sensitivity 
to 
interest 
rate 
changes 
for 
the 
loan 
portfolio 
at 
 December 31, 2023 (in thousands): 
 Due in 1 year or 
 less
 Due in 1 to 5 
 years
 Due after 5 to 15 
 years
 Due after 15 
 years
 Total
 Residential Real Estate
 $
 4,985
 $
 29,108
 $
 77,209
 $
 93,117
 $
 204,419
 Commercial Real Estate
 97,100
 186,345
 757,106
 7,042
 1,047,593
 Commercial and Industrial
 12,254
 50,280
 117,119
 40,104
 219,757
 Foreign Banks
 114,945
 -
 -
 -
 114,945
 Consumer and Other
 2,159
 3,232
 10,846
 175,693
 191,930
 Total 
gross loans
 $
 231,443
 $
 268,965
 $
 962,280
 $
 315,956
 $
 1,778,644
 Interest rate sensitivity:
 Fixed interest rates
 $
 195,381
 $
 156,815
 $
 188,148
 $
 208,681
 $
 749,025
 Floating or adjustable rates
 36,062
 112,150
 774,132
 107,275
 1,029,619
 Total 
gross loans
 $
 231,443
 $
 268,965
 $
 962,280
 $
 315,956
 $
 1,778,644
 The information 
presented 
in the 
table above 
is based 
upon the 
contractual 
maturities of 
the individual 
loans, which 
 may be 
subject to 
renewal at 
their contractual 
maturity. 
Renewals will 
depend on 
approval by 
our credit 
department and 
 balance sheet 
composition at the 
time of 
the analysis, 
as well 
as any 
modification of terms 
at the 
loan’s maturity. Additionally, 
 maturity 
concentrations, 
loan 
duration, 
prepayment 
speeds 
and 
other 
interest 
rate 
sensitivity 
measures 
are 
discussed, 
 reviewed, and analyzed by the ALCO. Decisions on term 
rate modifications are discussed as well. 

 As of 
December 31, 
2023, approximately 
57.9% 
of the 
loans 
have adjustable/variable 
rates 
and 
42.1% 
of the 
loans 
 have fixed rates. 
The adjustable/variable 
loans re-price to 
different benchmarks 
and tenors in 
different periods 
of time. By 
 contractual characteristics, there are no 
material concentrations on anniversary repricing. Additionally, it is 
important to note 
 that most 
of our 
loans have 
interest rate 
floors. This 
embedded option 
protects the 
Company from 
a decrease 
in interest 
 rates and positions us to gain in the scenario of higher interest 
rates. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 62 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 As of 
December 31, 2023, the 
commercial real estate 
portfolio was $1.0 
billion or 58.8% 
of the 
total gross loans 
portfolio, 
 17% of outstanding balances are 
characterized as owner occupied and 
83% are characterized as non-owner 
occupied. The 
 retail sector was $285.7 million or 33% of the $868.1 million 
non-owner occupied CRE portfolio. 
 The 
following 
table 
is 
a 
summary 
of 
the 
distribution 
of 
non-owner 
occupied 
commercial 
real 
estate 
loans 
held 
for 
 investment by loan type (in thousands): 
 December 31, 2023
 Balance
 # of Notes
 % of Total 
 Gross Loans
 Average Loan Size
 Non-Accruals
 Weighted Avg 
 LTV 
 (1)
 Retail
 $
 285,728
 98
 16%
 $
 2,916
 $
 -
 55%
 Multifamily
 179,976
 125
 10%
 1,440
 -
 59%
 Warehouse
 127,824
 51
 7%
 2,506
 -
 55%
 Office
 123,938
 57
 7%
 2,174
 -
 53%
 Hotels/Motels
 86,490
 17
 5%
 5,088
 -
 55%
 Construction/Land
 36,668
 16
 2%
 2,292
 -
 52%
 Other
 27,395
 18
 2%
 1,522
 -
 52%
 $
 868,019
 382
 49%
 $
 2,272
 $
 -
 $
 55%
 (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 
 (1)
 Rest of Florida 
 (2)
 Outside Florida 
 (3)
 Balance
 % of Non-
 Owner 
 Occupied 
 CRE Loans
 Balance
 % of Non-
 Owner 
 Occupied 
 CRE Loans
 Balance
 % of Non-
 Owner 
 Occupied 
 CRE Loans
 Retail
 $
 169,834
 20%
 $
 48,204
 6%
 $
 67,690
 8%
 Multifamily
 138,497
 16%
 41,480
 5%
 
- 

 
- 

 Warehouse
 75,543
 9%
 49,705
 6%
 2,576
 0%
 Office
 83,694
 10%
 31,157
 4%
 9,087
 1%
 Hotels/Motels
 63,562
 7%
 22,927
 3%
 
- 

 
- 

 Construction/Land
 36,093
 4%
 575
 0%
 
- 

 
- 

 Other
 20,295
 2%
 7,100
 1%
 
- 

 
- 

 $
 587,518
 68%
 $
 201,148
 23%
 $
 79,353
 9%
 (1) Miami-Dade, Broward, and West Palm Beach counties
 (2) All other Florida counties
 (3) Within the U.S. 
 As of December 
31, 2023, 
68% of the 
non-owner occupied 
CRE portfolio 
were located 
within South Florida, 
and only 
 10 loan 
notes with 
an outstanding 
balance of 
$79.4 million 
are located 
outside Florida. 
Balances of 
non-owner 
occupied 
 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 

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

 The internal credit risk grades used by the Company to 
assess the credit worthiness of a loan are shown below: 
 Pass 
 – Loans indicate different levels of satisfactory 
financial condition and performance. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 63 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Special Mention
 
– Loans classified as special mention have a potential weakness 
that deserves management’s 
 close attention. If left uncorrected, these potential weaknesses 
may result in deterioration of the repayment 
 prospects for the loan or of the institution’s 
credit position at some future date. 

 Substandard 
 – Loans classified as substandard are inadequately protected 
by the current net worth and paying 
 capacity of the obligator or of the collateral pledged, if 
any. Loans so classified 
have a well-defined weakness or 
 weaknesses that jeopardize the liquidation of the debt. 
They are characterized by the distinct possibility that the 
 institution will sustain some loss if the deficiencies are 
not corrected. 

 Doubtful
 
– Loans classified as doubtful have all the weaknesses inherent 
in those classified at substandard, with 
 the added characteristic that the weaknesses make collection 
or liquidation in full on the basis of currently existing 
 facts, conditions, and values, highly questionable and improbable. 

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

 December 31, 2023
 Pass
 Special Mention
 Substandard
 Doubtful
 Total
 Residential Real Estate
 $
 204,127
 $
 -
 $
 292
 $
 -
 $
 204,419
 Commercial Real Estate
 1,040,032
 -
 7,561
 -
 1,047,593
 Commercial and Industrial
 218,129
 -
 1,628
 -
 219,757
 Foreign Banks
 114,945
 -
 -
 -
 114,945
 Consumer and Other 
 191,930
 -
 -
 -
 191,930
 $
 1,769,163
 $
 -
 $
 9,481
 $
 -
 $
 1,778,644
 December 31, 2022
 Pass
 Special Mention
 Substandard
 Doubtful
 Total
 Residential Real Estate
 $
 185,636
 $
 -
 $
 -
 $
 -
 $
 185,636
 Commercial Real Estate
 967,465
 -
 2,945
 -
 970,410
 Commercial and Industrial
 126,177
 -
 807
 -
 126,984
 Foreign Banks
 93,769
 -
 -
 -
 93,769
 Consumer and Other 
 130,233
 -
 196
 -
 130,429
 $
 1,503,280
 $
 -
 $
 3,948
 $
 -
 $
 1,507,228
 Non-Performing Assets 
 The following table presents non-performing assets as 
of December 31, 2023 and 2022 (in thousands, except 
ratios): 
 2023
 2022
 Total 
non-performing loans
 $
 468
 $
 -
 Other real estate owned
 -
 -
 Total 
non-performing assets
 468
 -
 Asset quality ratios: 
 (1)
 -
 -
 Allowance for credit losses to total loans
 1.18%
 1.16%
 Allowance for credit losses to non-performing loans
 4505%
 - %
 Non-performing loans to total loans
 0.03%
 - %
 (1) ACL was calculated under CECL methodology for 2023, and incurred loss methodology for 2022
 Non-performing 
assets 
include 
all 
loans 
categorized 
as non-accrual 
or restructured, 
impaired 
securities, 
OREO 
and 
 other repossessed assets. Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on 
 a 
non-accrual 
status. 
This 
determination 
is 
based 
on 
current 
existing 
facts 
concerning 
collateral 
values 
and 
the 
paying 
 capacity of the borrower. When the collection of the full contractual balance is unlikely, 
the loan is placed on non-accrual to 
 avoid overstating the Company’s income for a 
loan with increased credit risk. 

 If the 
principal or 
interest on 
a commercial 
loan becomes 
due and 
unpaid for 
90 days 
or more, 
the loan 
is placed 
on 
 non-accrual status as of 
the date it becomes 
90 days past due 
and remains in non-accrual 
status until it meets 
the criteria 
 for restoration to accrual status. 
Residential loans, on 
the other hand, are placed 
on non-accrual status when 
the principal 
 or interest 
becomes due 
and unpaid 
for 120 
days or 
more and remains 
in non-accrual 
status until 
it meets 
the criteria 
for 
 restoration 
to 
accrual 
status. 
Restoring 
a 
loan 
to 
accrual 
status 
is 
possible 
when 
the 
borrower 
resumes 
payment 
of 
all 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 64 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 principal and interest 
payments for a period 
of six months 
and the Company 
has a documented 
expectation of repayment 
 of the remaining contractual principal and interest or the 
loan becomes secured and in the process of collection. 
 The 
Company 
may 
grant 
a 
loan 
concession 
to 
a 
borrower 
experiencing 
financial 
difficulties. 
This 
determination 
is 
 performed during 
the annual 
review process 
or whenever 
problems are 
surfacing regarding 
the client’s 
ability to 
repay in 
 accordance with 
the original 
terms of 
the loan 
or line 
of credit. 
The concessions 
are given 
to the 
debtor in 
various forms, 
 including interest rate 
reductions, principal forgiveness, extension 
of maturity date, 
waiver, or deferral of 
payments and other 
 concessions intended to minimize potential losses. 
 For further 
discussion on 
non-performing loans, 
see Note 
3 “Loans” 
to the 
Consolidated Financial 
Statements in 
this 
 Annual Report on Form 10-K. 
 Allowance for Credit Losses 
 On January 1, 
2023, the Company 
adopted FASB ASU 2016-13, which 
introduced the CECL methodology 
and required 
 us to 
estimate all 
expected credit 
losses over 
the remaining 
life of 
our loan 
portfolio. Accordingly, 
the ACL 
represents an 
 amount 
that, 
in 
management's 
evaluation, 
is 
adequate 
to 
provide 
coverage 
for 
all 
expected 
future 
credit 
losses 
on 
 outstanding loans as of the 
measurement date. Additionally, 
qualitative adjustments are made to 
the ACL when, based on 
 management’s judgment, there 
are factors impacting 
the allowance estimate 
not considered by 
the quantitative calculations. 
 See 
Note 
3 
“Loans” 
to 
the 
Consolidated 
Financial 
Statements 
set 
forth 
in 
Item 
8 
of 
Part 
1 
of 
this 
Form 
10-K 
for 
more 
 information on the allowance for credit losses. 
 The following table presents ACL and net charge-offs to average loans by 
type for the periods indicated (in thousands): 
 Residential
 Real Estate
 Commercial
 Real Estate
 Commercial
 and Industrial
 Foreign 

 Banks
 Consumer 
 and Other
 Total
 December 31, 2023:
 

 

 

 

 

 

 Beginning balance
 $
 1,352
 $
 10,143
 $
 4,163
 $
 720
 $
 1,109
 $
 17,487
 Cumulative effect of adoption of 
 accounting principle 
 (1)
 1,238
 1,105
 (2,158)
 23
 858
 1,066
 Provision for credit losses 
 (2)
 95
 (882)
 1,897
 168
 1,225
 2,503
 Recoveries
 10
 -
 72
 -
 3
 85
 Charge-offs
 -
 -
 -
 -
 (57)
 (57)
 Ending Balance 
 $
 2,695
 $
 10,366
 $
 3,974
 $
 911
 $
 3,138
 $
 21,084
 Average loans
 $
 186,854
 $
 986,234
 $
 179,574
 $
 93,364
 $
 160,934
 $
 1,606,960
 Net charge-offs (recoveries) to 
 average loans
 (0.01)%
 -
 (0.04)%
 -
 0.03%
 (0.00)%
 December 31, 2022:
 Beginning balance
 $
 2,498
 $
 8,758
 $
 2,775
 $
 457
 $
 569
 $
 15,057
 Provision for credit losses
 (1,179)
 1,385
 1,474
 263
 552
 2,495
 Recoveries
 33
 -
 18
 -
 4
 55
 Charge-offs
 -
 -
 (104)
 -
 (16)
 (120)
 Ending Balance 
 $
 1,352
 $
 10,143
 $
 4,163
 $
 720
 $
 1,109
 $
 17,487
 Average loans
 $
 193,368
 $
 842,914
 $
 127,473
 $
 81,421
 $
 96,517
 $
 1,341,693
 Net charge-offs (recoveries) to 
 average loans
 (0.02)%
 -
 0.07%
 -
 0.01%
 0.00%
 (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.

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 65 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The 
following 
table 
presents 
ACL 
by 
type 
and 
its 
individual 
percentage 
to 
total 
loans 
for 
the 
periods 
indicated 
(in 
 thousands): 
 December 31, 
 2023
 2022
 Loan Category
 Allowance
 % of Loans in 
 Each Category to 
 Total Loans
 Allowance
 % of Loans in 
 Each Category to 
 Total Loans
 Residential Real Estate
 $
 2,695
 11.5
 %
 $
 1,352
 12.3
 %
 Commercial Real Estate
 10,366
 58.8
 %
 10,143
 64.4
 %
 Commercial and Industrial
 3,974
 12.4
 %
 4,163
 8.4
 %
 Foreign Banks
 911
 6.5
 %
 720
 6.2
 %
 Consumer and Other
 3,138
 10.8
 %
 1,109
 8.7
 %
 Total
 $
 21,084
 100.0
 %
 $
 17,487
 100.0
 %
 

 Bank-Owned Life Insurance 
 At 
December 31, 
2023, 
the 
combined 
cash 
surrender 
value 
of 
all 
bank-owned 
life 
insurance 
(“BOLI”) 
policies 
was 
 $51.8 million. 
Changes 
in 
cash 
surrender 
value 
are 
recorded 
in 
non-interest 
income 
on 
the 
Consolidated 
Statements 
of 
 Operations. In 
2023, the Company 
maintained BOLI 
policies with 
five insurance 
carriers. The 
Company is 
the beneficiary 
 of these policies. 
 Deposits 
 Customer deposits are the 
primary funding source for 
the Bank’s growth. 
Through our network of 
banking centers, we 
 offer a competitive array of deposit 
accounts and treasury management services designed 
to meet our customers’ business 
 needs. Our primary 
deposit customers 
are SMBs, 
and the personal 
business of owners 
and operators 
of these SMBs, 
as 
 well as the retail/consumer relationships of the employees 
of these businesses. Our focus on quality and customer 
service 
 has created a strong brand recognition within 
our depositors, which reflects in the composition 
of our deposits; most of our 
 funding sources 
are core 
deposits. In 
addition to 
our banking 
centers 
network, we 
have 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. 

 Furthermore, our 
personal and 
private banking 
management 
line of 
business is 
focused on 
the needs 
of the 
owners 
 and operators of 
our business customers, 
offering a suite 
of checking, savings, 
money market and 
time deposit accounts, 
 and utilizing superior 
client service 
to build and 
expand client relationships. 
A unique aspect 
of our business 
model is our 
 ability to offer correspondent services to banks in 
Central America and the Caribbean. 
 The 
following 
table 
presents 
the 
daily 
average 
balance 
and 
average 
rate 
paid 
on 
deposits 
by 
category 
as 
of 
 December 31, 2023 and 2022 (in thousands, except ratios): 
 Twelve Months Ended December 31,
 2023
 2022
 Average Balance
 Average Rate 
 Paid
 Average Balance
 Average Rate 
 Paid
 Non-interest bearing demand deposits
 $
 607,506
 0.00%
 $
 645,366
 0.00%
 Interest-bearing demand deposits
 53,324
 1.69%
 64,835
 0.13%
 Saving and money market deposits
 963,708
 3.08%
 803,426
 0.64%
 Time deposits
 268,715
 3.16%
 220,319
 0.68%
 $
 1,893,253
 2.06%
 $
 1,733,946
 0.39%
 Total 
average deposits for the 
year ended December 31, 2023 
was $1.9 billion, 
an increase of $159.3 million 
, 
or 9.2% 
 over total 
average deposits 
of $1.7 billion 
for the 
same period 
in 2022. 
The greatest 
increase was 
in money 
market and 
 savings deposits which increased 
by $160.3 million, 
or 19.9%. Non-interest-bearing demand 
deposits decreased by $37.9 
 million or 
5.9% due 
to customers 
moving deposits 
to interest 
bearing accounts 
due to 
increases in 
rate paid 
on deposits 
 due to increases in the interest rate market. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 66 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The 
uninsured 
deposits 
are 
estimated 
based 
on 
the 
FDIC 
deposit 
insurance 
limit 
of 
$250 thousand 
for 
all 
deposit 
 accounts at 
the Bank 
per account 
holder. 
Total 
estimated uninsured 
deposits was 
$1.1 billion 
at December 31, 
2023 and 
 2022. 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 
thousand. Time deposits with 
balances of $250 
thousand or more 
totaled 
 $58.1 
million 
and 
$122.9 
million 
at 
December 31, 
2023 
and 
2022, 
respectively. 
U.S. 
Century 
Bank 
maintains 
a 
well-
 diversified deposit base. Our top 15 depositors only hold 20% 
of our total portfolio. 
 Critical elements of our liquidity 
risk management include: effective corporate governance consisting of 
oversight by the 
 Board and ALCO and 
involvement by senior management; 
appropriate strategies, policies, 
procedures, and limits 
used to 
 identify 
and 
mitigate 
liquidity 
risk; 
comprehensive 
liquidity 
risk 
measurement 
and 
monitoring 
systems 
(including 
 assessments 
of 
the 
current 
and 
prospective 
cash 
flows 
or 
sources 
and 
uses 
of 
funds) 
that 
are 
commensurate 
with 
the 
 complexity and business 
activities of the 
Company; management of intraday 
liquidity and collateral; 
an appropriately diverse 
 mix 
of 
existing 
and 
potential 
future 
funding 
sources; 
adequate 
levels 
of 
highly 
liquid 
marketable 
securities 
free 
of 
legal, 
 regulatory, 
or 
operational 
impediments, 
that 
can 
be 
used 
to 
meet 
liquidity 
needs 
in 
stressful 
situations; 
comprehensive 
 contingency 
funding 
plans 
that 
sufficiently 
address 
potential 
adverse 
liquidity 
events 
and 
emergency 
cash 
flow 
 requirements; 
and 
internal 
controls and 
internal 
audit 
processes 
sufficient 
to 
determine 
the 
adequacy 
of 
the 
institution’s 
 liquidity risk management process. 
 We 
expect 
funds 
to 
be 
available 
from 
several 
basic 
banking 
activity 
sources, 
including 
the 
core 
deposit 
base, 
the 
 repayment and maturity of loans and investment security 
cash flows. Other potential funding sources include 
federal funds 
 purchased, brokered 
certificates 
of deposit, 
listing certificates 
of deposit, 
Fed funds 
lines and 
borrowings from 
the FHLB 
 Atlanta. Accordingly, our liquidity resources were at sufficient levels to 
fund loans and meet other 
cash needs as necessary. 
 The following table shows scheduled maturities of uninsured 
time deposits as of December 31, 2023 (in thousands): 
 Three months or less
 $
 16,641
 Over three through six months
 16,451
 Over six though twelve months
 24,002
 Over twelve months
 1,016
 $
 58,110
 Borrowings 
 As 
a 
member 
of 
the 
FHLB 
Atlanta, 
we 
are 
eligible 
to 
obtain 
advances 
with 
various 
terms 
and 
conditions. 
This 
 accessibility of additional 
funding allows us 
to efficiently and 
timely meet both 
expected and unexpected 
outgoing cash flows 
 and collateral needs without adversely affecting 
either daily operations or the financial condition 
of the Company. 
 Outstanding fixed-rate 
advances from 
the FHLB 
were at 
$183.0 million 
and $46.0 
million, as 
of December 
31, 2023, 
 and December 31, 
2022, respectively. 
The weighted average 
rate for outstanding 
FHLB advances at 
December 31, 
2023 
 was 4.4%. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 67 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 The following table presents the FHLB fixed rate advances 
as of December 31, 2023 (in thousands): 
 At December 31, 2023
 Interest Rate
 Type of Rate
 Maturity Date
 Amount
 2.05%
 Fixed
 March 27, 2025
 $
 10,000
 1.07%
 Fixed
 July 18, 2025
 6,000
 1.04%
 Fixed
 July 30, 2024
 5,000
 3.76%
 Fixed
 January 24, 2028
 11,000
 3.77%
 Fixed
 April 25, 2028
 50,000
 5.57%
 Fixed
 December 26, 2024
 101,000
 $
 183,000
 At December 31, 2022
 Interest Rate
 Type of Rate
 Maturity Date
 Amount
 2.05%
 Fixed
 March 27, 2025
 $
 10,000
 1.07%
 Fixed
 July 18, 2025
 6,000
 1.04%
 Fixed
 July 30, 2024
 5,000
 0.81%
 Fixed
 August 17, 2023
 5,000
 4.17%
 Fixed
 January 13, 2023
 20,000
 $
 46,000
 We 
have 
also 
established 
Fed 
Funds 
lines 
of 
credit 
with 
our 
upstream 
correspondent 
banks 
to 
manage 
temporary 
 fluctuations in our daily 
cash balances. As of 
December 31, 2023, there were no 
outstanding balances under the Fed 
Funds 
 line of credit and the BTFP.
 Off-Balance Sheet Arrangements 
 We engage 
in various financial 
transactions in 
our operations 
that, under GAAP, 
may not be 
included on 
the balance 
 sheet. To 
meet the financing needs 
of our customers we may 
include commitments to extend 
credit and standby letters 
of 
 credit. To 
a varying 
degree, such 
commitments involve 
elements of 
credit, market, 
and interest 
rate risk 
in excess 
of the 
 amount recognized 
in the 
balance sheet. 
We use 
more conservative 
credit and 
collateral policies 
in making 
these credit 
 commitments as we 
do for on-balance sheet 
items. We are not 
aware of any accounting 
loss to be 
incurred by funding 
these 
 commitments; however, 
we maintain an allowance 
for off-balance sheet 
credit risk which is 
recorded under other liabilities 
 on the Consolidated Balance Sheets. 
 Since commitments associated with letters of 
credit and commitments to extend 
credit may expire unused, the 
amounts 
 shown do not necessarily 
reflect the actual 
future cash funding requirements 
. 
The following table 
presents lending related 
 commitments outstanding as of December 31, 2023 and 
2022 (in thousands): 
 2023
 2022
 Commitments to grant loans and unfunded lines of credit
 $
 85,117
 $
 95,461
 Standby and commercial letters of credit
 3,987
 4,320
 Total
 $
 89,104
 $
 99,781
 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition 
 established 
in 
the 
contract, 
for 
a 
specific 
purpose. 
Commitments 
generally 
have 
variable 
interest 
rates, 
fixed 
expiration 
 dates or 
other 
termination 
clauses 
and 
may require 
payment 
of 
a fee. 
Since many 
of the 
commitments 
are 
expected to 
 expire without being 
fully drawn, the 
total commitment 
amounts disclosed 
above do not 
necessarily represent 
future cash 
 requirements. 
 Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change 
 in credit risk in our portfolio. Lines of credit 
generally have variable interest rates. The 
maximum potential number of future 
 payments we could 
be required to 
make is represented 
by the contractual 
amount of the 
commitment, less 
the amount of 
 any advances made. 
 Letters of credit are 
conditional commitments issued 
by us to guarantee 
the performance of a 
client to a third 
party. 
In 
 the event of nonperformance by 
the client in accordance with the 
terms of the agreement with the 
third party, 
we would be 
 required to fund 
the commitment. 
If the commitment 
is funded, we 
would be entitled 
to seek recovery 
from the client 
from 
 the underlying collateral, 
which can include 
commercial real estate, 
physical plant and 
property, inventory, receivables, cash 
 or marketable securities. 

 
 
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 68 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Asset and Liability Management Committee 
 The asset and liability management committee of our Company, or ALCO, consists of members of senior management 
 and our Board. Senior management is responsible for 
ensuring in a timely manner that Board 
approved strategies, policies, 
 and procedures 
for managing 
and mitigating 
risks are 
appropriately executed 
within the 
designated lines 
of authority 
and 
 responsibility. 
 ALCO 
oversees 
the 
establishment, 
approval, 
implementation, 
and 
review 
of 
interest 
rate 
risk, 
management, 
and 
 mitigation strategies, ALM related policies, ALCO procedures 
and risk tolerances and appetite. 
 While some degree of interest 
rate risk (“IRR”) exposure is inherent 
to the banking business, our ALCO 
has established 
 sound risk management practices in place to identify, 
measure, monitor and mitigate IRR exposures. 
 When assessing the scope 
of IRR exposure and 
impact on the consolidated 
balance sheet, cash flows 
and statement 
 of operations, 
management considers 
both earnings 
and economic 
impacts. Asset price 
variations, deposits 
volatility and 
 reduced earnings or outright losses could adversely affect 
the Company’s liquidity, 
performance, and capital adequacy. 
 Income simulations 
are used 
to assess 
the impact 
of changing 
rates on 
earnings under 
different rates 
scenarios and 
 time horizons. 
These simulations 
utilize both 
instantaneous and 
parallel changes 
in the 
level of 
interest rates, 
as well 
as 
 non-parallel changes such as changing slopes (flat and steeping) and 
twists of the yield curve, Static simulation models are 
 based on current exposures and 
assume a constant balance sheet with 
no new growth. Dynamic simulation analysis 
is also 
 utilized to have a 
more comprehensive assessment 
on IRR. This simulation 
relies on detailed 
assumptions outlined in 
our 
 budget and strategic plan, and in assumptions regarding changes in 
existing lines of business, new business, management 
 strategies and client expected behavior. 
 To 
have 
a 
more 
complete 
picture 
of 
IRR, 
the 
Company 
also 
evaluates 
the 
economic 
value 
of 
equity, 
or 
EVE. 
This 
 assessment 
allows 
us 
to 
measure 
the 
degree 
to 
which 
the 
economic 
values 
will 
change 
under 
different 
interest 
rate 
 scenarios. The economic value of equity approach focuses on 
a longer-term time horizon and captures all 
future cash flows 
 expected from existing assets and liabilities. 
The economic value model utilizes a 
static approach in that the analysis does 
 not incorporate new business; rather, 
the analysis shows a snapshot in time of the risk 
inherent in the balance sheet.
 Market and Interest Rate Risk Management 
 
According to our ALCO model, as 
of December 31, 2023, we were 
a slightly asset sensitive/neutral 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 income 
when market 
interest rates 
decrease. Many 
assumptions are 
used to 
calculate the 
impact of 
interest rate 
 variations 
on 
our 
net 
interest 
income, 
such 
as 
asset 
prepayment 
speeds, 
non-maturity 
deposit 
price 
sensitivity, 
pricing 
 correlations, deposit truncations and decay rates, and 
key interest rate drivers. 
 Because of the inherent use 
of these estimates and 
assumptions in the model, 
our actual results may, 
and most likely 
 will, differ from static measures results. In 
addition, static measures like 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. As part of 
our ALM strategy and policy, 
management has the ability to modify the balance sheet to either 
 increase or 
decrease asset 
duration and 
increase or 
decrease liability 
duration to 
modify the 
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). For the 
static forecast for year one, 
the estimated NIM will increase 
from 2.81% base case scenario 
to 
 2.86% under a +400-basis 
points scenario. Additionally, 
utilizing an EVE approach, 
we analyze the risk 
to capital from the 
 effects 
of various 
interest rate 
scenarios 
through a 
long-term discounted 
cash flow 
model. This 
measures 
the difference 
 between the economic 
value of our 
assets and the 
economic value of 
our liabilities, which is 
a proxy for 
our liquidation value. 
 According to 
our balance 
sheet composition, 
and as 
expected, our 
model stipulates 
that an 
increase of 
interest rates 
will 
 have a negative impact on 
the EVE. Results and analysis are 
presented quarterly to the ALCO, and 
strategies are reviewed 
 and refined. 
 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. 

 
 
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 69 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Liquidity 
 
Liquidity is 
defined as 
a Company’s capacity 
to meet 
its cash 
and collateral 
obligations at 
a reasonable 
cost. Maintaining 
 an adequate level of liquidity depends on the Company’s ability to 
efficiently meet both expected and unexpected cash flow 
 and collateral needs without adversely affecting 
either daily operations or the financial condition of the 
Company. 
 Liquidity risk 
is the 
risk that 
we will 
be unable 
to meet 
our short-term 
and long-term 
obligations as 
they become 
due 
 because of an 
inability to liquidate 
assets or obtain 
adequate funding on 
acceptable terms in 
a timely matter. 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, interest rate 
environment and the cash flow 
profiles of our on- and 
off-balance 
 sheet obligations. 
 In 
managing 
cash 
inflows 
and 
outflows, 
management 
regularly 
monitors 
situations 
that 
can 
give 
rise 
to 
increased 
 liquidity risk. 
These include 
funding mismatches, market 
constraints on 
the ability 
to convert 
assets (particularly investments) 
 into cash or in 
accessing sources of 
funds (i.e., market 
liquidity), and contingent 
liquidity events. Management 
presents to 
 the ALCO, 
on a 
quarterly basis, liquidity 
stress tests following 
the scenarios 
described in 
the Company’s contingency 
funding 
 plan. 

 Changes 
in 
macroeconomic 
conditions, 
exposure 
to 
credit 
deterioration, 
market, 
operational, 
legal 
and 
reputational 
 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 
framework. 
 Management has established 
a comprehensive and 
holistic management process for 
identifying, measuring, monitoring 
 and 
mitigating 
liquidity 
risk. 
Due 
to 
its 
critical 
importance 
to 
the 
viability 
of 
the 
Company, 
liquidity 
risk 
management 
is 
 integrated into our risk management processes, Contingency 
Funding Plan and ALM policy. 
 Critical elements of our liquidity 
risk management include: effective corporate governance consisting of 
oversight by the 
 Board and ALCO and 
involvement by senior management; 
strategies, policies, procedures, 
and limits used to 
identify and 
 mitigate 
liquidity 
risk; 
comprehensive 
liquidity 
risk 
measurement 
and 
monitoring 
systems 
(including 
assessments 
of 
the 
 current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and 
business 
 activities 
of the 
Company; 
management 
of intraday 
liquidity and 
collateral; 
a diverse 
mix of 
existing 
and 
potential 
future 
 funding sources; adequate levels of highly liquid marketable securities free 
of legal, regulatory, or operational impediments, 
 that can 
be used 
to meet 
liquidity needs 
in stressful situations; 
comprehensive contingency 
funding plans 
that sufficiently 
 address potential adverse 
liquidity events and 
emergency cash 
flow requirements; and 
internal controls and 
internal audit 
 processes sufficient to determine the adequacy 
of the institution’s liquidity risk management 
process. 
 We 
expect 
funds 
to 
be 
available 
from 
several 
basic 
banking 
activity 
sources, 
including 
the 
core 
deposit 
base, 
the 
 repayment and maturity of loans and investment security 
cash flows. Other potential funding sources include 
federal funds 
 purchased, brokered 
certificates 
of deposit, 
listing certificates 
of deposit, 
Fed funds 
lines and 
borrowings from 
the FHLB 
 Atlanta. Accordingly, our liquidity resources were at sufficient levels to 
fund loans and meet other 
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 
excess cash. The Company 
had an additional $395.0 
 million in off balance sheet liquidity, 
excluding access to brokered deposits and other off balance 
sheet sources of funding.

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 70 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Capital Adequacy 
 As 
of 
December 31, 
2023, 
the 
Bank 
was 
well 
capitalized 
under 
the 
FDIC’s 
prompt 
corrective 
action 
framework. 
 Additionally, 
we follow the 
capital conservation buffer 
framework, and according 
to our actual ratios 
the Bank exceeds 
the 
 capital conversation 
buffer in 
all capital ratios 
as of December 31, 
2023. The Company 
is not subject 
to regulatory 
capital 
 requirements because it is deemed by the Federal Reserve 
to be a small bank holding company. 
 The 
following 
table 
presents 
the 
capital 
ratios 
for 
the 
Bank 
at 
December 31, 
2023 
and 
2022 
(in 
thousands, 
except 
 ratios): 
 Actual
 Minimum Capital 
 Requirements 
 To be Well Capitalized Under 
 Prompt Corrective Action 
 Provisions
 Amount
 Ratio
 Amount
 Ratio
 Amount
 Ratio
 December 31, 2023
 Total 
risk-based capital:
 $
 233,109
 12.65%
 $
 147,432
 8.00%
 184,290
 10.00%
 Tier 1 risk-based capital:
 $
 211,645
 11.48%
 $
 110,574
 6.00%
 147,432
 8.00%
 Common equity tier 1 capital:
 $
 211,645
 11.48%
 $
 82,931
 4.50%
 119,789
 6.50%
 Leverage ratio:
 $
 211,645
 9.17%
 $
 92,328
 4.00%
 115,410
 5.00%
 December 31, 2022
 Total 
risk-based capital:
 $
 216,693
 13.58%
 $
 127,616
 8.00%
 159,520
 10.00%
 Tier 1 risk-based capital:
 $
 198,909
 12.47%
 $
 95,712
 6.00%
 127,616
 8.00%
 Common equity tier 1 capital:
 $
 198,909
 12.47%
 $
 71,784
 4.50%
 103,688
 6.50%
 Leverage ratio:
 $
 198,909
 9.56%
 $
 83,210
 4.00%
 104,012
 5.00%
 

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

 Recently issued accounting 
pronouncements are discussed 
in Note 1 “Summary 
of Significant Accounting 
Policies” in 
 the Consolidated Financial Statements of this Annual Report 
on Form 10-K.

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 71 
USCB Financial Holdings, Inc. 
2023 10-K 
 

 Reconciliation and Management Explanation of Non 
-GAAP Financial Measures 
 Management has included 
non-GAAP measures set 
forth below because 
it believes these 
measures may provide 
useful 
 supplemental information 
for evaluating 
the Company’s 
underlying performance 
trends. Further, 
management uses 
these 
 measures 
in 
managing 
and 
evaluating 
the 
Company’s 
business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
 operations and performance. 
Operating performance 
measures should be 
viewed in addition 
to, and not 
as an alternative 
 to or 
substitute 
for, 
measures 
determined 
in 
accordance 
with 
GAAP, 
and 
are 
not 
necessarily 
comparable 
to non-GAAP 
 measures 
that 
may be 
presented 
by other 
companies. 
The Company 
believes 
these 
non-GAAP 
measurements 
are key 
 indicators of the 
earnings power 
of the Company. 
The following 
table reconciles 
the non-GAAP 
financial measurement 
of 
 operating net income available to common stockholders 
for the periods presented (in thousands, 
except per share data):
 As of and for the years ended December 31,
 2023
 2022
 Pre-Tax Pre-Provision ("PTPP") income: (1)
 Net income (GAAP)
 $
 16,545
 $
 20,141
 Plus: Provision for income taxes
 5,251
 6,944
 Plus: Provision for (recovery of) credit losses
 2,367
 2,495
 PTPP income
 $
 24,163
 $
 29,580
 Operating net income: (1)
 Net income (GAAP)
 $
 16,545
 $
 20,141
 Less: Net gain (loss) on sale of securities
 (1,859)
 (2,529)
 Less: Tax 
effect on sale of securities
 471
 641
 Operating net income
 $
 17,933
 $
 22,029
 Operating PTPP income: (1)
 PTPP income
 $
 24,163
 $
 29,580
 Less: Net gain (loss) on sale of securities
 (1,859)
 (2,529)
 Operating PTPP Income
 $
 26,022
 $
 32,109
 (1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
 

 Item 7A. 
Quantitative and Qualitative Disclosures About Market Risk 
 
 As a smaller reporting company, 
we are not required to provide the information required 
by this item.

 
 
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 72 
USCB Financial Holdings, Inc. 
2023 10-K
USCB FINANCIAL HOLDINGS, INC. 10-K

Item 7. Management’s Discussion and Analysis
