What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 568 added, 794 removed, 1029 unchanged (57% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

September 30, 2023

March 31, 2024

December 31, 2023

19 unchanged sentences

Total deposits

Federal Home Loan Bank advances

Federal Home Loan Bank advances and other

Lease liability

5 unchanged sentences

per share liquidation preference;

issued and outstanding as of September 30, 2023

issued and outstanding as of March 31, 2024

and December 31, 2023

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of September 30, 2023

issued and outstanding as of March 31, 2024

and December 31, 2023

1 unchanged sentence

per share liquidation preference;

issued and outstanding as of September 30, 2023

issued and outstanding as of March 31, 2024

and December 31, 2023

1 unchanged sentence

shares authorized;

as of September 30, 2023,

as of March 31, 2024,

issued and outstanding as of December 31,

1 unchanged sentence

shares authorized;

outstanding as of September 30, 2023 and

December 31, 2022

outstanding as of March 31, 2024 and December

Additional paid-in capital on common stock

11 unchanged sentences

except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest income:

17 unchanged sentences

Gain on sale of loans held for sale, net

Loan settlement

Other non-interest income

12 unchanged sentences

Net income per share, diluted

Cash dividend declared

The accompanying notes are an integral part of

6 unchanged sentences

(Dollars in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Other comprehensive income (loss):

Unrealized loss on investment securities

Amortization of net unrealized (loss) gain on

securities transferred from

available-for-sale to held-to-maturity

Reclassification adjustment for loss included in net

Unrealized gain (loss) on investment securities

Amortization of net unrealized gain (loss) on securities

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

Reclassification adjustment for (gain) loss included

in net income

Unrealized gain on cash flow hedge

Total other comprehensive loss, net of tax

Total comprehensive income (loss)

Total other comprehensive income (loss), net of tax

Total comprehensive income

The accompanying notes are an integral part of

13 unchanged sentences

Stockholders'

Balance at July 1, 2023

Balance at December 31, 2023

Other comprehensive loss

Repurchase of Class A common stock

Restricted stock issued

Restricted stock forfeiture

Stock-based compensation

Balance at September 30, 2023

Balance at July 1, 2022

Other comprehensive loss

Exercise of stock options

Dividend payment

Stock-based compensation

Balance at September 30, 2022

Additional Paid-in

Capital on Common

Accumulated Other

Comprehensive

Stockholders'

Balance at January 1, 2023

After tax cumulative effect of adoption of accounting

principle related to ASC

Balance at March 31, 2024

Balance at December 31, 2022

Cumulative effect of adoption of accounting principle

related to ASC 326

Adjusted beginning balance after cumulative

3 unchanged sentences

Restricted stock issued

Restricted stock forfeiture

Stock-based compensation

Balance at September 30, 2023

Balance at January 1, 2022

Other comprehensive loss

Exercise of stock options

Stock-based compensation

Balance at September 30, 2022

Balance at March 31, 2023

The accompanying notes are an integral

part of these unaudited consolidated financial

part of these consolidated financial statements.

USCB Financial Holdings, Inc.

3 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

10 unchanged sentences

life insurance

Bank owned life insurance enhancement

Decrease in deferred tax assets

4 unchanged sentences

Cash flows from investing activities:

Purchase of investment securities held

Proceeds from maturities and pay-downs of investment

9 unchanged sentences

Proceeds from the sale of loans held for sale

Purchase of Bank owned life insurance

Proceeds from the redemption of Federal

4 unchanged sentences

Proceeds from issuance of Class A common

Cash dividends paid

Repurchase of Class A common stock

Net increase in deposits

Proceeds from Federal Home Loan Bank advances

Proceeds from other borrowings

Repayments on Federal Home Loan Bank advances

8 unchanged sentences

Transfer of loans held for investment to loans held

Transfer of investment securities from available-for-sale

to held-to-maturity

Lease liability arising from obtaining right-of-use

The accompanying notes are an integral

32 unchanged sentences

financial statements

Form 10-K/A for the year ended December 31, 2022.

Form 10-K for the year ended December 31, 2023.

Principles of Consolidation

18 unchanged sentences

equity of the Company.

Recently Issued Accounting Standards

Adoption of New Accounting Standards

Measurement of Credit Losses on Financial Instruments

Company adopted

Accounting Standard

Update (“ASU”)

2016-13 Financial

incurred loss methodology with an expected loss

methodology that is referred to as the

current expected credit loss (CECL)

The measurement

credit losses

CECL methodology

is applicable

amortized cost,

including loan

receivables and

held-to-maturity debt

to off-balance

guarantees, and other similar

instruments) and net investments

in leases recognized by

a lessor in accordance

842 on leases.

ASC 326 amended the accounting

for available-for-sale debt securities.

One such change is to

require credit losses to be presented as an allowance

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

securities that

management does not intend to sell or believes that

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

estimates the

allowance for

credit losses

using relevant

available information,

Historical credit losses provide the basis for estimation of expected credit losses.

Qualitative adjustments are applied to the

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

expected credit

losses estimated

loan portfolio

limitations of

the quantitative model.

is used to aid management in the assessment of qualitative

factor adjustments applied to expected credit losses.

economic factors were used

to determine suitable

loss drivers for modeling

the lifetime rates of

probability of default (PD).

fundamentally utilizes an

expected discounted cash

flow (DCF) analysis

loan portfolio segments.

The DCF analysis

instrument-level

loan-specific

segment-implied

determine the lifetime expected

loss attributable to each

An implicit "hypothetical

loss" is derived

for each period

helps establish

instrument is the difference

between the sum of the present

value of future cash flows

and the book balance of

the measurement date.

long-term average

is calculated

quarterly basis

remaining life

management implemented a software solution

that uses an attrition-based

calculation that performs quarterly, cohort-based

attrition measurements based on the loan portfolio.

At adoption of

billion of loan

receivables were collectively

evaluated under DCF

million of loan receivables of the total loan portfolio were individually

Portfolio segments are the level at which loss assumptions

are applied to a pool of loans based on the similarity

characteristics inherent in

the included instruments,

relying on collateral

Report codes.

currently segments the portfolio based on collateral codes

for purpose of establishing reserves.

Each of these

characteristics.

Company has established relationships between internal segmentation and FFIEC

Call Report codes for this purpose.

loss driver for each loan

portfolio segment is derived

from a readily available and

reasonable economic forecast, including

the Federal Reserve Bank

projections of U.S.

unemployment rate and

the year-over-year real

Research Group

four quarters

straight-line basis

to the lookback

period's historical

indicator over

The model incorporates qualitative

factor adjustments in order to

calibrate the model for risk

in each portfolio segment

not be captured

through quantitative

Determinations

regarding qualitative

adjustments are

reflective of

credit losses within

other liabilities.

reserve is based

upon the same

quantitative and qualitative

factors applied to

collectively evaluated loan portfolio.

receivables of $

million and an increase

to the reserve for unfunded

commitments of $

This one-time net

of tax cumulative adjustment resulted in a

increase of $

million in accumulated deficit.

See “Allowance for Credit

section in Note 3 for more information on the ACL.

Trouble Debt Restructuring

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

Losses (Topic 326):

Debt Restructurings (“TDR”) and Vintage Disclosures.

The standard addresses the following:

1) eliminates

the accounting

TDRs, require

modification results

a continuation

modifications,

disclosure of

Reference Rate Reform

848), aiming to facilitate the impacts

of reference rate reform on financial reporting.

This initiative was subsequently

or acknowledging

of, reference

discretionary

associated with reference rate reform in financial reporting.

expedients and exceptions provided by these amendments

applicable to

contract modifications

hedging relationships

reviewed after

relationships

optional expedients, and which

are retained until the conclusion

of the hedging relationship.

Additionally,

the amendments

permit entities to make a one-time choice to divest, transfer,

or both divest and transfer debt securities categorized as held

to maturity, referencing a rate impacted by reference rate reform,

and classified as held to maturity

prior to January 1, 2020.

In December 2022, the

FASB issued new guidance extending the

expiration date of this

guidance from December 31,

entities will

be authorized

provided under

this guidance.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

material impact on the Company’s consolidated financial

Before this recent guidance, these amendments were effective for all entities

from March 12, 2020, to December 31, 2022.

(“LIBOR”) and the adjustment of

its existing financial instruments affected

by LIBOR, whether directly or

based originations were ceased as of June 30, 2023, and for existing LIBOR-based transactions,

the Company substituted

Secured Overnight

Financing Rate

completed its

transition away

its loan and other financial instruments.

Issued and Not Yet Adopted

Reference Rate Reform

on Financial Reporting.

In January 2021,

clarified the scope

of this guidance

2021-01 which provides

optional guidance for

a limited period of

time to ease the

burden in accounting for

(or recognizing

the effects of)

reference rate reform on

financial reporting.

is effective from March 12,

2020 through December 31,

evaluating the

determined whether

LIBOR transition

ASU will have a material effect on our business operations

and consolidated financial statements.

Improvements to Income Tax

This ASU pertains to

disclosures regarding effective

tax rates and cash income

taxes paid with the goal of providing stakeholders with more transparent

and relevant information.

This ASU is effective for

public business entities for annual periods beginning after Dec.

The Company is currently assessing the potential

impact of this

financial reporting and

concluded whether the

changes will materially

affect its business

operations or consolidated financial statements.

INVESTMENT SECURITIES

Measurement of Credit Losses

on Financial Instruments,

as amended, which replaces

the incurred loss methodology

loss methodology

current expected credit

The measurement

including loan receivables and held-to-maturity debt securities.

In addition, ASC 326 amended the accounting for available-

for-sale debt securities.

One such change is to

require credit losses to be presented as an allowance rather

than as a write-

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

sell or believes that it is more likely

than not they

will be required to sell.

CECL requires

a loss reserve

for securities

classified as

Held-to-Maturity (HTM).

The reserve should

reflect historical

The measurement of expected credit losses under the current expected credit loss (“CECL”) methodology is applicable

held-to-maturity

for available-for-sale

debt securities

allowance rather

Management does not intend to sell or believes that

it is more likely they will not be required to sell AFS

CECL requires a loss reserve for

securities classified as held-to-maturity

The reserve should reflect

credit performance

1 unchanged sentence

Government bonds

issued bonds in HTM the explicit guarantee

of the US Government is sufficient

to conclude that a credit loss reserve

requirement is for

three primary assets

municipal bonds,

corporate bonds,

and non-agency

classified as

explicit guarantee

Government is

sufficient to

conclude that

reserve is not required.

The reserve requirement is for three primary assets groups:

municipal bonds, corporate bonds, and

securitizations.

utilizing Moody’s

ImpairmentStudio.

Moody’s baseline

CECL measurement for

investment securities

incorporates historical

data, containing

defaults and recoveries

and Moody’s baseline

economic forecast.

uses probability of

default/loss given

default (“PD/LGD”)

represents the likelihood a borrower will

Within the Moody’s model

this is determined using historical

default data,

adjusted for the current economic environment.

uses probability of default/loss

given default (“PD/LGD”)

PD represents

the likelihood

will default.

Moody’s model

determined using

historical default

data, adjusted for the current economic environment.

the expected loss if a borrower were to default.

4 unchanged sentences

Credit ratings

are monitored by the

Company on at

least a quarterly

September 30, 2023

and December 31,

2022, all held-

to-maturity securities held by the Company were rated investment

securities held by the Company were rated investment

mortgage-backed

6 unchanged sentences

methodology to estimate

thousand ACL as of September 30, 2023.

The book value for debt securities classified as HTM represents amortized

cost less ACL.

The Company determined that

an ACL on its

debt securities available for

sale as of September 30,

2023 and December

thousand Allowance for

credit losses (“ACL”)

value for debt securities

classified as

HTM represents amortized cost less ACL.

The Company determined that an ACL on its debt securities available for sale as of March 31, 2024 and December 31,

2023 was not required.

9 unchanged sentences

value of investment securities at the dates indicated (in

September 30, 2023

March 31, 2024

Available-for-sale:

5 unchanged sentences

Bank subordinated debt securities

Corporate bonds

Held-to-maturity:

20 unchanged sentences

Mortgage-backed securities - commercial

Corporate bonds

investment securities

amortized cost

respectively,

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

the three and nine months

ended September 30,

2023, total amortization

out of AOCI for

net unrealized losses

on securities transferred

thousand, respectively.

The unamortized

net unrealized

September 30,

securities transferred from AFS

to HTM during

the nine months

ended September 30,

Allowance for credit losses - securities held-to-maturity

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

During the quarter ended March 31, 2024 there were

investment securities that were transferred from available-for-

sale (“AFS”) to

For the three

months ended March 31,

2024, total amortization out

of Additional Other Comprehensive

unamortized net unrealized loss as of March 31, 2024,

USCB FINANCIAL HOLDINGS, INC.

4 unchanged sentences

The following table presents the proceeds, realized gross gains and realized gross losses on sales and

calls of AFS debt securities for the three and nine months

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

Three Months Ended September 30,

Nine Months Ended September 30,

calls of AFS debt securities for the three months ended

March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Available-for-sale:

16 unchanged sentences

Held-to-maturity

September 30, 2023:

March 31, 2024:

Due within one year

6 unchanged sentences

Mortgage-backed securities - commercial

At September 30,

securities held

portfolio from

At March 31, 2024, there were no securities held in the portfolio from any

one issuer in an amount greater than 10% of

stockholders’

1 unchanged sentence

mortgage-backed

September 30, 2023 and December 31, 2022.

sponsored entities

attributable to a combination of factors, including relative

14 unchanged sentences

expects to recover the entire amortized cost basis of these

At September 30, 2023, the Company does not intend to sell debt securities

that are in an unrealized loss position and

it is not more than likely than not that the Company will be required to sell

these securities before recovery of the amortized

Therefore, management

does not consider any investment

to be other than temporarily

impaired at September

Pledged Securities

At March 31, 2024, the Company

does not intend to sell

debt securities that are in

an unrealized loss position

more than likely not required to sell these securities before recovery

of the amortized cost basis.

master repurchase

8 unchanged sentences

on prevailing rates

of September 30,

any securities

pledged under this agreement.

funding is requested.

of March 31, 2024,

the Company did

securities pledged

under this agreement.

The Bank is a Qualified Public Depository

2 unchanged sentences

municipalities,

maintain a minimum amount of pledged securities to be in the

securities pledged

the outstanding

uninsured deposits

also maintain

funds program.

As of March 31,

2024, the Bank

million in deposits

under the public

funds program

to the State of Florida for these public funds were

bonds with an aggregate fair value of $

December 31, 2023, the

deposits under the

public funds program

of Florida for

these public funds were

corporate bonds with an

aggregate fair value of

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

September 30,

pledged to the State

of Florida for these public

bonds with an aggregate fair

December 31, 2022, the

deposits under the

public funds program

to the State of Florida for these public funds were

corporate bonds with an aggregate fair value of $

Federal Reserve

2023, announced

Funding Program

savings associations,

Funding Program (“BTFP”).

The BTFP offers

loans of up to one year

in length to banks, savings

associations, credit

mortgage-backed

2 unchanged sentences

The Company had $

borrowing under the BTFP

program as of September

30, 2023, and had

in securities measured at par to the Federal Reserve

Bank of Atlanta for the BTFP program.

retrospective

allowance for credit losses (“ACL”) methodology that replaces its previous allowance

for loan losses methodology.

ACL section in this note for further information regarding the Company’s ACL.

Prior periods balance for ACL are presented

under legacy GAAP and may not be comparable to current

period presentation.

million in borrowings under

the BTFP program as

of March 31, 2024,

and had pledged $

BTFP program.

ceased making new loans as of March 2024.

The following table is a summary of the distribution of

loans held for investment by type (in thousands):

September 30, 2023

March 31, 2024

December 31, 2023

4 unchanged sentences

Consumer and Other

Deferred fees (cost)

loans net of deferred fees (cost)

Deferred costs

loans net of deferred fees (costs)

Allowance for credit losses

At September 30, 2023

and December 31, 2022,

the Company had

million and $

million, respectively,

respectively,

commercial real estate

3 unchanged sentences

Reserve Bank of Atlanta.

The Company was a participant

in the Small Business

Administration’s (“SBA”) Paycheck

Protection Program (“PPP”)

direct incentive

businesses to

the funds had to be used towards payroll cost, mortgage interest, rent, utilities and other costs related to COVID-19.

loans are forgivable under specific criteria as

determined by the SBA.

The Company had

PPP loans totaling $

at September 30, 2023 and $

million at December 31, 2022, which are categorized

as commercial and industrial loans.

The Company recognized

thousand and $

million in PPP

loan fees and

interest income

during the nine

ended September 30, 2023

and 2022, respectively,

which is reported

under loans, including

fees, within the

Statements of Operations.

Allowance for Credit Losses

In general, the Company utilizes

the Discounted Cash Flow (DCF)

method or the Remaining Life

(WARM) methodology

the quantitative

portion of the

analysis (LDA)

and discounted

cash flow analyses.

methodology to estimate the quantitative portion

of the ACL for loan

The DCF uses a

loss driver analysis (“LDA”) and

discounted cash flow

Management engaged

2 unchanged sentences

CECL model development

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

in development of

development of

a loss driver

analysis based on

regression models

and supportable

data obtained

from FFIEC Call Report

filings is used to

inform regression analyses

to quantify the impact

of reasonable and

forecasts in projective

Economic forecasts

applied to regression

models to estimate

probability of default

receivables use at least one

of the following economic indicators:

unemployment rate (national), real gross domestic

analysis based

on regression

supportable forecast.

Peer group data

of reasonable

default for loan receivables use at least

one of the following economic indicators:

civilian unemployment rate (national), real

gross domestic

product growth

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

Adjustments for

economic expectations are made through qualitative factors

(national GDP)

WARM methodology

Adjustments for economic expectations are made through

qualitative factors.

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

8 unchanged sentences

Changes in lending management, among others

ACL for the three

and nine months

ended September 30,

2023, was estimated

under the CECL

all periods in 2022, it was estimated under the incurred

Changes in the

allowance for credit

losses for the

three and nine

months ended September

as follows (in thousands):

Three Months Ended September 30, 2023

Beginning balance

Provision for credit losses

Ending Balance

Nine Months Ended September 30, 2023

Beginning balance

Cumulative effect of adoption of accounting

Provision for credit losses

Ending Balance

(1) Provision for credit losses excludes $

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

thousand release due to investment securities held to maturity.

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

(3) Provision for credit losses excludes $

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

thousand expense due to investment securities held to maturity.

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

and Industrial

Three Months Ended September 30, 2022

Changes in the ACL for the three months ended March 31,

2024 and 2023 were as follows (in thousands):

Three Months Ended March 31, 2024

Beginning balance

1 unchanged sentence

Ending Balance

Nine Months Ended September 30, 2022

(1) Provision for credit losses excludes a $

thousand charge due to unfunded commitments included in other liabilities and a $

thousand charge related to investment securities held to maturity.

and Industrial

Three Months Ended March 31, 2023

Beginning balance

Cumulative effect of adoption of accounting

Provision for credit losses

Ending Balance

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

thousand increase in the ACL for loan receivables due

to loan growth and to net charge-offs.

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

(2) Provision for credit losses excludes a $

thousand release due to unfunded commitments included in other liabilities.

At March 31, 2024, the

million compared to $

million at December 31,

The increase of

million was composed

thousand increase in

the ACL for loan

receivables due to

loan growth and

to net charge-

The Company had charge offs totaling $

thousand for the quarter ended March 31, 2024 related to loans that were all

originated in 2024.

September 30,

related to loans.

thousand was related to loans originated

in 2023 and $

thousand of charge offs was related to

The Company had charge

offs totaling $

thousand for the quarter

ended as of March

31, 2023 on loans

that were all

originated in 2023.

were originated

respectively.

thousand of charge offs related to loans that

were originated in 2022.

improvements in unemployment and a slower real GDP growth.

1 unchanged sentence

in national housing prices over the next four quarters.

The Company continued

to adjust the HPI index effect on 1-4 Family

The Company continued to adjust the HPI index effect on 1-4 Family

loan portfolio with a qualitative

3 unchanged sentences

were reviewed and updated;

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

based on portfolio and external developments during the third

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

based on portfolio and external developments during the first

quarter 2024.

included residential

potential impact

in qualitative

factors related

a sensitivity

in calculating

loan segment.

index, the forecast reduces

reserves by approximately $

thousand and about

basis point to

the reserve coverage ratio,

everything else being

sensitivity analysis provides

a hypothetical result

to assess the

sensitivity of the

and does not represent a change in management’s

As of March 31, 2024, we

stress tested two qualitative factors in our commercial real

estate loan pool, as it’s the largest

our portfolio.

the qualitative

sensitivity of

the qualitative

risk resulted

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

the outstanding balances

in the specified

loan categories

as of September

increase in the

allowance for

credit losses.

sensitivity analysis provides

a hypothetical result

the sensitivity

of the ACL and does not represent a change in management’s

The ACL and the outstanding

balances in the specified

loan categories as of March

31, 2024 and December 31,

are as follows (in thousands):

and Industrial

September 30, 2023:

March 31, 2024:

Allowance for credit losses:

Individually evaluated for impairment

Collectively evaluated for impairment

Individually evaluated

Collectively evaluated

Balances, end of period

Individually evaluated for impairment

Collectively evaluated for impairment

Individually evaluated

Collectively evaluated

Balances, end of period

1 unchanged sentence

Allowance for credit losses:

Individually evaluated for impairment

Collectively evaluated for impairment

Individually evaluated

Collectively evaluated

Balances, end of period

Individually evaluated for impairment

Collectively evaluated for impairment

Individually evaluated

Collectively evaluated

Balances, end of period

40 unchanged sentences

presented below for the periods indicated (in thousands):

As of September 30, 2023

As of March 31, 2024

Term Loans by Origination Year

10 unchanged sentences

As of December 31, 2023

Term Loans by Origination Year

Residential real estate

Home equity line of credit and other

1-4 family residential

Condo residential

Commercial real estate

Land and construction

Multi-family residential

Condo commercial

Commercial property

Commercial and industrial:

Commercial and

Foreign banks

Consumer and other loans

Consumer and other

Special Mention

USCB FINANCIAL HOLDINGS, INC.

11 unchanged sentences

tables include

accruing loans

of September 30,

and December 31, 2022 (in thousands):

As of September 30, 2023

total non-accruing

December 31, 2023 (in thousands):

As of March 31, 2024

Residential real estate:

36 unchanged sentences

past due over

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

September 30, 2023

Loans With No

and still accruing as of March 31, 2024 (in thousands):

March 31, 2024

Days and Still

3 unchanged sentences

Consumer and other

The Company did

t have loans in nonaccrual status as of December

December 31, 2023

Days and Still

Residential real estate

Commercial real estate

Commercial and industrial

Consumer and other

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2024 Form 10-Q

Accrued interest

2 unchanged sentences

interest income

attributable to non-accrual

loans outstanding during

the three months

ended September 30, 2023 and

Interest income

on these loans for

the three months

ended September 30,

2023 and 2022,

would have been

approximately $

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

Interest income on these

ended September

attributable to non-accrual loans outstanding during the three

months ended March 31, 2024 and 2023.

Interest income on

ended March 31,

approximately

2 unchanged sentences

original terms.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

Collateral-Dependent Loans

1 unchanged sentence

collateral dependent

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

Impaired Loans

The following table includes

the unpaid principal balances

for impaired loans with

the associated allowance amount,

applicable, on the basis of impairment methodology as of December

31, 2022 (in thousands):

December 31, 2022

Impaired Loans with No Specific Allowance:

Residential real estate

Commercial real estate

Impaired Loans with Specific Allowance:

Residential real estate

Commercial and industrial

Consumer and other

Net investment balance is the unpaid principal balance

of the loan adjusted for the remaining net deferred loan

The following table

presents the average

recorded investment

balance on impaired

the periods indicated

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Residential real estate

Commercial real estate

Commercial and industrial

Consumer and other

Interest income recognized on impaired loans for

the three months ended September 30, 2022

for the nine months ended September 30, 2022 was $

loans as of March 31, 2024, or as of December 31, 202

Loan Modifications to Borrowers Experiencing Financial

The following

table present

newly restructured

modification, which

occurred during

ended September 30, 2023 (in thousands):

The following table presents newly restructured loans,

by type of modification, which occurred during the three

ended March 31, 2024 (in thousands):

Recorded Investment Prior to Modification

8 unchanged sentences

Consumer and other

new modifications

new modification

experiencing financial

difficulties for

the three months ended March 31, 2024.

existing loan modifications that subsequently defaulted

modifications

difficulties and no loan modifications that subsequently

defaulted during for the three months ended March 31,

The Company’s provision for income taxes is presented

in the following table for the periods indicated (in thousands):

Three Months Ended March 31,

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

The Company had

new modifications and

new modifications to

borrowers experiencing financial

difficulties for

respectively.

modifications

subsequently defaulted during the three and nine months

ended September 30, 2023.

The Company’s provision for income taxes is presented

in the following table for the dates indicated (in thousands):

Nine Months Ended September 30,

The actual income tax expense for the nine months

ended September 30, 2023 and 2022 differs

from the statutory tax

period (computed

expense for the periods

(computed by applying the U.S.

federal corporate tax rate of

% for both 2024

and 2023 to income

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

Nine Months Ended September 30,

Three Months Ended March 31,

Federal taxes at statutory rate

3 unchanged sentences

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

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

Equity compensation

CECL Adoption

Deferred tax assets:

Deferred tax liability:

Deferred tax liabilities:

Deferred loan cost

2 unchanged sentences

Cash flow hedge

Deferred tax liability

Deferred tax liabilities

Net deferred tax assets

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

approximately

carryforwards

has approximately

loss carryforwards

expiring in various amounts between

22 unchanged sentences

authorities for years before 2020.

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

For the three months ended

March 31, 2024 and 2023,

the Company did

t have any unrecognized tax

benefits as a

tax positions

current period.

Additionally,

penalties were recorded as a result of tax uncertainties.

recorded as a result of tax uncertainties.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2024 Form 10-Q

OFF-BALANCE SHEET ARRANGEMENTS

23 unchanged sentences

is represented by the contractual amount of these commitments.

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

September 30, 2023

March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

December 31, 2023

39 unchanged sentences

Interest Rate Swaps Designated as a Cash Flow Hedge

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

As of September 30,

As of March 31,

2024, the Company

interest rate swap agreements

with a notional aggregate

interest rate swap

agreements with a

notional aggregate amount

were designated

interest rate

average maturity

compound SOFR being received.

As of December

the Company had

interest rate swap

agreements with

a notional aggregate

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

1 unchanged sentence

compound SOFR being received.

The Company had

cash flow hedges outstanding on December 31,

corresponding recognition

5 unchanged sentences

Interest Rate Swaps Designated as Fair Value

As of September 30, 2023,

the Company had four interest

rate swap agreements with a

notional aggregate amount of

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2024 Form 10-Q

As of March 31, 2024, the Company had

interest rate swap agreements with a notional aggregate amount of $

million that were designated as fair value hedges on loans.

rate swap agreements have an average maturity of

As of December

31, 2023, the

interest rate swap

agreements with a

notional aggregate amount

years, the weighted average fixed-rate paid

%, with the weighted average 3-month compound SOFR

%, with the weighted average

3-month compound SOFR

being received.

corresponding recognition in the assets being hedged.

Interest Rate Swaps

2 unchanged sentences

interest rate swaps

September 30,

December 31, 2023,

15 unchanged sentences

Balance Sheet Location

September 30, 2023:

March 31, 2024:

Derivatives designated as cash flow hedges:

Interest rate swaps

Derivatives designated as hedging instruments:

Interest rate swaps

Other liabilities

Derivatives not designated as hedging instruments:

2 unchanged sentences

December 31, 2023:

Derivatives designated as cash flow hedges:

Interest rate swaps

Derivatives designated as fair value hedges:

Interest rate swaps

Other liabilities

Derivatives not designated as hedging instruments:

33 unchanged sentences

under current

market conditions.

a significant

or liability,

USCB FINANCIAL HOLDINGS, INC.

2 unchanged sentences

Q1 2024 Form 10-Q

market conditions.

a significant

or liability,

valuation technique or

69 unchanged sentences

are classified within

the hierarchy

involve using quoted

market prices

the hierarchy and

often involve using

quoted market

prices for similar

securities, pricing models or discounted cash flow analyses

5 unchanged sentences

Q1 2024 Form 10-Q

September 30, 2023 and December 31, 2022 for each

of the fair value hierarchy levels (in thousands):

September 30, 2023

March 31, 2024 and December 31, 2023 for each of the

fair value hierarchy levels (in thousands):

March 31, 2024

December 31, 2023

6 unchanged sentences

Bank subordinated debt securities

Corporate bonds

Derivative assets

2 unchanged sentences

Total liabilities at fair value

Items Measured at Fair Value

on a Non-recurring Basis

Individually Evaluated

Impaired Loans:

eliminates the

current accounting

approximately

approximately $

million, resulting

impairment charge

the allowance

credit losses at December 31,

Loans subject to write-downs,

or impaired loans, are

estimated using the present

of expected cash

appraised value

of the underlying

collateral discounted

due to management's

estimates of changes in economic conditions and are

considered a Level 3 valuation.

the third-party

appraisals less

carrying cost of

Appraisals generally

use the market

valuation technique

market observable

the properties.

the appraiser

uses professional

determining the

the value for changes in

market conditions subsequent to

the valuation date when

current appraisals are not

a consequence of the carrying cost or the

third-party appraisal and adjustments therein, the fair values of the properties are

considered a Level 3 valuation.

The following table represents the Company’s assets measured at

fair value on a non-recurring basis at

September 30,

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

hierarchy levels (in thousands):

September 30, 2023:

Individually evaluated loans

December 31, 2022:

Impaired loans

The following table presents

quantified information about

Level 3 fair value

measurements for assets measured

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

Valuation Technique(s)

Unobservable Input(s)

December 31, 2022:

Residential real estate

Sales comparison approach

for differences between comparable sales

Commercial and industrial

Discounted cash flow

for differences in net operating income expectations

Consumer and other loans

Discounted cash flow

for differences in net operating income expectations

impaired loans

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

non-recurring

September 30,

December 31, 2022.

Items Not Measured at Fair Value

5 unchanged sentences

not carried at fair

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

(in thousands):

value as of March 31, 2024 and December 31, 2023 (in

Fair Value Hierarchy

September 30, 2023:

March 31, 2024:

Financial Assets:

25 unchanged sentences

Accrued interest payable

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2024 Form 10-Q

STOCKHOLDERS’ EQUITY

21 unchanged sentences

Company’s wholly owned subsidiary.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

Reorganization,

12 unchanged sentences

stock as they previously owned of the Bank’s common

In March 2023, the

Company issued

During the first quarter 2024, the Company issued

shares of Class A common stock to employees as restricted

the Company’s

incentive plan

quarter 2023,

shares of Class A

common stock to employees and

directors as restricted

stock awards pursuant to the Company’s 2015 equity incentive plan.

stock awards issued during the quarter

ended September 30, 2023 nor during the three and nine

months ended September 30, 2022.

ended September

approximately

pursuant to the Company’s publicly announced repurchase program.

shares were repurchased during the three months

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

of September 30, 2023 and December 31,

common stock to

employees and directors as

restricted stock awards pursuant

to the Company’s

2015 equity incentive plan.

During the three months ended

March 31, 2024, the Company

shares of Class A common stock at

a weighted average price per share of $

The aggregate purchase price for these transactions was approximately $

repurchase program.

As of March 31, 2024,

shares remained authorized for repurchase under this program.

the three months

ended March 31,

2023, the Company

shares of Class

common stock at

average price

aggregate purchase

these transactions

was approximately

including transaction costs.

See Note 11, Subsequent Events, for information

regarding the new share repurchase program declared in April 2024.

Shares of the Company’s Class

A common stock issued

and outstanding as of

March 31, 2024 and

December 31, 2023

, respectively.

Declaration of dividends by the Board is required before dividend payments are made.

dividends were approved by

the Board for

the common stock classes

for the three

months ended September 30, 2023

Additionally, there were

dividends declared and unpaid as of September 30,

2023 and 2022.

Declaration of dividends

is required before

dividend payments

limited in the

cash dividends

generally limited

dividend declaration,

must consider

additional factors

current period net income, liquidity,

asset quality,

capital adequacy and economic conditions

at the Bank since the Bank is

the primary source

of funds to fund

dividends by the Company.

It is likely that

these factors would

further limit the

of dividends which the

Company could declare.

In addition, bank

regulators have the authority to prohibit

banks from paying

dividends if they deem such payment to be an unsafe

or unsound practice.

quarterly dividend

first quarter

stockholders of record as of the close of business

on February 15, 2024.

Total amount paid to shareholders in dividends on

dividends were

stockholders for

March 31, 2023.

See Note 11, Subsequent

Events, for information regarding dividends declared in April 2024.

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2024 Form 10-Q

The following table details the dividends declared and paid by

the Company in the three months ended March

Declaration Date

Dividend Per Share

Dividend Amount

January 19, 2024

February 15, 2024

March 5, 2024

“well-capitalized”

guidelines as of September 30, 2023

and December 31, 2022.

At September 30, 2023, the

total risk-based capital ratios for

the Company and the Bank were

Company and the Bank were

%, respectively.

20 unchanged sentences

of diluted EPS when their effect is dilutive.

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

The following table reflects the calculation of net income

available to common shareholders for the three months ended

March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Net income available to common shareholders

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q3 2023 Form 10-Q

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

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

except per share amounts):

Three Months Ended September 30,

The following table reflects

the calculation of basic and

diluted earnings per common

share class for the

ended March 31, 2024 and 2023 (in thousands, except

per share amounts):

Three Months Ended March 31,

Net income available to common shares

17 unchanged sentences

common stock for each of the periods presented.

Nine Months Ended September 30,

Net income available to common shares

Weighted average shares outstanding

Earnings per share, basic

Net income available to common shares

Weighted average shares outstanding for basic EPS

Dilutive effects of assumed exercises of stock options

Weighted avg.

shares including dilutive potential common shares

Earnings per share, diluted

Anti-dilutive stock options excluded from diluted EPS

Net income has not been allocated to unvested

restricted stock awards that are participating securities

because the amounts that would be allocated are

not material to net income per share of common

Unvested restricted stock awards that are participating

securities represent less than one percent

of all of the outstanding shares of common stock

for each of the periods presented.

USCB FINANCIAL HOLDINGS, INC.

13 unchanged sentences

on the Company’s Consolidated Financial Statements.

As previously

disclosed, on

July 13, 2023,

individual shareholders

(“The Plaintiffs”)

filed a complaint

board members

without naming

named directors

authority to approve the exchange of

preferred stock in July 2021 as

part of the Bank’s initial public

offering and that further,

such action breached

their fiduciary duties.

The Plaintiffs

claim this exchange

was not permitted

by the Bank’s

Incorporation.

Company intends to vigorously defend against the allegations in

Despite the Company’s belief the lawsuit lacks

merit, if the plaintiffs were successful, the Court

could award substantial compensatory damages.

SUBSEQUENT EVENTS

On April 23, 2024,

the Company announced that its

Board of Directors declared its

second quarterly cash dividend.

quarterly dividend for

the second quarter

per share of Class

A common stock

and will be paid

5, 2024, to stockholders of record as of the close of

business on May 15, 2024.

Share Repurchase Program

On April 22, 2024, the Board of Directors approved a new share

repurchase program of up to

shares of Class

approximately

repurchase program,

Class A common

a discretionary

basis from time

time through open market repurchases, privately negotiated transactions, or other means.

The repurchase program has no

expiration date and may

be modified, suspended, or

terminated at any time.

The new repurchase program

will commence

upon completion of the Company’s current

repurchase program.

Repurchases under this new

program will be funded from

authorized for repurchase under the Company’s share

repurchase programs.

USCB Financial Holdings, Inc.

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements