What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 596 added, 401 removed, 1133 unchanged (47% of the section changed)

2 unchanged sentences

understanding

condition and results

of operations of

the Company and

the Bank, its

wholly owned subsidiary,

ended March 31,

discussion and analysis

in conjunction

with the unaudited

consolidated financial

condition and results of

operations of the

Company and the Bank,

its wholly owned subsidiary,

as of and for

the three and

consolidated financial statements and related

notes included in this Quarterly

Report on Form 10-Q (“Form

10-Q”) and the

audited consolidated financial

statements and related

notes included in

this Quarterly

notes included in the

Report on Form

10-Q (“Form 10-Q”)

and the audited

Securities and Exchange Commission (“SEC”) for the year ended

December 31, 2024.

10-K (“2024 Form

K”) filed with the Securities and Exchange Commission

(“SEC”) for the year ended December 31, 2024.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause

48 unchanged sentences

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 accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance

for credit losses and deferred tax asset valuation allowance;

the efficiency and effectiveness of our

15 unchanged sentences

significantly diversified loan

portfolio and the concentration

in the South Florida

market, including the

portfolio and our

concentration in the

South Florida market,

including the

of geographic,

15 unchanged sentences

and trade restrictions;

impacts of international hostilities and geopolitical events;

the impacts of international hostilities and geopolitical events;

increased competition and its

30 unchanged sentences

the Company filed or will file with the SEC.

March 31, 2024.

On January 21, 2025,

the Company’s Board of

Directors declared a quarterly

cash dividend of $0.10

per share on the

ended June 30, 2025

compared to $6.2 million

or $0.31 per diluted

share of common stock for

the three months ended

On January 21, 2025, the Company’s Board of Directors

declared the first quarter cash dividend of $0.10

the Company’s Class A common stock.

dividend was paid

2025 to shareholders

of record at the

business on February 15, 2025.

2 unchanged sentences

$2.0 million.

second quarter cash

dividend of $0.10

the Company’s

Class A common stock was

The aggregate

amount distributed

connection with this dividend

was $2.0 million.

Additionally, the

Company’s Board of

Directors declared a cash

$0.10 per share of the

Company’s Class A

common stock on July 21,

The dividend will

be paid on September 5,

to shareholders of record at the close of business on August 15, 2025.

In evaluating our financial

10 unchanged sentences

quarter ended

March 31, 2025

and annualized

where appropriate:

2025 increased

to $19.1 million

from $15.2 million for the quarter ended March 31,

Net interest margin (“NIM”)

was 3.10% for

the three months ended

2025 compared to 2.62%

for the three

months ended March 31,

Total assets were

$2.68 billion at

March 31, 2025,

representing an increase

of $188.2 million

June 30, 2025 compared to at or for the quarter ended June 30, 2024 and as of December 31, 2024 and annualized where

Net interest income for

the three months ended June

30, 2025 increased $3.7 million

or 21.5% to $21.0 million from

$17.3 million for the quarter ended June 30, 2024.

Net interest margin (“NIM”) was 3.28%

for the three months ended June 30, 2025 compared to 2.94% for the three

months ended June 30, 2024.

Total assets were $2.72 billion at

June 30, 2025, representing an increase of $261.2 million

or 10.6% from June 30,

2024 and an increase of $138.3 million or 10.8% annualized

from December 31, 2024.

$2.04 billion

2025, representing

13.0% annualized

increase of $244.1 million

or 13.1% from June

2024 and an increase

of $140.5 million or

14.4% annualized from

December 31, 2024.

Total deposits were $2.34

billion at June 30,

2025, representing an

increase of $279.0 million

or 13.6% from

30, 2024 and an increase of $161.7 million or 15.0% annualized

from December 31, 2024.

Total deposits were $2.31 billion at March 31, 2025, representing an increase of $206.8 million or 9.8% from March

31, 2024 and an increase of $135.6 million or 25.3%

annualized from December 31, 2024.

Annualized return on average assets for the quarter

ended March 31, 2025 was 1.19% compared to 0.76%

quarter ended March 31, 2024.

Annualized return on average stockholders’ equity for the quarter ended March 31, 2025 was 14.15% compared to

9.61% for quarter ended March 31, 2024.

The ACL to total loans was 1.22% at both March 31, 2025 and December 31, 2024.

Non-performing loans to total loans was 0.20% at March

Annualized return on

average assets for

ended June 30,

2025 was 1.22%

quarter ended June 30, 2024.

Annualized return on

average stockholders’ equity for

the quarter ended

June 30, 2025

was 14.29% compared

12.63% for quarter ended June 30, 2024.

The ACL to total loans was 1.18% at June 30, 2025 compared to 1.22% at December 31, 2024.

Non-performing loans to total loans was 0.06% at June

30, 2025 and 0.14% at December 31, 2024.

-based capital

respectively.

Tangible book

2025, representing

increase of $0.42 or 15.6% annualized from $10.81 at December 31, 2024.

At March 31, 2025, tangible book value

increase of $0.72 or 13.5%

annualized from $10.81

at December 31, 2024.

2025, tangible book value

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

per common share

6 unchanged sentences

Explanation for

Financial Measures” included in this Form 10-Q for a reconciliati

on of this non-GAAP financial measure.

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Financial Measures” included in this Form 10-Q for a reconciliation

of this non-GAAP financial measure.

The Company filed

a $100.0 million

universal shelf

offering registration

allows the Company

offer various securities over

time, as needed, without

the requirement to file

a new registration statement

for each offering.

Critical Accounting Policies and Estimates

“Summary of Significant Accounting Policies” in Part I

The consolidated

financial statements

the application

Generally Accepted

Practices (“GAAP”),

the most significant

described in Note

of Significant Accounting

the Company’s 2024 Form

10-K and “Summary of Significant

Accounting Policies” in Part I

in this Form 10-Q .

To prepare financial statements in conformity with

management makes estimates, assumptions,

and judgments based on available information.

These estimates,

estimates, assumptions,

and judgments are

based on information

available as of the

date of the financial

statements and,

financial statements

management has identified

accounting policies that,

in conformity

management makes

estimates, assumptions,

and judgments

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

financial statements.

In particular,

has identified

policies that,

understanding

presented the application of these policies to the Audit

and Risk Committee of our Board of Directors.

Management has

presented the application

of these policies to

the Audit and

Risk Committee of

Non-GAAP Financial Measures

This Form 10-Q

includes financial information determined by

methods other than in

accordance with generally accepted

accounting principles (“GAAP”).

This financial information

includes certain operating performance measures.

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

Operating performance measures

should be viewed in

addition to, and not

as an alternative to

or substitute for,

determined in accordance with GAAP,

and are not necessarily comparable to non-GAAP measures that may

by other companies.

To the extent applicable, reconciliations of these

non-GAAP measures to the most

directly comparable

“Reconciliation

Measures” included in this Form 10-Q.

measures because it believes these measures

may provide useful supplemental information

for evaluating the Company’s

underlying performance

the Company’s

measures should be

viewed in addition to,

an alternative to

or substitute for, measures determined in

not necessarily

comparable to

non-GAAP measures

the extent applicable,

reconciliations of

these non-GAAP

measures to the

most directly comparable

GAAP measures

section “Reconciliation

and Management

Explanation of

Non-GAAP Financial

Measures” included

Segment Reporting

9 unchanged sentences

Results of Operations

The following

tables present

selected balance

sheet, income

statement, and

profitability ratios

dates indicated

(in thousands, except ratios):

March 31, 2025

The following tables present selected

balance sheet, income statement, and

profitability ratios for the dates

indicated (in thousands, except ratios):

June 30, 2025

December 31, 2024

4 unchanged sentences

Q2 2025 Form 10-Q

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended

Consolidated Statements of Operations:

13 unchanged sentences

expense, and the provision for income taxes.

Three months ended March 31, 2025 compared to the three

months ended March 31, 2024

Net income increased to $7.7

million for the three months ended March

from $4.6 million for the same period

The $3.0 million

or 66% increase

in net income

was attributable to

higher interest income

from a larger

loan portfolio

and increased

activity in fee

generating transactions

(gain on sale

loans, prepayment

penalties, title

income) between periods.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

increased $1.9

ended June 30,

interest margin, resulting from a larger loan portfolio earning

higher yields, along with a reduction in interest expense.

Six months ended June 30, 2025 compared to the six

months ended June 30, 2024

Net income increased

to $15.8 million

months ended June

from $10.8 million

$5.0 million or

increase in net

improvement in

net interest margin,

from a larger loan portfolio earning higher yields, along with a reduction

in interest expense.

Additionally,

in fee generating transactions

(gain on sale of

SBA 7a loans, prepayment

penalties, title insurance

income) contributed to

the increase between periods.

Net Interest Income

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costs of liabilities for the periods indicated (dollars in

Three Months Ended March 31,

Three Months Ended June 30,

Interest-earning assets:

5 unchanged sentences

Interest-bearing liabilities:

Interest-bearing checking

Interest-bearing demand deposits

Saving and money market deposits

15 unchanged sentences

deferred fees/costs and non-accrual loans.

Interest income on loans includes accretion of

deferred loan fees, net of

Interest income on loans includes accretion

of deferred loan fees, net of

deferred loan costs.

6 unchanged sentences

income to average total interest-earning assets.

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Net interest income before the provision for

credit losses was $19.1 million for the

three months ended March 31, 2025,

an increase of $4.0 million

or 26.1%, from $15.2 million

for the same period in

This increase was

primarily attributable

to higher income from a larger loan portfolio combined with

an increase in the weighted average loan yield.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Six Months Ended June 30,

Interest-earning assets:

Investment securities

Other interest-earnings assets

Total interest-earning assets

Non-interest earning assets

Liabilities and stockholders' equity

Interest-bearing liabilities:

Interest-bearing demand deposits

Saving and money market deposits

Time deposits

Total interest-bearing deposits

FHLB advances and other borrowings

Total interest-bearing liabilities

Non-interest bearing demand deposits

Other non-interest-bearing liabilities

Total liabilities

Stockholders' equity

Total liabilities and stockholders' equity

Net interest income

Net interest spread

Net interest margin

3.10% for the

three months ended

March 31, 2025

and 2.62% for

the same period

NIM expansion

points was due

yields and the

average balance of

interest-earning

assets, and also a decrease on rates paid on interest-bearing

liabilities between periods.

Average balances - Daily average balances are used

to calculate yields/rates.

Average loan balances include non-accrual loans.

Interest income

on loans includes accretion of deferred

loan fees, net of deferred loan costs.

At fair value except for securities held to maturity.

This amount includes

Net interest spread is the weighted average

yield on total interest-earning assets minus the weighted

average rate on total interest-bearing

Net interest margin is the ratio of net interest

income to average total interest-earning assets.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Net interest income before the provision

for credit losses was $21.0 million

for the three months ended June

The increase of $3.7

million or 21.5% was

primarily driven by

higher income from

an expanded loan portfolio,

in the weighted average loan yield, and a reduction in rates

paid on interest-bearing liabilities between periods.

margin (“NIM”)

ended June 30,

NIM expansion of

points reflects both

yields and growth

portfolio average balance,

along with a decrease in interest rates paid on interest-bearing

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Net interest income before the provision for credit losses was $40.1 million for the six months ended June 30, 2025, an

increase of $7.7 million or

23.7%, from $32.5 million for the

same period in 2024.

growth was primarily driven by higher

income from an

expanded loan

portfolio, an increase

in the weighted

average loan yield,

and a reduction

in rates paid

interest-bearing liabilities between periods.

ended June 30, 2025

of 40 basis points reflects both higher loan yields and growth in the loan average balance, along with a decrease in interest

rates paid on interest-bearing liabilities.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Provision for Credit Losses

15 unchanged sentences

and net charge-offs.

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

The provision

$681 thousand

ended March 31, 2025

$410 thousand

portfolio was

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

The provision for credit loss was

$1.0 million for the three months

ended June 30, 2025 compared to $786 thousand for

the same period in 2024.

Growth in the loan portfolio

was the primary driver

of the increase in the

provision expense.

and to a lesser degree the

slight deterioration in the economic

forecast under the CECL methodology

to calculate the ACL

during the three months ended March 31, 2025.

impact was partially offset by the release of

reserves related to individually evaluated loans, following a charge-off recorded

during the second quarter of 2025.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

The provision for credit

loss was $1.7

million for the six

months ended June 30,

2025 compared to

$1.2 million for the

impact was partially offset by the release of

reserves related to individually evaluated loans, following a charge-off recorded

during the second quarter of 2025.

Non-Interest Income

2 unchanged sentences

income from gain

loans though our

SBA loan programs.

addition, we own

and are beneficiaries

surrender values.

loans though SBA 7a

loan program and

the monetization fees

earned through our

In addition, we own

and are beneficiaries of

the life insurance policies

on some of our employees,

which policies

generate income from the increase in the cash surrender values.

The following table presents the components of non-interest

income for the dates indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Gain on sale of securities available for sale, net

Gain on sale of loans held for sale, net

1 unchanged sentence

non-interest income

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

reported under service

fees category combined with

an increase in the

gain on sale of

of loans during

the first quarter of 2025 was greater than the first quarter

of 2024 due to higher loan amounts in new SBA 7a loans.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

$159 thousand

reported under service fees category.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Non-interest income

June 30, 2025

increased $1.4

million or 24.9%,

period in 2024.

This increase

was primarily

driven by growth

in prepayment

penalties and title

insurance income

under service fees category combined with an increase in

the gain on sale of loans.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Non-Interest Expense

1 unchanged sentence

expense for the dates indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Salaries and employee benefits

4 unchanged sentences

non-interest expense

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Non-interest expense for the three

months ended March 31, 2025

increased $878 thousand or 7.9%,

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Non-interest expense for the

three months ended the

June 30, 2025 increased

$1.1 million, or 9.3%,

compared to the

The increase was

primarily driven by

thousand rise

benefits, reflecting

merit increases

stock-based compensation

Additionally, other

operating expense

thousand, largely due to a reimbursement

of force-placed insurance expense

received in the second quarter

reimbursement reduced expenses in that period, making the

second quarter of 2025 appear higher by comparison.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Non-interest expense

months ended June

30, 2025 increased

$2.0 million or

8.6%, compared

period in 2024.

was primarily

in salaries and

employee benefits

due to merit increases, management

bonuses, stock-based compensation expense,

and an increase in payroll

taxes for the

first quarter 2025.

increase of $882

thousand in merit

increases and new

full-time employee salaries,

$318 thousand in

payroll taxes and

insurance expense, and $727 thousand in stock-based

compensation expense.

Provision for Income Tax

14 unchanged sentences

elements in determining our effective tax rate.

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Income tax expense

for the three

March 31, 2025

was $2.4 million

as compared to

same period in 2024.

The effective tax rate for the three months ended

March 31, 2025 was 24.2% compared to 23.6% for

the same period in 2024.

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

same period in 2024 and reflected the substantially increased level of net income

experienced during the 2025 period.

effective tax rate for the three months ended June 30,

2025 was 24.2% compared to 24.1% for the same period

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Income tax expense for the six months ended June 30, 2025 was $5.0 million as compared to $3.4 million for

substantially

effective tax rate for the six months ended June 30,

2025 was 24.2% compared to 23.9% for the same period

Statements in Item 1 of Part I of this Form 10-Q.

Analysis of Financial Condition

assets at March 31, 2025 were $2.68

billion, an increase of $96.2

million, or 15.1% annualized, over

of $2.58 billion at

December 31, 2024.

Total loans, net of deferred fees/costs, increased

$63.4 million, or 13.0% annualized,

March 31, 2025

million, or 25.3% annualized, to $2.31 billion at March

31, 2025 compared to $2.17 billion December 31, 2024.

assets at June 30, 2025 were

$2.72 billion, an increase

of $138.3 million, or 10.8%

annualized, over total assets

annualized, to $2.11

billion at June 30, 2025 compared to

$1.97 billion at December 31, 2024.

deposits increased by

$161.7 million,

or 15.0% annualized, to $2.34 billion at June 30, 2025 compared

to $2.17 billion December 31, 2024.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Investment Securities

45 unchanged sentences

and the ALCO of the Company to ensure an appropriate risk and return

profile as well as for adherence to the investment policy.

profile as well as for adherence to the Company’s

investment policy.

When evaluating AFS

10 unchanged sentences

company performance analysis, review of credit ratings, vintage bonds, remaining payment terms, prepayment speeds and

analysis of macro-economic conditions.

Each investment is expected to recover its unrealized loss position over its holding

period as it approaches

to maturity and the Company has the intent and ability to hold these securities maturity.

of this evaluation, the Company concluded that no allowance

was required on AFS securities as of March

macro-economic

required on AFS securities as of June 30, 2025.

mortgage-backed

5 unchanged sentences

million in investment

For the portion of the HTM

exposed to non-government credit risk,

the Company utilized the PD/LGD

allowance for

classified as HTM represents amortized cost less ACL.

AFS and HTM investment securities increased $12.0 million,

annualized, to $436.9 million at March 31, 2025

from $424.9 million at December 31, 2024.

securities increased due to reinvestment of payments

investment of excess

balances into high

credit quality investments

to increase the

Company’s profitability and

March 31, 2025,

grade corporate

to non-government credit

Company utilized

methodology to

classified as

represents amortized cost less ACL.

$19.2 million,

exempt securities.

$444.1 million

June 30, 2025 from $424.9 million

at December 31, 2024.

Investment securities

increased due to

reinvestment of payments

received and investment of

excess in cash

balances into high credit

quality investment securities to

increase the Company’s

profitability and modify the Company’s balance sheet

duration according to the ALM policy.

As of June 30, 2025,

investment securities with a market value of $49.6 million were pledged to secure public deposits.

The investment portfolio does not have any tax-exempt

USCB Financial Holdings, Inc.

7 unchanged sentences

in thousands):

March 31, 2025

June 30, 2025

December 31, 2024

19 unchanged sentences

for investment

as of March 31, 2025 (in thousands, except yields):

as of June 30, 2025 (in thousands,

except yields):

Within 1 year

36 unchanged sentences

as of the dates indicated (in thousands):

March 31, 2025

June 30, 2025

December 31, 2024

10 unchanged sentences

annualized to

$2.04 billion,

2025 compared to December 31, 2024.

The correspondent

banks loan segment had the most significant growth

2025 compared to

December 31, 2024.

commercial real estate

loan segment had

the most significant

growth compared

to December 31, 2024.

approximately

loan portfolio

March 31, 2025.

growth strategy

since inception

been reflective of the market in which we operate and

18 unchanged sentences

or unexpected

The following table shows maturities and sensitivity to interest rate changes of the loan portfolio at March 31,

The following table

shows maturities and sensitivity

to interest rate changes

of the loan portfolio

2025 (in thousands):

26 unchanged sentences

/rate modifications are discussed as well.

March 31, 2025,

approximately

adjustable/variable rates

The adjustable/variable

rate loans re-price

to different benchmarks

and tenors and

in different periods

adjustable/variable

periods of time.

By contractual characteristics,

there are no material concentrations

material concentrations

on anniversary repricing.

1 unchanged sentence

it is important to

our loans have

interest rate floors.

This embedded option

protects the Company

from a decrease

rates below the floor and positions us to gain in the scenario

of higher interest rates.

note that most of

our loans have interest

This embedded

option protects the

Company from a

decrease in interest rates below the floor and positions

us to gain in the scenario of higher interest rates.

USCB Financial Holdings, Inc.

46 unchanged sentences

as follows for the dates indicated (in thousands):

March 31, 2025

June 30, 2025

Special Mention

17 unchanged sentences

except ratios):

March 31, 2025

June 30, 2025

December 31, 2024

15 unchanged sentences

accrual status.

This determination is based on current existing facts concerning collateral values and the paying capacity of

overstating the Company’s income for a loan with

increased credit risk.

This determination is based on current existing facts concerning collateral values and the paying

overstating the Company’s income for a loan

with increased credit risk.

non-accrual status as of

45 unchanged sentences

Correspondent

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Beginning balance

3 unchanged sentences

Net charge-offs (recoveries) to average

Three Months Ended March 31, 2024

Six Months Ended June 30, 2025

Beginning balance

3 unchanged sentences

Net charge-offs (recoveries) to average

(1) Provision for credit losses excludes a $10 thousand expense due to unfunded commitments included in accrued interest and other

(1) Provision for credit losses excludes a $134 thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $2 thousand provision related to investment securities held to maturity.

(2) Annualized.

(3) Provision for credit losses excludes a $144 thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $1 thousand provision related to investment securities held to maturity.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Correspondent

Three Months Ended June 30, 2024

Beginning balance

Provision for credit losses

Ending Balance

Average loans

Net charge-offs (recoveries) to average

Six Months Ended June 30, 2024

Beginning balance

Provision for credit losses

Ending Balance

Average loans

Net charge-offs (recoveries) to average

(1) Provision for credit losses excludes a $15 thousand provision due to unfunded commitments included in accrued interest and other

liabilities and a $3 thousand release related to investment securities held to maturity.

(2) Provision for credit losses excludes a $43 thousand expense due to unfunded commitments included in accrued interest and other

liabilities and a $4 thousand charge related to investment securities held to maturity.

(2) Annualized.

(3) Provision for credit losses excludes $58 thousand provision due to unfunded commitments included in accrued interest and other

liabilities and $1 thousand provision due to investment securities held to maturity.

deterioration

4 unchanged sentences

housing prices

factor scorecard was updated based on the latest portfolio stress

test and the resulting maximum loss calculation.

factor scorecard was updated based on the latest portfo

lio stress test and the resulting maximum loss calculation.

included residential

4 unchanged sentences

in calculating

expected losses on the residential loan segment.

As of March 31,

2025, for every 100 basis points increase in the HPI, the

expected losses on

the residential loan

June 30, 2025,

for every 100

basis points increase

approximately

5 unchanged sentences

and does not represent a change in management’s

As of March 31,

2025, we stress tested two

qualitative factors in our commercial

real estate loan pool,

As of June 30, 2025, we stress tested two qualitative factors in our commercial real estate loan pool, as it is the largest

our portfolio.

the qualitative

measure the sensitivity

of the qualitative

resulted in a $10.2

million or 41.0%

sensitivity of

the qualitative

risk resulted

This sensitivity

4 unchanged sentences

Bank-Owned Life Insurance

As of March 31, 2025, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was

As of June 30,

2025, the combined

cash surrender value

of all bank-owned

life insurance (“BOLI”)

policies was $58.4

Changes in cash surrender value are recorded to non-interest income in the unaudited Consolidated Statements of

1 unchanged sentence

The Company is the beneficiary of these policies.

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Customer deposits are the

6 unchanged sentences

to meet our customers’ business

small-to-medium

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

deposit customers

are small-to-medium

sized businesses (“SMBs”),

and the personal

business of the

owners and operators of these SMBs, as well as the retail/consumer

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presented (in thousands, except ratios):

Three Months Ended March 31,

Three Months Ended June 30,

Average Balance

Non-interest-bearing checking

Interest-bearing checking

Money market and savings deposits

Non-interest bearing demand deposits

Interest-bearing demand deposits

Saving and money market deposits

Time deposits

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outstanding balances

collateralized)

deposits balance at March 31, 2025 was $178.0 million

and $133.0 million at December 31, 2024.

has approximately

deposit accounts

28% in personal deposits, 8% in public funds (which are

partially collateralized) and 8% in brokered deposits.

deposits balance at June 30, 2025 was $188.0 million

and was $133.0 million at December 31, 2024.

approximately

thousand as of March 31, 2025.

approximately $113

thousand as of June 30, 2025.

The uninsured deposits are estimated based on

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per account holder

for all deposit accounts at the Company.

The total estimated percentage of uninsured deposits was 54% at March 31, 2025

for all deposit accounts at

The total estimated percentage

of uninsured deposits was

52% at June 30, 2025

Deposit Account

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deposit balance

million at March 31, 2025 and $125.5 million at December

million at June 30, 2025 and was $125.5 million at December

The following table shows scheduled maturities of uninsured

time deposits as of March 31, 2025 (in thousands):

March 31, 2025

time deposits as of June 30, 2025 (in thousands):

June 30, 2025

Three months or less

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companies and taxing authority of the borrower.

Escrow funds are recorded as other liabilities.

As of March 31, 2025, escrow balances totaled $13.5

million compared to $6.1 million at December 31, 2024.

Escrow funds are recorded as accrued interest and other

As of June 30, 2025, escrow balances totaled $20.9 million

compared to $6.1 million at December 31, 2024

accessibility to additional

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either daily operations or the financial condition of the

As of March 31,

$108.0 million of

fixed-rate advances outstanding

from the FHLB

with a weighted

As of June 30, 2025, we had $108.0 million of fixed-rate advances outstanding from

the FHLB with a weighted average

rate of 3.60%.

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The following table presents the FHLB advances as of

March 31, 2025 (in thousands):

June 30, 2025 (in thousands):

Interest Rate

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correspondent

March 31, 2025, there were no outstanding balances with

any of these liquidity sources.

June 30, 2025, there were no outstanding balances with any

of these liquidity sources.

Off-Balance Sheet Arrangements

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for on-balance

of any accounting

these commitments;

we maintain an allowance

for off-balance sheet

credit risk which is

recorded under accrued

interest and other liabilities

on the unaudited Consolidated

for off-balance

recorded under

accrued interest

liabilities on

the unaudited

Balance Sheets.

ACL related to unfunded

commitments at

March 31, 2025 was $581 thousand and at March 31, 2024 was

$415 thousand.

unfunded commitments at June 30, 2025 was

$716 thousand and at December 31, 2024

was $571 thousand.

was primarily driven by an increase

in unfunded commitments and to

a lesser degree by the deterioration

of the estimated

Since commitments associated with letters of

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commitments outstanding as of the dates indicated (in thousands

March 31, 2025

June 30, 2025

December 31, 2024

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and mitigating

risks are appropriately executed within the designated lines of

authority and responsibility in a timely manner.

risks are appropriately executed within the designated lines

of authority and responsibility in a timely manner.

USCB Financial Holdings, Inc.

45 unchanged sentences

Market and Interest Rate Risk Management

According to our ALCO model, as of March

31, 2025, we had a neutral to slightly asset

sensitive balance sheet both for

asset sensitivity

According to our ALCO model, as of June 30,

2025, we had a slightly liability sensitive balance sheet

for year one, and

balance sheet

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assets generally

our liabilities,

which results

market interest

Liability sensitivity

indicates that

our liabilities generally

reprice faster

liabilities, which

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

rate variations

prepayment speeds,

non-maturity deposit

price sensitivity (betas), pricing correlations, deposit truncations

and decay rates, and key interest rate drivers.

assets, which

favorable impact

to net interest income when market interest rates

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 (betas),

pricing correlations,

deposit truncations and decay rates, and key interest rate

Because of the inherent use

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to increase asset sensitivity.

According to our model, as of March 31, 2025, our balance sheet is neutral to slightly asset sensitive

for year one more

asset sensitivity and year two

under interest static rate scenarios (an

increase or decrease of 400 basis

that the impact of rates variations will be minimal to our NIM.

Additionally, utilizing an EVE approach, we analyze the risk to

capital from the

various interest rate

scenarios through

According to our

2025, our balance

sheet is liability

sensitive for year

interest rate

scenarios (an

Additionally,

approach, we analyze

the risk to capital

from the effects

of various interest

rate scenarios through

a long-term discounted

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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.

sheet composition,

expected, our

model stipulates

interest rates will have a

negative impact on the EVE

and lower rates, a positive

Results and analysis are presented

quarterly to the ALCO, and strategies are reviewed and defined.

the difference

economic value

of our assets

and the economic

liabilities, which is

our liquidation value.

According to our

balance sheet composition, and

as expected, our

Results and analysis are presented quarterly to the ALCO,

and strategies are reviewed and defined.

Liquidity is defined

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borrowings from the

Accordingly, we believe our liquidity resources are adequate

to fund loans and meet

other cash needs as necessary.

FHLB Atlanta.

our liquidity

resources are

Capital Adequacy

March 31, 2025,

prompt corrective

action framework.

follow the capital conservation buffer framework, and as of March 31, 2025, we exceeded the capital conversation buffer

follow the capital conservation

buffer framework,

and as of June

exceeded the capital

conversation buffer

indicated (in thousands, except ratios).

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Action Provisions

March 31, 2025

June 30, 2025

risk-based capital

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The impact of inflation is mostly reflected

in the increased cost

of operations, inflation

can negatively impact

overhead expenses.

most industrial companies,

performance than the effects 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.

in the increased cost of operations, inflation can negatively impact overhead expenses and other variable expenses.

most industrial

and liabilities

greater impact on our performance than the effects 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.

Recently Issued Accounting Pronouncements

101 unchanged sentences

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 2. Management’s Discussion and Analysis