What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 613 added, 558 removed, 1171 unchanged (50% of the section changed)

8 unchanged sentences

the three and

September 30, 2025.

This discussion

conjunction with

the unaudited

consolidated financial statements and related

5 unchanged sentences

notes included in the

Report on Form

10-K (“2024 Form

Annual Report on

Form 10-K (“2024

K”) filed with the Securities and Exchange Commission

14 unchanged sentences

Forward-Looking Statements

statements that

This Form 10-Q

contains statements

historical in

24 unchanged sentences

events, or business

and growth strategies, including anticipated internal growth.

and growth strategies, including anticipated internal

growth and potential balance sheet restructuring.

These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ

16 unchanged sentences

deposit attrition and the level of our uninsured deposits;

legislative or regulatory

changes and changes

in accounting

legislative or regulatory changes, including the enactment

of the One Big Beautiful Bill, and changes in accounting

principles, policies,

practices or guidelines,

the on-going effects of the Current Expected Credit

Losses (“CECL”) standard;

guidelines, including

Expected Credit

(“CECL”) standard;

the lack of a

significantly diversified loan

portfolio and our

concentration in the

South Florida market,

including the

portfolio and our concentration

in the South Florida

market, including the

of geographic,

14 unchanged sentences

the effects of potential new or increased tariffs

and trade restrictions;

retaliatory tariffs, and trade restrictions;

the effects of

the current federal

government shutdown, including,

but not limited

to, the ability

to sell Small

Administration loans;

the impacts of international hostilities and geopolitical events;

5 unchanged sentences

the loss of key employees;

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client,

2 unchanged sentences

10-K and other filings we make with the SEC.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

forward-looking

17 unchanged sentences

the 2024 Form 10-K

the Company filed or will file with the SEC.

ended June 30, 2025

the Company has filed or will file with the SEC.

ended September 30,

For nine months

ended September 30,

2025, the Company

reported net income

of $24.7 million

or $1.23 per diluted

share of common stock

compared to $17.8 million

or $0.90 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.

The aggregate amount distributed in

connection with the quarterly cash dividend paid was

$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.

share of common stock

nine months ended September 30, 2024.

In evaluating our financial

10 unchanged sentences

quarter ended

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

September 30,

annualized where appropriate:

months ended September

increased $3.2 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.

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.

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

to $21.3 million

from $18.1 million for the quarter ended September

margin (“NIM”) expanded

three months ended

September 30, 2025

compared to 3.03%

for the three months ended September 30, 2024.

September 30,

2025, representing

September 30,

2024 and an increase of $186.7 million or 9.7%

annualized from December 31, 2024.

Total loans held

for investment (net

of deferred cost/fees)

were $2.13 billion

at September 30,

2025, representing

annualized from December 31, 2024.

Total deposits were $2.46 billion at September

30, 2025, representing an increase of $329.0

million or 15.5% from

September 30,

2024 and an increase of $281.6 million or 17.3%

annualized from December 31, 2024.

Annualized return on average assets for the quarter ended September 30, 2025 was

1.27% compared to 1.11% for

the quarter ended September 30, 2024.

stockholders’

compared to 13.38% for quarter ended September 30, 2024.

The ACL to total loans was 1.17% at September 30, 2025 compared to 1.22% at December 31, 2024.

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

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

At September 30, 2025, the total

risk-based capital ratios

for the Company and

the Bank were 14.20% and

respectively.

increase of $0.72 or 13.5%

annualized from $10.81

at December 31, 2024.

2025, tangible book value

Tangible book value per

common share (a

non-GAAP measure) was $11.55

at September 30,

2025, representing

an increase of $0.74 or

9.1% annualized from $10.81 at December

At September 30, 2025, tangible

value per common

negatively affected by

($2.09) due to

an accumulated

comprehensive loss

31, 2024, tangible

negatively affected

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

per common share

was negatively affected

to an accumulated

an accumulated

comprehensive loss

of $41.8 million.

accumulated comprehensive loss

“Reconciliation and Management

Explanation for

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

“Reconciliation and

Management Explanation

GAAP 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.

On August 14,

Company entered

Subordinated Note

Purchase Agreement

institutional buyers pursuant to which the

Company sold and issued $40.0 million

in aggregate principal amount of

fixed-to-floating rate

subordinated notes

due August 15,

placement transaction.

transaction was

conducted under

the provisions

of Regulation

D promulgated

Securities Act 1933.

subordinated notes were issued by

the Company to the

purchasers at a price equal

to 100% of their face

The majority of

the net proceeds

repurchase 2.0 million

shares of Class

common stock in

2025, from certain institutional shareholders through privately negotiated transactions, at a weighted average price

The aggregate

these transactions

approximately

$34.4 million.

Critical Accounting Policies and Estimates

72 unchanged sentences

reportable operating

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

Results of Operations

3 unchanged sentences

indicated (in thousands, except ratios):

June 30, 2025

September 30, 2025

December 31, 2024

2 unchanged sentences

Loan amounts include deferred fees/costs.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Three Months Ended June 30,

Six Months Ended

Three Months Ended

September 30,

Nine Months Ended

September 30,

Consolidated Statements of Operations:

13 unchanged sentences

expense, and the provision for income taxes.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Three months ended September 30, 2025 compared to the

three months ended September 30, 2024.

Net income increased $2.0 million to $8.9

million for the three months ended September

30, 2025 from $6.9 million for

the same period in

The $2.0 million

or 28.6% increase

in net income was

primarily driven by

an improvement in

interest margin due to reduction in rates paid on interest-bearing liabilitie

between periods and a decrease in provision for

credit losses for the third quarter ended September 30, 2025.

Nine months ended September 30, 2025 compared to

the nine months ended September 30, 2024

increased $7.0

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.

$24.7 million

ended September 30,

for the same period in 2024.

million or 39.2% increase in the net income

was primarily driven by an improvement

in net interest margin due to reduction in rates paid on interest-bearing liabilities between periods.

However, the increase in

in non-interest

Additionally,

in fee generating transactions

(gain on sale of

SBA 7a loans, prepayment

penalties, title insurance

income) contributed to

the increase between periods.

contributed to the increase between periods.

Net Interest Income

30 unchanged sentences

non-interest-

bearing sources

of funds, such as non-interest-bearing deposits and

stockholders’ equity, also fund interest-earning assets,

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

bearing sources of funds, such as non-interest-bearing deposits

and stockholders’ equity, also fund

interest-earning assets,

net interest margin includes the indirect benefit of these

26 unchanged sentences

costs of liabilities for the periods indicated (dollars in

Three Months Ended June 30,

Three Months Ended September 30,

Interest-earning assets:

10 unchanged sentences

FHLB advances and other borrowings

Subordinated notes

Total interest-bearing liabilities

23 unchanged sentences

Q3 2025 Form 10-Q

Six Months Ended June 30,

Nine Months Ended September 30,

Interest-earning assets:

9 unchanged sentences

Total interest-bearing deposits

FHLB advances and other borrowings

FHLB advances

Subordinated notes

Total interest-bearing liabilities

9 unchanged sentences

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.

Average loan balances include

deferred fees/costs and 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.

5 unchanged sentences

income to average total interest-earning assets.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Three months ended September 30, 2025 compared to the

three months ended September 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,

for credit losses was $21.3

million for the three months

ended September 30,

2025 as compared to $18.1 million for the same period 2024.

The increase of $3.2 million or 17.5% was primarily driven by

interest-bearing

Net interest margin (“NIM”) was 3.14%

for the three months ended September 30, 2025 and 3.03%

for the same period

11-basis-point

increase primarily

interest-bearing

that outweighed

interest-bearing

Additionally,

interest-bearing

assets grew more rapidly than the balance of interest-bearing

Nine months ended September 30, 2025 compared to the nine months

ended September 30, 2024

Net interest income

before the provision

for credit losses

was $61.4 million

months ended September

2025, an increase

of $10.8 million

or 21.4%, from

$50.6 million for

the same period

growth was primarily

by higher income

from an expanded

loan portfolio

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.

in the weighted

average rates

paid on interest

liabilities between periods.

The NIM was 3.17% for the nine months

ended September 30, 2025 and 2.87% for

the same period in 2024.

expansion of 30 basis points reflects both

higher loan yields and growth in the loan average

balance, along with a decrease

in interest rate paid on interest-bearing liabilities.

USCB Financial Holdings, Inc.

1 unchanged sentence

Provision for Credit Losses

The provision

losses represents

allowance for

credit losses

management's evaluation,

credit losses.

The provision for credit losses represents a charge to

earnings necessary to maintain an allowance for

credit losses at

a level that,

in management's evaluation,

is adequate to

provide coverage for

all expected credit

The provision for

credit losses is impacted by variations in the size and composition of our loan and debt securities portfolio, recent historical

portfolios and net charge-offs.

Three months ended September 30, 2025 compared to the

three months ended September 30, 2024.

The provision

losses is impacted

by variations in

composition of our

loan and debt

securities portfolio, recent

historical and

projected future economic conditions, our internal assessment of the credit quality of the loan and debt

securities portfolios

and net charge-offs.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

$105 thousand

ended September

significant decrease

primarily attributable

loan portfolio growth during the third quarter of 2025.

Nine months ended September 30, 2025 compared to the nine months

ended September 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.

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.

$1.8 million for the nine months

ended September 30, 2025 compared

to $2.1 million

individually evaluated loans, following two charge-offs

recorded during the nine months ended September

Non-Interest Income

1 unchanged sentence

We also generate

income from gain

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 monetization

swap program.

beneficiaries of

insurance policies

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 June 30,

Six Months Ended June 30,

Gain on sale of securities available for sale, net

Three Months Ended September 30,

Nine Months Ended September 30,

(Loss) 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 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

Three months ended September 30, 2025 compared to the

three months ended September 30, 2024.

Non-interest income for the

three months ended September

30, 2025 increased $246

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.

thousand or 7.2%, compared

fees category

Nine months ended September 30, 2025 compared to the nine months

ended September 30, 2024

Non-interest income for the nine months ended September

30, 2025 increased $1.7 million or 18.2%, compared to

reported under

fees category

combined with

bank owned life insurance reported under other non-interest

USCB Financial Holdings, Inc.

3 unchanged sentences

expense for the dates indicated (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Salaries and employee benefits

4 unchanged sentences

non-interest expense

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.

Three months ended September 30, 2025 compared to the

three months ended September 30, 2024.

Non-interest expense for the three

months ended September 30, 2025,

increased $1.6 million, or 13.9%,

reflecting merit increases,

new hires and

higher stock-based compensation

and legal fees

$424 thousand due to

the administration expense

related to the interest

rate collars and the

third quarter of 2024

reimbursement,

and contributed

the year-over-year

Additionally,

other operating

expense increased

primarily due

a reimbursement

force-placed insurance that was

received in the third quarter

These prior-period reimbursements

had the effect of

lowering reported expenses, making the current period’s

expenses appear higher by comparison.

Nine months ended September 30, 2025 compared to the nine months

ended September 30, 2024

Non-interest expense for the nine

months ended September 30, 2025 increased $3.5 million

or 10.4%, compared to the

was primarily

in salaries and

employee benefits

increase of $1.0

thousand in merit

million 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.

full-time employee

salaries, and

$1.5 million in

compensation expenses.

Additionally, other operating

expenses increased $744

thousand due to

increase of $276

shareholders expense and $103 thousand in forced placed insurance.

Provision for Income Tax

14 unchanged sentences

elements in determining our effective tax rate.

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

Three months ended September 30, 2025 compared to the

three months ended September 30, 2024.

Income tax expense for the

three months ended September

30, 2025 was $2.9

million as compared to

$2.2 million for

the same period

reflected the increased

level of pre-tax

net income experienced

during the 2025

effective tax rate for the three months ended September 30, 2025 was 24.28% compared to 24.15% for the same period

Nine months ended September 30, 2025 compared to the nine months

ended September 30, 2024

Income tax expense

nine months ended

September 30, 2025

was $7.9 million

as compared to

$5.6 million for

the same period in 2024 and

reflected the substantially increased

level of pre-tax net income

experienced during the 2025

The effective

the nine months

ended September 30, 2025

was 24.22% compared to

23.98% for the

period in 2024.

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

Analysis of Financial Condition

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.

Q3 2025 Form 10-Q

Analysis of Financial Condition

September 30, 2025

$186.7 million,

annualized, over

$2.58 billion

at December 31,

fees/costs, increased

$158.1 million,

September 30,

December 31, 2024.

Investment Securities

60 unchanged sentences

macro-economic

required on AFS securities as of June 30, 2025.

required on AFS securities as of September 30, 2025.

mortgage-backed

9 unchanged sentences

methodology to

of September 30,

classified as

represents amortized cost less ACL.

HTM represents amortized cost less ACL.

$55.6 million,

$480.5 million

June 30, 2025 from $424.9 million

at December 31, 2024.

September 30,

$424.9 million

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

September 30,

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

of $49.7 million

The investment portfolio does not contain any

tax-exempt securities.

USCB Financial Holdings, Inc.

7 unchanged sentences

in thousands):

June 30, 2025

September 30, 2025

December 31, 2024

19 unchanged sentences

for investment

as of June 30, 2025 (in thousands,

as of September 30, 2025 (in thousands,

except yields):

37 unchanged sentences

as of the dates indicated (in thousands):

June 30, 2025

September 30, 2025

December 31, 2024

7 unchanged sentences

Allowance for credit losses

fees/costs, increased

by $140.5 million,

annualized to

2025 compared to

December 31, 2024.

commercial real estate

loan segment had

the most significant

growth compared

$158.1 million,

September 30, 2025 compared

to December 31, 2024.

The commercial real

estate loan segment

balance increase compared to December 31, 2024.

approximately 57.7%

loan portfolio

been reflective of the market in which we operate and

September 30, 2025.

growth strategy

since inception

has been reflective of the market in which we operate and

of our strategic plan as approved by the Board.

commercial real estate

exposure represents

loans to commercial

businesses secured

by owner-occupied

experienced in

implementation of

our relationship-based

relationship managers

highly competitive

long-term relationships

senior management

relationship managers that date back to former institutions.

The growth experienced in recent

years is primarily due to

implementation of our relationship-based banking model

the success of our relationship managers in competing for new business in a highly competitive metropolitan area.

relationships

managers that date back to former institutions.

liquidity perspective,

3 unchanged sentences

or unexpected

The following table

shows maturities and sensitivity

to interest rate changes

of the loan portfolio

2025 (in thousands):

September 30, 2025 (in thousands):

Due in 1 year or

25 unchanged sentences

/rate modifications are discussed as well.

September 30, 2025,

approximately 61.7%

adjustable/variable

loan portfolio

has adjustable/variable

loan portfolio has fixed rates.

The adjustable/variable rate loans re-price to different benchmarks and tenors and

periods of time.

4 unchanged sentences

it is important to

note that most of

our loans have interest

This embedded

option protects the

Company from a

note that most

of our loans have

interest rate floors.

This embedded option

protects the Company from

decrease in interest rates below the floor and positions

48 unchanged sentences

as follows for the dates indicated (in thousands):

June 30, 2025

September 30, 2025

Special Mention

17 unchanged sentences

except ratios):

June 30, 2025

September 30, 2025

December 31, 2024

38 unchanged sentences

various forms,

including interest rate

reductions, principal forgiveness, extension

of maturity date,

including interest rate reductions, principal

forgiveness, extension of maturity date,

waiver or deferral of

7 unchanged sentences

the unaudited Consolidated Financial Statements in Item

1 of Part 1 this Form 10-Q.

1 of Part 1 of this Form 10-Q.

Allowance for Credit Losses

12 unchanged sentences

Correspondent

Three Months Ended June 30, 2025

Three Months Ended September 30,

Beginning balance

3 unchanged sentences

Net charge-offs (recoveries) to average

Six Months Ended June 30, 2025

Nine Months Ended September 30,

Beginning balance

3 unchanged sentences

Net charge-offs (recoveries) to average

(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.

(1) Provision for credit losses excludes a $80 thousand provision due to unfunded commitments included in accrued interest and other

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

(2) Annualized.

(3) Provision for credit losses excludes a $224 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.

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

USCB Financial Holdings, Inc.

1 unchanged sentence

Correspondent

Three Months Ended June 30, 2024

Three Months Ended September 30,

Beginning balance

3 unchanged sentences

Net charge-offs (recoveries) to average

Six Months Ended June 30, 2024

Nine Months Ended September 30,

Beginning balance

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(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

deterioration in

national housing

Company continued

loan portfolio

housing prices

factor scorecard was updated based on the latest portfo

lio stress test and the resulting maximum loss calculation.

(3) Provision for credit losses excludes $159 thousand provision due to unfunded commitments included in accrued interest.

in unemployment

(“HPI”) forecast reflected a

deterioration in national housing

The Company continued

to adjust the HPI index

on the 1-4 Family loan portfolio with a

qualitative factor because Florida housing

prices are performing better than national

included residential

4 unchanged sentences

in calculating

expected losses on

the residential loan

June 30, 2025,

for every 100

basis points increase

approximately

expected losses on the residential loan segment.

of September 30, 2025, for every 100 basis

points increase in the HPI,

by approximately

everything else being

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and does not represent a change in management’s

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

As of September 30,

2025, we stress tested

two qualitative factors in

our commercial real estate

loan pool, as it

largest segment

evaluated the

qualitative factors

sensitivity of

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risk resulted

This sensitivity

analysis provides

a hypothetical

sensitivity of

not represent a change in management’s judgement.

35.5% increase in the ACL.

This sensitivity analysis provides

a hypothetical result to assess

the sensitivity of the ACL

does not represent a change in management’s judgement.

Bank-Owned Life Insurance

As of June 30,

As of September 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

The Company has BOLI policies with five insurance carriers.

The Company is the beneficiary of these policies.

cash surrender

bank-owned life

insurance (“BOLI”)

$58.9 million.

cash surrender

other non-interest

the unaudited

Statements of Operations.

The Company has

BOLI policies with five insurance carriers.

The Company is the beneficiary of

these policies.

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

Customer deposits are the

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to meet our customers’ business

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

deposit customers

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presented (in thousands, except ratios):

Three Months Ended June 30,

Three Months Ended September 30,

Average Balance

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outstanding balances

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

approximately $113

thousand as of June 30, 2025.

The uninsured deposits are estimated based on

the FDIC deposit insurance limit of $250 thousand

per account holder

for all deposit accounts at

The total estimated percentage

of uninsured deposits was

52% at June 30, 2025

27% in personal

deposits, 6% in

public funds (which

are partially collateralized)

brokered deposits.

deposits balance at

September 30, 2025 was

$235.5 million and

$133.0 million at

December 31, 2024.

This increase was

primarily driven

aggregate notional

amount associated

costless collar

hedges executed

mitigating the impact of rate movements on future cash flows.

As of September 30,

2025, the Company

has approximately 21

thousand deposit accounts

with the majority

were personal accounts, approximately 13 thousand or 61.7%.

The estimated average account size in our deposit portfolio

was approximately $119

thousand as of September 30, 2025.

account holder for all deposit accounts at the Company.

The total estimated percentage of uninsured deposits

September 30,

Deposit Account

Registry Service

deposit products

deposit balance

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

ICS/CDARS was $183.9 million at September 30, 2025 and

was $129.5 million at December 31, 2024.

The following table shows scheduled maturities of uninsured

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

June 30, 2025

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

September 30, 2025

Three months or less

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Other Liabilities

The Company collects from commercial and residential loan

customers funds which are held in escrow for future

The Company collects from commercial and residential loan customers

funds which are held in escrow for future

payment of real estate taxes and insurance.

2 unchanged sentences

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

liabilities in the

consolidated balance sheet.

As of September 30, 2025, escrow balances totaled

$29.2 million compared to $6.1 million at December

The increase reflects the normal growth in escrow accounts

pending tax and insurance payments.

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

FHLB Advances

accessibility to additional

6 unchanged sentences

either daily operations or the financial condition of the

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%.

Maturity dates for the advances range

between 2025 to 2028 as detailed in the table below.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

September 30,

of fixed-rate

average rate of 3.76% maturing in 2028 as detailed in the table

The following table presents the FHLB advances as of

June 30, 2025 (in thousands):

September 30, 2025 (in thousands):

Interest Rate

Maturity Date

July 18, 2025

January 24, 2028

April 25, 2028

September 13, 2027

March 23, 2026

During the third

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correspondent

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

of these liquidity sources.

September 30, 2025, there were no outstanding balances

with any of these liquidity sources.

Subordinated Notes

institutional

7.625% Fixed-to-Floating Rate

Subordinated Notes due 2035.

The Notes were issued by

the Company to the purchasers

at a price equal to

100% of their face amount.

subordinated debt was originally issued at a

cost of $760 thousand.

amortization,

recognition over the

The subordinated

notes are presented

exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to

Company Form 8-K filed on August 14, 2025.

Off-Balance Sheet Arrangements

7 unchanged sentences

credit, market,

amount recognized

balance sheet.

more conservative

collateral policies

commitments than

for on-balance

for off-balance

amount recognized in

the balance sheet.

maintain an allowance

for off-balance sheet credit

risk which is

recorded under

accrued interest

liabilities on

the unaudited

Balance Sheets.

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

commitments at

September 30,

$795 thousand

$571 thousand.

was primarily driven by an increase in unfunded commitments.

Since commitments associated with letters of

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commitments outstanding as of the dates indicated (in thousands

June 30, 2025

September 30, 2025

December 31, 2024

2 unchanged sentences

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

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

expire without being

42 unchanged sentences

and mitigating

risks are appropriately executed within the designated lines

of authority and responsibility in a timely manner.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

risks are appropriately executed within the designated

lines of authority and responsibility in a timely manner.

establishment,

11 unchanged sentences

performance, and capital adequacy.

Income simulations

earnings under

different rates

scenarios and

time horizons.

These simulations

instantaneous and

parallel changes

interest rates,

Income simulations are

used to assess

of changing rates

on earnings under

different interest rates

instantaneous

interest rates, as well as

non-parallel changes such as

changing slopes (flat and steepening)

and twists of the yield curve.

Static simulation models

balance sheet

utilized to have a

more comprehensive assessment

and twists of the yield

Dynamic simulation

more comprehensive

This simulation

relies on detailed

assumptions outlined in

budget and strategic plan, and in assumptions regarding changes in

existing lines of business, new business, management

strategies and client expected behavior.

assumptions regarding

existing lines

new business,

management strategies

scenarios (parallel and non-parallel).

8 unchanged sentences

Market and Interest Rate Risk Management

According to our ALCO model, as of June 30,

2025, we had a slightly liability sensitive balance sheet

for year one, and

liability sensitive

balance sheet

sensitivity indicates

assets generally

our liabilities,

which results

market interest

Liability sensitivity

indicates that

our liabilities generally

reprice faster

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

a neutral balance

year two, using

the static model.

Liability sensitivity indicates

that our liabilities

Asset sensitivity indicates that our assets

generally reprice faster than our liabilities,

which results in a favorable

result of changes in

interest rates.

assumptions are used to

calculate the impact

of interest rate

correlations, deposit truncations and decay rates, and

key interest rate drivers.

Because of the inherent use

16 unchanged sentences

to increase asset sensitivity.

According to our

2025, our balance

sheet is liability

sensitive for year

interest rate

scenarios (an

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

According to our model, as of

September 30, 2025, our balance sheet is

liability sensitive for year one and

in year two under static interest rate scenarios

(an increase or decrease of 400 basis

Additionally,

utilizing an EVE

approach, we analyze

37 unchanged sentences

and off-balance sheet obligations.

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

monitors situations

38 unchanged sentences

the investment

portfolio cash flows.

Other potential

funding sources

include Federal

Funds purchased,

deposit, unsecured

other banking institutions

and draws from the

portfolio cash

potential funding

sources include

Funds purchased, brokered certificates of deposit, listing services

certificates of deposit, unsecured Federal Funds lines of

credit with other

banking institutions and

draws from the

Federal Reserve Bank

of Atlanta discount

borrowings from the

FHLB Atlanta.

of Atlanta Discount Window, and

our liquidity

resources are

needs as necessary.

USCB Financial Holdings, Inc.

Q3 2025 Form 10-Q

Capital Adequacy

follow the capital conservation

buffer framework,

and as of June

exceeded the capital

conversation buffer

indicated (in thousands, except ratios).

September 30,

well capitalized

prompt corrective

action framework.

also follow the capital conservation buffer framework, and

as of September 30, 2025, we exceeded the

capital conversation

all capital ratios,

our actual ratios.

The following table

presents the capital

ratios for the

dates indicated (in thousands,

except ratios).

Minimum Capital

2 unchanged sentences

Action Provisions

June 30, 2025

September 30, 2025

risk-based capital

17 unchanged sentences

of historical dollars, without considering

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

the changes in the relative purchasing power of money over time

32 unchanged sentences

of operating net income available to

common shareholders for the periods presented (in

common shareholders for the periods presented (in thousands,

except per share data):

4 unchanged sentences

Pre-tax pre-provision ("PTPP") income:

Provision for income taxes

Income tax expense

Provision for credit losses

3 unchanged sentences

Operating net income:

Net gains (losses) on sale of securities

Net losses on sale of securities

Tax effect on sale of securities

1 unchanged sentence

Operating PTPP income:

Net gains (losses) on sale of securities

Net losses on sale of securities

Operating PTPP income

14 unchanged sentences

Non-interest income

Net gains (losses) on sale of

Net losses on sale of securities

Operating revenue

3 unchanged sentences

Operating efficiency ratio

The Company believes these non-GAAP measurements

are key indicators of the ongoing earnings

power of the Company.

The Company believes these non-GAAP measurements are

key indicators of the ongoing earnings power

of the Company.

USCB Financial Holdings, Inc.

19 unchanged sentences

Tangible Common Equity/Tangible

The Company believes these non-GAAP measurements

are key indicators of the ongoing earnings

power of the Company.

The Company believes these non-GAAP measurements are

key indicators of the ongoing earnings power

of the Company.

Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise

1 unchanged sentence

(3) Since the Company has no intangible

assets, tangible total assets is the same amount

as total assets calculated under GAA

assets, tangible stockholders’ equity and tangible

total assets are the same amounts as stockholders’

and total assets, respectively, as calculated under GAAP.

USCB Financial Holdings, Inc.

5 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