What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-14 · 518 added, 472 removed, 1407 unchanged (41% of the section changed)

17 unchanged sentences

In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,” “us,”, and “our” refer to

the Company and the Bank, as

the contest dictates.

the discussion relates to a period

before the Effective Date,

the terms refer only to the Bank.

the Company and the Bank, as the contest dictates.

USCB Financial Holdings, Inc.

8 unchanged sentences

“contemplate,”

“expect,” “aim,”

“plan,” “estimate,”

“seek,” “continue,”

and “intend,”

similar words

and expressions

words and expressions of the

future, are intended to identify forward-looking statements.

These forward-looking statements include statements related to

our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as

statements relating to

the anticipated effects

on results of

operations and financial

condition from expected

or events, or business and growth strategies, including

anticipated internal growth and balance sheet restructuring.

These forward-looking statements

include statements related to

our projected growth, anticipated

future financial performance, and

management’s long-term

performance goals, as well as statements

relating to the anticipated effects

on results of operations and financial condition

potential future additional balance sheet restructuring.

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

9 unchanged sentences

the efficiency and effectiveness of our

internal control environment;

internal control procedures and processes;

extensive laws

4 unchanged sentences

deposit attrition and the level of our uninsured deposits;

legislative or regulatory

changes and changes

in accounting

principles, policies,

practices or guidelines,

the on-going effects of the implementation of CECL;

legislative or

regulatory changes and

changes including the

enactment of the

One Big Beautiful

in accounting principles, policies, practices or guidelines,

including the on-going effects of the CECL standard

the lack of a significantly diversified loan portfolio and concentration in the South Florida market, including the risks

13 unchanged sentences

fluctuations;

the effects of potential new or increased tariffs,

retaliatory tariffs and trade restrictions;

impacts of international hostilities and geopolitical events;

2 unchanged sentences

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

employee, or third-party fraud and cybersecurity breaches;

employee, or third-party fraud and security breaches;

other risks described in this Annual Report on Form 10-K

9 unchanged sentences

Annual Report

events or circumstances after the date on which the statement is made or to

reflect the occurrence of unanticipated events,

events or circumstances after the date on which the statement is made or to reflect the

occurrence of unanticipated events,

unless required to do so under

2 unchanged sentences

factors described in this Annual

the Effective

Date, the Bank filed with the FDIC.

Report on Form 10-K and in the reports the

Company filed or will file with the SEC.

Non-GAAP Financial Measures

10 unchanged sentences

management uses

USCB Financial Holdings, Inc.

operations and performance.

3 unchanged sentences

as an alternative

USCB Financial Holdings, Inc.

reconciliations

5 unchanged sentences

$26.1 million compared with net income

$16.5 million for the year ended December 31,

of $24.7 million for the year ended December 31, 2024.

deposits, growth

7 unchanged sentences

ended December 31, 2025:

On January 29,

2024, the Company

announced that its

Board of Directors

had adopted a

quarterly cash dividend

The quarterly dividend for all quarters in 2024 was $0.05 per share

of Class A common stock.

income before

provision for

credit losses

Net interest income

before provision

for credit losses

totaled $83.6

$11.4 million

increase of $13.7

million or 19.6%,

compared to $69.9 million for the year ended December

margin (“NIM”)

December 31, 2024

improvement from

the year ended December 31, 2023.

Total assets grew to

$2.6 billion at December

31, 2024, an increase

of $242.1 million

or 10.4%, compared

Net interest margin (“NIM”) was 3.20% for the year

ended December 31, 2025, an improvement from 2.94% for the

year ended December 31, 2024.

at December 31,

8.1%, compared

billion at December 31, 2024.

Total loans held for investment

grew to $2.0 billion at

December 31, 2024, an

increase of $192.0 million or

grew to $2.2 billion

at December 31, 2025,

an increase of $216.4

million or 11.0%,

compared to $2.0 billion at December 31, 2024.

Return on average assets for the year ended December

31, 2024 was 0.99% compared to 0.75% for 2023.

Return on average stockholders’ equity

for the year ended December 31, 2024 was 12.11% compared

Nonperforming

maintained its

strong capital

31, 2025 was 0.96% compared to 0.99%

Return on average

stockholders’ equity for

the year ended

December 31, 2025

was well-capitalized

was 11.79% compared

Nonperforming assets totaled $3.1 million at December

31, 2025 compared to $2.7 million at December 31, 2024.

well-capitalized

regulatory capital purposes,

2 unchanged sentences

risk-based capital ratio

a common equity tier 1 capital ratio of 12.10%, and a leverage ratio of 9.38%.

As of December 31, 2024 and 2023,

all of the Bank’s regulatory

capital ratios exceeded the

thresholds to be well-capitalized

under the applicable bank

regulatory requirements.

In April 2024, the Board of

Directors approved a

new share repurchase

program of up to

500,000 shares of

A common stock or approximately 2.5% of the Company’s then issued and outstanding shares

of common stock.

During the year ended December 31, 2024, the Company repurchased 42,100

shares of Class A common stock at

December 31, 2024, all of the Bank’s regulatory capital ratios exceeded the thresholds to be well-capitalized under

the applicable

bank regulatory

requirements.

regulatory capital requirements.

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

These repurchases

537,980 shares remained authorized for repurchase under

the current two programs.

During the third

quarter in 2024,

the Company unwound four

fair value interest rate

notional aggregate

amount of $200 million.

$34.4 million.

During the fourth quarter

of 2025 the Company

executed a portfolio restructuring

strategy which resulted in

its lower-yielding

available-for sale

securities for

$7.5 million.

proceeds from the sale were reinvested into loans at quarter-end.

USCB Financial Holdings, Inc.

40 unchanged sentences

Management considers the policies related to

the ACL as the most critical to the financial statement presentation.

Measurement of Credit Losses on Financial Instruments, as amended.

This update replaces the incurred

loss methodology

amortized cost,

including loan

receivables and

held-to-maturity debt

to off-balance

guarantees, and similar instruments), as

well as net investments in leases

recognized by lessors in accordance

842 on leases.

Under CECL, the Company estimates the allowance for credit losses by utilizing pertinent available data, sourced both

internally and

current conditions,

and reasonable

and supportable

credit losses provide the foundation for the

estimation of expected credit losses.

adjustments are applied to the

the ACL as the most critical to the Company’s financ

ial statement presentation.

ACL is calculated using

CECL methodology.

The CECL methodology

measures expected credit

losses and applies to

financial assets measured at amortized cost, including loan receivables and

held-to-maturity debt securities.

It also applies

financial guarantees,

instruments), as

net investments

recognized by

sourced both internally

and externally, relating to

past events, current

conditions, and reasonable

and supportable forecasts.

applied to the estimated

expected credit losses

for the loan portfolio

to account for

potential constraints of

the quantitative

to facilitate

the evaluation

of qualitative

factor adjustments

credit losses.

The estimation's

16 unchanged sentences

modeling the lifetime

probability of default

(“PD”) rates.

loss given default

probability of default (“PD”)

rate (“LGD”) is assigned to each pool

18 unchanged sentences

present value of future cash

flows and the book

flows and the book balance

the loan at the measurement date.

21 unchanged sentences

year-over-year

USCB Financial Holdings, Inc.

Research Group are utilized for the forecast.

Forecasts are applied for the first four

quarters of the credit loss estimate and

Forecasts are applied for the first

four quarters of the credit loss estimate and

then linearly revert to the historical mean of the economic indicator

over the expected life of the loans.

USCB Financial Holdings, Inc.

The model integrates qualitative

26 unchanged sentences

ACL and does not represent a change in management’s

As of December

December 31, 2025,

qualitative factors

in our commercial

commercial real

largest segment

1 unchanged sentence

qualitative factors

allowance for credit losses.

This sensitivity analysis

provides a hypothetical result

to assess the sensitivity

of the ACL and

does not represent a change in management’s judgement

sensitivity of

the qualitative

change resulted

$10.3 million

This sensitivity

analysis provides a

hypothetical result to

assess the sensitivity

not represent a

change in management’s judgement.

The Company calculates a reserve for unfunded commitments, distinct from

the allowance for credit losses reported in

other liabilities.

accrued interest

and other liabilities.

is determined

quantitative and

qualitative factors

those applied

collectively evaluated loan portfolio.

using both quantitative

and qualitative

factors identical

those applied to the collectively evaluated loan portfolio.

Results of Operations

4 unchanged sentences

Consolidated Balance Sheets:

loans held for investment

stockholders' equity

3 unchanged sentences

Net interest income before provision for credit losses

Provision fro credit losses

Provision for credit losses

non-interest income

17 unchanged sentences

income taxes.

USCB Financial Holdings, Inc.

December 31, 2025

5 unchanged sentences

same period in 2024 of $1.24.

USCB Financial Holdings, Inc.

Net Interest Income

20 unchanged sentences

Net interest spread is

to the difference

between the weighted

difference between

average yields

3 unchanged sentences

average rates

paid on interest-bearing liabilities.

Net interest margin is

net interest income divided

by average interest-earning

interest-bearing liabilities.

income divided

interest-earning

Because non-interest-bearing

29 unchanged sentences

Investment securities

Other interest-earnings assets

Other interest-earning assets

interest-earning assets

6 unchanged sentences

interest-bearing deposits

Borrowings and repurchase agreements

FHLB advances

Subordinated notes

interest-bearing liabilities

15 unchanged sentences

Net interest spread is the weighted average

yield on total interest-earning assets minus the weighted

average rate on total interest-bearing liabilities.

yield earned on total interest-earning assets

minus the weighted average rate paid on total interest-

bearing liabilities.

Net interest margin is the ratio of net interest

4 unchanged sentences

ended December 31,

increase of $11.4 million

or 19.4%, from

$58.6 million for

the year ended

increase of $13.7

million or 19.6%,

from $69.9 million

ended December 31,

was primarily

driven by a decrease in the weighted

average rates paid on interest

bearing liabilities, which lowered overall funding costs,

combined with higher weighted

average yields on interest

earning assets.

In addition, growth in the

loan portfolio increased

the volume of interest

earning assets, further contributing to the increase in net

interest income.

December 31, 2024.

attributable to increase in weighted average yields on interest-earning assets growing at a higher pace than the increase in

weighted average rates paid on

interest-earning liabilities.

Additionally, the increase

in the volume of

interest-earning assets

was higher than interest-earning liabilities.

interest margin was

the year ended

December 31, 2024 and

year ended 2023.

the overall and

individual yields for

interest-earning assets

and interest-bearing liabilities

both increased in

2024, the yield

on interest-earning assets, especially on loans, had a greater

increase when compared to 2023.

The increase in our yields

and cost of funds was primarily due to the interest rate

The Company did not have any tax-exempt securities

at both December 31, 2024 and 2023.

The NIM increased

primarily due to a decrease

in the weighted average rate

paid on interest-bearing

USCB Financial Holdings, Inc.

liabilities, in

weighted average

market deposits.

our cost of funds was primarily due to the interest rate

Provision for Credit Losses

22 unchanged sentences

compared to 1.22% at December

The ratio of ACL to total loans decreased due

to several payoffs of individually

loans during 2025 and the improvement of the expected loss

rate for various categories of pooled loans.

See “Allowance

1 unchanged sentence

discussion on

was calculated for

calculated for

Non-Interest Income

4 unchanged sentences

from our operations.

and products generate service charges and fees, mainly from our depository accounts.

generate income from gain

interest rate

SBA programs.

insurance policies

employees and generate income reflecting the increase in

the cash surrender value of these policies.

and products generate service charges and

fees, mainly from our depository accounts.

We also generate income from

policies on several

key employees and

generate income reflecting

the increase in

the cash surrender

value of these

The following table presents the components of non-interest

1 unchanged sentence

Years Ended December 31,

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

(Loss) gain on sale of securities available for sale, net

Gain on sale of loans held for sale, net

4 unchanged sentences

million compared

period in 2023.

increase was primarily

$2.9 million increase

in interest rate

swap income, $415

Additionally, in

Company executed

primarily driven

securities available

from a portfolio restructuring strategy

approved by the Board of

Directors and implemented in December 2025.

The portfolio

restructuring strategy

which resulted

lower-yielding

available-for-sale securities at a loss

in order to better

position our securities portfolio.

The loss on the sale

of securities was

$1.9 million for

Proceeds from

the sale transactions

were primarily reinvested

in securities and

loans bearing yields

higher than those on the securities that were sold.

lower-yielding available-for-sale

securities at

order to better

our securities portfolio.

Proceeds from the sale

transactions were primarily

reinvested in assets

bearing higher yields

those on the securities that were

Service fees increased $764

thousand or 8.6%, primarily due

to title insurance fees

and prepayment

loans increased

$254 thousand

insurance policies.

Non-Interest Expense

8 unchanged sentences

non-interest expense

Non-interest expense for

the year ended

USCB Financial Holdings, Inc.

Non-interest expense

December 31, 2025

increased $5.0 million

or 12.5%, compared

period in 2023.

The increase is primarily due to $4.4 million or

17.9% increase in salaries and employee benefits consisting

incentives, and a $1.1 million

increase in stock-based compensation

due to the Company’s financial

performance in 2024.

ended December 31, 2024.

The increase is

primarily due to

$3.4 million or

11.7% increase in

salaries and employee

consisting of a $2.2

million or 11.0% increase

promotions and new hires,

a $455 thousand or

13.6% increase

(health insurance)

$876 thousand

compensation due

Company’s favorable financial performance in 2025.

Other operating

13.0% consisting

expense had an increase of $946 thousand or 12.3%

consisting of

item processing,

$146 thousand

USCB Financial Holdings, Inc.

banking fees,

insurance expense,

director’s fees,

thousand in other expenses.

Provision for Income Tax

10 unchanged sentences

in determining our effective tax rate.

ended December

$9.8 million,

to $7.8 million

ended December 31,

effective tax rate for

the year ended December 31, 2024

was 24.0% and for the

December 31, 2023 was 24.1%.

The effective

increased to 27.3%

ended December 31,

2025 from 24.0%

December 31, 2024.

the recognition

$1.1 million of state tax liability expense for the year ended December 31, 2024.

The state tax liability

expense was related

to taxes due on interest income on loans whose collateral

is located outside the State of Florida.

The Company did not have any tax-exempt securities

at both December 31, 2025 and December 31, 2024.

For a further

27 unchanged sentences

Time deposits

Borrowings and repurchase agreements

Total increase in interest expense

Increase (decrease) in net interest income

FHLB advances

Subordinated notes

Total increase (decrease) in interest expense

Increase in net interest income

Average loan balances include non-accrual loans.

4 unchanged sentences

This amount includes

Both average yields

earned on interest-earning

assets and average

rates paid on

interest-bearing liabilities

in 2024 as a compared to 2023, reflecting the

changes in the macro interest rate environment.

However, the average yields

earned on interest-earning

assets increased to a

greater degree than

rates paid on interest

-bearing liabilities.

Additionally,

interest-earning assets volume growth was greater than

the volume growth of interest-bearing liabilities.

The Company did not have any tax-exempt securities

at both December 31, 2024 and December 31, 2023.

USCB Financial Holdings, Inc.

interest-bearing

interest-earning

interest-bearing

downward more rapidly than its interest-earning assets.

Analysis of Financial Condition

assets at December 31, 2024, were $2.6 billion, an increase of $242.1 million, or 10.4%, over total assets of $2.3

assets at December 31,

2025, were $2.8 billion,

an increase of $210.3

million, or 8.1%, over

total assets of $2.6

December 31, 2025

Total loans increased

$192.0 million,

December 31, 2024 compared

to $1.8 billion at December 31, 2023.

deposits increased by $236.9 million,

or 12.2%, to $2.2 billion at December

2024 compared to $1.9 billion at December 31, 2023.

USCB Financial Holdings, Inc.

at December 31,

deposits increased

billion at December 31, 2025 compared to $2.2

billion at December 31, 2024.

Investment Securities

20 unchanged sentences

objectives directed by the ALCO.

The portfolio of investments can be used to modify the duration of the

balance sheet.

The portfolio of investments can be used to modify the duration of the balance sheet.

allocation of cash into securities takes into consideration anticipated

23 unchanged sentences

debt securities.

In 2022, the Company transferred investment securities from AFS to

HTM with an amortized cost basis and

In 2022, the Company transferred investment securities from

AFS to HTM with an amortized cost basis and

$74.4 million

4 unchanged sentences

category was made at fair value at

The unrealized

comprehensive

income (loss)

carrying value

amortized over

the remaining

There was no impact to net income on the date of transfer.

There were no securities transferred from AFS to HTM

the date of transfer.

The unrealized gain or loss at the date of transfer is retained in accumulated other comprehensive loss

and in the carrying value

of the HTM securities.

amounts are amortized over

the remaining life of the security.

was no impact

to net income on

the date of transfer.

no securities transferred from

in 2025 or 2024.

1 unchanged sentence

unrealized gain or loss as a valuation allowance, and any

gain or loss is reported on an after-tax basis as a component of other comprehensive income (loss) in stockholders’ equity.

gain or loss is reported on an after-tax basis as a component

of other comprehensive loss in stockholders’ equity.

CECL requires a loss reserve for securities

2 unchanged sentences

historical credit performance

as well as the impact

of projected economic forecast.

Government bonds

Agency issued bonds

as well as the impact of projected economic forecast.

Government bonds and U.S.

Agency issued

bonds in HTM,

the explicit guarantee of the U.S.

27 unchanged sentences

by the Company were rated investment grade.

At December 31, 2024, HTM securities

included $155.5 million of U.S.

Government and

USCB Financial Holdings, Inc.

At December 31, 2025, HTM securities included $144.9

million of U.S.

Government and U.S.

Agency issued bonds and

7 unchanged sentences

December 31, 2025.

The book value

for debt securities

classified as HTM

represents amortized

book value for

debt securities classified

as HTM represents

cost less ACL.

As of December 31, 2024, securities with a market value of $66.1 million were pledged to secure public deposits.

December 31, 2024, the Company did not have any tax-exempt

securities in the portfolio.

As of December 31, 2025, securities with a fair value of $43.5

million were pledged to secure public deposits.

USCB Financial Holdings, Inc.

7 unchanged sentences

Bank subordinated debt securities

December 31, 2025

Held-to-maturity:

14 unchanged sentences

Bank subordinated debt securities

December 31, 2024

Held-to-maturity:

61 unchanged sentences

Consumer and Other

Deferred costs

loans net of deferred costs

Deferred costs/fees

loans held for investment, net of deferred costs/fees

Allowance for credit losses

$192.0 million

loans held for investment, net of allowance

loans held for investment net

of deferred costs/fees increased

by $216.4 million or 11.0%

at December 31, 2025

compared to December 31,

The most significant growth was in the residential real estate and commercial real estate

portfolio continues to diversify

as commercial and industrial loans

continue to increase as

to total loans.

However, we do not expect any significant

changes over the foreseeable future in

the composition of our loan

estate continues

significant growth was

in the commercial

real estate and

correspondent bank

Commercial real estate continues to

be the main category of

our portfolio, reflective of the

market in which we

to grow our non-CRE

loan pools to further

diversify the loan portfolio

overall composition, but we

not expect any significant changes over the foreseeable

future in the composition of our loan portfolio.

USCB Financial Holdings, Inc.

implementation

relationship-based

USCB Financial Holdings, Inc.

business in a highly competitive metropolitan area.

our larger loan clients have lengthy relationships with members

of our senior management team or our relationship managers

that date back to former institutions.

liquidity perspective,

77 unchanged sentences

(3) Within the U.S.

As of December

non-owner occupied

CRE portfolio

within South Florida,

an outstanding

December 31, 2025,

the non-owner

portfolio were

located within

South Florida.

notes with an

outstanding principal

$66.9 million

outside Florida.

occupied CRE loans outside Florida were:

$67.2 million in New York, $6.9 million in Georgia,

$4.4 million in Arkansas, $4.2

million in North Carolina, $2.8 million in Indiana, and $2.5 million

in New Jersey.

non-owner occupied

CRE loans outside

Florida were:

million in New

$7.3 million in

$7.1 million in

Indiana, $4.3 million

Arkansas, and $4.1 million in North Carolina.

Asset Quality

74 unchanged sentences

the loan is placed on non-accrual to

avoid overstating the Company’s income for a

loan with increased credit risk.

avoid overstating the Company’s income for a loan with

increased credit risk.

non-accrual status as of

10 unchanged sentences

in non-accrual

principal and interest

payments for a period

of six months

and the Company

has a documented

expectation of repayment

of the remaining contractual principal and interest or the

loan becomes secured and in the process of collection.

principal and interest payments for a period of six consecutive months and the Company

has a documented expectation of

repayment of the remaining contractual principal and interest or the loan becomes secured and in the process of collection.

difficulties.

17 unchanged sentences

Allowance for Credit Losses

On January 1,

2023, the Company

adopted FASB ASU 2016-13, which

introduced the CECL methodology

expected credit

the remaining

represents an

outstanding loans as of the

measurement date.

Additionally,

qualitative adjustments are made to

the ACL when, based on

management’s judgment, there

are factors impacting

the allowance estimate

not considered by

the quantitative calculations.

See Note 3 “Loans” to the Consolidated Financial Statements set

forth in Item 8 of Part 1

of this Annual Report as Form 10-

K for more information on the allowance for credit losses.

future credit losses on outstanding loans as of the measurement date.

Additionally, qualitative adjustments are made to the

management’s judgment,

factors impacting

the allowance

considered by

quantitative calculations.

“Loans” to the

Consolidated Financial

Statements set forth

Annual Report as Form 10-K for more information on the

allowance for credit losses.

The following table presents ACL and net charge-offs to average loans by

11 unchanged sentences

Beginning balance

Cumulative effect of adoption of

accounting principle

Provision for credit losses

3 unchanged sentences

average loans

(1) Provision for credit losses excludes $199 thousand release for unfunded commitments included in other liabilities and $2 thousand

release for investment securities held to maturity.

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

(3) Provision for credit losses excludes $144 thousand release for unfunded commitments included in other liabilities and $8 thousand

provision for investment securities held to maturity.

USCB Financial Holdings, Inc.

(1) Provision for credit losses excludes $182 thousand provision for unfunded commitments included in accrued interest and other

liabilities and $4 thousand release for investment securities held to maturity.

(2) Provision for credit losses excludes $199 thousand provision for unfunded commitments included in accrued interest and other

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

Loan Category

8 unchanged sentences

Consumer and Other

USCB Financial Holdings, Inc.

Bank-Owned Life Insurance

25 unchanged sentences

of our deposits;

funding sources

have developed

diversify our portfolio in

different specialty

industries and we offer

public fund deposit

products to municipalities

funding sources are customer

to our banking centers

network, we have developed

business verticals

to diversify our

portfolio in different specialty industries

and we offer public

fund deposit products to

municipalities and public

agencies in our geographical footprint.

29 unchanged sentences

of $2.1 billion

savings deposits which increased

by $146.1 million,

Non-interest-bearing demand

deposits decreased by $11.4

moving deposits

to interest-bearing

due to increases in the interest rate market.

USCB Financial Holdings, Inc.

market deposits which

$145.9 million, or

Non-interest-bearing

demand deposits

million or 3.2%.

$250 thousand

estimated uninsured

at December 31,

$1.1 billion at December

accounts at the Bank per account holder.

estimated uninsured deposits was $1.2 billion at December 31, 2025 and at

December 31, 2024.

of our deposits

are estimated to be

As of December 31, 2025,

49% of our deposits were estimated to

be FDIC-insured.

At December 31,

deposit portfolio

deposits were

(partially collateralized),

(FDIC-insured),

are partially

collateralized.

Brokered deposits

(FDIC-insured).

The estimated average

account size of our deposit

portfolio is $105 thousand.

Time deposits

with balances

of $250 thousand or more

totaled $94.0 million and

$58.1 million at December 31,

2024 and 2023, respectively.

maintains a well-diversified deposit

At December 31,

2024, our top

10 depositors only

held 16.7% of

our total portfolio.

estimated average

of our deposit

deposits with

$250 thousand

or more totaled $111.5

million and $94.0 million at December 31, 2025 and 2024,

respectively.

31, 2025, our

top 10 depositors held 15.59% of our

total deposit portfolio.

At December 31, 2024, our top 10

depositors held 16.7% of our

total deposit portfolio.

Critical elements of our liquidity

13 unchanged sentences

comprehensive

USCB Financial Holdings, Inc.

requirements;

4 unchanged sentences

federal funds

purchased, brokered

certificates of

deposit, listing

certificates of

and borrowings

Accordingly, our liquidity resources were at sufficient levels to

fund loans and meet other

cash needs as necessary.

purchased, brokered certificates of deposit, listing services certificates of deposit, Fed Funds lines and borrowings from the

our liquidity

at sufficient

The following table shows scheduled maturities of uninsured

4 unchanged sentences

Over twelve months

FHLB Advances

accessibility of additional

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advances from the

$163.0 million and

$183.0 million,

at $158.3 million

and $163.0 million,

as of December

and December 31,

respectively.

The weighted average

rate for outstanding

FHLB advances was

3.8% and 4.4%

December 31, 2024, and December 31, 2023, respectively.

USCB Financial Holdings, Inc.

December 31, 2025 and 2024.

The following table presents the FHLB fixed-rate advances

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March 16, 2026

July 18, 2025

January 24, 2028

April 25, 2028

September 13, 2027

March 23, 2026

February 13, 2025

December, 31, 2024

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Maturity Date

July 30, 2024

July 18, 2025

March 27, 2025

July 18, 2025

January 24, 2028

April 25, 2028

December 26, 2024

September 13, 2027

March 23, 2026

February 13, 2025

correspondent

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outstanding balances under the Fed

line of credit.

lines of credit.

of the Federal

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BTFP program ceased making new loans as of March

USCB Financial Holdings, Inc.

The Company paid off $80 million in borrowings under the BTFP

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under this program.

Subordinated Notes

institutional

7.625% Fixed-to-Floating

Rate Subordinated

Notes due 2035.

The Notes were

issued by the

Company to the

transaction in reliance

on exemptions from

the registration

requirements of the

Securities Act,

Section 4(a)(2)

of the Securities

Rule 506(b) of

Regulation D thereunder.

For additional

information, see the

filed on August 14, 2025.The subordinated debt was originally issued at a cost of $760 thousand.

The carrying value of the

December 31, 2025, the outstanding balance of subordinated

notes, net of costs, totaled $39.3 million.

Off-Balance Sheet Arrangements

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incurred by funding

we maintain an allowance

for off-balance sheet

credit risk which is

recorded under other liabilities

on the Consolidated Balance Sheets.

however, we maintain an allowance for off-balance sheet

credit risk which is recorded

under accrued interest

and other liabilities on the Consolidated Balance Sheets.

Since commitments associated with letters of

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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.

expire without being

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responsibility.

USCB Financial Holdings, Inc.

establishment,

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Market and Interest Rate Risk Management

According to our ALCO model, as

of December 31, 2024, the Bank’s balance sheet was neutral for

year one and asset

sensitive for year two.

Asset sensitivity indicates that

our assets generally reprice faster than our

liabilities, which results in

a favorable impact to

net interest income when market

interest rates increase.

Liability sensitivity

indicates that our liabilities

generally reprice

assets, which

rates decrease.

Neutral indicates

minimal changes

interest income

due to changes

on the market

interest rate.

As of December 31, 2025, both the

static and dynamic scenarios of the

ALCO model indicate that the Bank’s

our liabilities

favorable expansion in net interest income

(NII) when market interest rates

For year two, the static

model shifts to

a neutral position, while the dynamic model reflects an asset sensitive

posture, driven primarily by projected balance sheet

Many assumptions

rate variations

prepayment speeds,

deposit price

pricing correlations,

deposit truncations

key interest rate drivers.

calculate the

interest rate

variations on

correlations,

truncations and decay rates, and key interest rate drivers

Because of the inherent use

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to either increase

USCB Financial Holdings, Inc.

According to our model, as of

end of 2024, the NIM will

remain fairly stable for static rate

scenarios (-400 basis points:

+400 basis points).

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

capital from the effects of various interest

rate scenarios through a long-term discounted cash flow model.

This measures the difference between the economic value

Additionally, utilizing an EVE approach, we analyze the risk to capital from the effects

of various interest rate scenarios

through a long-term discounted

cash flow model.

measures the difference

between the economic value

of our assets

and the economic

liabilities, which is

our liquidation value.

According to our

sheet composition, and as

expected, our model stipulates

that an increase of

interest rates will have

a negative impact on

Results and analysis are presented quarterly

to the ALCO, and strategies are reviewed and refined.

Additionally, in the last year we have been reducing our asset sensitivity by extending asset duration.

This has reduced

our NII volatility for the first and

second year in the analysis and has helped us

to maintain the NII in accordance with ALCO

expectations.

composition, and

stipulates that

negative impact

analysis are presented

quarterly to the

ALCO, and strategies

are reviewed and

within policy limits for long-term interest

rate risk based on EVE

results as of December 31, 2025.

balance sheet shows

larger EVE swings

when rates go

rates go down.

This happens because,

in rising rate

scenarios, the value

of our longer

especially when

loan prepayments

slow while our

liabilities do

not reprice as

decline, faster

loan prepayments

asset repricing

help soften the

Additionally, during 2025, we have been taking actions to reduce

our asset sensitivity by extending asset duration.

reduced our NII

volatility for the

first and second

analysis and has

maintain the NII

in accordance

with ALCO expectations.

a Company’s capacity

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either daily operations or the financial condition of the

USCB Financial Holdings, Inc.

Liquidity risk

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cash needs as necessary.

At December 31, 2024,

the Company had $412.8

At December 31, 2025, the

Company had $321.4

million in available liquidity

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had an additional $349.0

million in off-balance sheet liquidity,

excluding access to brokered deposits and other off-balance sheet sources of funding.

million in off-balance sheet liquidity including excess FHLB Atlanta borrowing

capacity, the Federal Reserve

Bank discount

window and Fed

Fund lines of credit, excluding

access to brokered deposits

and other off-balance sheet sources

USCB Financial Holdings, Inc.

98 unchanged sentences

effect on sale of securities

liability expenses from prior periods

Operating net income

Operating PTPP income:

Net gain (loss) on sale of securities

Operating PTPP Income

Operating revenue:

Net interest income

Non-interest income

Net gain (losses) on sale of securities

Operating revenue

Operating efficency ratio:

non-interest expense

Operating revenue

Operating efficency ratio

(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.

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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-K

Item 7. Management’s Discussion and Analysis