USCB FINANCIAL HOLDINGS, INC. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis is designed to provide a better understanding of the consolidated financial condition and results of operations of the Company and the Bank, its wholly owned subsidiary, as of and for the three and six months ended June 30, 2026. This discussion and analysis is best read in conjunction with the unaudited 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 the Annual Report on Form 10-K (“2025 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2025. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed in the sections entitled "Forward-Looking Statements" and Item 1A “Risk Factors" below in Part II hereof and in the 2025 Form 10-K filed with the SEC which is available at the SEC’s website www.sec.gov. Throughout this document, references to “we,” “us,” “our,” and “the Company” generally refer to USCB Financial Holdings, Inc. Forward-Looking Statements This Form 10-Q contains statements that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. The words “may,” “will,” “anticipate,” “could,” “should,” “would,” “believe,” “contemplate,” “expect,” “aim,” “plan,” “estimate,” “seek,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements. These forward-looking statements include statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth and potential future additional balance sheet restructuring. These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Potential risks and uncertainties include, but are not limited to: • the strength of the United States economy in general and the strength of the local economies in which we conduct operations; • our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry; • the accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance for credit losses; • the efficiency and effectiveness of our internal control procedures and processes; • our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate; • adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; • deposit attrition and the level of our uninsured deposits; • legislative or regulatory changes, including the enactment of the One Big Beautiful Bill, and changes in accounting principles, policies, practices or guidelines; • the lack of a significantly diversified loan portfolio and our concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real estate, in particular, commercial real estate; • the effects of climate change; • the concentration of ownership of our common stock; • fluctuations in the price of our common stock; • our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic growth as well as growth through other means, such as future acquisitions; • inflation, interest rate, unemployment rate, market and monetary fluctuations; • the effects of potential new or increased tariffs , retaliatory tariffs, and trade restrictions; • the impacts of international hostilities and geopolitical events; • increased competition and its effect on the pricing of our products and services as well as our interest rate spread and net interest margin; • the loss of key employees; • the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, employee, or third-party fraud and security breaches; and • other risks described in this Form 10-Q, the 2025 Form 10-K and other filings we make with the SEC. Table of Contents 31 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. Therefore, you are cautioned not to place undue reliance on any forward-looking statements. Further, any forward-looking statements included in this Form 10-Q are made only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances ocurring after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so under the federal securities laws. You should also review the risk factors described in the 2025 Form 10-K and in the reports the Company has filed or will file with the SEC. Overview The Company reported net income of $9.1 million or $0.49 per diluted share of common stock for the three months ended June 30, 2026 compared to $8.1 million or $0.40 per diluted share of common stock for the three months ended June 30, 2025. In evaluating our financial performance, the Company considers the level of and trends in net interest income, the net interest margin, the cost of deposits and borrowings, the level and composition of non-interest income and non-interest expense, performance ratios, asset quality ratios, regulatory capital ratios, and any significant event or transaction. Unless otherwise stated, all period comparisons in the bullet points below are calculated at or for the quarter ended June 30, 2026 compared to at or for the quarter ended June 30, 2025 and as of December 31, 2025 and annualized where appropriate: • Net interest income before provision for credit losses for the three months ended June 30, 2026 increased $3.4 million or 15.9% to $24.4 million from $21.0 million for the quarter ended June 30, 2025. • Net interest margin (“NIM”) expanded to 3.49% for the three months ended June 30, 2026 compared to 3.28% for the three months ended June 30, 2025. • Total assets surpassed $3.0 billion at June 30, 2026, representing an increase of $300.2 million or 11.0% from June 30, 2025 and an increase of $228.2 million or 16.5% annualized from December 31, 2025. • Total loans held for investment (net of deferred cost/fees) were $2.3 billion at June 30, 2026, representing an increase of $209.0 million or 9.9% from June 30, 2025 and an increase of $133.1 million or 12.3% annualized from December 31, 2025. • Total deposits were $2.5 billion at June 30, 2026, representing an increase of $116.6 million or 5.0% from June 30, 2025 and an increase of $107.2 million or 9.2% annualized from December 31, 2025. • Annualized return on average assets for the quarter ended June 30, 2026 was 1. 26% compared to 1.22% for the quarter ended June 30, 2025. • Annualized return on average stockholders’ equity for the quarter ended June 30, 2026 was 15.90% compared to 14.29% for quarter ended June 30, 2025. • The ACL to total loans was 1.15% at June 30, 2026 compared to 1.16% at December 31, 2025. • Non-performing loans to total loans was 0.09% at June 30, 2026 and 0.14% at December 31, 2025. • At June 30, 2026, the total risk-based capital ratios for the Company and the Bank were 13.88% and 13.68%, respectively. • Tangible book value per common share (a non-GAAP measure) was $12.64 at June 30, 2026, representing an increase of $1.11 or 9.6% annualized from $11.53 at June 30, 2025. At June 30, 2026, tangible book value per common share was negatively affected by ($1.70) due to an accumulated comprehensive loss of $31.4 million. At June 30, 2025, tangible book value per common share was negatively affected by ($2.08) due to an accumulated comprehensive loss of $41.8 million. See “Reconciliation and Management Explanation for Non-GAAP Financial Measures” included in this Form 10-Q for a reconciliation of this non-GAAP financial measure. Table of Contents 32 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Critical Accounting Policies and Estimates The consolidated financial statements are prepared based on the application of U.S. Generally Accepted Accounting Principles (“GAAP”), the most significant of which are described in Note 1 “Summary of Significant Accounting Policies” in the Company’s 2025 Form 10-K and “Summary of Significant Accounting Policies” in Part I in this Form 10-Q. To prepare consolidated financial statements in conformity with US GAAP, management makes estimates, assumptions, and judgments based on available information. These estimates, assumptions, and judgments affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the consolidated financial statements. In particular, management has identified accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical to an understanding of our consolidated financial statements. Management has presented the application of these policies to the Audit and Risk Committee of our Board of Directors. Non-GAAP Financial Measures This Form 10-Q includes financial information determined by methods other than in accordance with GAAP. This financial information includes certain operating performance measures. Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends. Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the section “Reconciliation and Management Explanation of Non-GAAP Financial Measures” included in this Form 10-Q. Segment Reporting Management monitors the revenue streams for all its various products and services. The identifiable segments are not material and operations are managed and financial performance is evaluated on an overall Company-wide basis. Accordingly, all the financial service operations are considered by management to be aggregated in one reportable operating segment. Results of Operations General The following tables present selected balance sheet, income statement, and profitability ratios for the dates and periods indicated (in thousands, except ratios): June 30, 2026 December 31, 2025 Consolidated Balance Sheets: Total assets $ 3,019,701 $ 2,791,540 Total loans (1) $ 2,322,385 $ 2,189,257 Total deposits $ 2,452,271 $ 2,345,080 Total stockholders' equity $ 233,238 $ 217,183 (1) Loan amounts include deferred fees/costs. Table of Contents 33 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Consolidated Statements of Operations: Net interest income before provision for credit losses $ 24,387 $ 21,034 $ 46,435 $ 40,149 Total non-interest income $ 3,560 $ 3,370 $ 7,710 $ 7,086 Total non-interest expense $ 13,966 $ 12,634 $ 27,677 $ 24,686 Net income $ 9,078 $ 8,140 $ 18,429 $ 15,798 Profitability: Efficiency ratio 49.97% 51.77% 51.12% 52.26% Net interest margin 3.49% 3.28% 3.38% 3.18% The Company’s results of operations depend substantially on the levels of our net interest income and non-interest income. Other factors contributing to the results of operations include our provision for credit losses, the level of non-interest expense, and the provision for income taxes. Three months ended June 30, 2026 compared to the three months ended June 30, 2025 Net income increased $938 thousand to $9.1 million for the three months ended June 30, 2026 from $8.1 million for the same period in 2025. The $938 thousand or 11.5% increase in net income was primarily driven by growth in the average loan portfolio and expansion of net interest margin resulting from lower funding costs. These benefits were partially offset by higher non-interest expense, income tax expense, and provision for credit losses. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 Net income increased $2.6 million to $18.4 million for the six months ended June 30, 2026 from $15.8 million for the same period in 2025. The $2.6 million or 16.7% increase in the net income was primarily driven by higher income from a larger loan portfolio and, to a lesser extent, an increase in service fees. The increase in income was partially offset by an increase in non-interest expense, income tax expense, and provision for credit losses expense between periods. Net Interest Income Net interest income is the difference between interest earned on interest-earning assets and interest paid on interest- bearing liabilities and is the primary driver of core earnings. Interest income is generated from interest and dividends on interest-earning assets, including loans, investment securities and other short-term investments. Interest expense is incurred from interest paid on interest-bearing liabilities, including interest -bearing deposits, FHLB advances, subordinated debt, and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on loans and other interest-earning assets, (ii) the costs of deposits and other funding sources, (iii) net interest spread, and (iv) net interest margin. Net interest spread is equal to the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is equal to the annualized net interest income divided by average interest -earning assets. Because non-interest- bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the indirect benefit of these non-interest-bearing funding sources. Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets and interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Our asset liability committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect net interest income and net interest margin. Table of Contents 34 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q The following table contains information related to average balances, average yields earned on assets, and average costs of liabilities for the periods indicated (dollars in thousands): Three Months Ended June 30, 2026 2025 Average (1) Balance Interest Yield/Rate (2) Average (1) Balance Interest Yield/Rate (2) Assets Interest-earning assets: Loans held for investment (3) $ 2,258,965 $ 34,899 6.20% $ 2,057,445 $ 31,946 6.23% Investment securities (4) 461,849 3,858 3.35% 449,624 3,432 3.06% Other interest-earnings assets 80,640 823 4.09% 63,974 776 4.87% Total interest-earning assets 2,801,454 39,580 5.67% 2,571,043 36,154 5.64% Non-interest-earning assets 99,271 106,155 Total assets $ 2,900,725 $ 2,677,198 Liabilities and stockholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 51,711 311 2.41% $ 46,694 285 2.45% Savings and money market deposits 1,280,578 8,478 2.66% 1,211,513 9,410 3.12% Time deposits 524,474 4,628 3.54% 452,361 4,343 3.85% Total interest-bearing deposits 1,856,763 13,417 2.90% 1,710,568 14,038 3.29% FHLB advances 100,685 976 3.89% 116,527 1,082 3.72% Subordinated notes, net 39,351 800 8.15% - - - % Total interest-bearing liabilities 1,996,799 15,193 3.05% 1,827,095 15,120 3.32% Non-interest-bearing demand deposits 632,198 580,121 Other non-interest-bearing liabilities 42,795 41,490 Total liabilities 2,671,792 2,448,706 Stockholders' equity 228,933 228,492 Total liabilities and stockholders' equity $ 2,900,725 $ 2,677,198 Net interest income $ 24,387 $ 21,034 Net interest spread (5) 2.62% 2.32% Net interest margin (6) 3.49% 3.28% (1) Average balances - Daily average balances are used to calculate yields/rates. (2) Annualized. (3) 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. (4) At fair value except for securities held to maturity. This amount includes FHLB stock. (5) Net interest spread is the weighted average yield on total interest-earning assets minus the weighted average rate on total interest-bearing liabilities. (6) Net interest margin is the ratio of net interest income to average total interest-earning assets. Table of Contents 35 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Six Months Ended June 30, 2026 2025 Average Balance (1) Interest Yield/Rate (2) Average Balance (1) Interest Yield/Rate (2) Assets Interest-earning assets: Loans held for investment (3) $ 2,218,574 $ 67,688 6.15 % $ 2,022,345 $ 62,191 6.18 % Investment securities (4) 458,076 7,269 3.20 % 443,314 6,456 2.93 % Other interest-earnings assets 92,980 1,655 3.59 % 69,547 1,485 4.29 % Total interest-earning assets 2,769,630 76,612 5.58 % 2,535,206 70,132 5.56 % Non-interest earning assets 98,273 106,885 Total assets $ $2,867,903 $ 2,642,091 $ Liabilities and stockholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 51,904 $ 621 2.41 % $ 50,133 $ 623 2.50 % Savings and money market deposits 1,268,565 16,611 2.64 % 1,205,305 18,745 3.13 % Time deposits 529,094 9,328 3.56 % 426,081 8,261 3.90 % Total interest-bearing deposits 1,849,563 26,560 2.90 % 1,681,519 27,629 3.30 % FHLB advances 105,339 2,016 3.86 % 127,674 2,354 3.71 % Subordinated notes, net 39,332 1,601 8.21 % - - - Total interest-bearing liabilities 1,994,234 30,177 3.05 % 1,809,193 29,983 3.33 % Non-interest bearing demand deposits 608,622 571,627 Other non-interest-bearing liabilities 39,449 37,247 Total liabilities 2,642,305 2,418,067 Stockholders' equity 225,598 224,024 Total liabilities and stockholders' equity $ $2,867,903 $ 2,642,091 Net interest income $ 46,435 $ 40,149 Net interest spread (5) 2.53 % 2.23 % Net interest margin (6) 3.38 % 3.18 % (1) Average balances - Daily average balances are used to calculate yields/rates. (2) Annualized. (3) 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. (4) At fair value except for securities held to maturity. This amount includes FHLB stock. (5) Net interest spread is the weighted average yield on total interest-earning assets minus the weighted average rate on total interest-bearing liabilities. (6) Net interest margin is the ratio of net interest income to average total interest-earning assets. Three months ended June 30, 2026 compared to the three months ended June 30, 2025 Net interest income before the provision for credit losses was $24.4 million for the three months ended June 30, 2026, an increase of $3.4 million or 15.9%, from $21.0 million for the same period in 2025. This growth was primarily driven by higher income from a larger loan portfolio and lower rate s paid on interest -bearing deposits. This increase was partially offset by interest expense associated with the subordinated notes issued during 2025. The NIM was 3.49% for the three months ended June 30, 2026 and 3.28% for the same period in 2025. The 21-basis point increase in net interest margin was primarily attributable to a reduction in the weighted average rates paid on interest- bearing deposits, particularly savings and money market accounts, together with a favorable earning asset mix. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 Net interest income before the provision for credit losses was $46.4 million for the six months ended June 30, 2026, an increase of $6.3 million or 15.7%, from $40.1 million for the same period in 2025. This growth was primarily driven by higher income from a larger loan portfolio and a reduction in the weighted average rates paid on interest-bearing deposit between periods. Table of Contents 36 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q The NIM was 3.38% for the six months ended June 30, 2026 and 3.18% for the same period in 2025. The NIM expansion of 20 basis points reflects primarily the decrease in the weighted average interest rate paid on interest-bearing deposits, particularly in savings and money market deposits. Provision for 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 losses. The provision for credit losses is impacted by variations in the size and composition of our loan and investment securities portfolio, recent historical and projected future economic conditions, our internal assessment of the credit quality of the loan and investment securities portfolios and net charge-offs. Three months ended June 30, 2026 compared to the three months ended June 30, 2025 The provision for credit losses was $1.3 million for the three months ended June 30, 2026 compared to $1.0 million for the same period in 2025. The increase in the provision for credit losses primarily reflects growth in the loan portfolio and off- balance sheet arrangements, which increased the level of estimated expected credit losses under CECL. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 The provision for credit losses was $2.1 million for the six months ended June 30, 2026 compared to $1.7 million for the same period in 2025. The increase in the provision for credit losses primarily reflects growth in the loan portfolio, which increased the level of estimated expected credit losses under CECL. Non-Interest Income Our services and products generate service charges and fees, mainly from our depository accounts. We also generate income from gain on sale of loans though the SBA 7a loan program and the monetization of fees earned through our loan swap program. In addition, we own and are beneficiaries of the life insurance policies covering certain of our key 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 periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Service fees $ 2,601 $ 2,402 $ 5,701 $ 4,733 Gain on sale of securities available for sale, net - - 14 - Gain on sale of loans held for sale, net - 151 106 676 Other non-interest income 959 817 1,889 1,677 Total non-interest income $ 3,560 $ 3,370 $ 7,710 $ 7,086 Three months ended June 30, 2026 compared to the three months ended June 30, 2025 Non-interest income for the three months ended June 30, 2026 increased $190 thousand or 5.6%, compared to the same period in 2025. This increase was primarily driven by a $322 thousand increase in loan prepayment penalty income reported under service fees compared to the same period last year. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 Non-interest income for the six months ended June 30, 2026 increased $624 thousand or 8.8%, compared to the same period in 2025. This increase was primarily driven by $1.6 million increase in income generated by the Company’s loan swap program reported under service fees in the Consolidated Statements of Operations. This increase was partially offset by a decrease in gain on sale of loans during the quarter ended June 30, 2026. Table of Contents 37 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Non-Interest Expense The following table presents the components of non-interest expense for the dates indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Salaries and employee benefits $ 8,537 $ 7,954 $ 17,107 $ 15,590 Occupancy 1,369 1,337 2,685 2,621 Regulatory assessment and fees 397 396 881 817 Consulting and legal fees 583 263 1,144 456 Network and information technology services 524 564 1,084 1,069 Other operating 2,556 2,120 4,776 4,133 Total non-interest expense $ 13,966 $ 12,634 $ 27,677 $ 24,686 Three months ended June 30, 2026 compared to the three months ended June 30, 2025 Non-interest expense for the three months ended June 30, 2026 increased $1.3 million or 10.5%, compared to the same period in 2025. This increase was primarily driven by an increase of $583 thousand in salaries and employee benefits due to an increase of $236 thousand in salaries associated with additional full-time employees and an increase of $228 thousand in health insurance and 401(k) expense. Additionally , consulting and legal fees increase by $320 mainly due to $290 thousand reimbursement of legal expenses recognized during the second quarter of 2025, which reduced legal expense in the prior-year period. Other operating expenses increased by $436 thousand due mainly to $312 thousand excise tax expense paid in the quarter ended June 30, 2026. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 Non-interest expense for the six months ended June 30, 2026 increased $3.0 million or 12.1%, compared to the same period in 2025. The increase was primarily driven by an increase of $1.5 million in salaries and employee benefits, consisting of $666 thousand related to merit increases and new full-time employee salaries, $580 thousand increase in health insurance and 401(k) expense, and a $349 thousand increase in additional stock-based compensation expense. In addition, consulting and legal fees increased $688 thousand, primarily due to an increase of $405 thousand in legal fees due to the reimbursement of legal expenses recognized during the second quarter of 2025, which reduced legal expense in the prior- year period. Other non-interest expenses increased by $643 thousand, mainly due to increase of $285 thousand in excise tax expense and increase of $83 thousand in ATM expense for the six months ended June 30, 2026. Provision for Income Tax Fluctuations in the effective tax rate reflect the effect of the differences in the inclusion or deductibility of certain income and expenses for income tax purposes. Therefore, future decisions on the investments we choose will affect our effective tax rate. The cash surrender value of bank-owned life insurance policies covering key employees, purchasing municipal bonds, and overall levels of taxable income will be important elements in determining our effective tax rate. Three months ended June 30, 2026 compared to the three months ended June 30, 2025 Income tax expense for the three months ended June 30, 2026 was $3.6 million as compared to $2.6 million for the same period in 2025. The effective tax rate for the three months ended June 30, 2026 was 28.60% compared to 24.20% for the same period in 2025. Six months ended June 30, 2026 compared to the six months ended June 30, 2025 Income tax expense for the six months ended June 30, 2026 was $6.0 million as compared to $5.0 million for the same period in 2025. The Company recognized a non-recurring $619 thousand income tax benefit in the first quarter of 2026 due to an adjustment to the deferred tax asset calculation from December 31, 2025. The effective tax rate for the six months ended June 30, 2026 was 24.47% compared to 24.18% for the same period in 2025. For a further discussion of income taxes, see Note 5 “Income Taxes” to the unaudited Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Table of Contents 38 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Analysis of Financial Condition Total assets at June 30, 2026 were $3.02 billion, an increase of $228.2 million, or 16.5% annualized, over total assets of $2.79 billion at December 31, 2025. Total loans, net of deferred fees/costs, increased $133.1 million, or 12.3% annualized, to $2.32 billion at June 30, 2026 compared to $2.19 billion at December 31, 2025. Total deposits increased by $107.2 million, or 9.2% annualized, to $2.45 billion at June 30, 2026 compared to $2.35 billion at December 31, 2025. Investment Securities The investment portfolio is used and managed to provide liquidity through cash flows, marketability and, if necessary, collateral for borrowings. The investment portfolio is also used as a tool to manage interest rate risk and the Company’s capital market risk exposure. The philosophy of the portfolio is to maximize the Company’s profitability taking into consideration the Company’s risk appetite and tolerance, manage its asset composition and diversification, and maintain adequate risk-based capital ratios. The investment portfolio is managed in accordance with the Board approved Asset and Liability Management (“ALM”) policy, which includes investment guidelines. Such policy is reviewed at least annually or more frequently if deemed necessary, depending on market conditions and/or unexpected events. The investment portfolio composition is subject to change depending on the funding and liquidity needs of the Company, and the interest risk management objective directed by the Asset-Liability Committee (“ALCO”). The portfolio of investments also can be used to modify the duration of the balance sheet. The allocation of cash into securities takes into consideration anticipated future cash flows (uses and sources) and all available sources of credit. Our investment portfolio consists primarily of securities issued by the U.S. Government and U.S. Government Agencies and mortgage-backed securities, collateralized mortgage obligations, corporate bonds, municipal securities, other debt securities all with varying contractual maturities and coupons. Due to the optionality embedded in these securities, the contractual maturities do not necessarily represent the expected life of the portfolio. Some of these securities will be called or paid down prior to maturity depending on capital market conditions and expectations. The investment portfolio is regularly reviewed by the Chief Financial Officer, Treasurer, and the ALCO of the Company to ensure an appropriate risk and return profile as well as for adherence to the Company’s investment policies. When evaluating AFS debt securities under ASC Topic 326, the Company evaluates whether the decline in fair value is attributable to credit losses or other factors like interest rate risk, using both quantitative and qualitative analyses, including company performance analysis, review of credit ratings, vintage bonds, remaining payment terms, prepayment speeds and analysis of macro-economic conditions. As a result of this evaluation, the Company concluded that no allowance was required on AFS securities as of June 30, 2026. At quarter end, HTM securities included $136.1 million of U.S. Government and U.S. Government Agencies issued bonds and mortgage-backed securities. Because of the explicit and/or implicit guarantee on these bonds, the Company holds no reserves on these holdings. Using the PD/LGD methodology and considering that there are no HTM securities exposed to non ‑ government credit risk, the Company estimated an allowance for credit losses (“ACL”) of $0 as of June 30, 2026. For periods where there was an ACL for HTM securities recorded the book value for debt securities classified as HTM represents amortized cost less ACL. Aggregate AFS and HTM investment securities increased $7.6 million to $469.0 million at June 30, 2026 from $461.4 million at December 31, 2025. As of June 30, 2026, investment securities with a market value of $56.3 million were pledged to secure public deposits. The investment portfolio does not contain any tax-exempt securities. Table of Contents 39 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q The following table presents the amortized cost and fair value of investment securities for the dates indicated (dollars in thousands): June 30, 2026 December 31, 2025 Available-for-sale: Amortized Cost Fair Value Amortized Cost Fair Value U.S. Government Agency $ 11,883 $ 10,855 $ 15,169 $ 14,144 Collateralized mortgage obligations 84,406 67,099 92,871 75,828 Mortgage-backed securities - residential 34,909 28,991 35,865 29,917 Mortgage-backed securities - commercial 215,345 206,999 174,622 168,108 Municipal securities 5,191 4,225 5,196 4,263 Bank subordinated debt securities 14,578 14,690 15,284 15,230 $ 366,312 $ 332,859 $ 339,007 $ 307,490 Held-to-maturity: U.S. Government Agency $ 37,328 $ 34,129 $ 41,158 $ 37,970 Collateralized mortgage obligations 48,762 43,821 51,431 46,786 Mortgage-backed securities - residential 35,188 32,522 37,221 34,718 Mortgage-backed securities - commercial 14,849 13,705 15,088 14,051 Corporate bonds - - 9,045 8,983 $ 136,127 $ 124,177 $ 153,943 $ 142,508 Allowance for credit losses - securities held-to-maturity - (2) Securities held-to maturity, net of allowance for credit losses $ 136,127 $ 153,941 The following table shows the weighted average yields, categorized by contractual maturity, for investment securities as of June 30, 2026 (in thousands, except yields): Within 1 year After 1 year through 5 years After 5 years through 10 years After 10 years Total Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Available-for-sale: U.S. Government Agency $ - - $ - - $ - - $ 11,883 3.43% $ 11,883 3.43% Collateralized mortgage obligations - - - - - - 84,406 1.56% 84,406 1.56% MBS - residential - - - - - - 34,909 2.43% 34,909 2.43% MBS - commercial - - 4,996 4.55% 4,906 4.81% 205,443 4.38% 215,345 4.40% Municipal securities - - - - 5,191 1.87% - - 5,191 1.87% Bank subordinated debt securities - - 2,000 7.86% 12,578 5.81% - - 14,578 6.09% $ - - $ 6,996 5.50% $ 22,675 4.69% $ 336,641 3.44% $ 366,312 3.56% Held-to-maturity: U.S. Government Agency $ 4,988 1.24% $ 18,041 1.31% $ 1,483 2.85% $ 12,816 1.85% $ 37,328 1.55% Collateralized mortgage obligations - - - - - - 48,762 1.65% 48,762 1.65% MBS - residential 21 2.98% 8,874 1.65% - - 26,293 2.29% 35,188 2.13% MBS - commercial - - 3,034 1.63% - - 11,815 2.57% 14,849 2.37% $ 5,009 1.25% $ 29,949 1.44% $ 1,483 2.85% $ 99,686 1.95% $ 136,127 1.83% Loans Loans are the largest category of interest-earning assets on the unaudited Consolidated Balance Sheets, and usually provide higher yields than the remainder of the interest -earning assets. Higher yields typically carry greater inherent credit and liquidity risks in comparison to lower yield assets. The Company manages and mitigates such risks in accordance with the credit and ALM policies, risk tolerance and balance sheet composition. Table of Contents 40 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q The following table shows the loan portfolio composition as of the dates indicated (in thousands): June 30, 2026 December 31, 2025 Total Percent of Total Total Percent of Total Residential real estate $ 356,747 15.4 % $ 307,692 14.1 % Commercial real estate 1,314,367 56.6 % 1,244,835 57.0 % Commercial and industrial 300,265 13.0 % 295,548 13.5 % Correspondent banks 137,912 6.0 % 127,968 5.9 % Consumer and other 207,404 9.0 % 207,215 9.5 % Total gross loans 2,316,695 100.0 % 2,183,258 100.0 % Plus: Deferred fees/costs 5,690 5,999 Total loans net of deferred fees/costs 2,322,385 2,189,257 Less: Allowance for credit losses 26,701 25,500 Total net loans $ 2,295,684 $ 2,163,757 Total loans, net of deferred fees/costs, increased by $133.1 million, or 12.3% annualized to $2.32 billion, at June 30, 2026 compared to December 31, 2025. The commercial real estate loan segment had the most significant balance increase compared to December 31, 2025. Our loan portfolio continues to grow, with commercial real estate lending being the primary focus which represented approximately 56.6% of the total gross loan portfolio as of June 30, 2026. Our loan growth strategy since inception has been reflective of the market in which we operate and of our strategic plan as approved by the Board. The growth experienced in recent years is primarily due to implementation of our relationship-based banking model and the success of our relationship managers in competing for new business in a highly competitive metropolitan area. Many of our larger loan clients have long-term relationships with members of our senior management team or our relationship managers that date back to former institutions. From a liquidity perspective, our loan portfolio provides us with additional liquidity due to repayments or unexpected prepayments. The following table shows maturities and sensitivity to interest rate changes of the loan portfolio at June 30, 2026 (in thousands): Due in 1 year or less Due in 1 to 5 years Due after 5 to 15 years Due after 15 years Total Residential real estate $ 7,064 $ 83,310 $ 65,616 $ 200,757 $ 356,747 Commercial real estate 71,847 590,427 647,640 4,453 1,314,367 Commercial and industrial 12,401 111,248 133,331 43,285 300,265 Correspondent banks 137,912 - - - 137,912 Consumer and other 3,579 1,238 21,910 180,677 207,404 Total gross loans $ 232,803 $ 786,223 $ 868,497 $ 429,172 $ 2,316,695 Interest rate sensitivity: Fixed interest rates $ 187,594 $ 201,973 $ 159,167 $ 302,650 $ 851,384 Floating or adjustable rates 45,209 584,250 709,330 126,522 1,465,311 Total gross loans $ 232,803 $ 786,223 $ 868,497 $ 429,172 $ 2,316,695 The information presented in the table above is based upon the contractual maturities of the individual loans, which may be subject to renewal at their contractual maturity. Renewals will depend on approval by our credit department and balance sheet composition at the time of the analysis, as well as any modification of terms at the loan’s maturity. Additionally, maturity concentrations, loan duration, prepayment speeds and other interest rate sensitivity measures are discussed, reviewed, and analyzed by the ALCO. Decisions on term /rate modifications are discussed as well. As of June 30, 2026, approximately 63% of the loan portfolio has adjustable/variable rates and 37% of the loan portfolio has fixed rates. The adjustable/variable rate loans re-price to different benchmarks and tenors and in different periods of time. By contractual characteristics, there are no material concentrations on anniversary repricing. Table of Contents 41 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Asset Quality Our asset quality grading analysis estimates the capability of the borrower to repay the contractual obligation of the loan agreement as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans. Internal credit risk grades are reviewed at least once a year, and more frequently as needed. Internal credit risk ratings may change based on management’s assessment of the results from the annual review, portfolio monitoring, and other developments observed with borrowers. The internal credit risk grades used by the Company to assess the credit worthiness of a loan are shown below: Pass – Loans indicate different levels of satisfactory financial condition and performance. Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligator or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified at substandard, with the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss – Loans classified as loss are considered uncollectible. Loan credit exposures by internally assigned grades are as follows for the dates indicated (in thousands): June 30, 2026 Pass Special Mention Substandard Doubtful Total Residential real estate $ 353,869 $ 1,370 $ 1,508 $ - $ 356,747 Commercial real estate 1,301,144 11,520 1,703 - 1,314,367 Commercial and industrial 298,081 773 1,411 - 300,265 Correspondent banks 137,912 - - - 137,912 Consumer and other 207,404 - - - 207,404 $ 2,298,410 $ 13,663 $ 4,622 $ - $ 2,316,695 December 31, 2025 Pass Special Mention Substandard Doubtful Total Residential real estate $ 304,276 $ 916 $ 2,500 $ - $ 307,692 Commercial real estate 1,230,823 11,613 2,399 - 1,244,835 Commercial and industrial 293,169 907 1,472 - 295,548 Correspondent banks 127,968 - - - 127,968 Consumer and other 207,215 - - - 207,215 $ 2,163,451 $ 13,436 $ 6,371 $ - $ 2,183,258 Table of Contents 42 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Non-Performing Assets The following table presents non-performing assets as of the dates shown (in thousands, except ratios): June 30, 2026 December 31, 2025 Non-accrual loans $ 2,148 $ 3,138 Loans past due over 90 days and still accruing - - Total non-performing loans $ 2,148 $ 3,138 Other real estate owned - - Total non-performing assets $ 2,148 $ 3,138 Asset quality ratios: Allowance for credit losses to total loans 1.15% 1.16% Allowance for credit losses to non-performing loans 1,243% 813% Non-performing loans to total loans 0.09% 0.14% Non-performing assets include all loans categorized as non-accrual, other real estate owned (“OREO”) and other repossessed assets. Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on a non- accrual status. This determination is based on current existing facts concerning collateral values and the paying capacity of the borrower. When the collection of the full contractual balance is unlikely, the loan is placed on non-accrual to avoid overstating the Company’s income for a loan with increased credit risk. If the principal or interest on a commercial loan becomes due and unpaid for 90 days or more, the loan is placed on non-accrual status as of the date it becomes 90 days past due and remains in non-accrual status until it meets the criteria for restoration to accrual status. Residential loans, on the other hand, are placed on non-accrual status when the principal or interest becomes due and unpaid for 120 days or more and remains in non-accrual status until it meets the criteria for restoration to accrual status. Restoring a loan to accrual status is possible when the borrower resumes payment of all 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. The Company may grant a loan concession to a borrower experiencing financial difficulties. This determination is performed during the annual review process or whenever problems surface regarding the borrower’s ability to repay in accordance with the original terms of the loan or line of credit. The concessions are given to the debtor in various forms, including interest rate reductions, principal forgiveness, extension of maturity date, waiver or deferral of payments and other concessions intended to minimize potential losses. For further discussion of non-performing loans and borrowers experiencing financial difficulties, see Note 3 “Loans” to the unaudited Consolidated Financial Statements in Item 1 of Part 1 of this Form 10-Q. Allowance for Credit Losses The ACL on loans represents an amount that, in management's evaluation, is adequate to provide coverage for all expected future credit losses on outstanding loans. 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” in Item 1 of Part 1 of this Form 10-Q for more information on the ACL. Table of Contents 43 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q The following table presents ACL on loans and net charge-offs to average loans by type for the periods indicated (in thousands): Residential Real Estate Commercial Real Estate Commercial and Industrial Correspondent Banks Consumer and Other Total Three Months Ended June 30, 2026 Beginning balance $ 5,270 $ 9,932 $ 5,330 $ 1,018 $ 4,552 $ 26,102 Provision for credit losses (1) 222 184 407 76 (2) 887 Recoveries 8 - 1 - - 9 Charge-offs (296) - - - (1) (297) Ending Balance $ 5,204 $ 10,116 $ 5,738 $ 1,094 $ 4,549 $ 26,701 Average loans $ 354,678 $ 1,275,161 $ 292,088 $ 128,762 $ 208,276 $ 2,258,965 Net charge-offs (recoveries) to average loans (2) 0.33% - % (0.00)% - % 0.00% 0.05% Six Months Ended June 30, 2026 Beginning balance $ 5,908 $ 9,476 $ 4,814 $ 1,015 $ 4,287 $ 25,500 Provision for credit losses (3) (422) 640 919 79 269 1,485 Recoveries 14 - 5 - - 19 Charge-offs (296) - - - (7) (303) Ending Balance $ 5,204 $ 10,116 $ 5,738 $ 1,094 $ 4,549 $ 26,701 Average loans $ 329,736 $ 1,271,120 $ 264,440 $ 128,783 $ 224,495 $ 2,218,574 Net charge-offs (recoveries) to average loans (2) 0.17% - % (0.00)% - % 0.01% 0.03% (1) Provision for credit losses excludes a $380 thousand provision due to unfunded commitments included in accrued interest and other liabilities. (2) Annualized. (3) Provision for credit losses excludes a $585 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. Table of Contents 44 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Residential Real Estate Commercial Real Estate Commercial and Industrial Correspondent Banks Consumer and Other Total Three Months Ended June 30, 2025 Beginning balance $ 5,115 $ 9,197 $ 4,434 $ 817 $ 5,177 $ 24,740 Provision for credit losses (1) 356 294 73 57 115 895 Recoveries 6 - 1 - 1 8 Charge-offs - - - - (710) (710) Ending Balance $ 5,477 $ 9,491 $ 4,508 $ 874 $ 4,583 $ 24,933 Average loans $ 299,857 $ 1,167,698 $ 265,465 $ 101,776 $ 222,649 $ 2,057,445 Net charge-offs (recoveries) to average loans (2) (0.01)% - % (0.00)% - % 1.28% 0.14% Six Months Ended June 30, 2025 Beginning balance $ 5,121 $ 8,788 $ 4,633 $ 654 $ 4,874 $ 24,070 Provision for credit losses (3) 344 703 (131) 220 431 1,567 Recoveries 12 - 6 - 1 19 Charge-offs - - - - (723) (723) Ending Balance $ 5,477 $ 9,491 $ 4,508 $ 874 $ 4,583 $ 24,933 Average loans $ 300,560 $ 1,155,436 $ 261,377 $ 94,516 $ 210,456 $ 2,022,345 Net charge-offs (recoveries) to average loans (2) (0.01)% - % (0.00)% - % 0.69% 0.07% (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 $144 thousand provision due to unfunded commitments included in accrued interest and a $1 thousand provision related to investment securities held to maturity. The Federal Open Market Committee (“FOMC”) economic forecasts as of June 30, 2026, showed moderate improvement in the forecast for real GDP and a slight improvement in the unemployment rate. Fannie Mae House Price Index (“HPI”) forecast reflected an improvement in national housing prices. The Company continued to adjust the HPI index effect on the 1-4 Family loan portfolio with a qualitative factor because Florida housing prices are performing better than national levels. The Q-factor scorecard was updated based on the latest portfolio stress test and the resulting maximum loss calculation. Our ACL included residential loans. To assess the potential impact of changes in qualitative factors related to these loans, management performed a sensitivity analysis. The Company evaluated the impact of the HPI used in calculating expected losses on the residential loan segment. As of June 30, 2026, for every 100 basis point increase in the HPI, the forecast reduces reserves by approximately $241 thousand and about 1 basis points to the reserve coverage ratio, everything else being constant. This sensitivity analysis provides a hypothetical result to assess the sensitivity of the ACL and does not represent a change in management’s judgement. For comparative purposes, in prior periods the Company stress tested the commercial real estate loan subcategory based on collateral code (1st lien, commercial property) rather than the non ‑ owner ‑ occupied subsegment. As of June 30, 2026, the Company stress tested two qualitative factors within the non ‑ owner ‑ occupied subsegment of the commercial real estate loan portfolio, as it represents the largest segment of the Company’s portfolio. The analysis evaluated the impact of changing the qualitative factors from no risk to maximum loss to assess the sensitivity of the allowance for credit losses (“ACL”). This stress resulted in a hypothetical increase of $6.0 million, or 22.3%, in the ACL. The sensitivity analysis is intended solely to illustrate the responsiveness of the ACL to changes in qualitative assumptions and does not represent a change in management’s judgment. For comparative purposes, in prior periods the Company stress tested the commercial real estate loan subcategory based on collateral code (1st lien, commercial property) rather than the non ‑ owner ‑ occupied subsegment. Table of Contents 45 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Bank-Owned Life Insurance As of June 30, 2026, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was $60.4 million. Changes in cash surrender value are recorded to other non-interest income in the unaudited Consolidated Statements of Operations. The Company has BOLI policies with five insurance carriers. The Company is the beneficiary of these policies. Deposits Customer deposits are the primary funding source for the Bank’s growth. Through our network of banking centers, we offer a competitive array of deposit accounts and treasury management services designed to meet our customers’ business needs. Our primary deposit customers are small-to-medium sized businesses (“SMBs”), and the personal business of the owners and operators of these SMBs, as well as the retail/consumer relationships of the employees of these businesses. The following table presents the daily average balance and average rate paid on deposits by category for the periods presented (in thousands, except ratios): Three Months Ended June 30, 2026 2025 Average Balance Average Rate Paid Average Balance Average Rate Paid Non-interest bearing demand deposits $ 632,198 0.00% $ 580,121 0.00% Interest-bearing demand deposits 51,711 2.41% 46,694 2.45% Saving and money market deposits 1,280,578 2.66% 1,211,513 3.12% Time deposits 524,474 3.54% 452,361 3.85% Total $ 2,488,961 2.16% $ 2,290,689 2.46% The Company has a granular deposit portfolio with outstanding balances comprised of 57.1% in commercial deposits, 26.0% in personal deposits, 9.1% in public funds (which are partially collateralized) and 7.8% in brokered deposits. The brokered deposits balance at June 30, 2026 was $190.9 million and $256.8 million at December 31, 2025. As of June 30, 2026, the Company has approximately 21 thousand deposit accounts with the majority of which were personal accounts, approximately 12 thousand or 58.6%. The estimated average account size in our deposit portfolio was approximately $118 thousand as of June 30, 2026. The amount of uninsured deposits are estimated based on the FDIC deposit insurance limit of $250 thousand per account holder for all deposit accounts at the Company. The total estimated percentage of uninsured deposits was 55% at June 30, 2026 and 51% at December 31, 2025. The Company offers Insured Cash Sweep (“ICS”) and Certificate of Deposit Account Registry Service (“CDARS”) deposit products to fully insure our clients. The deposit balance in ICS/CDARS was $176.1 million at June 30, 2026 and was $183.2 million at December 31, 2025. The following table shows scheduled maturities of uninsured time deposits as of June 30, 2026 (in thousands): June 30, 2026 Three months or less $ 68,697 Over three through six months 17,702 Over six through twelve months 57,687 Over twelve months 51,597 $ 195,683 Other Liabilities The Company collects from commercial and residential loan customers funds which are held in escrow for future payment of real estate taxes and insurance. These escrow funds are disbursed by the Company directly to the insurance companies and taxing authority of the borrower. Escrow funds are recorded as accrued interest and other liabilities in the consolidated balance sheet. As of June 30, 2026, escrow balances totaled $23.5 million compared to $8.1 million at December 31, 2025. The increase reflects the normal growth in escrow accounts pending tax and insurance payments. Table of Contents 46 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Borrowings FHLB Advances As a member of the FHLB of Atlanta, we are eligible to obtain advances with various terms and conditions. This accessibility to additional funding allows us to efficiently and timely meet both expected and unexpected outgoing cash flows and collateral needs without adversely affecting either daily operations or the financial condition of the Company. As of June 30, 2026, we had $112.0 million of fixed-rate advances and $128.9 million of daily-rate advances outstanding with the FHLB, with weighted average interest rates of 3.82% and 3.88%, maturing in July 2026 and September 2026 for the fixed-rate advances and May 2027 for the daily-rate advance , as detailed in the table below. The following table presents the FHLB advances as of June 30, 2026 (in thousands): June 30, 2026 Interest Rate Type of Rate Maturity Date Amount 3.82% Fixed July 13, 2026 37,000 3.82% Fixed July 23, 2026 5,000 3.81% Fixed July 29, 2026 30,000 3.84% Fixed September 09, 2026 40,000 3.88% Daily May 24, 2027 128,900 $ 240,900 The Company has also established Federal Funds lines of credit with our upstream correspondent banks and the Federal Reserve Bank of Atlanta Discount Window to manage temporary fluctuations in our daily cash balances. As of June 30, 2026, there were no outstanding balances with any of these additional liquidity sources. Subordinated Notes On August 14, 2025, the Company entered into a Subordinated Note Purchase Agreement with certain qualified institutional buyers pursuant to which the Company sold and issued $40.0 million in aggregate principal amount of its 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. The subordinated debt was originally issued at a cost of $760 thousand. The subordinated debt, net of amortized expenses, was $39.4 million, reflecting the scheduled expense recognition over the term of the instruments. The subordinated notes are presented net of these costs on the consolidated balance sheet. The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D thereunder. For additional information, see the Company Form 8-K filed on August 14, 2025. Off-Balance Sheet Arrangements We engage in various financial transactions in our operations that, under GAAP, may not be included on the balance sheet. To meet the financing needs of our customers, we may include commitments to extend credit and standby letters of credit. To a varying degree, such commitments involve elements of credit, market, and interest rate risk in excess of the amount recognized in the consolidated balance sheets. We maintain an allowance for off-balance sheet credit risk which is recorded under accrued interest and other liabilities on the unaudited Consolidated Balance Sheets. The ACL related to unfunded commitments at June 30, 2026 was $1.3 million and at December 31, 2025 was $752 thousand. The increase was primarily driven by an increase in unfunded commitments. Table of Contents 47 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect actual future cash funding requirements. The following table presents lending related commitments outstanding as of the dates indicated (in thousands ): June 30, 2026 December 31, 2025 Commitments to grant loans and unfunded lines of credit $ 205,573 $ 161,606 Standby and commercial letters of credit 3,646 2,700 Total $ 209,219 $ 164,306 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition established in the contract, for a specific purpose. Commitments generally have variable interest rates, fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash requirements. Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change in credit risk in our portfolio. Lines of credit generally have variable interest rates. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment, less the amount of any advances made. Letters of credit are conditional commitments issued by us to guarantee the performance of a client to a third party. In the event of nonperformance by the client in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. If the commitment is funded, we would be entitled to seek recovery from the client from the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash or marketable securities. Asset and Liability Management Committee Members of senior management and our Board make up the asset and liability management committee, or ALCO. Senior management is responsible for ensuring that Board approved strategies and policies for managing and mitigating risks are appropriately executed within the designated lines of authority and responsibility in a timely manner. ALCO oversees the establishment, approval, implementation, and review of interest rate risk, management, and mitigation strategies, ALM related policies, ALCO procedures and risk tolerances and appetite. While some degree of Interest Rate Risk (“IRR”) is inherent to the banking business, we believe our ALCO implements sound risk management practices to identify, quantify, monitor, and limit IRR exposures. When assessing the scope of IRR exposure and impact on the consolidated balance sheet, cash flows and consolidated statement of operations, management considers both earnings and economic impacts. Asset price variations, deposit volatility and reduced earnings or outright losses could adversely affect the Company’s liquidity, performance, and capital adequacy. Income simulations are used to assess the impact of changing rates on earnings under different interest rates scenarios, yield curve shapes and time horizons. These simulations utilize both instantaneous and parallel changes in the level of interest rates, as well as non-parallel changes such as changing slopes (flat and steepening) and twists of the yield curve. Static simulation models are based on current exposures and assume a constant balance sheet with no new growth. Dynamic simulation is also utilized to have a more comprehensive assessment on IRR. This simulation relies on assumptions regarding changes in existing lines of business, new business, management strategies and client expected behavior. To have a more complete picture of IRR, the Company also evaluates the economic value of equity (“EVE”). This assessment allows us to measure the degree to which the economic values will change under different interest rate scenarios (parallel and non-parallel). The economic value approach focuses on a longer-term time horizon and captures all future cash flows expected from existing assets and liabilities. The economic value model utilizes a static approach in that the analysis does not incorporate new business; rather, the analysis shows a snapshot in time of the risk inherent in the balance sheet. Table of Contents 48 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Market and Interest Rate Risk Management According to our ALCO model, as of June 30, 2026, both the static and dynamic ALM simulations indicate that the Bank’s balance sheet remains liability sensitive in Year 1, positioning the Bank to benefit in a declining rate environment as liabilities reprice more quickly than assets, resulting in favorable Net Interest Income (NII) outcomes. Beginning in Year 2, both models transition toward an asset sensitive posture, reflecting projected balance sheet growth, continued variable rate loan production, and changes in balance sheet mix over time. This progression is consistent with management’s forward looking assumptions embedded in the dynamic model. The Bank’s interest rate risk profile is fairly neutral, with no significant change in overall sensitivity. While the funding mix shifted modestly, core deposits remained essentially flat, and the Bank’s Year 1 liability-sensitive positioning was unchanged. All modeled NII and EVE results continued to remain within ALCO policy limits across all rate shock scenarios. Management’s interest rate positioning reflects a deliberate balance between earnings stability and balance sheet flexibility, particularly given the Bank’s relationship driven deposit base and variable rate lending profile within the South Florida market. The ALM model incorporates a wide range of assumptions, including asset prepayment speeds, non maturity deposit beta and decay assumptions, pricing correlations, deposit truncations, and key interest rate drivers. Given the inherent estimation involved in these assumptions, actual results may differ from modeled outcomes, particularly as static measures do not incorporate potential management actions in response to changes in market conditions or customer behavior. EVE sensitivity remains compliant with policy guidelines, with greater volatility observed in rising rate scenarios, driven by asset and liability convexity. In higher rate environments, the value of longer term assets declines more rapidly, particularly as loan prepayments slow, while certain funding sources reprice less immediately. Conversely, in declining rate scenarios, faster prepayments and quicker asset repricing help mitigate downside EVE exposure. Importantly, EVE volatility declined quarter over quarter, reflecting balance sheet actions taken during the period and an overall reduction in structural interest rate risk. Overall, the Bank remains well positioned to manage current interest rate volatility, with limited exposure under rising rate scenarios and favorable positioning in a declining rate environment. Management continues to actively review ALM results and retains the flexibility, consistent with ALCO policy, to adjust asset and liability duration through balance sheet strategies as market conditions evolve. Results and related strategies are reviewed quarterly with ALCO and adjusted as appropriate. Liquidity Liquidity is defined as a Company’s capacity to meet its cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and unexpected cash flow and collateral needs without adversely affecting either daily operations or the financial condition of the Company. Liquidity risk is the risk that we will be unable to meet our short-term and long-term obligations as they become due because of an inability to liquidate assets or obtain relatively adequate funding. The Company’s obligations, and the funding sources used to meet them, depend significantly on our business mix, balance sheet structure and composition, credit quality of our assets and the cash flow profiles of our on- and off-balance sheet obligations. In managing inflows and outflows, management regularly monitors situations that can give rise to increased liquidity risk. These include funding mismatches, market constraints on the ability to convert assets (particularly investments) into cash or in accessing sources of funds (i.e., market liquidity), pledging assets and contingent liquidity events. Changes in macroeconomic conditions, as well as exposure to credit, market, operational, legal, cybersecurity risk and reputational risks, could have an unexpected impact on the Company’s liquidity risk profile and are factored into the assessment of liquidity and the ALM framework. Management has established a comprehensive and holistic management process for identifying, measuring, monitoring and mitigating liquidity risk. Liquidity management also reflects the Bank’s granular mix of consumer and commercial relationships, which management believes enhances funding stability and mitigates reliance on more rate sensitive wholesale funding sources. Due to its critical importance to the viability of the Company, liquidity risk management is integrated into our risk management processes, Contingency Funding Plan and ALM policy. Table of Contents 49 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Critical elements of our liquidity risk management include: effective corporate governance consisting of oversight by the Board and ALCO, and active involvement of senior management; appropriate strategies, policies, procedures, and limits used to identify and mitigate liquidity risk; comprehensive liquidity risk measurement and monitoring systems (including assessments of the current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and business activities of the Company; active management of intraday liquidity and collateral; an appropriately diverse mix of existing and potential future funding sources; adequate levels of highly liquid marketable securities free of legal, regulatory, or operational impediments, that can be used to meet liquidity needs in stressful situations; comprehensive contingency funding plans that sufficiently address potential adverse liquidity events and emergency cash flow requirements; and internal controls and internal audit processes sufficient to determine the adequacy of the institution’s liquidity risk management process. We expect funds to be available from several basic banking activity sources, including the core deposit base, the repayment and maturity of loans and investment security cash flows. Other potential funding sources include federal funds purchased, brokered certificates of deposit, listing certificates of deposit, Fed Funds lines and borrowings from the FHLB Atlanta. Accordingly, our liquidity resources were at sufficient levels to fund loans and meet other cash needs as necessary. As of June 30, 2026, the Company had $428 million in available liquidity on balance sheet, including $314 million in unpledged securities (excluding Unencumbered HTM securities) available to use as collateral and $114 million in excess cash. The Company had an additional $309 million in off-balance sheet liquidity, excluding access to brokered deposits and other off-balance sheet sources of funding. Management believes current liquidity levels remain appropriate relative to the Bank’s risk appetite, balance sheet size, and anticipated funding needs under both base case and stressed scenarios. Table of Contents 50 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Capital Adequacy As of June 30, 2026, the Company and the Bank were well capitalized under the FRB’s and FDIC’s prompt corrective action framework. We also follow the capital conservation buffer framework, and as of June 30, 2026, we exceeded the capital conversation buffer in all capital ratios, according to our actual ratios. The following table presents the capital ratios for the Company and the Bank at the dates indicated (in thousands, except ratios). The Company's consolidated regulatory capital amounts and ratios: Actual Minimum Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio June 30, 2026 Total risk-based capital $ 325,362 13.88 % $ 187,482 8.00 % $ 234,352 10.00 % Tier 1 risk-based capital $ 257,948 11.01 % $ 140,611 6.00 % $ 187,482 8.00 % Common equity tier 1 capital $ 257,948 11.01 % $ 105,458 4.50 % $ 152,329 6.50 % Leverage ratio $ 257,948 8.81 % $ 117,132 4.00 % $ 146,415 5.00 % December 31, 2025 Total risk-based capital $ 305,225 13.91 % $ 175,565 8.00 % $ 219,457 10.00 % Tier 1 risk-based capital $ 239,671 10.92 % $ 131,674 6.00 % $ 175,565 8.00 % Common equity tier 1 capital $ 239,671 10.92 % $ 98,756 4.50 % $ 142,647 6.50 % Leverage ratio $ 239,671 8.46 % $ 113,285 4.00 % $ 141,606 5.00 % The Bank's regulatory capital amounts and ratios: Actual Minimum Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio June 30, 2026 Total risk-based capital $ 320,052 13.68 % $ 187,185 8.00 % $ 233,981 10.00 % Tier 1 risk-based capital $ 292,014 12.48 % $ 140,389 6.00 % $ 187,185 8.00 % Common equity tier 1 capital $ 292,014 12.48 % $ 105,291 4.50 % $ 152,088 6.50 % Leverage ratio $ 292,014 9.97 % $ 117,144 4.00 % $ 146,430 5.00 % December 31, 2025 Total risk-based capital $ 299,596 13.67 % $ 175,387 8.00 % $ 219,234 10.00 % Tier 1 risk-based capital $ 273,342 12.47 % $ 131,541 6.00 % $ 175,387 8.00 % Common equity tier 1 capital $ 273,342 12.47 % $ 98,655 4.50 % $ 142,502 6.50 % Leverage ratio $ 273,342 9.65 % $ 113,296 4.00 % $ 141,620 5.00 % Impact of Inflation Our Consolidated Financial Statements and related notes have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is mostly reflected in the increased cost of operations; inflation can negatively impact overhead expenses and other variable expenses. Unlike most industrial companies, nearly all our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than 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. Inflationary conditions may also influence customer deposit behavior, loan demand, and pricing dynamics, which management considers as part of its ongoing balance sheet and earnings planning processes. Table of Contents 51 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Reconciliation and Management Explanation of Non -GAAP Financial Measures Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends. Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance. Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. The following table reconciles the non-GAAP financial measurement of operating net income available to common shareholders for the periods presented (in thousands, except per share data): USCB FINANCIAL HOLDINGS, INC. NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) As of or For the Three Months Ended 6/30/2026 3/31/2026 12/31/2025 9/30/2025 6/30/2025 Pre-tax pre-provision ("PTPP") income: (1) Net income $ 9,078 $ 9,351 $ 1,363 $ 8,939 $ 8,140 Plus: Income tax expense 3,636 2,335 1,911 2,866 2,599 Plus: Provision for credit losses 1,267 801 480 105 1,031 PTPP income $ 13,981 $ 12,487 $ 3,754 $ 11,910 $ 11,770 PTPP return on average assets: (1) PTPP income $ 13,981 $ 12,487 $ 3,754 $ 11,910 $ 11,770 Average assets $ 2,900,725 $ 2,834,717 $ 2,799,863 $ 2,798,115 $ 2,677,198 PTPP return on average assets (2) 1.93% 1.79% 0.53% 1.69% 1.76% Operating net income: (1) Net income $ 9,078 $ 9,351 $ 1,363 $ 8,939 $ 8,140 Less: Net gains (losses) on sale of securities - 14 (7,498) (28) - Less: Tax effect on sale of securities - (4) 1,900 7 - Plus: Tax (benefit) liability expense from prior periods - (619) (3) 1,096 (4) - - Operating net income $ 9,078 $ 8,722 $ 8,057 $ 8,960 $ 8,140 Operating return on average assets: (1) Operating net income $ 9,078 $ 8,722 $ 8,057 $ 8,960 $ 8,140 Average assets $ 2,900,725 $ 2,834,717 $ 2,799,863 $ 2,798,115 $ 2,677,198 Operating return on average assets (2) 1.26% 1.25% 1.14% 1.27% 1.22% Operating return on average equity: (1) Operating net income $ 9,078 $ 8,722 $ 8,057 $ 8,960 $ 8,140 Average equity $ 228,933 $ 222,226 $ 212,393 $ 225,316 $ 228,492 Operating return on average equity (2) 15.90% 15.92% 15.05% 15.78% 14.29% Operating Revenue: (1) Net interest income $ 24,387 $ 22,048 $ 22,207 $ 21,274 $ 21,034 Plus: Non-interest income 3,560 4,150 (4,178) 3,684 3,370 Less: Net gains (losses) on sale of securities - 14 (7,498) (28) - Operating revenue $ 27,947 $ 26,184 $ 25,527 $ 24,986 $ 24,404 Operating Efficiency Ratio: (1) Total non-interest expense $ 13,966 $ 13,711 $ 14,275 $ 13,048 $ 12,634 Operating revenue $ 27,947 $ 26,184 $ 25,527 $ 24,986 $ 24,404 Operating efficiency ratio 49.97% 52.36% 55.92% 52.22% 51.77% (1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company. (2) Annualized. (3) The Company recognized a $619 thousand income tax benefit in first quarter of 2026 due to an adjustment to the deferred tax asset calculation from 2025. (4) State tax liability expenses for 2024 and for the first three quarters of 2025 were recognized during the fourth quarter of 2025. The state tax expense is related to taxes due on interest income on loans whose collateral are located outside of the State of Florida. Table of Contents 52 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q USCB FINANCIAL HOLDINGS, INC. NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands, except per share data) As of or For the Three Months Ended 6/30/2026 3/31/2026 12/31/2025 9/30/2025 6/30/2025 Tangible book value per common share (at period-end): (1)(4) Total stockholders' equity $ 233,238 $ 223,246 $ 217,183 $ 209,095 $ 231,583 Less: Intangible assets - - - - - Tangible stockholders' equity (3) $ 233,238 $ 223,246 $ 217,183 $ 209,095 $ 231,583 Total shares issued and outstanding (at period-end): Total common shares issued and outstanding 18,459,470 18,257,400 18,137,885 18,107,385 20,078,385 Tangible book value per common share (2) $ 12.64 $ 12.23 $ 11.97 $ 11.55 $ 11.53 Operating diluted net income per common share: (1) Operating net income $ 9,078 $ 8,722 $ 8,057 $ 8,960 $ 8,140 Total weighted average diluted shares of common stock 18,509,572 18,454,006 18,348,725 19,755,820 20,295,794 Operating diluted net income per common share: $ 0.49 $ 0.47 $ 0.44 $ 0.45 $ 0.40 Tangible Common Equity/Tangible Assets (1)(4) Tangible stockholders' equity (3) $ 233,238 $ 223,246 $ 217,183 $ 209,095 $ 231,583 Tangible total assets (3) $ 3,019,701 $ 2,845,735 $ 2,791,540 $ 2,767,945 $ 2,719,474 Tangible Common Equity/Tangible Assets 7.72% 7.84% 7.78% 7.55% 8.52% (1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company. (2) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options. (3) Since the Company has no intangible assets, tangible stockholders’ equity and tangible total assets are the same amounts as stockholders’ equity and total assets, (4) The decrease in total stockholders’ equity in September 2025 was primarily driven by the repurchase of 2.0 million shares of Class A common stock, as previously disclosed. Table of Contents 53 USCB Financial Holdings, Inc. Q2 2026 Form 10-Q Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide the information required by this item.