[10-Q] USCB Financial Holdings, Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
USCB Financial Holdings (USCB) Q2-25 10-Q snapshot:
Net income rose 31% YoY to $8.1 m, lifting diluted EPS to $0.40. Net interest income jumped 22% to $21.0 m as interest expense was essentially flat, expanding margin despite an 8% larger funding base. Six-month profit reached $15.8 m (+46% YoY) and YTD dividends doubled to $0.20 per share.
Loans grew 7% year-to-date to $2.11 bn, deposits 7% to $2.34 bn, while FHLB advances fell 34% to $108 m. Total assets stand at $2.72 bn (+5%), and tangible book value climbed 8% to $231.6 m (~$11.54/sh). Operating costs increased 9%, but revenue growth pushed the efficiency ratio near 55%.
Credit quality remains stable: allowance coverage is 1.18% of loans after a $1.7 m YTD provision and $0.7 m charge-offs (20 bp annualized). CRE exposure is still high at 57% of the loan book.
Market-value pressures persist: unrealized losses total $47.2 m on AFS and $16.5 m on HTM securities, keeping AOCI at –$41.8 m. Cash balances declined to $54.8 m as excess funds were redeployed into loans and securities.
Outlook: Rising loan volume and disciplined deposit pricing support further earnings momentum, but rate volatility and CRE concentration remain key watch-points.
Positive
- EPS up 31% YoY to $0.40; six-month EPS +44%.
- Net interest income +22% with flat interest expense, indicating margin expansion.
- Loans and deposits each +7% YTD, demonstrating continued franchise growth.
- FHLB advances cut 34%, improving funding mix.
- Tangible book value +8% to $231.6 m; dividend doubled to $0.10 quarterly.
Negative
- $47.2 m AFS and $16.5 m HTM unrealized losses keep AOCI deeply negative.
- CRE accounts for 57% of loans, elevating sector concentration risk.
- Provision and net charge-offs increased YoY (provision $1.0 m vs $0.8 m; 0.7 m charge-offs).
- Cash & equivalents fell 29% YTD as balance-sheet liquidity tightened.
- Interest expense still 42% of interest income, leaving earnings exposed to future deposit repricing.
Insights
TL;DR – solid quarter; margin expansion drives 31 % EPS gain.
Earnings quality improved as NII outpaced expense growth and credit costs stayed contained. Deposit growth was achieved without materially higher funding costs, a positive differentiator versus peers. Tangible book rose 8 %, supporting capital flexibility and the dividend hike. The lingering AOCI drag and high CRE mix temper the upside but do not yet impair capital ratios. Overall, results are moderately positive for the equity story.
TL;DR – credit stable, but rate & CRE risks persist.
Allowance coverage held at 1.18 % with low net charge-offs, signalling sound underwriting. However, 57 % CRE concentration plus $64 m combined unrealized securities losses leave equity sensitive to further rate shocks or property weakness. Liquidity tightened as cash fell 29 %, though reduced FHLB usage offsets some concern. Risk profile is manageable but worth monitoring.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
,
,
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code:
)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
☒
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
☒
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 31, 2025 the registrant had
A
common stock outstanding.
FORM 10-Q
June 30, 2025
TABLE OF CONTENTS
PART I
3
Item 1.
Financial Statements
3
Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024
3
Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024
(Unaudited)
4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and
2024 (Unaudited)
5
Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30,
2025 and 2024 (Unaudited)
6
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)
8
Notes to the Consolidated Financial Statements (Unaudited)
9
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
31
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
53
Item 4.
Controls and Procedures
53
PART II
54
Item 1.
Legal Proceedings
54
Item 1A.
Risk Factors
54
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
54
Item 3.
Defaults Upon Senior Securities
54
Item 4.
Mine Safety Disclosures
54
Item 5.
Other Information
54
Item 6.
Exhibit Index
55
Signatures
Table of Contents
3 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
PART I
Item 1. Financial Statements
USCB FINANCIAL HOLDINGS, INC
Consolidated Balance Sheets – Unaudited
(Dollars in thousands, except share data)
June 30, 2025
December 31, 2024
ASSETS:
Cash and due from banks
$
$
Interest-bearing deposits in banks
Total cash and cash equivalents
Investment securities held to maturity, net of allowance of $
, respectively (fair value of
$
, respectively)
Investment securities available for sale, at fair value
Federal Home Loan Bank stock, at cost
Loans held for investment, net of allowance of $
, respectively
Accrued interest receivable
Premises and equipment, net
Bank owned life insurance
Deferred tax assets, net
Lease right-of-use asset
Other assets
Total assets
$
$
LIABILITIES:
Deposits:
Non-interest bearing demand deposits
$
$
Savings and money market deposits
Interest-bearing demand deposits
Time deposits
Total deposits
Federal Home Loan Bank advances
Lease liability
Accrued interest and other liabilities
Total liabilities
Commitments and contingencies (See Notes 5 and 11)
(nil)
(nil)
STOCKHOLDERS' EQUITY:
Preferred stock - Class C; $
authorized;
-
-
Preferred stock - Class D; $
authorized;
-
-
Preferred stock - Class E; $
authorized;
-
-
Common stock - Class A Voting; $
outstanding as of June 30, 2025,
Common stock - Class B Non-voting; $
outstanding as of June 30, 2025 and December 31, 2024
-
-
Additional paid-in capital on common stock
Accumulated deficit
(56,025 )
(67,813 )
Accumulated other comprehensive loss
(41,752 )
(44,534 )
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Table of Contents
4 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Unaudited
(Dollars in thousands, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Interest income:
$
$
$
$
Interest expense:
Interest-bearing demand deposits
Savings and money market deposits
Provision for credit losses
Non-interest income:
-
-
Non-interest expense:
Income tax expense
$
$
$
$
Per share information:
Net income per share, basic
$
$
$
$
Net income per share, diluted
$
$
$
$
Cash dividends declared
$
$
$
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Table of Contents
5 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Comprehensive Income - Unaudited
(Dollars in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2025
2024
2025
2024
Net income
$
$
$
$
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities
(895 )
(1,224 )
Reclassification adjustment for amortization of net unrealized losses on
securities transferred from available-for-sale to held-to-maturity
Reclassification adjustment for gain included in net income
-
(14 )
-
(14 )
Unrealized gain (loss) on cash flow hedge
(28 )
(186 )
Tax benefit (expense)
(251 )
(944 )
Total other comprehensive income (loss), net of tax
(639 )
(415 )
Total comprehensive income
$
$
$
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Table of Contents
6 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Changes in Stockholders’ Equity - Unaudited
(Dollars in thousands, except per share data)
Common Stock
Additional Paid-in
Capital on Common
Stock
Accumulated
Deficit
Accumulated Other
Comprehensive
Loss
Shares
Par Value
Total
Stockholders'
Equity
Balance at March 31, 2025
$
$
$
(62,160 )
$
(41,113 )
$
Net income
-
-
-
-
Other comprehensive loss
-
-
-
-
(639 )
(639 )
Exercise of stock options
-
-
Dividend payment
-
-
-
(2,005 )
-
(2,005 )
Stock-based compensation
-
-
-
-
Balance at June 30, 2025
$
$
$
(56,025 )
$
(41,752 )
$
Balance at March 31, 2024
$
$
$
(84,952 )
$
(45,427 )
$
Net income
-
-
-
-
Other comprehensive income
-
-
-
-
Repurchase of Class A common stock
(25,000 )
(25 )
(275 )
-
-
(300 )
Restricted stock issued
(6 )
-
-
-
Dividend payment
-
-
-
(1,017 )
-
(1,017 )
Stock-based compensation
-
-
-
-
Balance at June 30, 2024
$
$
$
(79,760 )
$
(44,686 )
$
Table of Contents
7 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Common Stock
Additional Paid-in
Capital on Common
Stock
Accumulated
Deficit
Accumulated Other
Comprehensive
Loss
Shares
Par Value
Total
Stockholders'
Equity
Balance at December 31, 2024
$
$
$
(67,813 )
$
(44,534 )
$
Net income
-
-
-
-
Other comprehensive income
-
-
-
-
Repurchase of Class A common stock
(9,671 )
(10 )
(164 )
-
-
(174 )
Restricted stock issued
(124 )
-
-
-
Restricted stock forfeiture
-
-
-
-
-
-
Exercise of stock options
-
-
Dividend payment
-
-
-
(4,010 )
-
(4,010 )
Stock-based compensation
-
-
-
-
Balance at June 30, 2025
$
$
$
(56,025 )
$
(41,752 )
$
Balance at December 31, 2023
(88,548 )
(44,271 )
Net income
-
-
-
-
Other comprehensive loss
-
-
-
-
(415 )
(415 )
Repurchase of Class A common stock
(32,100 )
(32 )
(348 )
-
-
(380 )
Restricted stock issued
(58 )
-
-
-
Restricted stock forfeiture
(8,625 )
(8 )
-
-
-
Exercise of stock options
-
-
Dividend payment
-
-
-
(2,033 )
-
(2,033 )
Stock-based compensation
-
-
-
-
Balance at June 30, 2024
$
$
$
(79,760 )
$
(44,686 )
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
8 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
Six Months Ended June 30,
2025
2024
Cash flows from operating activities:
Net income
$
$
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
Depreciation and amortization
Accretion of premiums on securities, net
(728 )
(228 )
Amortization of deferred loan fees, net
Stock-based compensation
Gain on sale of available for sale securities, net
-
(14 )
Gain on sale of loans held for sale, net
(676 )
(484 )
Proceeds from the sale of loans held for sale
Origination of loans held for sale
(9,069 )
(5,565 )
Increase in cash surrender value of bank owned life insurance
(955 )
(826 )
Decrease in deferred tax assets
Net change in operating assets and liabilities:
Accrued interest receivable
(340 )
(850 )
Other assets
(6,586 )
(1,198 )
Accrued interest and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from maturities and pay-downs of investment securities held to maturity
Purchase of investment securities available for sale
(31,676 )
(52,449 )
Proceeds from maturities and pay-downs of investment securities available for sale
Proceeds from sales of investment securities available for sale
-
Net increase in loans held for investment
(71,439 )
(43,821 )
Purchase of loans held for investment
(70,015 )
(44,691 )
Additions to premises and equipment
(94 )
(178 )
Purchase of bank owned life insurance
(4,000 )
-
Proceeds from the redemption of Federal Home Loan Bank stock
Purchase of Federal Home Loan Bank stock
(5,727 )
(177 )
Net cash used in investment activities
(157,674 )
(86,680 )
Cash flows from financing activities:
Proceeds from issuance of Class A common stock, net
Cash dividends paid
(4,010 )
(2,033 )
Repurchase of Class A common stock
(174 )
(380 )
Net increase in deposits
Proceeds from FHLB advances
-
Proceeds from other borrowings
-
Repayments on Federal Home Loan Bank advances
(172,000 )
(101,000 )
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
(22,216 )
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
Supplemental disclosure of cash flow information:
Interest paid
$
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
9 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Overview
USCB Financial Holdings, Inc., a Florida corporation incorporated in 2021, is a bank holding company with one direct
wholly owned subsidiary, U.S. Century Bank (the “Bank”), together referred to as “the Company”. The Bank, established in
2002, is a Florida state-chartered, non-member financial institution providing financial services through its banking centers
located in South Florida.
The Bank owns a subsidiary, Florida Peninsula Title LLC, that offers our clients title insurance policies for real estate
transactions closed at the Bank. Licensed in the State of Florida and approved by the Department of Insurance Regulation,
Florida Peninsula Title LLC began operations in 2021.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to
Form 10-Q and do not include all the information and footnotes required by U.S. generally accepted accounting principles
(“U.S. GAAP”) for complete financial statements. All adjustments consisting of normally recurring accruals that, in the
opinion of management, are necessary for a fair presentation of the financial position and results of operations for the
periods presented have been included. These unaudited consolidated financial statements should be read in conjunction
with the Company’s audited consolidated financial statements and related notes appearing in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2024.
Principles of Consolidation
The Company consolidates entities in which it has a controlling financial interest. Intercompany transactions and
balances are eliminated in consolidation.
Use of Estimates
To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts reported in the financial statements. The
most significant estimate impacting the Company’s consolidated financial statements is the allowance for credit losses
(“ACL”).
Reclassifications
Certain amounts in prior period consolidated financial statements have been reclassified to conform to the current
presentation. Reclassifications had no impact on prior period net income or stockholders’ equity.
Recently Issued Accounting Standards
Adoption of New Accounting Standards
Improvements to Income Tax Disclosures
In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures. This ASU pertains to disclosures regarding effective tax rates and cash income
taxes paid with the goal of providing stakeholders with more transparent and relevant information. This ASU is effective for
public business entities for annual periods beginning after December 15, 2024. The Company adopted this ASU 2023-09
effective January 1, 2025. The adoption of this ASU did not have a material impact on the Company’s consolidated financial
statements.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
10 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
2. INVESTMENT SECURITIES
The following tables present a summary of the amortized cost, unrealized or unrecognized gains and losses, and fair
value of investment securities at the dates indicated (in thousands):
June 30, 2025
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
$
$
(1,476 )
$
Collateralized mortgage obligations
(20,748 )
Mortgage-backed securities - residential
(11,024 )
Mortgage-backed securities - commercial
(8,261 )
Municipal securities
-
(5,054 )
Bank subordinated debt securities
(657 )
$
$
$
(47,220 )
$
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
$
$
(4,154 )
$
Collateralized mortgage obligations
(6,641 )
Mortgage-backed securities - residential
(4,168 )
Mortgage-backed securities - commercial
-
(1,293 )
Corporate bonds
-
(221 )
$
$
$
(16,477 )
$
Allowance for credit losses - securities held-to-maturity
(7 )
Securities held-to maturity, net of allowance for credit losses
$
December 31, 2024
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
$
$
(1,668 )
$
Collateralized mortgage obligations
(22,918 )
Mortgage-backed securities - residential
(12,063 )
Mortgage-backed securities - commercial
(7,905 )
Municipal securities
-
(5,614 )
Bank subordinated debt securities
(1,044 )
$
$
$
(51,212 )
$
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
$
-
$
(5,094 )
$
Collateralized mortgage obligations
(7,785 )
Mortgage-backed securities - residential
(4,613 )
Mortgage-backed securities - commercial
-
(1,385 )
Corporate bonds
-
(393 )
$
$
$
(19,270 )
$
Allowance for credit losses - securities held-to-maturity
(6 )
Securities held-to maturity, net of allowance for credit losses
$
Transfers of debt securities into the HTM category from the AFS category are made at fair value as of the date of
transfer. The unrealized gain or loss at the date of transfer is retained in AOCI and in the carrying value of the HTM securities
and there is no impact to net income. Such amounts are amortized over the remaining life of the security. The Company
made
During the quarter ended June 30, 2025 there were
For the three months ended June 30, 2025, total amortization out of AOCI for net unrealized losses on securities transferred
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
11 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
in 2022 from AFS to HTM was $
the fair value of the securities was $
For the quarter ended June 30, 2024, total amortization out of AOCI for the net unrealized losses on securities
transferred from AFS to HTM was $
2024, the fair value of the securities was $
$
The measurement of expected credit losses under the current expected credit loss (“CECL”) methodology is applicable
to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities.
CECL requires a loss reserve for securities classified as held-to-maturity (“HTM”). The reserve should reflect historical
credit performance as well as the impact of projected economic forecasts. For U.S. Government bonds and U.S. Agency
issued bonds classified as HTM, the explicit guarantee of the U.S. Government is sufficient to conclude that a credit loss
reserve is not required. The reserve requirement is for three primary assets groups: municipal bonds, corporate bonds, and
non-agency securitizations. The Company calculates quarterly the loss reserve utilizing Moody’s ImpairmentStudio. The
CECL measurement for investment securities incorporates historical data, containing defaults and recoveries information,
and Moody’s baseline economic forecast. The solution uses the probability of default/loss given default (“PD/LGD”)
approach. PD represents the likelihood a borrower will default. Within the Moody’s model, this is determined using historical
default data, adjusted for the current economic environment. LGD projects the expected loss if a borrower were to default.
The Company monitors the credit quality of HTM securities through the use of credit ratings. Credit ratings are monitored
by the Company on at least a quarterly basis. As of June 30, 2025 and December 31, 2024, all HTM securities held by the
Company were rated investment grade.
At June 30, 2025 HTM securities included $
mortgage-backed securities. Because of the explicit and/or implicit guarantee on these bonds, the Company holds
reserves on these holdings. The remaining portion of the HTM portfolio is made up of $
corporate bonds. The required reserve for these holdings is determined each quarter using the model described above. For
the portion of the HTM exposed to non-government credit risk, the Company utilized the PD/LGD methodology to estimate
a $
less the ACL related to these securities.
The Company’s investment portfolio includes Available-for-Sale (“AFS”) debt securities, which are carried at fair value
with unrealized gains and losses recognized in accumulated other comprehensive income (loss) (“AOCI”), net of applicable
taxes. The Company evaluates whether the declines in fair value are 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,
bond vintage, remaining payment terms, prepayment speeds and analysis of macro-economic conditions. When the fair
value of an AFS security is less than its amortized cost and the decline is attributable to credit-related factors, an allowance
for credit losses (“ACL”) is recorded. As a result of this evaluation, the Company concluded that no allowance was required
on AFS securities as of June 30, 2025.
Information pertaining to investment securities with gross unrealized losses, aggregated by investment category and
length of time that those individual securities have been in a continuous loss position, are presented as of the following
dates (in thousands):
June 30, 2025
Less than 12 months
12 months or more
Total
Available-for-Sale:
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
$
(48 )
$
$
(1,428 )
$
$
(1,476 )
Collateralized mortgage obligations
-
-
(20,748 )
(20,748 )
Mortgage-backed securities - residential
(29 )
(10,995 )
(11,024 )
Mortgage-backed securities - commercial
(1,637 )
(6,624 )
(8,261 )
Municipal securities
-
-
(5,054 )
(5,054 )
Bank subordinated debt securities
(18 )
(639 )
(657 )
$
$
(1,732 )
$
$
(45,488 )
$
$
(47,220 )
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
12 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
December 31, 2024
Less than 12 months
12 months or more
Total
Available-for-sale:
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
$
(76 )
$
$
(1,592 )
$
$
(1,668 )
Collateralized mortgage obligations
(23 )
(22,895 )
(22,918 )
Mortgage-backed securities - residential
(11 )
(12,052 )
(12,063 )
Mortgage-backed securities - commercial
(1,265 )
(6,640 )
(7,905 )
Municipal securities
-
-
(5,614 )
(5,614 )
Bank subordinated debt securities
-
-
(1,044 )
(1,044 )
$
$
(1,375 )
$
$
(49,837 )
$
$
(51,212 )
The contractual cash flows for these securities are guaranteed by U.S. government sponsored entities. The municipal
bonds are of high credit quality and the declines in fair value are not due to credit quality. Based on the assessment of these
mitigating factors, management believed that the unrealized losses on these debt security holdings are a function of changes
in investment spreads and interest rate movements and not changes in credit quality.
Gains and losses on the sale of securities are recorded on the trade date and are determined on the specific
identification basis. There were
six months ended June 30, 2025. The following table presents the proceeds, realized gross gains and realized gross losses
on sales and calls of AFS debt securities for the three and six months ended June 30, 2024 (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
Available-for-sale:
2025
2024
2025
2024
Proceeds from sale and call of securities
$
$
$
$
Gross gains
$
-
$
$
-
$
Gross losses
-
(181 )
-
(181 )
Net realized gain
$
-
$
$
-
$
The amortized cost and fair value of investment securities, by contractual maturity, are shown below as of the date
indicated (in thousands). Actual maturities may differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown
separately.
Available-for-sale
Held-to-maturity
June 30, 2025:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Due within one year
$
-
$
-
$
$
Due after one year through five years
-
-
Due after five years through ten years
-
-
Due after ten years
-
-
U.S. Government Agency
Collateralized mortgage obligations
Mortgage-backed securities - residential
Mortgage-backed securities - commercial
$
$
$
$
At June 30, 2025, there were no securities held in the portfolio from any one issuer in an amount greater than 10% of
total stockholders’ equity other than the U.S. Government and U.S. Government Agency securities. All the collateralized
mortgage obligations and mortgage-backed securities at June 30, 2025 and December 31, 2024 were issued by U.S.
Government entities.
The Bank is a Qualified Public Depository (“QPD”) with the State of Florida. As a QPD, the Bank has the legal authority
to maintain public deposits from cities, municipalities, and the State of Florida. These public deposits are secured by
securities pledged to the State of Florida at a ratio of
% of the quarter daily average balance at June 30, 2025 and
%
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
13 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
at December 31, 2024. The Bank must also maintain a minimum amount of pledged securities to be in the public funds
program.
As of June 30, 2025, the Bank had a total of $
the State of Florida for these public funds were
As of December 31, 2024, the Bank had a total of $
to the State of Florida for these public funds were
3. LOANS
The following table is a summary of the distribution of loans held for investment by type (dollars in thousands):
June 30, 2025
December 31, 2024
Total
Percent of
Total
Total
Percent of
Total
Residential Real Estate
$
%
$
%
Commercial Real Estate
%
%
Commercial and Industrial
%
%
Correspondent Banks
%
%
Consumer and Other
%
%
Total gross loans
%
%
Plus: Deferred fees/costs
Total loans net of deferred fees/costs
Less: Allowance for credit losses
Total net loans
$
$
At June 30, 2025 and December 31, 2024, the Company had $
commercial real estate and residential mortgage loans pledged as collateral for lines of credit with the FHLB of Atlanta and
the Federal Reserve Bank of Atlanta.
Allowance for Credit Losses
In general, the Company utilizes the Discounted Cash Flow (“DCF”) method or the Weighted-Average Remaining
Maturity (“WARM”) methodology to estimate the quantitative portion of the ACL for loan pools. The DCF method uses a loss
driver analysis (“LDA”) and discounted cash flow analyses. Management engaged advisors and consultants with expertise
in CECL model development to assist in development of a LDA based on regression models and supportable forecast. Peer
group data obtained from FFIEC Call Report filings is used to inform regression analyses to quantify the impact of
reasonable and supportable forecasts in projective models. Economic forecasts applied to regression models to estimate
probability of default for loan receivables use at least one of the following economic indicators: civilian unemployment rate
(national), real gross domestic product growth (national GDP) or the House Price Index (“HPI”). For each of the segments
in which the WARM methodology is used, the long-term average loss rate is calculated and applied on a quarterly basis for
the remaining life of the pool. Adjustments for economic expectations are made through qualitative factors.
Qualitative factors (“Q-Factors”) used in the ACL methodology include:
•
•
•
•
•
•
•
•
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
14 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Changes in the ACL for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2025
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(1)
Recoveries
-
-
Charge-offs
-
-
-
-
(710 )
(710 )
Ending Balance
$
$
$
$
$
$
Six Months Ended June 30, 2025
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(2)
(131 )
Recoveries
-
-
Charge-offs
-
-
-
-
(723 )
(723 )
Ending Balance
$
$
$
$
$
$
(1) Provision for credit losses excludes a $
other liabilities and a $
(2) Provision for credit losses excludes a $
other liabilities and a $
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2024
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(1)
(30 )
(25 )
Recoveries
-
-
-
Charge-offs
-
-
-
-
(5 )
(5 )
Ending Balance
$
$
$
$
$
$
Six Months Ended June 30, 2024
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(2)
(94 )
(19 )
(4 )
Recoveries
-
-
Charge-offs
-
-
-
-
(10 )
(10 )
Ending Balance
$
$
$
$
$
$
(1) Provision for credit losses excludes a $
liabilities and a $
(2) Provision for credit losses excludes a $
liabilities and $
At June 30, 2025, the ACL for loans was $
of $
Charge offs related to loans for the three months ended June 30, 2025 were $
originated in 2025. Charge offs for the six months ended June 30, 2025 were $
thousand originated in 2025.
Charge offs related to loans for the three months ended June 30, 2024 totaled $
2024. Charge offs for the six months ended June 30, 2024 totaled $
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
15 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The ACL and the outstanding balances in the specified loan categories as of June 30, 2025 and December 31, 2024
are as follows (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Correspondent
Banks
Consumer
and Other
Total
June 30, 2025:
Allowance for credit losses:
Individually evaluated
$
$
-
$
$
-
$
-
$
Collectively evaluated
Balances, end of period
$
$
$
$
$
$
Loans:
Individually evaluated
$
$
-
$
$
-
$
-
$
Collectively evaluated
Balances, end of period
$
$
$
$
$
$
December 31, 2024:
Allowance for credit losses:
Individually evaluated
$
$
-
$
$
-
$
$
Collectively evaluated
Balances, end of period
$
$
$
$
$
$
Loans:
Individually evaluated
$
$
-
$
$
-
$
$
Collectively evaluated
Balances, end of period
$
$
$
$
$
$
Credit Quality Indicators
The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the
loan agreement based on relevant information which may include: current financial information on the borrower, historical
payment experience, credit documentation and other current economic trends. Internal credit risk grades are evaluated
periodically.
The Company's internally assigned credit risk grades are as follows:
Pass
– Loans indicate different levels of satisfactory financial condition and performance.
Special Mention
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
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.
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
16 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Loan credit exposures by internally assigned grades are presented below for the periods indicated (in thousands):
As of June 30, 2025
Term Loans by Origination Year
Revolving
Loans
Total
2025
2024
2023
2022
2021
Prior
Residential real estate
Pass
$
$
$
$
$
$
$
$
Special Mention
-
-
-
-
-
-
Substandard
-
-
-
-
-
Total
Commercial real estate
Pass
Special Mention
-
-
-
-
-
Substandard
-
-
-
-
-
Total
Commercial and
industrial
Pass
Special Mention
-
-
-
-
-
Substandard
-
-
-
-
Total
Correspondent banks
Pass
-
-
-
-
-
Total
-
-
-
-
-
Consumer and other
loans
Pass
Total
Total Loans
Pass
Special Mention
-
-
-
Substandard
-
-
-
Doubtful
-
-
-
-
-
-
-
-
Total
$
$
$
$
$
$
$
$
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
17 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
As of December 31, 2024
Term Loans by Origination Year
Revolving
Loans
Total
2024
2023
2022
2021
2020
Prior
Residential real estate
Pass
$
$
$
$
$
$
$
$
Substandard
-
-
-
-
-
-
Total
Commercial real estate
Pass
Substandard
-
-
-
-
-
Total
Commercial and
industrial
Pass
Substandard
-
-
-
-
Total
Correspondent banks
Pass
-
-
-
-
-
-
Total
-
-
-
-
-
-
Consumer and other
loans
Pass
Substandard
-
-
-
-
-
-
Total
Total Loans
Pass
Special Mention
-
-
-
-
-
-
-
-
Substandard
-
-
Doubtful
-
-
-
-
-
-
-
-
Total
$
$
$
$
$
$
$
$
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
18 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Loan Aging
The Company also considers the performance of loans in grading and in evaluating the credit quality of the loan portfolio.
The Company analyzes credit quality and loan grades based on payment performance and the aging status of the loan.
The following tables include an aging analysis of accruing loans and total non-accruing loans as of June 30, 2025 and
December 31, 2024 (in thousands):
Accruing
As of June 30, 2025
Current
Past Due 30-
89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
$
-
$
-
$
$
-
$
1-4 family residential
-
Condo residential
-
-
Commercial real estate:
Land and construction
-
-
-
Multi-family residential
-
-
-
Condo commercial
-
-
-
Commercial property
-
-
-
-
Commercial and industrial:
Secured
-
Unsecured
-
-
-
-
Correspondent banks
-
-
-
Consumer and other
-
-
-
Total
$
$
$
-
$
$
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
19 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Accruing
As of December 31, 2024:
Current
Past Due
30-89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
$
-
$
-
$
$
-
$
1-4 family residential
-
-
Condo residential
-
-
Commercial real estate:
Land and construction
-
-
-
Multi-family residential
-
-
-
Condo commercial
-
-
-
Commercial property
-
-
-
-
Commercial and industrial:
Secured
-
Unsecured
-
-
-
-
Correspondent banks
-
-
-
Consumer and other
-
-
Total
$
$
$
-
$
$
$
Non-accrual Status
The following table includes the amortized cost basis of loans on non-accrual status as of June 30, 2025 and as of
December 31, 2024 (in thousands):
June 30, 2025
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
$
-
$
Commercial and industrial
Total
$
$
$
December 31, 2024
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
$
-
$
Commercial and industrial
-
Consumer and other
-
Total
$
$
$
Accrued interest receivable is excluded from the estimate of credit losses. There was
attributable to non-accrual loans outstanding during the three months ended June 30, 2025 and 2024. Interest income on
these loans for the three months ended June 30, 2025 and 2024, would have been approximately $
thousand, respectively, had these loans performed in accordance with their original terms. Interest income on these loans
for the six months ended June 30, 2025 and 2024, would have been approximately $
respectively, had these loans performed in accordance with their original terms.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
20 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Collateral-Dependent Loans
A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is
expected to be provided substantially through the sale or operation of the collateral.
The following table includes the amortized cost basis of collateral dependent loans related to borrowers experiencing
financial difficulty by type of collateral as of June 30, 2025 and December 31, 2024 (in thousands):
June 30, 2025
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
$
-
Total
$
$
-
December 31, 2024
Collateral Type
Boat
Specific Reserve
Consumer and other
$
$
Total
$
$
Management evaluates on an individual basis collateral dependent loans using the fair value of the collateral method
to determine if a credit loss reserve is necessary. The ACL is measured based on the difference of the fair value of the
collateral and the recorded investment (amortized cost basis of the loan). If the final collateral valuation is less than the
recorded investment of the loan, a reserve amount is calculated. If the collateral valuation is equal to or greater than the
recorded investment of the loan, no reserve is determined.
Loan Modifications to Borrowers Experiencing Financial Difficulties
The Company had no new modifications to borrowers experiencing financial difficulties for the three and six months
ended June 30, 2025 and three months ended June 30, 2024. The Company had one new modification to borrowers
experiencing financial difficulties for the six months ended June 30, 2024. The following table presents newly restructured
loans, by type of modification, which occurred during the six months ended June 30, 2024 (in thousands):
Recorded Investment Prior to Modification
Recorded Investment After Modification
Number of
Loans
Combination
Modifications
Total
Modifications
Number of
Loans
Combination
Modifications
Total
Modifications
Commercial and industrial
$
$
$
$
Total
$
$
$
$
The loan modification for the borrower experiencing financial difficulty at June 30, 2024 included a combination of rate
and maturity modifications. The rate was modified from a variable rate to a fixed rate of
%. The original maturity of
September 2029 was extended to January 2034.
There were
June 30, 2025 and June 30, 2024.
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
21 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
4. INCOME TAXES
The Company’s provision for income taxes is presented in the following table for the periods indicated (in thousands):
Six Months Ended June 30,
2025
2024
Current:
Federal
$
-
$
-
State
-
-
Total current
-
-
Deferred:
Federal
State
Total deferred
Total tax expense
$
$
The actual income tax expense for the six months ended June 30, 2025 and 2024 differs from the statutory tax expense
for the periods (computed by applying the U.S. federal corporate tax rate of
% for both 2025 and 2024 periods to income
before provision for income taxes) as follows (in thousands):
Six Months Ended June 30,
2025
2024
Federal taxes at statutory rate
$
$
State income taxes, net of federal tax benefit
Bank owned life insurance
(242 )
(210 )
Total tax expense
$
$
The Company’s deferred tax assets and deferred tax liabilities as of the dates indicated were (in thousands):
June 30, 2025
December 31, 2024
Deferred tax assets:
Net operating loss
$
$
Allowance for credit losses
Lease liability
Unrealized losses on available for sale securities
Depreciable property
Equity compensation
Accruals
Other, net
Deferred tax assets:
Deferred tax liabilities:
Deferred loan cost
(1,807 )
(1,934 )
Lease right of use asset
(1,786 )
(2,142 )
Deferred expenses
(323 )
(224 )
Cash flow hedge
(34 )
(81 )
Deferred tax liabilities
(3,950 )
(4,381 )
Net deferred tax assets
$
$
The Company has approximately $
expiring in various amounts between 2031 and 2036 and which are limited to offset, to the extent permitted, future taxable
earnings of the Company.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those temporary differences become deductible.
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
22 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment.
The major tax jurisdictions where the Company files income tax returns are the U.S. federal jurisdiction and the State
of Florida. With few exceptions, the Company is no longer subject to U.S. federal and state income tax return examinations
by tax authorities for years before 2022.
For the six months ended June 30, 2025 and 2024, the Company did
t have any unrecognized tax benefits as a result
of tax positions taken during a prior period or during the current period. Additionally,
as a result of tax uncertainties.
5. OFF-BALANCE SHEET ARRANGEMENTS
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to
meet the financial needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial
instruments include unfunded commitments under lines of credit, commitments to extend credit, standby and commercial
letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the Company’s Consolidated Balance Sheets. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet instruments.
The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instruments
for unused lines of credit, and standby letters of credit is represented by the contractual amount of these commitments.
A summary of the amounts of the Company's financial instruments with off-balance sheet risk are shown below at
June 30, 2025 and December 31, 2024 (in thousands):
June 30, 2025
December 31, 2024
Commitments to grant loans and unfunded lines of credit
$
$
Standby and commercial letters of credit
Total
$
$
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other termination clauses.
Unfunded lines of credit and revolving credit lines are commitments for possible future extensions of credit to existing
customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and ultimately may
not be drawn upon to the total extent to which the Company committed.
Standby and commercial letters of credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing
arrangements. Essentially all letters of credit have fixed maturity dates and since many of them expire without being drawn
upon, they do not generally present a significant liquidity risk to the Company.
6. DERIVATIVES
The Company utilizes interest rate swap agreements as part of its asset-liability management strategy to help manage
its interest rate risk exposure. The notional amount of the interest rate swaps does not represent actual amounts exchanged
by the parties. The amounts exchanged are determined by reference to the notional amount and the other terms of the
individual interest rate swap agreements.
Interest Rate Swaps Designated as a Cash Flow Hedge
As of June 30, 2025, the Company had
million that were designated as cash flow hedges of certificates of deposit. The interest rate swap agreements have an
average maturity of
%, and with a weighted average 3-month
compound SOFR being received.
As of December 31, 2024, the Company had
$
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
23 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
average maturity of
%, and with a weighted average 3-month
compound SOFR being received.
The changes in fair value of these interest rate swaps are recorded in other assets or accrued interest and other liabilities
with a corresponding recognition in other comprehensive income (loss) and subsequently reclassified to earnings when
gains or losses are realized.
Interest Rate Swaps Designated as Fair Value Hedge
The Company had
quarter ended September 30, 2024, the Company unwound
amount of $
liability management strategies. The early termination fee to unwind the fair value swaps totaled $
fee allocated to each loan category is being amortized over the remining life of the hedge loans on a monthly straight-line
basis with full recognition of the unamortized cost upon the early payoff of the hedge loan. The amortization of the
termination fee is reflected in the loan interest income line in the Consolidated Statement of Operations . The remaining
unamortized termination fee as of June 30, 2025 was $
were between 2025 and 2026. The fair value interest rate swap agreements had an average maturity of
date of their termination.
At June 30, 2024, the Company had
million that were designated as fair value hedges on loans. The interest rate swap agreements have an average maturity of
%, with the weighted average 3-month compound SOFR being
received.
Interest Rate Swaps
The Company enters into interest rate swaps with its loan customers. The Company had
with loan customers with an aggregate notional amount of $
December 31, 2024, respectively. At June 30, 2025, these interest rate swaps mature between 2025 and 2051. The
Company entered into corresponding and offsetting derivatives with third parties. The fair value of the liability created by
these derivatives requires the Company to provide the counterparty with funds to be held as collateral which the Company
reports as other assets under the Consolidated Balance Sheets. While these derivatives represent economic hedges, they
do not qualify as hedges for accounting purposes.
The following table reflects the Company’s interest rate swaps at the dates indicated (in thousands):
Fair Value
Notional
Amount
Collateral
Amount
Balance Sheet Location
Asset
Liability
June 30, 2025:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
$
-
Other assets
$
$
-
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
$
Other assets/Other liabilities
$
$
December 31, 2024:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
$
-
Other assets
$
$
-
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
$
Other assets/Other liabilities
$
$
7. FAIR VALUE MEASUREMENTS
Determination of Fair Value
The Company uses fair value measurements to record fair-value adjustments to certain assets and liabilities and to
determine fair value disclosures. In accordance with the fair value measurements accounting guidance, the fair value of a
financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
24 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
between market participants at the measurement date. Fair value is best determined based upon quoted market prices.
However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases
where quoted market prices are not available, fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates
of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction
(that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current
market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a
change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining
the price at which willing market participants would transact at the measurement date under current market conditions
depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point
within the range that is most representative of fair value under current market conditions.
Fair Value Hierarchy
In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured
at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the
assumptions used to determine fair value.
Level 1
entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and
equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing
sources for market transactions involving identical assets or liabilities.
Level 2
asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the asset or liability.
Level 3
significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments
whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as
well as instruments for which determination of fair value requires significant management judgment or estimation.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement.
Items Measured at Fair Value on a Recurring Basis
AFS investment securities:
for such securities, management generally relies on prices obtained from independent vendors or third-party broker-dealers.
Management reviews pricing methodologies provided by the vendors and third-party broker-dealers in order to determine if
observable market information is being utilized. Securities measured with pricing provided by independent vendors or third-
party broker-dealers are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar
securities, pricing models or discounted cash flow analyses utilizing inputs observable in the market where available.
Derivatives:
classified within Level 2 of the hierarchy.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
25 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The following table represents the Company's assets and liabilities measured at fair value on a recurring basis at
June 30, 2025 and December 31, 2024 for each of the fair value hierarchy levels (in thousands):
June 30, 2025
December 31, 2024
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Investment securities available for sale:
U.S. Government Agency
$
-
$
$
-
$
$
-
$
$
-
$
Collateralized mortgage obligations
-
-
-
-
Mortgage-backed securities - residential
-
-
-
-
Mortgage-backed securities - commercial
-
-
-
-
Municipal securities
-
-
-
-
Bank subordinated debt securities
-
-
-
-
Total
-
-
-
-
Derivative assets
-
-
-
-
Total assets at fair value
$
-
$
$
-
$
$
-
$
$
-
$
Derivative liabilities
$
-
$
$
-
$
$
-
$
$
-
$
Total liabilities at fair value
$
-
$
$
-
$
$
-
$
$
-
$
Items Not Measured at Fair Value
The following table presents the carrying amounts and estimated fair values of financial instruments not carried at fair
value as of June 30, 2025 and December 31, 2024 (in thousands):
Fair Value Hierarchy
Carrying
Amount
Level 1
Level 2
Level 3
Fair Value
Amount
June 30, 2025:
Financial Assets:
Cash and due from banks
$
$
$
-
$
-
$
Interest-bearing deposits in banks
$
$
$
-
$
-
$
Investment securities held to maturity, net
$
$
-
$
$
-
$
Loans held for investment, net
$
$
-
$
-
$
$
Accrued interest receivable
$
$
-
$
$
$
Financial Liabilities:
Non-interest bearing demand deposits
$
$
$
-
$
-
$
Savings and money market deposits
$
$
$
-
$
-
$
Interest-bearing demand deposits
$
$
$
-
$
-
$
Time deposits
$
$
-
$
$
-
$
FHLB advances and other borrowings
$
$
-
$
$
-
$
Accrued interest payable
$
$
-
$
$
-
$
December 31, 2024:
Financial Assets:
Cash and due from banks
$
$
$
-
$
-
$
Interest-bearing deposits in banks
$
$
$
-
$
-
$
Investment securities held to maturity
$
$
-
$
$
-
$
Loans held for investment, net
$
$
-
$
-
$
$
Accrued interest receivable
$
$
-
$
$
$
Financial Liabilities:
Non-interest bearing demand deposits
$
$
$
-
$
-
$
Savings and money market deposits
$
$
$
-
$
-
$
Interest-bearing demand deposits
$
$
$
-
$
-
$
Time deposits
$
$
-
$
$
-
$
FHLB advances
$
$
-
$
$
-
$
Accrued interest payable
$
$
-
$
$
-
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
26 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
8. STOCKHOLDERS’ EQUITY
Common Stock
There were
June 30, 2025, the Company issued
pursuant to the Company’s 2015 equity incentive plan.
During the second quarter 2024, the Company issued
stock awards pursuant to the Company’s 2015 equity incentive plan. For the six month ended June 30, 2024 the Company
issued
equity incentive plan.
During the first quarter 2025, the Company repurchased
cost per share of $
. The aggregate purchase price for these transactions was approximately $
transaction costs. These repurchases were made pursuant to the Company’s publicly announced repurchase programs.
There were
authorized for repurchase under the Company’s two stock repurchase programs.
Shares of the Company’s Class A common stock issued and outstanding as of June 30, 2025 and December 31, 2024
were
, respectively.
Dividends
Declaration of dividends by the Board is required before dividend payments are made. The Company is limited in the
amount of cash dividends that it may pay. Payment of dividends is generally limited to the Company’s net income of the
current year combined with the Company’s retained income for the preceding two years, as defined by state banking
regulations. However, for any dividend declaration, the Company must consider additional factors such as the amount of
current period net income, liquidity, asset quality, capital adequacy and economic conditions at the Bank since the Bank is
the primary source of funds to fund dividends by the Company. It is likely that these factors would further limit the amount
of dividends which the Company could declare. In addition, bank regulators have the authority to prohibit banks and bank
holding companies from paying dividends if they deem such payment to be an unsafe or unsound practice.
As of June 30, 2025, the Company was not subject to any formal supervisory restrictions on its ability to pay dividends
but will notify the Federal Reserve Bank of Atlanta in advance of any proposed dividend to the Company's shareholders in
light of the Bank's negative retained earnings. In addition, under applicable FDIC regulations and policy, because the Bank
has negative retained earnings, it must obtain the prior approval of the FDIC before effecting a cash dividend or other capital
distribution.
On January 21, 2025, the Board of Directors declared a quarterly cash dividend. The quarterly dividend for the first
quarter of 2025 was $
close of business on February 14, 2025. The aggregate distribution in connection with the first quarter 2025 dividend was
$
June 5, 2025, to stockholders of record as of close of business on May 15, 2025. The aggregate distribution in connection
with the second quarter dividend was $
The quarterly dividend for the first quarter of 2024 was $
to stockholders of record as of the close of business on February 15, 2024. The aggregate distribution in connection with
the first quarter dividend was $
common stock, paid on June 5, 2024, to stockholders of record as of the close of business on May 15, 2024. The aggregate
distribution in connection with the second quarter dividend was $
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
27 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The following table details the dividends declared and paid by the Company for the periods presented:
Six Months Ended June 30, 2025
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
$
-
$
$
$
Six Months Ended June 30, 2024
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
$
-
$
$
$
The Company and the Bank exceeded all regulatory capital requirements and remained above “well-capitalized”
guidelines as of June 30, 2025 and December 31, 2024. At June 30, 2025, the total risk -based capital ratios for the Bank
was
%. The Company is not subject to regulatory capital ratios imposed by Basel III on bank holding companies
because the Company is deemed to be a small bank holding company.
See Note 13, Subsequent Events, for information regarding dividends declared in July 2025.
9. EARNINGS PER SHARE
Earnings per share (“EPS”) for common stock is calculated using the two-class method required for participating
securities. Basic EPS is calculated by dividing net income available to common shareholders by the weighted-average
number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is
computed by dividing net income available to common shareholders by the weighted-average number of common shares
outstanding for the period and the weighted-average number of dilutive common stock equivalents outstanding for the period
determined using the treasury-stock method. For purposes of this calculation, common stock equivalents include common
stock options and are only included in the calculation of diluted EPS when their effect is dilutive.
The following table reflects the calculation of net income available to common shareholders for the three and six months
ended June 30, 2025 and 2024 (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Net Income
$
$
$
$
Net income available to common shareholders
$
$
$
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
28 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The following table reflects the calculation of basic and diluted earnings per common share class for the three and six
months ended June 30, 2025 and 2024 (in thousands, except share amounts):
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Class A
Class A
Basic EPS
Numerator:
Net income available to common shares
$
$
$
$
Denominator:
Weighted average shares outstanding
Earnings per share, basic
$
$
$
$
Diluted EPS
Numerator:
Net income available to common shares
$
$
$
$
Denominator:
Weighted average shares outstanding for basic EPS
Add: Dilutive effects of assumed exercises of stock options
Weighted avg. shares including dilutive potential common shares
Earnings per share, diluted
$
$
$
$
Anti-dilutive stock options excluded from diluted EPS
Net income has not been allocated to unvested restricted stock awards that are participating securities because the amounts that
would be allocated are not material to net income per share of common stock. Unvested restricted stock awards that are
participating securities represent less than one percent of all of the outstanding shares of common stock for each of the periods
presented.
10. SEGMENT REPORTING
Operating segments are components of an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker (“CODM”) in assessing performance and in deciding how to
allocate resources. The Company’s CODM is the President, Chief Executive Officer, and Chairman of the Board.
The Company through the Bank, its sole direct subsidiary, operates
wide range of personal and business banking products and services, and through a subsidiary of the Bank, offers clients
title insurance policies for real estate transactions closed at the Bank. The Company’s business activities are similar in
their nature, operations and economic characteristics, largely serving commercial and specialty banking clients with
products and services that are offered through similar processes and platforms. Accounting policies for the products and
services referenced here are the same as those described in Note 1, “Summary of Significant Accounting Policies” in this
From 10-Q. The Company’s segment revenue is driven primarily by interest income on loans as well as fee income from
the origination of loans and from fees charged on loans and deposit accounts. Lending activities include loans to
individuals, which primarily consist of home equity lines of credit, residential real estate loans, yacht loans, and consumer
loans, and loans to commercial clients, which include commercial and industrial loans, commercial real estate loans,
investor residential real estate loans, correspondent bank loans, and letters of credit.
The CODM regularly reviews consolidated income and expenses, as presented on the Consolidated Statements of
Operations, in addition to consolidated assets presented on the Consolidated Balance Sheets. The significant segment
expenses that the CODM reviews regularly are interest expense, provision for credit losses, salaries and wages,
employee benefits, and occupancy expense. The CODM evaluates the performance of the segment and allocates
resources based on net income that is also reported on the Consolidated Statements of Operations as consolidated net
income to maximize shareholder value. Additionally, consolidated internal financial information is used by the CODM to
monitor credit quality and credit loss expense. Furthermore, net income, as the measure of profit or loss, is used to
monitor budget versus actual results and to perform competitive analyses that benchmark the Company to competitors.
As a result, the Company has determined that it has only
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
29 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
11. LOSS CONTINGENCIES
Loss contingencies, including claims and legal actions may arise in the ordinary course of business. In the opinion of
management, none of these actions, either individually or in the aggregate, is expected to have a material adverse effect
on the Company’s Consolidated Financial Statements.
12. RELATED PARTY TRANSACTIONS
In the ordinary course of business, principal officers, directors, and affiliates may engage in transactions with the
Company.
Loan Purchases
During the six months ended June 30, 2025 the Bank purchased $
parties. The Bank paid those entities net fees of $
During the year 2024, the Bank purchased $
The Bank paid those entities fees of $
Loan Originations
During the three months ended June 30, 2025, the Bank acted as the lead arranger in a $
extended to an entity deemed to be a related party. As of June 30, 2025, the Bank held an outstanding balance of $
million related to this transaction. In connection with the syndication, the Bank received a
-basis point commitment fee
and will earn a
-basis point annual servicing fee. The other two financial institutions participating in the syndication were
also deemed to be related parties. Although originating loans to related parties is not part of the Company’s standard
policy, this transaction was reviewed by the appropriate departments in accordance with Company procedures. Detailed
analyses were presented to the Board of Directors and the Audit and Risk Committee, and all necessary approvals were
obtained. Additional analysis was conducted to determine that the transaction was executed in the ordinary course of
business and on arm’s-length terms, consistent with the requirements of Regulation O.
There were
months ended March 31, 2025 and for the year ended December 31, 2024.
13. SUBSEQUENT EVENTS
Dividends
On July 21, 2025, the Company announced that its Board of Directors declared its quarterly cash dividend. The quarterly
dividend for the third quarter of 2025 was $
to stockholders of record as of the close of business on August 15, 2025.
Derivatives
In July 2025, the Company entered into a two-year costless collar hedge with a notional amount of $
exposure to interest rate volatility on a three-month brokered CD. The derivative is based on the USD SOFR overnight index
and establishes a cap rate of
% and a floor rate of
%, effectively creating a defined range of interest rate outcomes
without requiring an upfront premium. The hedge was designated as a cash flow hedge under ASC 815, Derivatives and
Hedging, and will be accounted for accordingly. Changes in the fair value of the derivative will be recorded in other
comprehensive income to the extent the hedge remains effective. Management believes this instrument strengthens the
Company’s interest rate risk management strategy by mitigating the impact of rate movements on future cash flows.
In Augus 2025, the Company entered into a two-year costless collar hedge with a notional amount of $
manage exposure to interest rate volatility on a three-month brokered CD. The derivative is based on the USD SOFR
overnight index and establishes a cap rate of
% and a floor rate of
%, effectively creating a defined range of
interest rate outcomes without requiring an upfront premium. The hedge was designated as a cash flow hedge under ASC
815, Derivatives and Hedging, and will be accounted for accordingly. Changes in the fair value of the derivative will be
recorded in other comprehensive income to the extent the hedge remains effective. Management believes this instrument
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USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
30 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
strengthens the Company’s interest rate risk management strategy by mitigating the impact of rate movements on future
cash flows.
Debt Rating
Kroll Bond Rating Agency assigned both the Company and the Bank investment grade debt ratings in July 2025.
Table of Contents
31 USCB Financial Holdings, Inc. Q2 2025 Form 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
the six months ended June 30, 2025. 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 (“2024 Form 10-
K”) filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2024.
This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause
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 2024
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,” “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.
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:
•
operations;
•
•
for credit losses and deferred tax asset valuation allowance;
•
•
jurisdiction where we operate;
•
industry;
•
•
the on-going effects of the Current Expected Credit Losses (“CECL”) standard;
•
risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real
estate, in particular, commercial real estate;
•
•
•
•
growth as well as growth through other means, such as future acquisitions;
•
•
•
•
and net interest margin;
•
•
employee, or third-party fraud and security breaches; and
•
Table of Contents
32 USCB Financial Holdings, Inc. Q2 2025 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, 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
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 2024 Form 10-K and in the reports
the Company filed or will file with the SEC.
Overview
The Company reported net income of $8.1 million or $0.40 per diluted share of common stock for the three months
ended June 30, 2025 compared to $6.2 million or $0.31 per diluted share of common stock for the three months ended June
30, 2024.
On January 21, 2025, the Company’s Board of Directors declared the first quarter cash dividend of $0.10 per share on
the Company’s Class A common stock. The dividend was paid on March 5, 2025 to shareholders of record at the close of
business on February 15, 2025. The aggregate amount distributed in connection with the quarterly cash dividend paid was
$2.0 million. The second quarter cash dividend of $0.10 per share on the Company’s Class A common stock was paid on
June 5, 2025 to shareholders of record at the close of business on May 15, 2025. The aggregate amount distributed in
connection with this dividend was $2.0 million. Additionally, the Company’s Board of Directors declared a cash dividend of
$0.10 per share of the Company’s Class A common stock on July 21, 2025. The dividend will be paid on September 5, 2025
to shareholders of record at the close of business on August 15, 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, levels 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, 2025 compared to at or for the quarter ended June 30, 2024 and as of December 31, 2024 and annualized where
appropriate:
•
$17.3 million for the quarter ended June 30, 2024.
•
months ended June 30, 2024.
•
2024 and an increase of $138.3 million or 10.8% annualized from December 31, 2024.
•
increase of $244.1 million or 13.1% from June 30, 2024 and an increase of $140.5 million or 14.4% annualized from
December 31, 2024.
•
30, 2024 and an increase of $161.7 million or 15.0% annualized from December 31, 2024.
•
quarter ended June 30, 2024.
•
12.63% for quarter ended June 30, 2024.
•
•
•
respectively.
•
increase of $0.72 or 13.5% annualized from $10.81 at December 31, 2024. At June 30, 2025, tangible book value
Table of Contents
33 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
per common share was negatively affected by $2.08 due to an accumulated comprehensive loss of $41.8 million.
At December 31, 2024, tangible book value per common share was negatively affected by $2.24 due to an
accumulated comprehensive loss of $44.5 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.
•
offer various securities over a period of time, as needed, without the requirement to file a new registration statement
for each offering.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared based on the application of U.S. Generally Accepted Accounting
Practices (“GAAP”), the most significant of which are described in Note 1 “Summary of Significant Accounting Policies” in
the Company’s 2024 Form 10-K and “Summary of Significant Accounting Policies” in Part I in this Form 10-Q . To prepare
financial statements in conformity with US GAAP, management makes estimates, assumptions, and judgments based on
available information. These estimates, assumptions, and judgments affect the amounts reported in the financial statements
and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date
of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and
judgments reflected in the 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 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, 2025
December 31, 2024
Consolidated Balance Sheets:
Total assets
$
2,719,474
$
2,581,216
Total loans
(1)
$
2,113,318
$
1,972,848
Total deposits
$
2,335,661
$
2,174,004
Total stockholders' equity
$
231,583
$
215,388
(1) Loan amounts include deferred fees/costs.
Table of Contents
34 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Three Months Ended June 30,
Six Months Ended
June 30,
2025
2024
2025
2024
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
21,034
$
17,311
$
40,149
$
32,469
Total non-interest income
$
3,370
$
3,211
$
7,086
$
5,675
Total non-interest expense
$
12,634
$
11,560
$
24,686
$
22,734
Net income
$
8,140
$
6,209
$
15,798
$
10,821
Profitability:
Efficiency ratio
51.77%
56.33%
52.26%
59.60%
Net interest margin
3.28%
2.94%
3.18%
2.78%
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, 2025 compared to the three months ended June 30, 2024.
Net income increased $1.9 million to $8.1 million for the three months ended June 30, 2025 from $6.2 million for the
same period in 2024. The $1.9 million or 31.1% increase in net income was primarily driven by an improvement in net
interest margin, resulting from a larger loan portfolio earning higher yields, along with a reduction in interest expense.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
Net income increased to $15.8 million for the six months ended June 30, 2025
from $10.8 million for the same period
in 2024. The $5.0 million or 46.0% increase in net income was driven by an improvement in net interest margin, resulting
from a larger loan portfolio earning higher yields, along with a reduction in interest expense. Additionally, increased activity
in fee generating transactions (gain on sale of SBA 7a loans, prepayment penalties, title insurance income) contributed to
the increase between periods.
Net Interest Income
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 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
35 USCB Financial Holdings, Inc. Q2 2025 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,
2025
2024
Average
(1)
Balance
Interest
Yield/Rate
(2)
Average
(1)
Balance
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
2,057,445
$
31,946
6.23%
$
1,828,487
$
28,017
6.16%
Investment securities
(4)
449,624
3,432
3.06%
440,559
3,069
2.80%
Other interest-earnings assets
63,974
776
4.87%
100,371
1,531
6.13%
Total interest-earning assets
2,571,043
36,154
5.64%
2,369,417
32,617
5.54%
Non-interest-earning assets
106,155
109,805
Total assets
$
2,677,198
$
2,479,222
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
46,694
285
2.45%
$
56,369
391
2.79%
Saving and money market deposits
1,211,513
9,410
3.12%
1,101,272
10,071
3.68%
Time deposits
452,361
4,343
3.85%
315,872
3,222
4.10%
Total interest-bearing deposits
1,710,568
14,038
3.29%
1,473,513
13,684
3.74%
FHLB advances and other borrowings
116,527
1,082
3.72%
162,000
1,622
4.03%
Total interest-bearing liabilities
1,827,095
15,120
3.32%
1,635,513
15,306
3.76%
Non-interest-bearing demand deposits
580,121
610,370
Other non-interest-bearing liabilities
41,490
35,584
Total liabilities
2,448,706
2,281,467
Stockholders' equity
228,492
197,755
Total liabilities and stockholders' equity
$
2,677,198
$
2,479,222
Net interest income
$
21,034
$
17,311
Net interest spread
(5)
2.32%
1.78%
Net interest margin
(6)
3.28%
2.94%
(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
36 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Six Months Ended June 30,
2025
2024
Average
Balance
(1)
Interest
Yield/Rate
(2)
Average
Balance
(1)
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
2,022,345
$
62,191
6.18
%
$
1,805,008
$
54,660
6.09
%
Investment securities
(4)
443,314
6,456
2.93
%
430,274
5,880
2.75
%
Other interest-earnings assets
69,547
1,485
4.29
%
112,808
2,964
5.28
%
Total interest-earning assets
2,535,206
70,132
5.56
%
2,348,090
63,504
5.44
%
Non-interest earning assets
106,885
109,572
Total assets
$
2,642,091
$
2,457,662
$
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
50,133
623
2.50
%
$
54,857
$
760
2.79
%
Saving and money market deposits
1,205,305
18,745
3.13
%
1,099,423
20,465
3.74
%
Time deposits
426,081
8,261
3.90
%
319,392
6,516
4.10
%
Total interest-bearing deposits
1,681,519
27,629
3.30
%
1,473,672
27,741
3.79
%
FHLB advances and other borrowings
127,674
2,354
3.71
%
163,093
3,294
4.06
%
Total interest-bearing liabilities
1,809,193
29,983
3.33
%
1,636,765
31,035
3.81
%
Non-interest bearing demand deposits
571,627
592,565
Other non-interest-bearing liabilities
37,247
32,908
Total liabilities
2,418,067
2,262,238
Stockholders' equity
224,024
195,424
Total liabilities and stockholders' equity
$
2,642,091
$
2,457,662
Net interest income
$
40,149
$
32,469
Net interest spread
(5)
2.23
%
1.63
%
Net interest margin
(6)
3.18
%
2.78
%
(1) Average balances - Daily average balances are used to calculate yields/rates.
(2) Annualized.
(3) Average loan balances include 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, 2025 compared to the three months ended June 30, 2024.
Net interest income before the provision for credit losses was $21.0 million for the three months ended June 30, 2025.
The increase of $3.7 million or 21.5% was primarily driven by higher income from an expanded loan portfolio, an increase
in the weighted average loan yield, and a reduction in rates paid on interest-bearing liabilities between periods.
Net interest margin (“NIM”) was 3.28% for the three months ended June 30, 2025 and 2.94% for the same period in
2024. The NIM expansion of 34 basis points reflects both higher loan yields and growth in the loan portfolio average balance,
along with a decrease in interest rates paid on interest-bearing liabilities.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
Net interest income before the provision for credit losses was $40.1 million for the six months ended June 30, 2025, an
increase of $7.7 million or 23.7%, from $32.5 million for the same period in 2024. This growth was primarily driven by higher
income from an expanded loan portfolio, an increase in the weighted average loan yield, and a reduction in rates paid on
interest-bearing liabilities between periods.
The NIM was 3.18% for the six months ended June 30, 2025 and 2.78% for the same period in 2024. The NIM expansion
of 40 basis points reflects both higher loan yields and growth in the loan average balance, along with a decrease in interest
rates paid on interest-bearing liabilities.
Table of Contents
37 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Provision for Credit Losses
The provision for credit losses represents a charge to earnings necessary to maintain an allowance for credit losses
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 debt securities portfolio, recent historical and
projected future economic conditions, our internal assessment of the credit quality of the loan and debt securities portfolios
and net charge-offs.
Three months ended June 30, 2025 compared to the three months ended June 30, 2024.
The provision for credit loss was $1.0 million for the three months ended June 30, 2025 compared to $786 thousand for
the same period in 2024. Growth in the loan portfolio was the primary driver of the increase in the provision expense. This
impact was partially offset by the release of reserves related to individually evaluated loans, following a charge-off recorded
during the second quarter of 2025.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
The provision for credit loss was $1.7 million for the six months ended June 30, 2025 compared to $1.2 million for the
same period in 2024. Growth in the loan portfolio was the primary driver of the increase in the provision expense. This
impact was partially offset by the release of reserves related to individually evaluated loans, following a charge-off recorded
during the second quarter of 2025.
Non-Interest Income
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 SBA 7a loan program and the monetization fees earned through our loan swap
program. In addition, we own and are beneficiaries of the life insurance policies on some of our employees, which policies
generate income from the increase in the cash surrender values.
The following table presents the components of non-interest income for the dates indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Service fees
$
2,402
$
1,977
$
4,733
$
3,628
Gain on sale of securities available for sale, net
-
14
-
14
Gain on sale of loans held for sale, net
151
417
676
484
Other non-interest income
817
803
1,677
1,549
Total non-interest income
$
3,370
$
3,211
$
7,086
$
5,675
Three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Non-interest income for the three months ended June 30, 2025 increased $159 thousand or 5.0%, compared to the
same period in 2024. This increase was primarily driven by growth in prepayment penalties and title insurance income
reported under service fees category.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
Non-interest income for the six months ended June 30, 2025 increased $1.4 million or 24.9%, compared to the same
period in 2024. This increase was primarily driven by growth in prepayment penalties and title insurance income reported
under service fees category combined with an increase in the gain on sale of loans.
Table of Contents
38 USCB Financial Holdings, Inc. Q2 2025 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,
2025
2024
2025
2024
Salaries and employee benefits
$
7,954
$
7,353
$
15,590
$
13,663
Occupancy
1,337
1,266
2,621
2,580
Regulatory assessment and fees
396
476
817
909
Consulting and legal fees
263
263
456
855
Network and information technology services
564
479
1,069
986
Other operating
2,120
1,723
4,133
3,741
Total non-interest expense
$
12,634
$
11,560
$
24,686
$
22,734
Three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Non-interest expense for the three months ended the June 30, 2025 increased $1.1 million, or 9.3%, compared to the
same period in 2024. The increase was primarily driven by a $601 thousand rise in salaries and employee benefits, reflecting
merit increases and higher stock-based compensation expense. Additionally, other operating expense increased by $397
thousand, largely due to a reimbursement of force-placed insurance expense received in the second quarter of 2024. This
reimbursement reduced expenses in that period, making the second quarter of 2025 appear higher by comparison.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
Non-interest expense for the six months ended June 30, 2025 increased $2.0 million or 8.6%, compared to the same
period in 2024. The increase was primarily driven by an increase of $1.9 million in salaries and employee benefits due to
increase of $882 thousand in merit increases and new full-time employee salaries, $318 thousand in payroll taxes and group
insurance expense, and $727 thousand in stock-based compensation expense.
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, 2025 compared to the three months ended June 30, 2024.
Income tax expense for the three months ended June 30, 2025 was $2.6 million as compared to $2.0 million for the
same period in 2024 and reflected the substantially increased level of net income experienced during the 2025 period. The
effective tax rate for the three months ended June 30, 2025 was 24.2% compared to 24.1% for the same period in 2024.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
Income tax expense for the six months ended June 30, 2025 was $5.0 million as compared to $3.4 million for the same
period in 2024 and reflected the substantially increased level of net income experienced during the 2025 period. The
effective tax rate for the six months ended June 30, 2025 was 24.2% compared to 23.9% for the same period in 2024.
For a further discussion of income taxes, see Note 4 “Income Taxes” to the unaudited Consolidated Financial
Statements in Item 1 of Part I of this Form 10-Q.
Analysis of Financial Condition
Total assets at June 30, 2025 were $2.72 billion, an increase of $138.3 million, or 10.8% annualized, over total assets
of $2.58 billion at December 31, 2024. Total loans, net of deferred fees/costs, increased $140.5 million, or 14.4%
annualized, to $2.11 billion at June 30, 2025 compared to $1.97 billion at December 31, 2024. Total deposits increased by
$161.7 million, or 15.0% annualized, to $2.34 billion at June 30, 2025 compared to $2.17 billion December 31, 2024.
Table of Contents
39 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
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 it’s 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 policy.
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, 2025.
At quarter end, HTM securities included $149.6 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. The remaining portion of the HTM portfolio is made up of $9.1 million in investment
grade corporate bonds. For the portion of the HTM exposed to non-government credit risk, the Company utilized the PD/LGD
methodology to estimate a $7 thousand ACL as of June 30, 2025. The book value for debt securities classified as HTM
represents amortized cost less ACL.
Aggregate AFS and HTM investment securities increased $19.2 million, or 9.1% annualized, to $444.1 million at
June 30, 2025 from $424.9 million at December 31, 2024. Investment securities increased due to reinvestment of payments
received and investment of excess in cash balances into high credit quality investment securities to increase the Company’s
profitability and modify the Company’s balance sheet duration according to the ALM policy.
As of June 30, 2025, investment securities with a market value of $49.6 million were pledged to secure public deposits.
The investment portfolio does not have any tax-exempt securities.
Table of Contents
40 USCB Financial Holdings, Inc. Q2 2025 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, 2025
December 31, 2024
Available-for-sale:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Government Agency
$
16,308
$
14,850
$
14,279
$
12,625
Collateralized mortgage obligations
97,459
76,724
101,808
78,905
Mortgage-backed securities - residential
62,002
50,987
58,995
46,933
Mortgage-backed securities - commercial
104,782
96,524
86,604
78,739
Municipal securities
24,885
19,831
24,925
19,311
Bank subordinated debt securities
26,873
26,466
24,314
23,708
$
332,309
$
285,382
$
310,925
$
260,221
Held-to-maturity:
U.S. Government Agency
$
41,716
$
37,584
$
42,538
$
37,444
Collateralized mortgage obligations
54,312
47,937
56,987
49,259
Mortgage-backed securities - residential
38,404
34,555
40,681
36,121
Mortgage-backed securities - commercial
15,182
13,889
15,272
13,887
Corporate bonds
9,133
8,912
9,222
8,829
$
158,747
$
142,877
$
164,700
$
145,540
Allowance for credit losses - securities held-to-maturity
(7)
(6)
Securities held-to maturity, net of allowance for credit losses
$
158,740
$
164,694
The following table shows the weighted average yields, categorized by contractual maturity, for investment securities
as of June 30, 2025 (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
$
-
-
$
-
-
$
5,374
4.20%
$
10,933
4.18%
$
16,308
4.19%
Collateralized mortgage obligations
-
-
-
-
-
-
97,459
1.61%
97,459
1.61%
MBS - residential
-
-
-
-
-
-
62,002
2.11%
62,002
2.11%
MBS - commercial
-
-
1,594
4.41%
4,092
4.71%
99,097
3.97%
104,782
4.01%
Municipal securities
-
-
-
-
20,645
1.73%
4,240
1.86%
24,885
1.75%
Bank subordinated debt securities
-
-
7,925
9.13%
18,948
4.96%
-
-
26,873
6.19%
$
-
-
$
9,519
8.34%
$
49,058
3.50%
$
273,732
2.68%
$
332,309
2.97%
Held-to-maturity:
U.S. Government Agency
$
2,997
1%
$
4,967
1.25%
$
19,866
1.44%
$
13,886
1.85%
$
41,716
1.50%
Collateralized mortgage obligations
-
-
-
-
-
-
54,312
1.65%
54,312
1.65%
MBS - residential
-
-
3,818
1.71%
5,865
1.75%
28,721
2.32%
38,404
2.17%
MBS - commercial
-
-
3,050
1.62%
-
-
12,132
2.57%
15,182
2.38%
Corporate bonds
9,133
2.81%
-
-
-
-
-
-
9,133
2.81%
$
12,130
2.27%
$
11,835
1.49%
$
25,731
1.51%
$
109,051
1.95%
$
158,747
1.87%
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
41 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The following table shows the loan portfolio composition as of the dates indicated (in thousands):
June 30, 2025
December 31, 2024
Total
Percent of
Total
Total
Percent of
Total
Residential Real Estate
$
307,020
14.6
%
$
289,961
14.8
%
Commercial Real Estate
1,206,621
57.3
%
1,136,417
57.8
%
Commercial and Industrial
263,966
12.5
%
258,311
13.1
%
Correspondent Banks
110,155
5.2
%
82,438
4.2
%
Consumer and Other
218,426
10.4
%
198,091
10.1
%
Total gross loans
2,106,188
100.0
%
1,965,218
100.0
%
Plus: Deferred fees/costs
7,130
7,630
Total loans net of deferred fees/costs
2,113,318
1,972,848
Less: Allowance for credit losses
24,933
24,070
Total net loans
$
2,088,385
$
1,948,778
Total loans, net of deferred fees/costs, increased by $140.5 million, or 14.4% annualized to $2.11 billion, at June 30,
2025 compared to December 31, 2024. The commercial real estate loan segment had the most significant growth compared
to December 31, 2024.
Our loan portfolio continues to grow, with commercial real estate lending as the primary focus which represented
approximately 57.3% of the total gross loan portfolio as of June 30, 2025. 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.
Most of the commercial real estate exposure represents loans to commercial businesses secured by owner-occupied
real estate. 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,
2025 (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
$
17,952
$
44,877
$
64,545
$
179,646
$
307,020
Commercial Real Estate
88,561
441,689
670,767
5,604
1,206,621
Commercial and Industrial
10,922
86,096
122,542
44,406
263,966
Correspondent Banks
110,155
-
-
-
110,155
Consumer and Other
2,218
1,534
20,038
194,636
218,426
Total gross loans
$
229,808
$
574,196
$
877,892
$
424,292
$
2,106,188
Interest rate sensitivity:
Fixed interest rates
$
187,629
$
189,334
$
151,576
$
333,915
$
862,454
Floating or adjustable rates
42,179
384,862
726,316
90,377
1,243,734
Total gross loans
$
229,808
$
574,196
$
877,892
$
424,292
$
2,106,188
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, 2025, approximately 59.1% of the loan portfolio has adjustable/variable rates and 40.9% 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. Additionally,
it is important to note that most of our loans have interest rate floors. This embedded option protects the Company from a
decrease in interest rates below the floor and positions us to gain in the scenario of higher interest rates.
Table of Contents
42 USCB Financial Holdings, Inc. Q2 2025 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
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
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, 2025
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
303,536
$
2,925
$
559
$
-
$
307,020
Commercial Real Estate
1,198,870
5,327
2,424
-
1,206,621
Commercial and Industrial
260,342
965
2,659
-
263,966
Correspondent Banks
110,155
-
-
-
110,155
Consumer and Other
218,426
-
-
-
218,426
$
2,091,329
$
9,217
$
5,642
$
-
$
2,106,188
December 31, 2024
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
289,401
$
-
$
560
$
-
$
289,961
Commercial Real Estate
1,133,965
-
2,452
-
1,136,417
Commercial and Industrial
256,031
-
2,280
-
258,311
Correspondent Banks
82,438
-
-
-
82,438
Consumer and Other
196,101
-
1,990
-
198,091
$
1,957,936
$
-
$
7,282
$
-
$
1,965,218
Table of Contents
43 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Non-Performing Assets
The following table presents non-performing assets as of the dates shown (in thousands, except ratios):
June 30, 2025
December 31, 2024
Non-accrual loans
$
1,366
$
2,707
Loans past due over 90 days and still accruing
-
-
Total non-performing loans
$
1,366
$
2,707
Other real estate owned
-
-
Total non-performing assets
$
1,366
$
2,707
Asset quality ratios:
Allowance for credit losses to total loans
1.18%
1.22%
Allowance for credit losses to non-performing loans
1,825%
889%
Non-performing loans to total loans
0.06%
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 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
44 USCB Financial Holdings, Inc. Q2 2025 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, 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 a $144 thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $1 thousand provision related to investment securities held to maturity.
Table of Contents
45 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2024
Beginning balance
$
2,930
$
10,302
$
4,272
$
794
$
3,156
$
21,454
Provision for credit losses
(1)
257
(30)
474
98
(25)
774
Recoveries
6
-
1
-
-
7
Charge-offs
-
-
-
-
(5)
(5)
Ending Balance
$
3,193
$
10,272
$
4,747
$
892
$
3,126
$
22,230
Average loans
$
231,807
$
1,064,636
$
232,019
$
102,597
$
197,428
$
1,828,487
Net charge-offs (recoveries) to average
loans
(0.01)%
-
(0.00)%
-
0.01%
0.00%
Six Months Ended June 30, 2024
Beginning balance
$
2,695
$
10,366
$
3,974
$
911
$
3,138
$
21,084
Provision for credit losses
(3)
492
(94)
762
(19)
(4)
1,137
Recoveries
6
-
11
-
2
19
Charge-offs
-
-
-
-
(10)
(10)
Ending Balance
$
3,193
$
10,272
$
4,747
$
892
$
3,126
$
22,230
Average loans
$
228,830
$
1,050,965
$
229,040
$
101,280
$
194,893
$
1,805,008
Net charge-offs (recoveries) to average
loans
(0.01)%
-
(0.01)%
-
0.01%
0.00%
(1) Provision for credit losses excludes a $15 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $3 thousand release related to investment securities held to maturity.
(2) Annualized.
(3) Provision for credit losses excludes $58 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and $1 thousand provision due to investment securities held to maturity.
The Federal Open Market Committee (“FOMC”) economic forecasts as of June 30, 2025, showed moderate
deterioration in unemployment and forecast for real GDP. Fannie Mae House Price Index (“HPI”) forecast reflected a
deterioration in national housing prices as well. 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 portfo lio 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, 2025, for every 100 basis points increase in the HPI, the
forecast reduces reserves by approximately $353 thousand and about 2 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.
As of June 30, 2025, we stress tested two qualitative factors in our commercial real estate loan pool, as it is the largest
segment in our portfolio. We evaluated the impact of a change in the qualitative factors from no risk to maximum loss to
measure the sensitivity of the qualitative factors. The change from no risk to high risk resulted in a $9.4 million or 36.4%
increase in the ACL. This sensitivity analysis provides a hypothetical result to assess the sensitivity of the ACL and does
not represent a change in management’s judgement.
Bank-Owned Life Insurance
As of June 30, 2025, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was $58.4
million. Changes in cash surrender value are recorded to 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
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46 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
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,
2025
2024
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest bearing demand deposits
$
580,121
0.00%
$
610,370
0.00%
Interest-bearing demand deposits
46,694
2.45%
56,369
2.79%
Saving and money market deposits
1,211,513
3.12%
1,101,272
3.68%
Time deposits
452,361
3.85%
315,872
4.10%
Total
$
2,290,689
2.46%
$
2,083,883
2.64%
The Company has a granular deposit portfolio with outstanding balances comprised of 57% in commercial deposits,
28% in personal deposits, 8% in public funds (which are partially collateralized) and 8% in brokered deposits. The brokered
deposits balance at June 30, 2025 was $188.0 million and was $133.0 million at December 31, 2024.
As of June 30, 2025, the Company has approximately 21 thousand deposit accounts with the majority in personal
accounts, approximately 13 thousand or 61.4%. The estimated average account size of our deposit portfolio was
approximately $113 thousand as of June 30, 2025.
The uninsured deposits are estimated based on the FDIC deposit insurance limit of $250 thousand per account holder
for all deposit accounts at the Company. The total estimated percentage of uninsured deposits was 52% at June 30, 2025
and 55% at December 31, 2024. 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 $143.4
million at June 30, 2025 and was $125.5 million at December 31, 2024.
The following table shows scheduled maturities of uninsured time deposits as of June 30, 2025 (in thousands):
June 30, 2025
Three months or less
$
53,680
Over three through six months
25,041
Over six though twelve months
11,888
Over twelve months
40,376
$
130,985
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.
As of June 30, 2025, escrow balances totaled $20.9 million compared to $6.1 million at December 31, 2024 .
Borrowings
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, 2025, we had $108.0 million of fixed-rate advances outstanding from the FHLB with a weighted average
rate of 3.60%. Maturity dates for the advances range between 2025 to 2028 as detailed in the table below.
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47 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
The following table presents the FHLB advances as of June 30, 2025 (in thousands):
Interest Rate
Type of Rate
Maturity Date
Amount
1.07%
Fixed
July 18, 2025
$
6,000
3.76%
Fixed
January 24, 2028
11,000
3.77%
Fixed
April 25, 2028
50,000
3.68%
Fixed
September 13, 2027
21,000
3.79%
Fixed
March 23, 2026
20,000
$
108,000
During the third quarter 2024, the Company paid off the $80.0 million fixed-rate loan outstanding from the Bank Term
Funding Program with an original maturity date of January 10, 2025.
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, 2025, there were no outstanding balances with any of these liquidity sources.
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 balance sheet. We use more conservative credit and collateral policies in making these credit
commitments than we do for on-balance sheet items. 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, 2025 was $716 thousand and at December 31, 2024 was $571 thousand. The increase
was primarily driven by an increase in unfunded commitments and to a lesser degree by the deterioration of the estimated
loss rate.
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, 2025
December 31, 2024
Commitments to grant loans and unfunded lines of credit
$
124,051
$
122,578
Standby and commercial letters of credit
2,616
5,389
Total
$
126,667
$
127,967
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.
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48 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
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 income
statement, 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 rates scenarios 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 detailed assumptions outlined in our
budget and strategic plan, and in 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.
Market and Interest Rate Risk Management
According to our ALCO model, as of June 30, 2025, we had a slightly liability sensitive balance sheet for year one, and
a neutral balance sheet for year two, using the static model. 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 faster than our assets, which results in a favorable impact
to net interest income when market interest rates decrease. Many assumptions are used to calculate the impact of interest
rate variations on our net interest income, such as asset prepayment speeds, non-maturity deposit price sensitivity (betas),
pricing correlations, deposit truncations and decay rates, and key interest rate drivers.
Because of the inherent use of these estimates and assumptions in the model, our actual results may, and most likely
will, differ from static measures results. In addition, static measures like EVE do not include actions that management may
undertake to manage the risks in response to anticipated changes in interest rates or customer deposit behavior. As part of
our ALM strategy and policy, management has the ability to modify the balance sheet to either increase asset duration and
decrease liability duration to reduce asset sensitivity, or to decrease asset duration and increase liability duration in order
to increase asset sensitivity.
According to our model, as of June 30, 2025, our balance sheet is liability sensitive for year one and more neutral in
year two under static interest rate scenarios (an increase or decrease of 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 of our assets and the economic value of our
liabilities, which is a proxy for our liquidation value. According to our balance sheet composition, and as expected, our model
stipulates that an increase in interest rates will have a negative impact on the EVE and lower rates, a positive impact.
Results and analysis are presented quarterly to the ALCO, and strategies are reviewed and defined.
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.
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49 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
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. 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.
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 the investment portfolio cash flows. Other potential funding sources include Federal
Funds purchased, brokered certificates of deposit, listing services certificates of deposit, unsecured fed funds lines with
other banking institutions and draws from the Federal Reserve Bank of Atlanta discount window, and borrowings from the
FHLB Atlanta. Accordingly, we believe our liquidity resources are adequate to fund loans and meet other cash needs as
necessary.
Capital Adequacy
As of June 30, 2025, the Bank was well capitalized under the FDIC’s prompt corrective action framework. We also
follow the capital conservation buffer framework, and as of June 30, 2025, we exceeded the capital conversation buffer in
all capital ratios, according to our actual ratios. The following table presents the capital ratios for the Bank at the dates
indicated (in thousands, except ratios).
Actual
Minimum Capital
Requirements
To be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
June 30, 2025
Total risk-based capital
$
287,836
13.67
%
$
168,507
8.00
%
$
210,634
10.00
%
Tier 1 risk-based capital
$
262,180
12.45
%
$
126,380
6.00
%
$
168,507
8.00
%
Common equity tier 1 capital
$
262,180
12.45
%
$
94,785
4.50
%
$
136,912
6.50
%
Leverage ratio
$
262,180
9.65
%
$
108,629
4.00
%
$
135,786
5.00
%
December 31, 2024
Total risk-based capital
$
266,387
13.34
%
$
159,795
8.00
%
$
199,744
10.00
%
Tier 1 risk-based capital
$
241,740
12.10
%
$
119,846
6.00
%
$
159,795
8.00
%
Common equity tier 1 capital
$
241,740
12.10
%
$
89,885
4.50
%
$
129,834
6.50
%
Leverage ratio
$
241,740
9.38
%
$
103,074
4.00
%
$
128,843
5.00
%
The Company is not subject to regulatory capital ratios imposed by Basel III on bank holding companies because the
Company is deemed to be a small bank holding company.
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
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50 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
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.
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements are discussed in Note 1 “Summary of Significant Accounting Policies” to
the unaudited Consolidated Financial Statements in Part 1 of this Form 10-Q.
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51 USCB Financial Holdings, Inc. Q2 2025 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
6/30/2025
3/31/2025
12/31/2024
9/30/2024
6/30/2024
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,209
Plus: Provision for income taxes
2,599
2,440
2,197
2,213
1,967
Plus: Provision for credit losses
1,031
681
1,030
931
786
PTPP income
$
11,770
$
10,779
$
10,131
$
10,093
$
8,962
PTPP return on average assets:
(1)
PTPP income
$
11,770
$
10,779
$
10,131
$
10,093
$
8,962
Average assets
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
$
2,479,222
PTPP return on average assets
(2)
1.76%
1.68%
1.58%
1.62%
1.45%
Operating net income:
(1)
Net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,209
Less: Net gains (losses) on sale of securities
-
-
-
-
14
Less: Tax effect on sale of securities
-
-
-
-
(4)
Operating net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,199
Operating PTPP income:
(1)
PTPP income
$
11,770
$
10,779
$
10,131
$
10,093
$
8,962
Less: Net gains (losses) on sale of securities
-
-
-
-
14
Operating PTPP income
$
11,770
$
10,779
$
10,131
$
10,093
$
8,948
Operating PTPP return on average assets:
(1)
Operating PTPP income
$
11,770
$
10,779
$
10,131
$
10,093
$
8,948
Average assets
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
$
2,479,222
Operating PTPP return on average assets
(2)
1.76%
1.68%
1.58%
1.62%
1.45%
Operating return on average assets:
(1)
Operating net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,199
Average assets
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
$
2,479,222
Operating return on average assets
(2)
1.22%
1.19%
1.08%
1.11%
1.01%
Operating return on average equity:
(1)
Operating net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,199
Average equity
$
228,492
$
219,505
$
215,715
$
206,641
$
197,755
Operating return on average equity
(2)
14.29%
14.15%
12.73%
13.38%
12.61%
Operating Revenue:
(1)
$
21,034
$
19,115
$
19,358
$
18,109
$
17,311
3,370
3,716
3,627
3,438
3,211
-
-
-
-
14
$
24,404
$
22,831
$
22,985
$
21,547
$
20,508
Operating Efficiency Ratio:
(1)
$
12,634
$
12,052
$
12,854
$
11,454
$
11,560
$
24,404
$
22,831
$
22,985
$
21,547
$
20,508
51.77%
52.79%
55.92%
53.16%
56.37%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Annualized.
Table of Contents
52 USCB Financial Holdings, Inc. Q2 2025 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
6/30/2025
3/31/2025
12/31/2024
9/30/2024
6/30/2024
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity
$
231,583
$
225,088
$
215,388
$
213,916
$
201,020
Less: Intangible assets
-
-
-
-
-
Tangible stockholders' equity
$
231,583
$
225,088
$
215,388
$
213,916
$
201,020
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
20,078,385
20,048,385
19,924,632
19,620,632
19,630,632
Tangible book value per common share
(2)
$
11.53
$
11.23
$
10.81
$
10.90
$
10.24
Operating diluted net income per common share:
(1)
Operating net income
$
8,140
$
7,658
$
6,904
$
6,949
$
6,199
Total weighted average diluted shares of common stock
20,295,794
20,319,535
20,183,731
19,825,211
19,717,167
Operating diluted net income per common share:
$
0.40
$
0.38
$
0.34
$
0.35
$
0.31
Tangible Common Equity/Tangible Assets
(1)
$
231,583
$
225,088
$
215,388
$
213,916
$
201,020
(3)
$
2,719,474
$
2,677,382
$
2,581,216
$
2,503,954
$
2,458,270
Tangible Common Equity/Tangible Assets
8.52%
8.41%
8.34%
8.54%
8.18%
(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 total assets is the same amount as total assets calculated under GAA
P.
Table of Contents
53 USCB Financial Holdings, Inc. Q2 2025 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.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our President and Chief Executive Officer
and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of the Company’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
(“Exchange Act”)) as of June 30, 2025. Based on that evaluation, management believes that, as of the end of the period
covered by this Form 10-Q, the Company's disclosure controls and procedures were effective to collect, process, and
disclose the information required to be disclosed in the reports filed or submitted under the Exchange Act within the required
time periods.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the period covered by this Form 10-Q that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving
the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls
and procedures relative to their costs.
Table of Contents
54 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
PART II
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation
arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of
violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as
claims or litigation relating to intellectual property, securities, breach of contract and tort. We intend to defend ourselves
vigorously against any pending or future claims and litigation.
There can be no assurance that any future legal proceedings to which we are a party will not be decided adversely to
our interests and have a material adverse effect on our financial condition and operations.
Item 1A. Risk Factors
For detailed information about certain risk factors that could materially affect our business, financial condition, or future
results, see “Part I, Item 1A – Risk Factors” of the 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) Not applicable.
(c) There were no repurchases of equity securities during any month in the three months ended June 30, 2025. As of
June 30, 2025 the maximum number of shares that may yet be purchased under the Company’s Board approved stock
repurchase programs was 528,309 shares.
Item 3. Defaults Upon Senior Securities
(a)
(b)
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)
(b)
(c)
terms are defined in Item 408 of the SEC’s Regulation S-K).
Table of Contents
55 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
Item 6. Exhibits
Exhibit No.
Description of Exhibit
2.1
Agreement and Plan of Share Exchange, dated December 27, 2021, by and between U.S. Century Bank and USCB
Financial Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No.
001-41196) filed with the Securities and Exchange Commission on December 30, 2021).
3.1
Articles of Incorporation, as amended, of USCB Financial Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (File No. 001-41196) filed with the
Securities and Exchange Commission on August 11, 2023).
3.2
Amended and Restated Bylaws of USCB Financial Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s
Current Report on Form 8-K (File No. 001-41196) filed with the Securities and Exchange Commission on July 26, 2023).
4.1
Side Letter Agreement, dated December 30, 2021, between USCB Financial Holdings, Inc., U.S. Century Bank, Priam
Capital Fund II, LP, Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P. (incorporated by
reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41196) filed with the Securities and
Exchange Commission on December 30, 2021).
4.2
Registration Rights Agreement, dated March 17, 2015, between U.S. Century Bank, Priam Capital Fund II, LP, Patriot
Financial Partners II, L.P., Patriot Financial Partners Parallel II, L.P., and certain other shareholders of U.S. Century Bank
(incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41196) filed with the
Securities and Exchange Commission on December 30, 2021).
4.3
Assignment and Assumption of Agreement, dated December 30, 2021, between U.S. Century Bank and USCB Financial
Holdings, Inc. (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K (File No. 001-41196)
filed with the Securities and Exchange Commission on December 30, 2021).
4.4
Description of USCB Financial Holdings, Inc.’s securities (incorporated by reference to Exhibit 4.4 to the Registrant's Annual
Report on Form 10-K (File No. 001-41196) filed with the Securities and Exchange Commission on March 22, 2024).
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
**
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
**
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
***
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
***
101
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025
formatted in Inline XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations
(unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statements of Changes
in Stockholders’ Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited), (vi) Notes to Consolidated
Financial Statements (unaudited).
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
**
Management Contract or Compensatory plan or arrangement.
Filed herewith.
***
Furnished hereby.
Table of Contents
56 USCB Financial Holdings, Inc. Q2 2025 Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
USCB FINANCIAL HOLDINGS, INC.
(Registrant)
Signature
Title
Date
/s/ Luis de la Aguilera
Chairman, President and Chief Executive
Officer
August 8, 2025
Luis de la Aguilera
(Principal Executive Officer)
/s/ Robert Anderson
Executive Vice President and Chief Financial
Officer
August 8, 2025
Robert Anderson
(Principal Financial Officer and Principal
Accounting Officer)
FAQ
What was USCB's Q2 2025 diluted EPS?
Diluted EPS was $0.40, up 29% from $0.31 in Q2 2024.
How did USCB's net interest income change year over year?
Net interest income increased 22% YoY to $21.0 million.
What are the current loan and deposit balances at USCB (USCB)?
Loans held for investment total $2.11 billion; deposits stand at $2.34 billion as of 30-Jun-25.
How large are USCB's unrealized securities losses?
Unrealized losses equal $47.2 m on AFS and $16.5 m on HTM portfolios.
What is USCB's allowance for credit losses coverage ratio?
ACL is $24.9 m, representing 1.18 % of total loans.
What dividend did USCB declare for Q2 2025?
The board declared a $0.10 per share cash dividend, double the $0.05 paid in Q2 2024.
Uscb Fincl