USCB posts higher Q3 earnings with $2.46B deposits and $2.11B loans
Rhea-AI Filing Summary
USCB Financial Holdings, Inc. reported stronger Q3 2025 results. Net income rose to $8.9M from $6.9M a year ago, with diluted EPS of $0.45 versus $0.35. Net interest income increased to $21.3M from $18.1M as loan interest and securities income improved, while the provision for credit losses decreased to $0.1M from $0.9M. The company declared a quarterly cash dividend of $0.10 per share.
Balance sheet growth was broad-based. Total assets reached $2.77B (from $2.58B at December 31, 2024), driven by loans held for investment of $2.11B and available-for-sale securities of $324.2M. Total deposits increased to $2.46B from $2.17B, while Federal Home Loan Bank advances fell to $11.0M from $163.0M. USCB issued $39.3M in subordinated notes and repurchased 2.0M shares in Q3, ending with 18,107,385 Class A shares outstanding. Nonperforming loans declined to $1.31M, and the allowance for credit losses stood at $25.0M.
Positive
- None.
Negative
- None.
Insights
Earnings improved with deposit growth and lower FHLB reliance.
USCB posted higher Q3 net income of $8.9M, supported by net interest income of $21.3M and a lighter credit provision of $0.1M. Non-interest income also ticked up modestly while operating expenses increased, reflecting normal growth and technology spending.
On the balance sheet, deposits rose to $2.46B, loans reached $2.12B gross, and FHLB advances dropped to $11.0M, indicating reduced wholesale funding dependence. The company issued $39.3M in subordinated notes, repurchased 2.0M shares in Q3, and paid a $0.10 dividend, balancing capital return and funding. Asset quality remained stable, with nonaccruals at $1.31M and an ACL of $24.96M.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did USCB (USCB) perform in Q3 2025?
Net income was $8.9M versus $6.9M a year ago; diluted EPS was $0.45 versus $0.35.
What were USCB’s key revenue drivers in Q3 2025?
Net interest income rose to $21.3M, with interest income from loans at $32.9M and securities at $3.5M.
How did USCB’s deposits and loans change by September 30, 2025?
Deposits increased to $2.46B and loans held for investment reached $2.11B.
What capital actions did USCB take in Q3 2025?
USCB repurchased 2.0M shares and paid a $0.10 per-share dividend.
What funding and liquidity moves did USCB make?
FHLB advances declined to $11.0M from $163.0M, and the company issued $39.3M of subordinated notes.
How is USCB’s asset quality?
Nonaccrual loans were $1.31M and the allowance for credit losses was $24.96M.
What were USCB’s total assets and equity at quarter end?
Total assets were $2.77B; total stockholders’ equity was $209.1M.
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 October 31, 2025, the registrant had
A
common stock outstanding.
FORM 10-Q
September 30, 2025
TABLE OF CONTENTS
PART I
3
Item 1.
Financial Statements
3
Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024
3
Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024
(Unaudited)
4
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30,
2025 and 2024 (Unaudited)
5
Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended
September 30, 2025 and 2024 (Unaudited)
6
Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024
(Unaudited)
7
Notes to the Consolidated Financial Statements (Unaudited)
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
29
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
52
Item 4.
Controls and Procedures
52
PART II
53
Item 1.
Legal Proceedings
53
Item 1A.
Risk Factors
53
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
53
Item 3.
Defaults Upon Senior Securities
53
Item 4.
Mine Safety Disclosures
53
Item 5.
Other Information
53
Item 6.
Exhibit Index
55
Signatures
Table of Contents
3 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
PART I
Item 1. Financial Statements
USCB FINANCIAL HOLDINGS, INC
Consolidated Balance Sheets – Unaudited
(Dollars in thousands, except share data)
September 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
Subordinated notes
-
Lease liability
Accrued interest and other liabilities
Total liabilities
Commitments and contingencies (See Notes 5 and 10)
(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 September 30, 2025,
Common stock - Class B Non-voting; $
outstanding as of September 30, 2025 and December 31, 2024
-
-
Additional paid-in capital on common stock
Accumulated deficit
(49,094 )
(67,813 )
Accumulated other comprehensive loss
(37,806 )
(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. Q3 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Unaudited
(Dollars in thousands, except per share data)
Three Months Ended September 30,
Nine Months Ended September 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:
(28 )
-
(28 )
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. Q3 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Comprehensive Income - Unaudited
(Dollars in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Net income
$
$
$
$
Other comprehensive income:
Unrealized gain on investment securities
Reclassification adjustment for amortization of net unrealized losses on
securities transferred from available-for-sale to held-to-maturity
Reclassification adjustment for realized losses (gains) included in net
income
-
(14 )
Unrealized loss on cash flow hedge
(123 )
(930 )
(309 )
(381 )
Tax expense
(1,340 )
(2,277 )
(2,284 )
(2,136 )
Total other comprehensive income, net of tax
Total comprehensive income
$
$
$
$
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Table of Contents
6 USCB Financial Holdings, Inc. Q3 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 June 30, 2025
$
$
$
(56,025 )
$
(41,752 )
$
Net income
-
-
-
-
Other comprehensive income
-
-
-
-
Repurchase of Class A common stock
(2,000,000 )
(2,000 )
(32,380 )
-
-
(34,380 )
Exercise of stock options
-
-
Dividend payment
-
-
-
(2,008 )
-
(2,008 )
Stock-based compensation
-
-
-
-
Balance at September 30, 2025
$
$
$
(49,094 )
$
(37,806 )
$
Balance at June 30, 2024
$
$
$
(79,760 )
$
(44,686 )
$
Net income
-
-
-
-
Other comprehensive income
-
-
-
-
Repurchase of Class A common stock
(10,000 )
(10 )
(111 )
-
-
(121 )
Dividend payment
-
-
-
(1,016 )
-
(1,016 )
Stock-based compensation
-
-
-
-
Balance at September 30, 2024
$
$
$
(73,827 )
$
(37,978 )
$
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
(2,009,671 )
(2,010 )
(32,544 )
-
-
(34,554 )
Restricted stock issued
(124 )
-
-
-
Exercise of stock options
-
-
Dividend payment
-
-
-
(6,018 )
-
(6,018 )
Stock-based compensation
-
-
-
-
Balance at September 30, 2025
$
$
$
(49,094 )
$
(37,806 )
$
Balance at December 31, 2023
(88,548 )
(44,271 )
Net income
-
-
-
-
Other comprehensive income
-
-
-
-
Repurchase of Class A common stock
(42,100 )
(42 )
(459 )
-
-
(501 )
Restricted stock issued
(58 )
-
-
-
Restricted stock forfeiture
(8,625 )
(8 )
-
-
-
Exercise of stock options
-
-
Dividend payment
-
-
-
(3,049 )
-
(3,049 )
Stock-based compensation
-
-
-
-
Balance at September 30, 2024
$
$
$
(73,827 )
$
(37,978 )
$
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
7 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
Nine Months Ended September 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
(1,136 )
(365 )
Amortization of deferred loan fees, net
Stock-based compensation
(Loss) gain on sale of available for sale securities, net
(14 )
Gain on sale of loans held for sale, net
(804 )
(593 )
Proceeds from the sale of loans held for sale
Origination of loans held for sale
(10,569 )
(6,815 )
Increase in cash surrender value of bank owned life insurance
(1,451 )
(1,257 )
Decrease in deferred tax assets
Net change in operating assets and liabilities:
Accrued interest receivable
(1,181 )
(77 )
Other assets
(7,389 )
(8,292 )
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
(101,486 )
(70,996 )
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
(78,149 )
(92,812 )
Purchase of loans held for investment
(81,392 )
(58,368 )
Additions to premises and equipment
(208 )
(256 )
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 )
(5,734 )
Net cash used in investment activities
(201,898 )
(161,561 )
Cash flows from financing activities:
Proceeds from issuance of Class A common stock, net
Cash dividends paid
(6,018 )
(3,049 )
Repurchase of Class A common stock
(34,554 )
(501 )
Net increase in deposits
Proceeds from subordinated notes
-
Proceeds from FHLB advances
Repayments on Federal Home Loan Bank advances
(269,000 )
(262,000 )
Net cash provided by financing activities
Net decrease in cash and cash equivalents
(20,224 )
(2,576 )
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
8 USCB Financial Holdings, Inc. Q3 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 Financial Accounting Standard Board (“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
9 USCB Financial Holdings, Inc. Q3 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):
September 30, 2025
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
$
$
(1,214 )
$
Collateralized mortgage obligations
-
(19,135 )
Mortgage-backed securities - residential
(9,715 )
Mortgage-backed securities - commercial
(7,491 )
Municipal securities
-
(3,923 )
Bank subordinated debt securities
(439 )
$
$
$
(41,917 )
$
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
$
$
(3,529 )
$
Collateralized mortgage obligations
(5,956 )
Mortgage-backed securities - residential
(3,523 )
Mortgage-backed securities - commercial
-
(1,133 )
Corporate bonds
-
(129 )
$
$
$
(14,270 )
$
Allowance for credit losses - securities held-to-maturity
(5 )
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 held -to-maturity (“HTM”) category from the available for sale (“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 accumulated
other comprehensive loss (“AOCL”) 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
portfolios in 2022.
During the quarter ended September 30, 2025, there were
HTM. For the three months ended September 30, 2025, total amortization out of AOCL for net unrealized losses on
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
10 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
securities transferred in 2022 from AFS to HTM was $
30, 2025. At September 30, 2025, the fair value of the transferred securities was $
unrealized loss was $
For the quarter ended September 30, 2024, total amortization out of AOCL for the net unrealized losses on securities
transferred from AFS to HTM was $
September 30, 2024, the fair value of the transferred securities was $
losses 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 HTM debt securities.
CECL requires a loss reserve for securities classified as 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 September 30, 2025 and December 31, 2024, all HTM securities held
by the Company were rated investment grade.
At September 30, 2025, HTM securities included $
and 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 $
cost less the ACL related to these securities.
The Company’s investment portfolio includes AFS debt securities, which are carried at fair value with unrealized gains
and losses recognized in AOCL, 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 ACL is recorded. As a result of this evaluation, the Company concluded
that no allowance was required on AFS securities as of September 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):
September 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
$
$
(11 )
$
$
(1,203 )
$
$
(1,214 )
Collateralized mortgage obligations
(34 )
(19,101 )
(19,135 )
Mortgage-backed securities - residential
-
-
(9,715 )
(9,715 )
Mortgage-backed securities - commercial
(412 )
(7,079 )
(7,491 )
Municipal securities
-
-
(3,923 )
(3,923 )
Bank subordinated debt securities
(1 )
(438 )
(439 )
$
$
(458 )
$
$
(41,459 )
$
$
(41,917 )
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
11 USCB Financial Holdings, Inc. Q3 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 associated with U.S. Government Agency securities, collateralized mortgage obligations,
and residential and commercial mortgage-backed securities are guaranteed by U.S. government-sponsored enterprises,
thereby minimizing credit risk. Municipal bonds are of high credit quality, and the observed declines in fair value are not
attributable to deterioration in the creditworthiness. Similarly, the decrease in fair value of bank subordinated debt securities
is primarily driven by changes in market interest rates rather than credit concerns. Based on management’s evaluation of
these factors, management believes that the unrealized losses on these debt securities are attributable to fluctuations in
market spreads and interest rate movements, rather than adverse changes in the underlying credit quality of the issuers.
Gains and losses on the sale of securities are recorded on the trade date and are determined on the specific
identification basis. 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 nine months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
Available-for-sale:
2025
2024
2025
2024
Proceeds from sale and call of securities
$
$
-
$
$
Gross gains
$
$
-
$
$
Gross losses
(363 )
-
(363 )
(181 )
Net realized gain (loss)
$
(28 )
$
-
$
(28 )
$
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
September 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 September 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 issued securities. All the
collateralized mortgage obligations and mortgage-backed securities at September 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
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
12 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
securities pledged to the State of Florida at a ratio of
% of the quarter daily average balance for quarter ended
September 30, 2025, and
% for the quarter daily average balance for quarter ended December 31, 2024. The Bank must
also maintain a minimum amount of pledged securities to be in the public funds program.
As of September 30, 2025, the Bank had a total of $
pledged to 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):
September 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 September 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 Federal Home Loan
Bank (“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 DCF 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:
•
•
•
•
•
•
•
•
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
13 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Changes in the ACL for the three and nine months ended September 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 September 30,
2025
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(1)
(102 )
(118 )
(45 )
(252 )
Recoveries
-
-
-
Charge-offs
-
-
-
-
(7 )
(7 )
Ending Balance
$
$
$
$
$
$
Nine Months Ended September 30, 2025
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(2)
(249 )
Recoveries
-
-
Charge-offs
-
-
-
-
(730 )
(730 )
Ending Balance
$
$
$
$
$
$
(1) Provision for credit losses excludes a $
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 September 30,
2024
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(1)
(86 )
(96 )
(69 )
Recoveries
-
-
Charge-offs
-
-
-
-
(7 )
(7 )
Ending Balance
$
$
$
$
$
$
Nine Months Ended September 30, 2024
Beginning balance
$
$
$
$
$
$
Provision for credit losses
(2)
(180 )
(88 )
Recoveries
-
-
Charge-offs
-
-
-
-
(17 )
(17 )
Ending Balance
$
$
$
$
$
$
(1) Provision for credit losses excludes a $
other liabilities and a $
(2) Provision for credit losses excludes a $
other liabilities.
At September 30, 2025, the ACL for loans was $
increase of $
Charge offs related to loans for the three months ended September 30, 2025 were $
Charge offs for the nine months ended September 30, 2025 were $
originated in 2025.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
14 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Charge-offs for the three months ended September 30, 2024 totaled $
Charge-offs for the nine months ended September 30, 2024 totaled $
The ACL and the outstanding balances in the specified loan categories as of September 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
September 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.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
15 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Loan credit exposures by internally assigned grades are presented below for the periods indicated (in thousands):
As of September 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
$
$
$
$
$
$
$
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
16 USCB Financial Holdings, Inc. Q3 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
$
$
$
$
$
$
$
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
17 USCB Financial Holdings, Inc. Q3 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 loans.
The following tables include an aging analysis of accruing loans and total non-accruing loans as of September 30, 2025
and December 31, 2024 (in thousands):
Accruing
As of September 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
18 USCB Financial Holdings, Inc. Q3 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 September 30, 2025 and as
of December 31, 2024 (in thousands):
September 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 and nine months ended September 30, 2025 and 2024.
Interest income on these loans for the three months ended September 30, 2025 and 2024, would have been approximately
$
income on these loans for the nine months ended September 30, 2025 and 2024, would have been approximately $
thousand and $
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
19 USCB Financial Holdings, Inc. Q3 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 September 30, 2025 and December 31, 2024 (in thousands):
September 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 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 nine months
ended September 30, 2025 and three months ended September 30, 2024. The Company had one new modification to
borrowers experiencing financial difficulties for the nine months ended September 30, 2024. The following table presents
newly restructured loans, by type of modification, which occurred during the nine months ended September 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 September 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
September 30, 2025 and 2024.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
20 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
4. INCOME TAXES
The Company’s income tax expense is presented in the following table for the periods indicated (in thousands):
Nine Months Ended September 30,
2025
2024
Current:
Federal
$
$
-
State
-
-
Total current
-
Deferred:
Federal
State
Total deferred
Total tax expense
$
$
The actual income tax expense for the nine months ended September 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 income tax expense) as follows (in thousands):
Nine Months Ended September 30,
2025
2024
Federal taxes at statutory rate
$
$
State income taxes, net of federal tax benefit
Bank owned life insurance
(368 )
(319 )
Total tax expense
$
$
The Company’s deferred tax assets and deferred tax liabilities as of the dates indicated were (in thousands):
September 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
(1,602 )
(1,934 )
Lease right of use asset
(1,592 )
(2,142 )
Deferred expenses
(245 )
(224 )
Cash flow hedge
(3 )
(81 )
Other, net
(286 )
-
Deferred tax liabilities
(3,728 )
(4,381 )
Net deferred tax assets
$
$
The Company has approximately $
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.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
21 USCB Financial Holdings, Inc. Q3 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 nine months ended September 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,
recorded as a result of tax uncertainties.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes
significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act enacted
in 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business
provisions, in particular the depreciation of capital asset additions. The legislation has multiple effective dates, with certain
provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its
consolidated financial statements but preliminarily does not believe the OBBBA provisions will significantly modify its
effective income tax rate.
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, and 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
September 30, 2025 and December 31, 2024 (in thousands):
September 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.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
22 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Interest Rate Swaps Designated as a Cash Flow Hedge
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 (loss) to the extent the hedge remains effective.
In August 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 (loss) to the extent the hedge remains effective.
As of September 30, 2025, the Company had
$
average maturity of
%, and with a weighted average 3-month
compound USD SOFR being received.
As of December 31, 2024, the Company had
$
average maturity of
%, and with a weighted average 3-month
compound USD 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
the 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 loans. 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 September 30, 2025 was $
swaps were between 2025 and 2026. The fair value interest rate swap agreements had an average maturity of
at the date of their termination.
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 September 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.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
23 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
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
September 30, 2025:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
$
-
Other assets/Accrued interest and
other liabilities
$
$
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
$
Other assets/Accrued interest and
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/Accrued interest and
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
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
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
24 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
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.
The following table represents the Company's assets and liabilities measured at fair value on a recurring basis at
September 30, 2025 and December 31, 2024 for each of the fair value hierarchy levels (in thousands):
September 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
$
-
$
$
-
$
$
-
$
$
-
$
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
25 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Fair Value Measurements on a Nonrecurring Basis
During the three and nine months ended September 30, 2025 and 2024, the Company did not have any assets or
liabilities measured at fair value on a nonrecurring basis.
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 September 30, 2025 and December 31, 2024 (in thousands):
Fair Value Hierarchy
Carrying
Amount
Level 1
Level 2
Level 3
Fair Value
Amount
September 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
$
$
-
$
$
-
$
Subordinated notes
$
$
$
-
$
$
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
$
$
-
$
$
-
$
8. STOCKHOLDERS’ EQUITY
Common Stock
During the three months ended September 30 2025, the Company repurchased
stock from certain institutional shareholders through privately negotiated transactions, at a weighted average price per share
of $
. The aggregate purchase price for these transactions was approximately $
supplemental and not part of the Company’s two previously announced stock repurchase programs. During the nine months
ended September 30, 2025 pursuant to the Company’s publicly announced repurchase programs the Company
repurchased
. The aggregate
purchase price for these transactions was approximately $
2025,
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
26 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
During the three months ended September 30, 2024, the Company repurchased
stock at a weighted average price per share of $
. The aggregate purchase price for these transactions was
approximately $
repurchased
. The aggregate
purchase price for these transactions was approximately $
There were
ended September 30, 2025, the Company issued
stock awards pursuant to the Company’s 2015 equity incentive plan.
There were
ended September 30, 2024 the Company issued
awards pursuant to the Company’s 2015 equity incentive plan.
The number of shares of the Company’s Class A common stock issued and outstanding as of September 30, 2025 and
December 31, 2024 were
, respectively.
Dividends
Declaration of dividends by the Board of Directors 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 legally 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 September 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
stockholders 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 from the Bank to the Company.
The following table details the dividends declared and paid by the Company for the periods presented:
Nine Months Ended September 30, 2025
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
$
$
$
$
$
$
Nine Months Ended September 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 September 30, 2025 and December 31, 2024. At September 30, 2025, the total risk-based capital ratio 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 12, Subsequent Events, for information regarding dividends declared in October 2025.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
27 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
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 nine
months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Net Income
$
$
$
$
Net income available to common shareholders
$
$
$
$
The following table reflects the calculation of basic and diluted earnings per common share class for the three and nine
months ended September 30, 2025 and 2024 (in thousands, except share amounts):
Three Months Ended September 30,
Nine Months Ended September 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. 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.
Table of Contents
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
28 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
11. 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 nine months ended September 30, 2025, the Bank purchased $
related parties. The Bank paid those entities net fees of $
During the nine months ended September 30, 2024, the Bank purchased $
deemed to be related parties. The Bank paid those entities fees of $
Loan Originations
During the nine months ended September 30, 2025, the Bank acted as the lead arranger in a $
loan extended to an entity deemed to be a related party. As of September 30, 2025, the Bank held an outstanding balance
of $
-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
December 31, 2024.
12. SUBSEQUENT EVENTS
Dividends
On October 21, 2025, the Company announced that its Board of Directors declared its quarterly cash dividend. The
quarterly dividend for the fourth quarter of 2025 was $
5, 2025, to stockholders of record as of the close of business on November 14, 2025.
Table of Contents
29 USCB Financial Holdings, Inc. Q3 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 nine months ended September 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 and potential balance sheet restructuring.
These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ
materially from those anticipated in such statements. Potential risks and uncertainties include, but are not limited to:
•
operations;
•
•
for credit losses and deferred tax asset valuation allowance;
•
•
jurisdiction where we operate;
•
industry;
•
•
principles, policies, practices or guidelines, including 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;
•
•
•
Administration loans;
•
•
and net interest margin;
•
Table of Contents
30 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
•
employee, or third-party fraud and security breaches; and
•
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 has filed or will file with the SEC.
Overview
The Company reported net income of $8.9 million or $0.45 per diluted share of common stock for the three months
ended September 30, 2025 compared to $6.9 million or $0.35 per diluted share of common stock for the three months
ended September 30, 2024. For nine months ended September 30, 2025, the Company reported net income of $24.7 million
or $1.23 per diluted share of common stock compared to $17.8 million or $0.90 per diluted share of common stock for the
nine months ended September 30, 2024.
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
September 30, 2025 compared to at or for the quarter ended September 30, 2024 and as of December 31, 2024 and
annualized where appropriate:
•
from $18.1 million for the quarter ended September 30, 2024.
•
for the three months ended September 30, 2024.
•
September 30, 2024 and an increase of $186.7 million or 9.7% annualized from December 31, 2024.
•
an increase of $199.6 million or 10.3% from September 30, 2024 and an increase of $158.1 million or 10.7%
annualized from December 31, 2024.
•
September 30, 2024 and an increase of $281.6 million or 17.3% annualized from December 31, 2024.
•
the quarter ended September 30, 2024.
•
compared to 13.38% for quarter ended September 30, 2024.
•
•
•
respectively.
•
an increase of $0.74 or 9.1% annualized from $10.81 at December 31, 2024. At September 30, 2025, tangible book
value per common share was negatively affected by ($2.09) due to an accumulated comprehensive loss of $37.8
million. At December 31, 2024, tangible book value per common share was negatively affected by ($2.24) due to
Table of Contents
31 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
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.
•
institutional buyers pursuant to which the Company sold and issued $40.0 million in aggregate principal amount of
its 7.625% fixed-to-floating rate subordinated notes due August 15, 2035 in a private placement transaction. This
transaction was conducted under the provisions of Regulation D promulgated under the Securities Act 1933. The
subordinated notes were issued by the Company to the purchasers at a price equal to 100% of their face amount.
The majority of the net proceeds were used to repurchase 2.0 million shares of Class A common stock in September
2025, from certain institutional shareholders through privately negotiated transactions, at a weighted average price
per share of $17.19. The aggregate purchase price for these transactions was approximately $34.4 million. The
repurchases were supplemental and not part of the Company’s two previously announced stock repurchase
programs.
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.
Table of Contents
32 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
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):
September 30, 2025
December 31, 2024
Consolidated Balance Sheets:
Total assets
$
2,767,945
$
2,581,216
Total loans
(1)
$
2,130,966
$
1,972,848
Total deposits
$
2,455,614
$
2,174,004
Total stockholders' equity
$
209,095
$
215,388
(1) Loan amounts include deferred fees/costs.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
21,274
$
18,109
$
61,423
$
50,578
Total non-interest income
$
3,684
$
3,438
$
10,770
$
9,113
Total non-interest expense
$
13,048
$
11,454
$
37,734
$
34,188
Net income
$
8,939
$
6,949
$
24,737
$
17,770
Profitability:
Efficiency ratio
52.28%
53.16%
52.27%
57.27%
Net interest margin
3.14%
3.03%
3.17%
2.87%
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 September 30, 2025 compared to the three months ended September 30, 2024.
Net income increased $2.0 million to $8.9 million for the three months ended September 30, 2025 from $6.9 million for
the same period in 2024. The $2.0 million or 28.6% increase in net income was primarily driven by an improvement in net
interest margin due to reduction in rates paid on interest-bearing liabilitie s between periods and a decrease in provision for
credit losses for the third quarter ended September 30, 2025.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Net income increased $7.0 million to $24.7 million for the nine months ended September 30, 2025
from $17.8 million
for the same period in 2024. The $7.0 million or 39.2% increase in the net income was primarily driven by an improvement
in net interest margin due to reduction in rates paid on interest-bearing liabilities between periods. However, the increase in
net interest income was partially offset by an increase in non-interest expense between periods. 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-
Table of Contents
33 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets,
net interest margin includes the indirect benefit of these non-interest-bearing funding sources.
Changes in market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing
liabilities, as well as the volume and types of interest-earning assets and interest-bearing and non-interest-bearing liabilities,
are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Our
asset liability committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect
net interest income and net interest margin.
Table of Contents
34 USCB Financial Holdings, Inc. Q3 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 September 30,
2025
2024
Average
(1)
Balance
Interest
Yield/Rate
(2)
Average
(1)
Balance
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
2,099,043
$
32,866
6.21%
$
1,878,230
$
29,819
6.32%
Investment securities
(4)
461,303
3,522
3.03%
419,315
2,754
2.61%
Other interest-earnings assets
130,740
1,332
4.04%
80,378
989
4.89%
Total interest-earning assets
2,691,086
37,720
5.56%
2,377,923
33,562
5.61%
Non-interest-earning assets
107,029
107,511
Total assets
$
2,798,115
$
2,485,434
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
47,338
286
2.40%
$
57,925
411
2.82%
Saving and money market deposits
1,319,862
10,343
3.11%
1,084,562
10,064
3.69%
Time deposits
520,345
5,036
3.84%
325,580
3,391
4.14%
Total interest-bearing deposits
1,887,545
15,665
3.29%
1,468,067
13,866
3.76%
FHLB advances and other borrowings
40,065
377
3.73%
156,043
1,587
4.05%
Subordinated notes
26,029
404
6.16%
-
-
- %
Total interest-bearing liabilities
1,953,639
16,446
3.34%
1,624,110
15,453
3.79%
Non-interest-bearing demand deposits
569,522
609,456
Other non-interest-bearing liabilities
49,638
45,227
Total liabilities
2,572,799
2,278,793
Stockholders' equity
225,316
206,641
Total liabilities and stockholders' equity
$
2,798,115
$
2,485,434
Net interest income
$
21,274
$
18,109
Net interest spread
(5)
2.22%
1.82%
Net interest margin
(6)
3.14%
3.03%
(1) Average balances - Daily average balances are used to calculate yields/rates.
(2) Annualized.
(3) Average loan balances include deferred fees/costs and non-accrual loans. Interest income on loans includes accretion of deferred loan fees, net of
deferred loan costs.
(4) At fair value except for securities held to maturity. This amount includes FHLB stock.
(5) Net interest spread is the weighted average yield on total interest-earning assets minus the weighted average rate on total interest-bearing liabilities.
(6) Net interest margin is the ratio of net interest income to average total interest-earning assets.
Table of Contents
35 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Nine Months Ended September 30,
2025
2024
Average
Balance
(1)
Interest
Yield/Rate
(2)
Average
Balance
(1)
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
2,048,192
$
95,057
6.21
%
$
1,829,593
$
84,479
6.17
%
Investment securities
(4)
449,376
9,978
2.97
%
426,594
8,634
2.70
%
Other interest-earnings assets
90,169
2,817
4.18
%
101,919
3,953
5.18
%
Total interest-earning assets
2,587,737
107,852
5.57
%
2,358,106
97,066
5.50
%
Non-interest earning assets
106,933
108,902
Total assets
$
2,694,670
$
2,467,008
$
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
49,191
909
2.47
%
$
55,887
$
1,171
2.80
%
Saving and money market deposits
1,243,911
29,088
3.13
%
1,094,433
30,529
3.73
%
Time deposits
457,847
13,297
3.88
%
321,470
9,907
4.12
%
Total interest-bearing deposits
1,750,949
43,294
3.31
%
1,471,790
41,607
3.78
%
FHLB advances
98,151
2,731
3.72
%
160,726
4,881
4.06
%
Subordinated notes
8,771
404
6.16
%
-
-
-
Total interest-bearing liabilities
1,857,871
46,429
3.34
%
1,632,516
46,488
3.80
%
Non-interest bearing demand deposits
570,918
598,294
Other non-interest-bearing liabilities
41,422
37,045
Total liabilities
2,470,211
2,267,855
Stockholders' equity
224,459
199,153
Total liabilities and stockholders' equity
$
2,694,670
$
2,467,008
Net interest income
$
61,423
$
50,578
Net interest spread
(5)
2.23
%
1.70
%
Net interest margin
(6)
3.17
%
2.87
%
(1) Average balances - Daily average balances are used to calculate yields/rates.
(2) Annualized.
(3) Average loan balances include deferred fees/costs and non-accrual loans. Interest income on loans includes accretion of deferred loan fees, net of
deferred loan costs.
(4) At fair value except for securities held to maturity. This amount includes FHLB stock.
(5) Net interest spread is the weighted average yield on total interest-earning assets minus the weighted average rate on total interest-bearing
liabilities.
(6) Net interest margin is the ratio of net interest income to average total interest-earning assets.
Three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Net interest income before the provision for credit losses was $21.3 million for the three months ended September 30,
2025 as compared to $18.1 million for the same period 2024. The increase of $3.2 million or 17.5% was primarily driven by
higher income from an expanded loan portfolio, and a reduction in rates paid on interest-bearing liabilities between the
periods.
Net interest margin (“NIM”) was 3.14% for the three months ended September 30, 2025 and 3.03% for the same period
in 2024. The 11-basis-point increase primarily reflects a reduction in the weighted average rate paid on interest-bearing
liabilities that outweighed the decline in the yield on interest-bearing assets. Additionally, the balance of interest-bearing
assets grew more rapidly than the balance of interest-bearing liabilities.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Net interest income before the provision for credit losses was $61.4 million for the nine months ended September 30,
2025, an increase of $10.8 million or 21.4%, from $50.6 million for the same period in 2024. This growth was primarily driven
by higher income from an expanded loan portfolio and a reduction in the weighted average rates paid on interest -bearing
liabilities between periods.
The NIM was 3.17% for the nine months ended September 30, 2025 and 2.87% for the same period in 2024. The NIM
expansion of 30 basis points reflects both higher loan yields and growth in the loan average balance, along with a decrease
in interest rate paid on interest-bearing liabilities.
Table of Contents
36 USCB Financial Holdings, Inc. Q3 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 at
a level that, in management's evaluation, is adequate to provide coverage for all expected credit losses. The provision for
credit losses is impacted by variations in the size and composition of our loan and 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 September 30, 2025 compared to the three months ended September 30, 2024.
The provision for credit loss was $105 thousand for the three months ended September 30, 2025 compared to $931
thousand for the same period in 2024. The significant decrease in provision expense was primarily attributable to slower
loan portfolio growth during the third quarter of 2025.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
The provision for credit loss was $1.8 million for the nine months ended September 30, 2025 compared to $2.1 million
for the same period in 2024. The decrease in the provision for credit losses was due to release of reserves related to
individually evaluated loans, following two charge-offs recorded during the nine months ended September 30, 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 the 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 September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Service fees
$
2,661
$
2,544
$
7,394
$
6,172
(Loss) gain on sale of securities available for sale, net
(28)
-
(28)
14
Gain on sale of loans held for sale, net
128
109
804
593
Other non-interest income
923
785
2,600
2,334
Total non-interest income
$
3,684
$
3,438
$
10,770
$
9,113
Three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Non-interest income for the three months ended September 30, 2025 increased $246 thousand or 7.2%, compared to
the same period in 2024. This increase was primarily driven by growth in prepayment penalties and wire transfer fees
reported under the service fees category and income from bank owned life insurance reported under other non-interest
income.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Non-interest income for the nine months ended September 30, 2025 increased $1.7 million or 18.2%, compared to the
same period in 2024. This increase was primarily driven by growth in prepayment penalties and title insurance income
reported under the service fees category combined with an increase in the gain on sale of loans as well as income from
bank owned life insurance reported under other non-interest income.
Table of Contents
37 USCB Financial Holdings, Inc. Q3 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 September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Salaries and employee benefits
$
7,909
$
7,200
$
23,499
$
20,863
Occupancy
1,382
1,341
4,003
3,921
Regulatory assessment and fees
377
452
1,194
1,361
Consulting and legal fees
585
161
1,041
1,016
Network and information technology services
656
513
1,725
1,499
Other operating
2,139
1,787
6,272
5,528
Total non-interest expense
$
13,048
$
11,454
$
37,734
$
34,188
Three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Non-interest expense for the three months ended September 30, 2025, increased $1.6 million, or 13.9%, compared to
the same period in 2024. The increase was primarily driven by a $709 thousand rise in salaries and employee benefits,
reflecting merit increases, new hires and higher stock-based compensation expense. Consulting and legal fees increased
$424 thousand due to the administration expense related to the interest rate collars and the third quarter of 2024 included
a legal expense reimbursement, which reduced expenses in that period and contributed to the year-over-year increase.
Additionally, other operating expense increased by $352 thousand, primarily due to the absence of a reimbursement for
force-placed insurance that was received in the third quarter of 2024. These prior-period reimbursements had the effect of
lowering reported expenses, making the current period’s expenses appear higher by comparison.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Non-interest expense for the nine months ended September 30, 2025 increased $3.5 million or 10.4%, compared to the
same period in 2024. The increase was primarily driven by an increase of $2.6 million in salaries and employee benefits
due to an increase of $1.0 million in merit increases and new full-time employee salaries, and $1.5 million in stock-based
compensation expenses. Additionally, other operating expenses increased $744 thousand due to increase of $276 thousand
due to item processing and internet banking fees, $160 thousand in board of directors’ expenses, $147 thousand in
shareholders expense and $103 thousand in forced placed insurance.
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 September 30, 2025 compared to the three months ended September 30, 2024.
Income tax expense for the three months ended September 30, 2025 was $2.9 million as compared to $2.2 million for
the same period in 2024 and reflected the increased level of pre-tax net income experienced during the 2025 period. The
effective tax rate for the three months ended September 30, 2025 was 24.28% compared to 24.15% for the same period in
2024.
Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
Income tax expense for the nine months ended September 30, 2025 was $7.9 million as compared to $5.6 million for
the same period in 2024 and reflected the substantially increased level of pre-tax net income experienced during the 2025
period. The effective tax rate for the nine months ended September 30, 2025 was 24.22% compared to 23.98% 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.
Table of Contents
38 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Analysis of Financial Condition
Total assets at September 30, 2025 were $2.77 billion, an increase of $186.7 million, or 9.7% annualized, over total
assets of $2.58 billion at December 31, 2024. Total loans, net of deferred fees/costs, increased $158.1 million, or 10.7%
annualized, to $2.13 billion at September 30, 2025 compared to $1.97 billion at December 31, 2024. Total deposits
increased by $281.6 million, or 17.3% annualized, to $2.46 billion at September 30, 2025 compared to $2.17 billion
December 31, 2024.
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 September 30, 2025.
At quarter end, HTM securities included $147.3 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 $5 thousand ACL as of September 30, 2025. The book value for debt securities classified as
HTM represents amortized cost less ACL.
Aggregate AFS and HTM investment securities increased $55.6 million, or 17.5% annualized, to $480.5 million at
September 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 September 30, 2025, investment securities with a market value of $49.7 million were pledged to secure public
deposits. The investment portfolio does not contain any tax-exempt securities.
Table of Contents
39 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
The following table presents the amortized cost and fair value of investment securities for the dates indicated (dollars
in thousands):
September 30, 2025
December 31, 2024
Available-for-sale:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Government Agency
$
13,143
$
11,965
$
14,279
$
12,625
Collateralized mortgage obligations
100,830
81,695
101,808
78,905
Mortgage-backed securities - residential
60,915
51,318
58,995
46,933
Mortgage-backed securities - commercial
145,991
138,517
86,604
78,739
Municipal securities
22,838
18,915
24,925
19,311
Bank subordinated debt securities
22,046
21,769
24,314
23,708
$
365,763
$
324,179
$
310,925
$
260,221
Held-to-maturity:
U.S. Government Agency
$
41,500
$
38,046
$
42,538
$
37,444
Collateralized mortgage obligations
52,766
47,376
56,987
49,259
Mortgage-backed securities - residential
37,880
34,915
40,681
36,121
Mortgage-backed securities - commercial
15,135
14,002
15,272
13,887
Corporate bonds
9,089
8,960
9,222
8,829
$
156,370
$
143,299
$
164,700
$
145,540
Allowance for credit losses - securities held-to-maturity
(5)
(6)
Securities held-to maturity, net of allowance for credit losses
$
156,365
$
164,694
The following table shows the weighted average yields, categorized by contractual maturity, for investment securities
as of September 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
$
-
-
$
-
-
$
2,390
2.90%
$
10,753
2.62%
$
13,143
2.68%
Collateralized mortgage obligations
-
-
-
-
-
-
100,830
1.46%
100,830
1.46%
MBS - residential
-
-
-
-
-
-
60,915
1.86%
60,915
1.86%
MBS - commercial
-
-
-
-
-
-
145,991
3.67%
145,991
3.67%
Municipal securities
-
-
-
-
22,838
1.45%
-
-
22,838
1.45%
Bank subordinated debt securities
-
-
1,983
7.97%
20,063
5.26%
-
-
22,046
5.52%
$
-
-
$
1,983
7.97%
$
45,291
3.21%
$
318,489
2.59%
$
365,763
2.70%
Held-to-maturity:
U.S. Government Agency
$
2,998
0.64%
$
13,873
1.22%
$
10,885
1.59%
$
13,744
2.07%
$
41,500
1.56%
Collateralized mortgage obligations
-
-
-
-
-
-
52,766
1.64%
52,766
1.64%
MBS - residential
-
-
4,597
1.85%
5,052
1.62%
28,231
2.33%
37,880
2.18%
MBS - commercial
-
-
3,046
1.63%
-
-
12,089
2.57%
15,135
2.38%
Corporate bonds
9,089
2.82%
-
-
-
-
-
-
9,089
2.82%
$
12,087
2.28%
$
21,516
1.42%
$
15,937
1.60%
$
106,830
1.98%
$
156,370
1.89%
Loans
Loans are the largest category of interest-earning assets on the unaudited Consolidated Balance Sheets, and usually
provide higher yields than the remainder of the interest -earning assets. Higher yields typically carry greater inherent credit
and liquidity risks in comparison to lower yield assets. The Company manages and mitigates such risks in accordance with
the credit and ALM policies, risk tolerance and balance sheet composition.
Table of Contents
40 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
The following table shows the loan portfolio composition as of the dates indicated (in thousands):
September 30, 2025
December 31, 2024
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
316,557
14.9
%
$
289,961
14.8
%
Commercial real estate
1,226,121
57.7
%
1,136,417
57.8
%
Commercial and industrial
269,430
12.7
%
258,311
13.1
%
Correspondent banks
104,598
4.9
%
82,438
4.2
%
Consumer and other
207,939
9.8
%
198,091
10.1
%
Total gross loans
2,124,645
100.0
%
1,965,218
100.0
%
Plus: Deferred fees/costs
6,321
7,630
Total loans net of deferred fees/costs
2,130,966
1,972,848
Less: Allowance for credit losses
24,964
24,070
Total net loans
$
2,106,002
$
1,948,778
Total loans, net of deferred fees/costs, increased by $158.1 million, or 10.7% annualized to $2.13 billion, at
September 30, 2025 compared to December 31, 2024. The commercial real estate loan segment had the most significant
balance increase compared to December 31, 2024.
Our loan portfolio continues to grow, with commercial real estate lending as the primary focus which represented
approximately 57.7% of the total gross loan portfolio as of September 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.
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
September 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
$
15,515
$
51,018
$
68,095
$
181,929
$
316,557
Commercial real estate
83,082
463,653
673,810
5,576
1,226,121
Commercial and industrial
10,968
109,875
104,382
44,205
269,430
Correspondent banks
104,598
-
-
-
104,598
Consumer and other
2,519
1,307
22,547
181,566
207,939
Total gross loans
$
216,682
$
625,853
$
868,834
$
413,276
$
2,124,645
Interest rate sensitivity:
Fixed interest rates
$
170,510
$
180,720
$
146,407
$
315,912
$
813,549
Floating or adjustable rates
46,172
445,133
722,427
97,364
1,311,096
Total gross loans
$
216,682
$
625,853
$
868,834
$
413,276
$
2,124,645
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 September 30, 2025, approximately 61.7% of the loan portfolio has adjustable/variable rates and 38.3% 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
41 USCB Financial Holdings, Inc. Q3 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):
September 30, 2025
Pass
Special Mention
Substandard
Doubtful
Total
Residential real estate
$
313,945
$
2,060
$
552
$
-
$
316,557
Commercial real estate
1,212,052
11,656
2,413
-
1,226,121
Commercial and industrial
266,801
936
1,693
-
269,430
Correspondent banks
104,598
-
-
-
104,598
Consumer and other
207,939
-
-
-
207,939
$
2,105,335
$
14,652
$
4,658
$
-
$
2,124,645
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
42 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Non-Performing Assets
The following table presents non-performing assets as of the dates shown (in thousands, except ratios):
September 30, 2025
December 31, 2024
Non-accrual loans
$
1,310
$
2,707
Loans past due over 90 days and still accruing
-
-
Total non-performing loans
$
1,310
$
2,707
Other real estate owned
-
-
Total non-performing assets
$
1,310
$
2,707
Asset quality ratios:
Allowance for credit losses to total loans
1.17%
1.22%
Allowance for credit losses to non-performing loans
1,906%
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 of this Form 10-Q.
Allowance for Credit Losses
The ACL on loans represents an amount that, in management's evaluation, is adequate to provide coverage for all
expected future credit losses on outstanding loans. Additionally, qualitative adjustments are made to the ACL when, based
on management’s judgment, there are factors impacting the allowance estimate not considered by the quantitative
calculations. See Note 3 “Loans” in Item 1 of Part 1 of this Form 10-Q for more information on the ACL.
Table of Contents
43 USCB Financial Holdings, Inc. Q3 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 September 30,
2025
Beginning balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
Provision for credit losses
(1)
544
(102)
(118)
(45)
(252)
27
Recoveries
5
-
6
-
-
11
Charge-offs
-
-
-
-
(7)
(7)
Ending Balance
$
6,026
$
9,389
$
4,396
$
829
$
4,324
$
24,964
Average loans
$
316,701
$
1,184,145
$
269,204
$
103,210
$
225,783
$
2,099,043
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
-
(0.01)%
-
0.01%
(0.00)%
Nine Months Ended September 30,
2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(3)
888
601
(249)
175
179
1,594
Recoveries
17
-
12
-
1
30
Charge-offs
-
-
-
-
(730)
(730)
Ending Balance
$
6,026
$
9,389
$
4,396
$
829
$
4,324
$
24,964
Average loans
$
304,401
$
1,170,204
$
264,718
$
95,724
$
213,145
$
2,048,192
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
-
(0.00)%
-
0.69%
0.07%
(1) Provision for credit losses excludes a $80 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $2 thousand release related to investment securities held to maturity.
(2) Annualized.
(3) Provision for credit losses excludes a $224 thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $1 thousand release related to investment securities held to maturity.
Table of Contents
44 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended September 30,
2024
Beginning balance
$
3,193
$
10,272
$
4,747
$
892
$
3,126
$
22,230
Provision for credit losses
(1)
760
(86)
(96)
(69)
322
831
Recoveries
2
-
10
-
1
13
Charge-offs
-
-
-
-
(7)
(7)
Ending Balance
$
3,955
$
10,186
$
4,661
$
823
$
3,442
$
23,067
Average loans
$
238,113
$
1,093,599
$
238,331
$
105,388
$
202,799
$
1,878,230
Net charge-offs (recoveries) to average
loans
(0.01)%
-
(0.02)%
-
0.01%
0.00%
Nine Months Ended September 30,
2024
Beginning balance
$
2,695
$
10,366
$
3,974
$
911
$
3,138
$
21,084
Provision for credit losses
(3)
1,252
(180)
666
(88)
318
1,968
Recoveries
8
-
21
-
3
32
Charge-offs
-
-
-
-
(17)
(17)
Ending Balance
$
3,955
$
10,186
$
4,661
$
823
$
3,442
$
23,067
Average loans
$
231,947
$
1,065,280
$
232,160
$
102,659
$
197,547
$
1,829,593
Net charge-offs (recoveries) to average
loans
(0.01)%
-
(0.02)%
-
0.01%
0.00%
(1) Provision for credit losses excludes a $101 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $1 thousand release related to investment securities held to maturity.
(2) Annualized.
(3) Provision for credit losses excludes $159 thousand provision due to unfunded commitments included in accrued interest.
The Federal Open Market Committee (“FOMC”) economic forecasts as of September 30, 2025, showed moderate
improvement in the forecast for real GDP an slight improvement in unemployment rate. Fannie Mae House Price Index
(“HPI”) forecast reflected a deterioration in national housing prices. The Company continued to adjust the HPI index effect
on the 1-4 Family loan portfolio with a qualitative factor because Florida housing prices are performing better than national
levels. The Q-factor scorecard was updated based on the latest portfolio stress test and the resulting maximum loss
calculation.
Our ACL included residential loans. To assess the potential impact of changes in qualitative factors related to these
loans, management performed a sensitivity analysis. The Company evaluated the impact of the HPI used in calculating
expected losses on the residential loan segment. As of September 30, 2025, for every 100 basis points increase in the HPI,
the forecast reduces reserves by approximately $380 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 September 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 $9.1 million or
35.5% 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 September 30, 2025, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was
$58.9 million. Changes in cash surrender value are recorded to other non-interest income in the unaudited Consolidated
Statements of Operations. The Company has BOLI policies with five insurance carriers. The Company is the beneficiary of
these policies.
Table of Contents
45 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Deposits
Customer deposits are the primary funding source for the Bank’s growth. Through our network of banking centers, we
offer a competitive array of deposit accounts and treasury management services designed to meet our customers’ business
needs. Our primary deposit customers are small-to-medium sized businesses (“SMBs”), and the personal business of the
owners and operators of these SMBs, as well as the retail/consumer relationships of the employees of these businesses.
The following table presents the daily average balance and average rate paid on deposits by category for the periods
presented (in thousands, except ratios):
Three Months Ended September 30,
2025
2024
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest bearing demand deposits
$
569,522
0.00%
$
609,456
0.00%
Interest-bearing demand deposits
47,338
2.40%
57,925
2.82%
Saving and money market deposits
1,319,862
3.11%
1,084,562
3.69%
Time deposits
520,345
3.84%
325,580
4.14%
Total
$
2,457,067
2.53%
$
2,077,523
2.66%
The Company has a granular deposit portfolio with outstanding balances comprised of 57% in commercial deposits,
27% in personal deposits, 6% in public funds (which are partially collateralized) and 10% in brokered deposits. The brokered
deposits balance at September 30, 2025 was $235.5 million and $133.0 million at December 31, 2024. This increase was
primarily driven by a $100 million aggregate notional amount associated with two costless collar hedges executed during
the third quarter of 2025.These costless hedges enhance the Company’s interest rate risk management strategy by
mitigating the impact of rate movements on future cash flows.
As of September 30, 2025, the Company has approximately 21 thousand deposit accounts with the majority of which
were personal accounts, approximately 13 thousand or 61.7%. The estimated average account size in our deposit portfolio
was approximately $119 thousand as of September 30, 2025.
The amount of uninsured deposits are estimated based on the FDIC deposit insurance limit of $250 thousand per
account holder for all deposit accounts at the Company. The total estimated percentage of uninsured deposits was 53% at
September 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 $183.9 million at September 30, 2025 and was $129.5 million at December 31, 2024.
The following table shows scheduled maturities of uninsured time deposits as of September 30, 2025 (in thousands):
September 30, 2025
Three months or less
$
68,923
Over three through six months
24,033
Over six though twelve months
9,923
Over twelve months
38,097
$
140,976
Other Liabilities
The Company collects from commercial and residential loan customers funds which are held in escrow for future
payment of real estate taxes and insurance. These escrow funds are disbursed by the Company directly to the insurance
companies and taxing authority of the borrower. Escrow funds are recorded as accrued interest and other liabilities in the
consolidated balance sheet.
As of September 30, 2025, escrow balances totaled $29.2 million compared to $6.1 million at December 31, 2024.
The increase reflects the normal growth in escrow accounts pending tax and insurance payments.
Table of Contents
46 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Borrowings
FHLB Advances
As a member of the FHLB of Atlanta, we are eligible to obtain advances with various terms and conditions. This
accessibility to additional funding allows us to efficiently and timely meet both expected and unexpected outgoing cash flows
and collateral needs without adversely affecting either daily operations or the financial condition of the Company.
As of September 30, 2025, we had $11.0 million of fixed-rate advances outstanding from the FHLB with a weighted
average rate of 3.76% maturing in 2028 as detailed in the table below.
The following table presents the FHLB advances as of September 30, 2025 (in thousands):
Interest Rate
Type of Rate
Maturity Date
Amount
3.76%
Fixed
January 24, 2028
11,000
$
11,000
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
September 30, 2025, there were no outstanding balances with any of these liquidity sources.
Subordinated Notes
On August 14, 2025, the Company entered into a Subordinated Note Purchase Agreement with certain qualified
institutional buyers pursuant to which the Company sold and issued $40.0 million in aggregate principal amount of its
7.625% Fixed-to-Floating Rate Subordinated Notes due 2035. The Notes were issued by the Company to the purchasers
at a price equal to 100% of their face amount. The subordinated debt was originally issued at a cost of $760 thousand. After
two months of amortization, the carrying value has been reduced to $738 thousand, reflecting the scheduled expense
recognition over the term of the instrument. The subordinated notes are presented net of these costs on the consolidated
balance sheet. The Notes were offered and sold by the Company in a private placement transaction in reliance on
exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to
Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D thereunder. For additional information, see the
Company Form 8-K filed on August 14, 2025.
Off-Balance Sheet Arrangements
We engage in various financial transactions in our operations that, under GAAP, may not be included on the balance
sheet. To meet the financing needs of our customers, we may include commitments to extend credit and standby letters of
credit. To a varying degree, such commitments involve elements of credit, market, and interest rate risk in excess of the
amount recognized in the balance sheet. 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 September 30, 2025 was $795 thousand and at December 31, 2024 was $571 thousand. The increase
was primarily driven by an increase in unfunded commitments.
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 ):
September 30, 2025
December 31, 2024
Commitments to grant loans and unfunded lines of credit
$
140,146
$
122,578
Standby and commercial letters of credit
3,855
5,389
Total
$
144,001
$
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
Table of Contents
47 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash
requirements.
Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change
in credit risk in our portfolio. Lines of credit generally have variable interest rates. The maximum potential amount of future
payments we could be required to make is represented by the contractual amount of the commitment, less the amount of
any advances made.
Letters of credit are conditional commitments issued by us to guarantee the performance of a client to a third party. In
the event of nonperformance by the client in accordance with the terms of the agreement with the third party, we would be
required to fund the commitment. If the commitment is funded, we would be entitled to seek recovery from the client from
the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash
or marketable securities.
Asset and Liability Management Committee
Members of senior management and our Board make up the asset and liability management committee, or ALCO.
Senior management is responsible for ensuring that Board approved strategies and policies for managing and mitigating
risks are appropriately executed within the designated lines of authority and responsibility in a timely manner.
ALCO oversees the establishment, approval, implementation, and review of interest rate risk, management, and
mitigation strategies, ALM related policies, ALCO procedures and risk tolerances and appetite.
While some degree of Interest Rate Risk (“IRR”) is inherent to the banking business, we believe our ALCO implements
sound risk management practices to identify, quantify, monitor, and limit IRR exposures.
When assessing the scope of IRR exposure and impact on the consolidated balance sheet, cash flows and 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 interest rates scenarios,
yield curve shapes and time horizons. These simulations utilize both instantaneous and parallel changes in the level of
interest rates, as well as non-parallel changes such as changing slopes (flat and steepening) and twists of the yield curve.
Static simulation models are based on current exposures and assume a constant balance sheet with no new growth.
Dynamic simulation is also utilized to have a more comprehensive assessment on IRR. This simulation relies on, 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 September 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. 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. 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. Neutral denotes minimal or no effect on net interest
income as a result of changes in interest rates. Many assumptions are used to calculate the impact of interest rate variations
on our net interest income, such as asset prepayment speeds, non-maturity deposit price sensitivity (betas), pricing
correlations, deposit truncations and decay rates, and key interest rate 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.
Table of Contents
48 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
According to our model, as of September 30, 2025, our balance sheet is liability sensitive for year one and 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.
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 Federal Funds lines of
credit 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.
Table of Contents
49 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
Capital Adequacy
As of September 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 September 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
September 30, 2025
Total risk-based capital
$
299,147
13.93
%
$
171,861
8.00
%
$
214,826
10.00
%
Tier 1 risk-based capital
$
273,382
12.73
%
$
128,896
6.00
%
$
171,861
8.00
%
Common equity tier 1 capital
$
273,382
12.73
%
$
96,672
4.50
%
$
139,637
6.50
%
Leverage ratio
$
273,382
9.63
%
$
113,507
4.00
%
$
141,883
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
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.
Table of Contents
50 USCB Financial Holdings, Inc. Q3 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
9/30/2025
6/30/2025
3/31/2025
12/31/2024
9/30/2024
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
8,939
$
8,140
$
7,658
$
6,904
$
6,949
Plus: Income tax expense
2,866
2,599
2,440
2,197
2,213
Plus: Provision for credit losses
105
1,031
681
1,030
931
PTPP income
$
11,910
$
11,770
$
10,779
$
10,131
$
10,093
PTPP return on average assets:
(1)
PTPP income
$
11,910
$
11,770
$
10,779
$
10,131
$
10,093
Average assets
$
2,798,115
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
PTPP return on average assets
(2)
1.69%
1.76%
1.68%
1.58%
1.62%
Operating net income:
(1)
Net income
$
8,939
$
8,140
$
7,658
$
6,904
$
6,949
Less: Net losses on sale of securities
(28)
-
-
-
-
Less: Tax effect on sale of securities
7
-
-
-
-
Operating net income
$
8,960
$
8,140
$
7,658
$
6,904
$
6,949
Operating PTPP income:
(1)
PTPP income
$
11,910
$
11,770
$
10,779
$
10,131
$
10,093
Less: Net losses on sale of securities
(28)
-
-
-
-
Operating PTPP income
$
11,938
$
11,770
$
10,779
$
10,131
$
10,093
Operating PTPP return on average assets:
(1)
Operating PTPP income
$
11,938
$
11,770
$
10,779
$
10,131
$
10,093
Average assets
$
2,798,115
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
Operating PTPP return on average assets
(2)
1.69%
1.76%
1.68%
1.58%
1.62%
Operating return on average assets:
(1)
Operating net income
$
8,960
$
8,140
$
7,658
$
6,904
$
6,949
Average assets
$
2,798,115
$
2,677,198
$
2,606,593
$
2,544,592
$
2,485,434
Operating return on average assets
(2)
1.27%
1.22%
1.19%
1.08%
1.11%
Operating return on average equity:
(1)
Operating net income
$
8,960
$
8,140
$
7,658
$
6,904
$
6,949
Average equity
$
225,316
$
228,492
$
219,505
$
215,715
$
206,641
Operating return on average equity
(2)
15.78%
14.29%
14.15%
12.73%
13.38%
Operating Revenue:
(1)
$
21,274
$
21,034
$
19,115
$
19,358
$
18,109
3,684
3,370
3,716
3,627
3,438
(28)
-
-
-
-
$
24,986
$
24,404
$
22,831
$
22,985
$
21,547
Operating Efficiency Ratio:
(1)
$
13,048
$
12,634
$
12,052
$
12,854
$
11,454
$
24,986
$
24,404
$
22,831
$
22,985
$
21,547
52.22%
51.77%
52.79%
55.92%
53.16%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Annualized.
Table of Contents
51 USCB Financial Holdings, Inc. Q3 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
9/30/2025
6/30/2025
3/31/2025
12/31/2024
9/30/2024
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity
$
209,095
$
231,583
$
225,088
$
215,388
$
213,916
Less: Intangible assets
-
-
-
-
-
Tangible stockholders' equity
(3)
$
209,095
$
231,583
$
225,088
$
215,388
$
213,916
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
18,107,385
20,078,385
20,048,385
19,924,632
19,620,632
Tangible book value per common share
(2)
$
11.55
$
11.53
$
11.23
$
10.81
$
10.90
Operating diluted net income per common share:
(1)
Operating net income
$
8,960
$
8,140
$
7,658
$
6,904
$
6,949
Total weighted average diluted shares of common stock
19,755,820
20,295,794
20,319,535
20,183,731
19,825,211
Operating diluted net income per common share:
$
0.45
$
0.40
$
0.38
$
0.34
$
0.35
Tangible Common Equity/Tangible Assets
(1)
$
209,095
$
231,583
$
225,088
$
215,388
$
213,916
(3)
$
2,767,945
$
2,719,474
$
2,677,382
$
2,581,216
$
2,503,954
Tangible Common Equity/Tangible Assets
7.55%
8.52%
8.41%
8.34%
8.54%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
(2) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.
(3) Since the Company has no intangible assets, tangible stockholders’ equity and tangible total assets are the same amounts as stockholders’ equity
and total assets, respectively, as calculated under GAAP.
Table of Contents
52 USCB Financial Holdings, Inc. Q3 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 September 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
53 USCB Financial Holdings, Inc. Q3 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) The Company’s repurchases of equity securities for the three months ended September 30, 2025 were as follows:
Total
Number of
Shares
Purchased
Average
Price Paid
Per Share
Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs (1)
Maximum Number
of Shares that
May
Yet Be Purchased
Under Plans or
Programs (1)
Period
July 1 - 31, 2025
-
$
-
-
528,309
August 1 - 31, 2025
-
$
-
-
528,309
September 1 - 30, 2025
2,000,000
$
17.19
-
528,309
Total
2,000,000
(2)
$
17.19
-
(1) As of September 30, 2025 there were 528,309 number of shares available for repurchase under the two outstanding share repurchase programs:
- On January 24, 2022, the Company announced its initial stock repurchase program to repurchase up to 750,000 shares of Class A common stock.
- On April 22, 2024, the Company announced the adoption of a second repurchase program to repurchase up to 500,000 share of Class A common
stock to commence upon completion of its first repurchase program.
(2) Reflects the repurchase of shares pursuant to stock repurchase agreements entered into with certain institutional investors on September 2, 2025.
For additional information regarding such repurchases, please see the Current Report on Form 8-K filed with the SEC on September 5, 2025.
Item 3. Defaults Upon Senior Securities
(a)
(b)
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)
(b)
Table of Contents
54 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q
(c)
persons
such terms are defined in Item 408 of the SEC’s Regulation S-K).
Table of Contents
55 USCB Financial Holdings, Inc. Q3 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).
4.5
Indenture, dated August 14, by and between USCB Financial Holdings, Inc. and Wilmington Trust, National Association, as
trustee (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 August 14, 2025).
4.6
Form of 7.625% Fixed-to-Floating Rate Subordinated Note due 2035 (included as Exhibit A-1 and Exhibit A-2 to the
Indenture referenced in Exhibit 4.5 hereto (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 August 14, 2025).
10.1
Form of Subordinated Note Purchase Agreement, dated August 14, 2024, by and among USCB Financial Holdings, Inc.
and certain qualified institutional buyers (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on
Form 8-K (File No. 001-41196) filed with the Securities and Exchange Commission on August 14, 2025).
10.2
Form of Registration Rights Agreement, dated August 14, 2025, by and among USCB Financial Holdings, Inc. and certain
institutional buyers (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-
41196) filed with the Securities and Exchange Commission on August 14, 2025).
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 September 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. Q3 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
November 7, 2025
Luis de la Aguilera
(Principal Executive Officer)
/s/ Robert Anderson
Executive Vice President and Chief Financial
Officer
November 7, 2025
Robert Anderson
(Principal Financial Officer and Principal
Accounting Officer)