[10-Q] USCB FINANCIAL HOLDINGS, INC. Quarterly Earnings Report

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.

Insights

Bank earnings and balance sheet analyst

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.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2025

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:

001-41196

USCB Financial Holdings, Inc.

(Exact name of registrant as specified in its charter)

Florida

87-4070846

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2301 N.W. 87th Avenue

,

Doral

,

FL

33172

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code:

 (

305

)

715-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $1.00 par value per share

USCB

The Nasdaq Stock Market LLC

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. 

Yes

☒

 No

☐

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). 

Yes

☒

 No

☐

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

☐

Accelerated filer

☒

 Non-accelerated filer

☐

 Smaller reporting company

☒

 Emerging growth company

☒

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

☐

No

☒

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

18,110,385

 shares of Class

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

$

9,988

$

6,986

Interest-bearing deposits in banks

46,823

70,049

Total cash and cash equivalents

56,811

77,035

Investment securities held to maturity, net of allowance of $

5

 and $

6

, respectively (fair value of

$

143,299

 and $

145,540

, respectively)

156,365

164,694

Investment securities available for sale, at fair value

324,179

260,221

Federal Home Loan Bank stock, at cost

2,328

9,379

Loans held for investment, net of allowance of $

24,964

 and $

24,070

, respectively

2,106,002

1,948,778

Accrued interest receivable

12,126

10,945

Premises and equipment, net

4,315

4,563

Bank owned life insurance

58,923

53,472

Deferred tax assets, net

19,457

29,646

Lease right-of-use asset

6,282

8,451

Other assets

21,157

14,032

Total assets

$

2,767,945

$

2,581,216

LIABILITIES:

Deposits:

Non-interest bearing demand deposits

$

584,240

$

575,159

Savings and money market deposits

1,291,283

1,180,809

Interest-bearing demand deposits

60,016

50,648

Time deposits

520,075

367,388

Total deposits

2,455,614

2,174,004

Federal Home Loan Bank advances 

11,000

163,000

Subordinated notes

39,262

-

Lease liability

6,282

8,451

Accrued interest and other liabilities

46,692

20,373

Total liabilities

2,558,850

2,365,828

Commitments and contingencies (See Notes 5 and 10)

(nil)

(nil)

STOCKHOLDERS' EQUITY:

Preferred stock - Class C; $

1.00

 par value; $

1,000

 per share liquidation preference;

52,748

 shares

authorized;

0

 and

0

 issued and outstanding as of September 30, 2025 and December 31, 2024

-

-

Preferred stock - Class D; $

1.00

 par value; $

5.00

 per share liquidation preference;

12,309,480

 shares

authorized;

0

 and

0

 issued and outstanding as of September 30, 2025 and December 31, 2024

-

-

Preferred stock - Class E; $

1.00

 par value; $

1,000

 per share liquidation preference;

3,185,024

 shares

authorized;

0

 and

0

 issued and outstanding as of September 30, 2025 and December 31, 2024

-

-

Common stock - Class A Voting; $

1.00

 par value;

45,000,000

 shares authorized;

18,107,385

 issued and

outstanding as of September 30, 2025,

19,924,632

 issued and outstanding as of December 31, 2024

18,107

19,925

Common stock - Class B Non-voting; $

1.00

 par value;

8,000,000

 shares authorized;

0

 and

0

 issued and

outstanding as of September 30, 2025 and December 31, 2024

-

-

Additional paid-in capital on common stock

277,888

307,810

Accumulated deficit

(49,094)

(67,813)

Accumulated other comprehensive loss

(37,806)

(44,534)

Total stockholders' equity

209,095

215,388

Total liabilities and stockholders' equity

$

2,767,945

$

2,581,216

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:

 Loans, including fees

$

32,866

$

29,819

$

95,057

$

84,479

 Investment securities

3,522

2,754

9,978

8,634

 Interest-bearing deposits in financial institutions

1,332

989

2,817

3,953

 Total interest income

37,720

33,562

107,852

97,066

Interest expense:

Interest-bearing demand deposits

286

411

909

1,171

Savings and money market deposits

10,343

10,064

29,088

30,529

 Time deposits

5,036

3,391

13,297

9,907

 Federal Home Loan Bank advances

377

1,587

2,731

4,881

 Subordinated notes

404

-

404

-

 Total interest expense

16,446

15,453

46,429

46,488

 Net interest income before provision for credit losses

21,274

18,109

61,423

50,578

Provision for credit losses

105

931

1,817

2,127

 Net interest income after provision for credit losses

21,169

17,178

59,606

48,451

Non-interest income:

 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

Non-interest expense:

 Salaries and employee benefits

7,909

7,200

23,499

20,863

 Occupancy

1,382

1,341

4,003

3,921

 Regulatory assessments 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 expense

2,139

1,787

6,272

5,528

 Total non-interest expense

13,048

11,454

37,734

34,188

 Income before income tax expense

11,805

9,162

32,642

23,376

Income tax expense

2,866

2,213

7,905

5,606

 Net income

$

8,939

$

6,949

$

24,737

$

17,770

Per share information:

Net income per share, basic

$

0.46

$

0.35

$

1.25

$

0.90

Net income per share, diluted

$

0.45

$

0.35

$

1.23

$

0.90

Cash dividends declared

$

0.10

$

0.05

$

0.30

$

0.15

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

$

8,939

$

6,949

$

24,737

$

17,770

Other comprehensive income:

Unrealized gain on investment securities

5,315

9,848

9,093

8,624

Reclassification adjustment for amortization of net unrealized losses on

securities transferred from available-for-sale to held-to-maturity

66

67

200

200

Reclassification adjustment for realized losses (gains) included in net

income

28

-

28

(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

3,946

6,708

6,728

6,293

Total comprehensive income

$

12,885

$

13,657

$

31,465

$

24,063

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

20,078,385

$

20,078

$

309,282

$

(56,025)

$

(41,752)

$

231,583

Net income

-

-

-

8,939

-

8,939

Other comprehensive income

-

-

-

-

3,946

3,946

Repurchase of Class A common stock

(2,000,000)

(2,000)

(32,380)

-

-

(34,380)

Exercise of stock options

29,000

29

212

-

-

241

Dividend payment

-

-

-

(2,008)

-

(2,008)

Stock-based compensation

-

-

774

-

-

774

Balance at September 30, 2025

18,107,385

$

18,107

$

277,888

$

(49,094)

$

(37,806)

$

209,095

Balance at June 30, 2024

19,630,632

$

19,631

$

305,835

$

(79,760)

$

(44,686)

$

201,020

Net income

-

-

-

6,949

-

6,949

Other comprehensive income

-

-

-

-

6,708

6,708

Repurchase of Class A common stock

(10,000)

(10)

(111)

-

-

(121)

Dividend payment

-

-

-

(1,016)

-

(1,016)

Stock-based compensation

-

-

376

-

-

376

Balance at September 30, 2024

19,620,632

$

19,621

$

306,100

$

(73,827)

$

(37,978)

$

213,916

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

19,924,632

$

19,925

$

307,810

$

(67,813)

$

(44,534)

$

215,388

Net income

-

-

-

24,737

-

24,737

Other comprehensive income

-

-

-

-

6,728

6,728

Repurchase of Class A common stock

(2,009,671)

(2,010)

(32,544)

-

-

(34,554)

Restricted stock issued

124,424

124

(124)

-

-

-

Exercise of stock options

68,000

68

490

-

-

558

Dividend payment

-

-

-

(6,018)

-

(6,018)

Stock-based compensation

-

-

2,256

-

-

2,256

Balance at September 30, 2025

18,107,385

$

18,107

$

277,888

$

(49,094)

$

(37,806)

$

209,095

Balance at December 31, 2023

19,575,435

19,575

305,212

(88,548)

(44,271)

191,968

Net income

-

-

-

17,770

-

17,770

Other comprehensive income

-

-

-

-

6,293

6,293

Repurchase of Class A common stock

(42,100)

(42)

(459)

-

-

(501)

Restricted stock issued

57,922

58

(58)

-

-

-

Restricted stock forfeiture

(8,625)

(8)

8

-

-

-

Exercise of stock options

38,000

38

285

-

-

323

Dividend payment

-

-

-

(3,049)

-

(3,049)

Stock-based compensation

-

-

1,112

-

-

1,112

Balance at September 30, 2024

19,620,632

$

19,621

$

306,100

$

(73,827)

$

(37,978)

$

213,916

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 

$

24,737

$

17,770

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 

1,817

2,127

Depreciation and amortization

456

436

Accretion of premiums on securities, net

(1,136)

(365)

Amortization of deferred loan fees, net

723

660

Stock-based compensation

2,256

1,112

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

28

(14)

Gain on sale of loans held for sale, net

(804)

(593)

Proceeds from the sale of loans held for sale

11,373

7,408

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

7,905

5,129

Net change in operating assets and liabilities:

Accrued interest receivable

(1,181)

(77)

Other assets

(7,389)

(8,292)

Accrued interest and other liabilities

26,051

20,505

Net cash provided by operating activities

52,816

37,734

Cash flows from investing activities:

Proceeds from maturities and pay-downs of investment securities held to maturity

8,469

8,110

Purchase of investment securities available for sale 

(101,486)

(70,996)

Proceeds from maturities and pay-downs of investment securities available for sale

16,433

15,097

Proceeds from sales of investment securities available for sale

31,384

34,753

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

12,778

8,645

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

558

323

Cash dividends paid

(6,018)

(3,049)

Repurchase of Class A common stock

(34,554)

(501)

Net increase in deposits

281,610

189,478

Proceeds from subordinated notes

39,262

-

Proceeds from FHLB advances

117,000

197,000

Repayments on Federal Home Loan Bank advances 

(269,000)

(262,000)

Net cash provided by financing activities

128,858

121,251

Net decrease in cash and cash equivalents

(20,224)

(2,576)

Cash and cash equivalents at beginning of period

77,035

41,062

Cash and cash equivalents at end of period

$

56,811

$

38,486

Supplemental disclosure of cash flow information:

Interest paid

$

45,751

$

46,058

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

$

13,143

$

36

$

(1,214)

$

11,965

Collateralized mortgage obligations

100,830

-

(19,135)

81,695

Mortgage-backed securities - residential

60,915

118

(9,715)

51,318

Mortgage-backed securities - commercial

145,991

17

(7,491)

138,517

Municipal securities

22,838

-

(3,923)

18,915

Bank subordinated debt securities

22,046

162

(439)

21,769

$

365,763

$

333

$

(41,917)

$

324,179

Held-to-maturity:

Amortized

Cost

Unrecognized

Gains

Unrecognized

Losses

Fair Value

U.S. Government Agency

$

41,500

$

75

$

(3,529)

$

38,046

Collateralized mortgage obligations

52,766

566

(5,956)

47,376

Mortgage-backed securities - residential

37,880

558

(3,523)

34,915

Mortgage-backed securities - commercial

15,135

-

(1,133)

14,002

Corporate bonds

9,089

-

(129)

8,960

$

156,370

$

1,199

$

(14,270)

$

143,299

Allowance for credit losses - securities held-to-maturity

(5)

Securities held-to maturity, net of allowance for credit losses

$

156,365

December 31, 2024

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

$

14,279

$

14

$

(1,668)

$

12,625

Collateralized mortgage obligations

101,808

15

(22,918)

78,905

Mortgage-backed securities - residential

58,995

1

(12,063)

46,933

Mortgage-backed securities - commercial

86,604

40

(7,905)

78,739

Municipal securities

24,925

-

(5,614)

19,311

Bank subordinated debt securities

24,314

438

(1,044)

23,708

$

310,925

$

508

$

(51,212)

$

260,221

Held-to-maturity:

Amortized

Cost

Unrecognized

Gains

Unrecognized

Losses

Fair Value

U.S. Government Agency

$

42,538

$

-

$

(5,094)

$

37,444

Collateralized mortgage obligations

56,987

57

(7,785)

49,259

Mortgage-backed securities - residential

40,681

53

(4,613)

36,121

Mortgage-backed securities - commercial

15,272

-

(1,385)

13,887

Corporate bonds

9,222

-

(393)

8,829

$

164,700

$

110

$

(19,270)

$

145,540

Allowance for credit losses - securities held-to-maturity

(6)

Securities held-to maturity, net of allowance for credit losses

$

164,694

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

two

 transfers from AFS to HTM

portfolios in 2022. 

During the quarter ended September 30, 2025, there were

no

 investment securities that were transferred from AFS to

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 $

66

 thousand and $

200

 thousand for the nine months ended September

30, 2025. At September 30, 2025, the fair value of the transferred securities was $

100.2

 million and the balance of the net

unrealized loss was $

9.1

 million. 

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 $

67

 thousand and $

200

 thousand for the nine month ended September 30, 2024. At

September 30, 2024, the fair value of the transferred securities was $

106.3

 million and the balance of the net unrealized

losses was $

9.3

 million.

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 $

147.3

 million of U.S. Government and U.S. Agency 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. 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 $

5

 thousand ACL as of September 30, 2025. The book value for debt securities classified as HTM represents amortized

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

$

511

$

(11)

$

8,237

$

(1,203)

$

8,748

$

(1,214)

Collateralized mortgage obligations

9,257

(34)

72,438

(19,101)

81,695

(19,135)

Mortgage-backed securities - residential

-

-

43,856

(9,715)

43,856

(9,715)

Mortgage-backed securities - commercial

81,800

(412)

51,918

(7,079)

133,718

(7,491)

Municipal securities 

-

-

18,915

(3,923)

18,915

(3,923)

Bank subordinated debt securities

1,999

(1)

10,535

(438)

12,534

(439)

$

93,567

$

(458)

$

205,899

$

(41,459)

$

299,466

$

(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

$

4,468

$

(76)

$

7,451

$

(1,592)

$

11,919

$

(1,668)

Collateralized mortgage obligations

3,101

(23)

72,952

(22,895)

76,053

(22,918)

Mortgage-backed securities - residential

972

(11)

44,600

(12,052)

45,572

(12,063)

Mortgage-backed securities - commercial

44,411

(1,265)

27,874

(6,640)

72,285

(7,905)

Municipal securities 

-

-

19,311

(5,614)

19,311

(5,614)

Bank subordinated debt securities

-

-

14,352

(1,044)

14,352

(1,044)

$

52,952

$

(1,375)

$

186,540

$

(49,837)

$

239,492

$

(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

$

31,384

$

-

$

31,384

$

34,753

Gross gains

$

335

$

-

$

335

$

195

Gross losses

(363)

-

(363)

(181)

Net realized gain (loss)

$

(28)

$

-

$

(28)

$

14

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

$

-

$

-

$

9,089

$

8,960

Due after one year through five years

1,983

1,999

-

-

Due after five years through ten years

42,901

38,685

-

-

Due after ten years

-

-

-

-

U.S. Government Agency

13,143

11,965

41,500

38,046

Collateralized mortgage obligations

100,830

81,695

52,766

47,376

Mortgage-backed securities - residential 

60,915

51,318

37,880

34,915

Mortgage-backed securities - commercial 

145,991

138,517

15,135

14,002

$

365,763

$

324,179

$

156,370

$

143,299

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

25

% of the quarter daily average balance for quarter ended

September 30, 2025, and

50

% 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 $

151.4

 million in deposits under the public funds program and

pledged to the State of Florida for these public funds were

sixteen

 bonds with an aggregate fair value of $

49.7

 million.

As of December 31, 2024, the Bank had a total of $

110.5

 million in deposits under the public funds program and pledged

to the State of Florida for these public funds were

twenty-one

 bonds with an aggregate fair value of $

66.1

 million.

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

$

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

At September 30, 2025 and December 31, 2024, the Company had $

592.0

 million and $

518.8

 million, respectively, of

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:

•

 Changes in lending policies, procedures, and strategies

•

 Changes in international, national, regional, and local economic conditions

•

 Changes in nature and volume of the portfolio

•

 Changes in the volume and severity of past due loans and other similar conditions

•

 Concentration risk

•

 Changes in the value of underlying collateral

•

 The effect of other external factors: e.g., competition, legal, and regulatory requirements

•

 Changes in lending management, among others

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

$

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

Nine Months Ended September 30, 2025

Beginning balance

$

5,121

$

8,788

$

4,633

$

654

$

4,874

$

24,070

Provision for credit losses

(2)

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

(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) 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.

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

Nine Months Ended September 30, 2024

Beginning balance

$

2,695

$

10,366

$

3,974

$

911

$

3,138

$

21,084

Provision for credit losses

(2)

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

(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) Provision for credit losses excludes a $

159

 thousand provision due to unfunded commitments included in accrued interest and

other liabilities.

At September 30, 2025, the ACL for loans was $

25.0

 million compared to $

24.1

 million at December 31, 2024. The

increase of $

894

 thousand in the ACL was due to loan growth. 

Charge offs related to loans for the three months ended September 30, 2025 were $

7

 thousand originated in 2025.

Charge offs for the nine months ended September 30, 2025 were $

709

 thousand originated in 2022 and $

21

 thousand

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 $

7

 thousand and were all originated in 2024.

Charge-offs for the nine months ended September 30, 2024 totaled $

17

 thousand and were all originated in 2024.

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

$

32

$

-

$

53

$

-

$

-

$

85

Collectively evaluated

5,994

9,389

4,343

829

4,324

24,879

Balances, end of period

$

6,026

$

9,389

$

4,396

$

829

$

4,324

$

24,964

Loans:

Individually evaluated

$

3,761

$

-

$

1,005

$

-

$

-

$

4,766

Collectively evaluated

312,796

1,226,121

268,425

104,598

207,939

2,119,879

Balances, end of period

$

316,557

$

1,226,121

$

269,430

$

104,598

$

207,939

$

2,124,645

December 31, 2024:

Allowance for credit losses:

Individually evaluated

$

40

$

-

$

27

$

-

$

651

$

718

Collectively evaluated

5,081

8,788

4,606

654

4,223

23,352

Balances, end of period

$

5,121

$

8,788

$

4,633

$

654

$

4,874

$

24,070

Loans:

Individually evaluated

$

6,788

$

-

$

690

$

-

$

1,990

$

9,468

Collectively evaluated

283,173

1,136,417

257,621

82,438

196,101

1,955,750

Balances, end of period

$

289,961

$

1,136,417

$

258,311

$

82,438

$

198,091

$

1,965,218

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

 – Loans classified as special mention have a potential weakness that deserves management’s

close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment

prospects for the loan or of the institution’s credit position at some future date. 

Substandard

– Loans classified as substandard are inadequately protected by the current net worth and paying

capacity of the obligator or of the collateral pledged, if any. Loans so classified have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the

institution will sustain some loss if the deficiencies are not corrected. 

Doubtful

 – Loans classified as doubtful have all the weaknesses inherent in those classified at substandard, with

the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing

facts, conditions, and values, highly questionable and improbable. 

Loss

– Loans classified as loss are considered uncollectible.

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

$

61,481

$

95,490

$

33,220

$

25,812

$

21,418

$

60,492

$

16,032

$

313,945

Special Mention

-

592

1,468

-

-

-

-

2,060

Substandard

-

434

-

-

-

118

-

552

Total

61,481

96,516

34,688

25,812

21,418

60,610

16,032

316,557

Commercial real estate

Pass

196,195

182,297

113,450

284,214

135,835

293,746

6,315

1,212,052

Special Mention

-

-

8,474

-

-

3,182

-

11,656

Substandard

-

-

-

-

1,735

678

-

2,413

Total

196,195

182,297

121,924

284,214

137,570

297,606

6,315

1,226,121

Commercial and

industrial

Pass

34,112

64,047

72,949

32,776

28,646

13,020

21,251

266,801

Special Mention

-

72

-

-

864

-

-

936

Substandard

-

-

-

-

460

758

475

1,693

Total

34,112

64,119

72,949

32,776

29,970

13,778

21,726

269,430

Correspondent banks

Pass

98,192

6,406

-

-

-

-

-

104,598

Total

98,192

6,406

-

-

-

-

-

104,598

Consumer and other

loans 

Pass

49,530

37,792

37,068

54,155

26,435

1,133

1,826

207,939

Total

49,530

37,792

37,068

54,155

26,435

1,133

1,826

207,939

Total Loans

Pass

439,510

386,032

256,687

396,957

212,334

368,391

45,424

2,105,335

Special Mention

-

664

9,942

-

864

3,182

-

14,652

Substandard

-

434

-

-

2,195

1,554

475

4,658

Doubtful

-

-

-

-

-

-

-

-

Total

$

439,510

$

387,130

$

266,629

$

396,957

$

215,393

$

373,127

$

45,899

$

2,124,645

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

$

109,590

$

39,666

$

34,315

$

23,039

$

5,791

$

66,115

$

10,885

$

289,401

Substandard

-

-

-

-

-

560

-

560

Total

109,590

39,666

34,315

23,039

5,791

66,675

10,885

289,961

Commercial real estate

Pass

175,023

130,503

317,971

175,535

98,695

231,558

4,680

1,133,965

Substandard

-

-

-

1,765

687

-

-

2,452

Total

175,023

130,503

317,971

177,300

99,382

231,558

4,680

1,136,417

Commercial and

industrial

Pass

68,405

80,644

33,962

30,495

3,891

11,839

26,795

256,031

Substandard

-

-

-

519

-

1,093

668

2,280

Total

68,405

80,644

33,962

31,014

3,891

12,932

27,463

258,311

Correspondent banks

Pass

82,438

-

-

-

-

-

-

82,438

Total

82,438

-

-

-

-

-

-

82,438

Consumer and other

loans 

Pass

40,921

51,392

65,603

35,181

491

815

1,698

196,101

Substandard

-

-

1,990

-

-

-

-

1,990

Total

40,921

51,392

67,593

35,181

491

815

1,698

198,091

Total Loans

Pass

476,377

302,205

451,851

264,250

108,868

310,327

44,058

1,957,936

Special Mention

-

-

-

-

-

-

-

-

Substandard

-

-

1,990

2,284

687

1,653

668

7,282

Doubtful

-

-

-

-

-

-

-

-

Total

$

476,377

$

302,205

$

453,841

$

266,534

$

109,555

$

311,980

$

44,726

$

1,965,218

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

$

1,268

$

-

$

-

$

1,268

$

-

$

1,268

1-4 family residential

251,453

3,548

-

255,001

434

255,435

Condo residential

59,615

121

-

59,736

118

59,854

312,336

3,669

-

316,005

552

316,557

Commercial real estate:

Land and construction

87,417

1,587

-

89,004

-

89,004

Multi-family residential

237,215

1,969

-

239,184

-

239,184

Condo commercial

57,108

-

-

57,108

-

57,108

Commercial property

839,925

900

-

840,825

-

840,825

1,221,665

4,456

-

1,226,121

-

1,226,121

Commercial and industrial:

Secured

245,445

-

-

245,445

758

246,203

Unsecured

23,227

-

-

23,227

-

23,227

268,672

-

-

268,672

758

269,430

Correspondent banks

104,598

-

-

104,598

-

104,598

Consumer and other

207,939

-

-

207,939

-

207,939

Total

$

2,115,210

$

8,125

$

-

$

2,123,335

$

1,310

$

2,124,645

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

$

1,120

$

-

$

-

$

1,120

$

-

$

1,120

1-4 family residential

225,334

2,886

-

228,220

-

228,220

Condo residential

58,956

1,351

-

60,307

314

60,621

285,410

4,237

-

289,647

314

289,961

Commercial real estate:

Land and construction

40,090

-

-

40,090

-

40,090

Multi-family residential

214,912

-

-

214,912

-

214,912

Condo commercial

57,402

-

-

57,402

-

57,402

Commercial property

823,326

687

-

824,013

-

824,013

1,135,730

687

-

1,136,417

-

1,136,417

Commercial and industrial:

Secured

232,779

521

-

233,300

403

233,703

Unsecured

24,608

-

-

24,608

-

24,608

257,387

521

-

257,908

403

258,311

Correspondent banks

82,438

-

-

82,438

-

82,438

Consumer and other

196,101

-

-

196,101

1,990

198,091

Total

$

1,957,066

$

5,445

$

-

$

1,962,511

$

2,707

$

1,965,218

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

$

552

$

-

$

552

Commercial and industrial

712

46

758

Total

$

1,264

$

46

$

1,310

December 31, 2024

Non-accrual

Loans With No

Related Allowance

Non-accrual

Loans With

Related Allowance

Total Non-

accruals

Residential real estate

$

314

$

-

$

314

Commercial and industrial

-

403

403

Consumer and other

-

1,990

1,990

Total

$

314

$

2,393

$

2,707

Accrued interest receivable is excluded from the estimate of credit losses. There was

no

 interest income recognized

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

$

28

 thousand and $

24

 thousand, respectively, had these loans performed in accordance with their original terms. Interest

income on these loans for the nine months ended September 30, 2025 and 2024, would have been approximately $

108

thousand and $

44

 thousand, respectively, had these loans performed in accordance with their original terms.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

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

$

575

$

-

Total

$

575

$

-

December 31, 2024

Collateral Type

Boat

Specific Reserve

Consumer and other

$

1,990

$

651

Total

$

1,990

$

651

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

1

$

468

$

468

1

$

468

$

468

Total

1

$

468

$

468

1

$

468

$

468

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

8.0

%. The original maturity

of September 2029 was extended to January 2034.

There were

no

 existing loan modifications that subsequently defaulted during either the three or the nine months ended

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

$

401

$

-

State

-

-

Total current

401

-

Deferred:

Federal

5,782

4,384

State

1,722

1,222

Total deferred

7,504

5,606

Total tax expense

$

7,905

$

5,606

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

21

% 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

$

6,855

$

4,909

State income taxes, net of federal tax benefit

1,418

1,016

Bank owned life insurance

(368)

(319)

Total tax expense

$

7,905

$

5,606

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

$

906

$

9,276

Allowance for credit losses

6,327

6,100

Lease liability

1,592

2,142

Unrealized losses on available for sale securities

12,838

15,200

Depreciable property

4

38

Equity compensation

1,072

686

Accruals

446

520

Other, net

-

65

Deferred tax assets:

23,185

34,027

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

$

19,457

$

29,646

The Company has approximately $

20.8

 million of state net operating loss carryforwards expiring in various amounts

between 2031 and 2036 and which are limited to offset, to the extent permitted, future taxable earnings of the Company.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some

portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent

upon the generation of future taxable income during the periods in which those temporary differences become deductible.

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

no

t have any unrecognized tax benefits

as a result of tax positions taken during a prior period or during the current period. Additionally,

no

 interest or penalties were

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

$

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 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 $

50

 million to 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

4.50

% and a floor rate of

1.875

%, 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 $

50

 million to

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

4.50

% and a floor rate of

1.965

%, 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

two

 interest rate swap agreements with a notional aggregate amount of

$

50

 million that were designated as cash flow hedges of certificates of deposit. The interest rate swap agreements have an

average maturity of

0.63

 years, a weighted average fixed-rate paid of

3.59

%, and with a weighted average 3-month

compound USD SOFR being received. 

As of December 31, 2024, the Company had

two

 interest rate swap agreements with a notional aggregate amount of

$

50

 million that were designated as cash flow hedges of certificates of deposit. The interest rate swap agreements have an

average maturity of

1.38

 years, a weighted average fixed-rate paid of

3.59

%, 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

no

 interest rate swap agreements designated as fair value hedges at September 30, 2025. During

the quarter ended September 30, 2024, the Company unwound

four

 fair value interest rate swaps with a notional aggregate

amount of $

200

 million. The decision to unwind these swaps was driven by changes in interest rate forecasts and asset-

liability management strategies. The early termination fee to unwind the fair value swaps totaled $

3.7

 million. The termination

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 $

3.0

 million. The original maturities of these fair value interest

swaps were between 2025 and 2026. The fair value interest rate swap agreements had an average maturity of

1.51

 years

at the date of their termination. 

Interest Rate Swaps

The Company enters into interest rate swaps with its loan customers. The Company had

82

 and

60

 interest rate swaps

with loan customers with an aggregate notional amount of $

277.9

 million and $

206.3

 million at September 30, 2025 and

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

$

150,000

$

-

Other assets/Accrued interest and

other liabilities

$

56

$

44

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

$

277,924

$

5,074

Other assets/Accrued interest and

other liabilities

$

10,033

$

10,033

December 31, 2024:

Derivatives designated as cash flow hedges:

Interest rate swaps

$

50,000

$

-

Other assets

$

321

$

-

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

$

206,258

$

4,943

Other assets/Accrued interest and

other liabilities

$

6,869

$

6,869

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

 - Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting

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

 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the

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

 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are

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:

 When instruments are traded in secondary markets and quoted market prices do not exist

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:

 The fair value of derivatives are measured with pricing provided by third-party participants and are

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

$

-

$

11,965

$

-

$

11,965

$

-

$

12,625

$

-

$

12,625

Collateralized mortgage obligations

-

81,695

-

81,695

-

78,905

-

78,905

Mortgage-backed securities - residential 

-

51,318

-

51,318

-

46,933

-

46,933

Mortgage-backed securities - commercial

-

138,517

-

138,517

-

78,739

-

78,739

Municipal securities

-

18,915

-

18,915

-

19,311

-

19,311

Bank subordinated debt securities

-

21,769

-

21,769

-

23,708

-

23,708

Total

-

324,179

-

324,179

-

260,221

-

260,221

Derivative assets

-

10,089

-

10,089

-

7,190

-

7,190

Total assets at fair value

$

-

$

334,268

$

-

$

334,268

$

-

$

267,411

$

-

$

267,411

Derivative liabilities

$

-

$

10,077

$

-

$

10,077

$

-

$

6,869

$

-

$

6,869

Total liabilities at fair value

$

-

$

10,077

$

-

$

10,077

$

-

$

6,869

$

-

$

6,869

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

$

9,988

$

9,988

$

-

$

-

$

9,988

Interest-bearing deposits in banks

$

46,823

$

46,823

$

-

$

-

$

46,823

Investment securities held to maturity, net

$

156,365

$

-

$

143,299

$

-

$

143,299

Loans held for investment, net

$

2,106,002

$

-

$

-

$

2,143,816

$

2,143,816

Accrued interest receivable

$

12,126

$

-

$

1,634

$

10,492

$

12,126

Financial Liabilities:

Non-interest bearing demand deposits

$

584,240

$

584,240

$

-

$

-

$

584,240

Savings and money market deposits

$

1,291,283

$

1,291,283

$

-

$

-

$

1,291,283

Interest-bearing demand deposits

$

60,016

$

60,016

$

-

$

-

$

60,016

Time deposits

$

520,075

$

-

$

519,740

$

-

$

519,740

FHLB advances

$

11,000

$

-

$

11,045

$

-

$

11,045

Subordinated notes

$

39,262

$

39,262

$

-

$

$

39,262

Accrued interest payable

$

3,184

$

-

$

3,184

$

-

$

3,184

December 31, 2024:

Financial Assets:

Cash and due from banks

$

6,986

$

6,986

$

-

$

-

$

6,986

Interest-bearing deposits in banks

$

70,049

$

70,049

$

-

$

-

$

70,049

Investment securities held to maturity

$

164,694

$

-

$

145,540

$

-

$

145,540

Loans held for investment, net

$

1,948,778

$

-

$

-

$

1,950,646

$

1,950,646

Accrued interest receivable

$

10,945

$

-

$

1,372

$

9,573

$

10,945

Financial Liabilities:

Non-interest bearing demand deposits

$

575,159

$

575,159

$

-

$

-

$

575,159

Savings and money market deposits

$

1,180,809

$

1,180,809

$

-

$

-

$

1,180,809

Interest-bearing demand deposits

$

50,648

$

50,648

$

-

$

-

$

50,648

Time deposits

$

367,388

$

-

$

366,479

$

-

$

366,479

FHLB advances

$

163,000

$

-

$

161,375

$

-

$

161,375

Accrued interest payable

$

2,125

$

-

$

2,125

$

-

$

2,125

8. STOCKHOLDERS’ EQUITY

Common Stock

During the three months ended September 30 2025, the Company repurchased

2.0

 million shares of Class A common

stock 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. During the nine months

ended September 30, 2025 pursuant to the Company’s publicly announced repurchase programs the Company

repurchased

9,671

 shares of Class A common stock at a weighted average price per share of $

17.91

. The aggregate

purchase price for these transactions was approximately $

174

 thousand including transaction costs. As of September 30,

2025,

528,309

 shares remained authorized for repurchase under the Company’s two stock repurchase programs.

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

10,000

 shares of Class A common

stock at a weighted average price per share of $

11.99

. The aggregate purchase price for these transactions was

approximately $

120

 thousand, including transaction costs. During the nine months ended September 30, 2024, Company

repurchased

42,100

 shares of Class A common stock at a weighted average price per share of $

11.90

. The aggregate

purchase price for these transactions was approximately $

501

 thousand, including transaction costs

There were

no

 restricted stock awards issued in the three months ended September 30, 2025. During the nine months

ended September 30, 2025, the Company issued

124,424

 shares of Class A common stock to employees as restricted

stock awards pursuant to the Company’s 2015 equity incentive plan. 

There were

no

 restricted stock awards issued in the three months ended September 30, 2024. For the nine month

ended September 30, 2024 the Company issued

52,753

 shares of Class A common stock to employees as restricted stock

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

18,107,385

 and

19,924,632

, 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

January 21, 2025

February 14, 2025

March 5, 2025

$

0.10

$

2.0

 million

April 21, 2025

May 15, 2025

June 5, 2025

$

0.10

$

2.0

 million

July 21, 2025

August 15, 2025

September 5, 2025

$

0.10

$

2.0

 million

Nine Months Ended September 30, 2024

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

January 22, 2024

February 15, 2024

March 5, 2024

$

0.05

$

1.0

 million

April 22, 2024

May 15, 2024

June 5, 2024

$

0.05

$

1.0

 million

July 22, 2024

August 15, 2024

September 5, 2024

$

0.05

$

1.0

 million

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

13.93

%. 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

$

8,939

$

6,949

$

24,737

$

17,770

Net income available to common shareholders

$

8,939

$

6,949

$

24,737

$

17,770

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 

$

8,939

$

6,949

$

24,737

$

17,770

Denominator:

Weighted average shares outstanding

19,524,798

19,621,447

19,866,514

19,653,103

Earnings per share, basic

$

0.46

$

0.35

$

1.25

$

0.90

Diluted EPS

Numerator:

Net income available to common shares

$

8,939

$

6,949

$

24,737

$

17,770

Denominator:

Weighted average shares outstanding for basic EPS

19,524,798

19,621,447

19,866,514

19,653,103

Add: Dilutive effects of assumed exercises of stock options

231,022

203,764

239,536

108,139

Weighted avg. shares including dilutive potential common shares

19,755,820

19,825,211

20,106,050

19,761,242

Earnings per share, diluted

$

0.45

$

0.35

$

1.23

$

0.90

Anti-dilutive stock options excluded from diluted EPS

-

-

-

15,000

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 $

79.6

 million from entities that deemed to be

related parties. The Bank paid those entities net fees of $

447

 thousand. 

During the nine months ended September 30, 2024, the Bank purchased $

73.8

 million of loans from entities that are

deemed to be related parties. The Bank paid those entities fees of $

2.5

 million.

Loan Originations

During the nine months ended September 30, 2025, the Bank acted as the lead arranger in a $

40.0

 million syndicated

loan extended to an entity deemed to be a related party. As of September 30, 2025, the Bank held an outstanding balance

of $

15.0

 million related to this transaction. In connection with the syndication, the Bank received a

50

-basis point

commitment fee and will earn a

25

-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

no

 loan originations or syndications extended to entities deemed to be related parties for the year ended

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 $

0.10

 per share of Class A common stock and will be paid on December

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:

•

 the strength of the United States economy in general and the strength of the local economies in which we conduct

operations;

•

 our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry;

•

 the accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance

for credit losses and deferred tax asset valuation allowance;

•

 the efficiency and effectiveness of our internal control procedures and processes;

•

 our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each

jurisdiction where we operate;

•

 adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking

industry;

•

 deposit attrition and the level of our uninsured deposits;

•

 legislative or regulatory changes, including the enactment of the One Big Beautiful Bill, and changes in accounting

principles, policies, practices or guidelines, including the on-going effects of the Current Expected Credit Losses

(“CECL”) standard;

•

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

risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real

estate, in particular, commercial real estate;

•

 the effects of climate change;

•

 the concentration of ownership of our common stock;

•

 fluctuations in the price of our common stock;

•

 our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic

growth as well as growth through other means, such as future acquisitions;

•

 inflation, interest rate, unemployment rate, market and monetary fluctuations;

•

 the effects of potential new or increased tariffs , retaliatory tariffs, and trade restrictions;

•

 the effects of the current federal government shutdown, including, but not limited to, the ability to sell Small Business

Administration loans;

•

 the impacts of international hostilities and geopolitical events;

•

 increased competition and its effect on the pricing of our products and services as well as our interest rate spread

and net interest margin;

•

 the loss of key employees;

Table of Contents

30 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q

•

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

employee, or third-party fraud and security breaches; and

•

 other risks described in this Form 10-Q, the 2024 Form 10-K and other filings we make with the SEC.

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:

•

 Net interest income for the three months ended September 30, 2025 increased $3.2 million or 17.5% to $21.3 million

from $18.1 million for the quarter ended September 30, 2024.

•

 Net interest margin (“NIM”) expanded to 3.14% for the three months ended September 30, 2025 compared to 3.03%

for the three months ended September 30, 2024.

•

 Total assets were $2.77 billion at September 30, 2025, representing an increase of $264.0 million or 10.5% from

September 30, 2024 and an increase of $186.7 million or 9.7% annualized from December 31, 2024.

•

 Total loans held for investment (net of deferred cost/fees) were $2.13 billion at September 30, 2025, representing

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.

•

 Total deposits were $2.46 billion at September 30, 2025, representing an increase of $329.0 million or 15.5% from

September 30, 2024 and an increase of $281.6 million or 17.3% annualized from December 31, 2024. 

•

 Annualized return on average assets for the quarter ended September 30, 2025 was 1.27% compared to 1.11% for

the quarter ended September 30, 2024. 

•

 Annualized return on average stockholders’ equity for the quarter ended September 30, 2025 was 15.74%

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

•

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

•

 Non-performing loans to total loans was 0.06% at September 30, 2025 and 0.14% at December 31, 2024. 

•

 At September 30, 2025, the total risk-based capital ratios for the Company and the Bank were 14.20% and 13.93%,

respectively.

•

 Tangible book value per common share (a non-GAAP measure) was $11.55 at September 30, 2025, representing

an increase of $0.74 or 9.1% annualized from $10.81 at December 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.

•

 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 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. 

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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

 – Loans classified as special mention have a potential weakness that deserves management’s

close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment

prospects for the loan or of the institution’s credit position at some future date. 

Substandard

– Loans classified as substandard are inadequately protected by the current net worth and paying

capacity of the obligator or of the collateral pledged, if any. Loans so classified have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the

institution will sustain some loss if the deficiencies are not corrected. 

Doubtful

 – Loans classified as doubtful have all the weaknesses inherent in those classified at substandard, with

the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing

facts, conditions, and values, highly questionable and improbable. 

Loss

– Loans classified as loss are considered uncollectible.

Loan credit exposures by internally assigned grades are as follows for the dates indicated (in thousands): 

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

 (2)

(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

 (2)

(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)

 Net interest income

$

21,274

$

21,034

$

19,115

$

19,358

$

18,109

 Plus: Non-interest income

3,684

3,370

3,716

3,627

3,438

 Less: Net losses on sale of securities

(28)

-

-

-

-

 Operating revenue

$

24,986

$

24,404

$

22,831

$

22,985

$

21,547

Operating Efficiency Ratio:

(1)

 Total non-interest expense

$

13,048

$

12,634

$

12,052

$

12,854

$

11,454

 Operating revenue

$

24,986

$

24,404

$

22,831

$

22,985

$

21,547

 Operating efficiency ratio

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)

 Tangible stockholders' equity

$

209,095

$

231,583

$

225,088

$

215,388

$

213,916

 Tangible total assets

(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)

 Not applicable

(b)

 Not applicable

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a)

 Not applicable

(b)

 Not applicable

Table of Contents

54 USCB Financial Holdings, Inc. Q3 2025 Form 10-Q

(c)

 During the three months ended September 30, 2025, none of the Company’s directors or Section 16 reporting

persons

adopted

 or

terminated

 any Rule 10b5-1 trading arrangement or

non-Rule

10b5-1

 trading arrangement (as

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)

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.