USCB Financial Holdings, Inc.

USCB

US90355N1019

Banks

End-of-day quote Nasdaq Other stock markets 06:00:00 2024-04-15 pm EDT			5-day change	1st Jan Change
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Jan. 30	Keefe, Bruyette & Woods Adjusts Price Target on U.S. Century Bank to $15 From $14, Maintains Outperform Rating	MT
Jan. 30	USCB Financial Holdings Unveils Inaugural Dividend of $0.05 per Class A Common Share, Payable March 5 to Holders as of Feb. 15	MT

Management's Discussion and Analysis of Financial Condition

August 11, 2022 at 04:17 pm EDT

and Results of Operations


The

following

discussion

and

analysis

are

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, for

the quarter and

six months
ended June 30, 2022. This discussion and

analysis are best read in conjunction with the



consolidated financial statements
and related footnotes

included in this Form

10-Q and in the Annual

Report filed on

the Form 10-K ("2021

form 10-K") filed
with the Security and Exchange Commission ("SEC") for the year

ended December 31, 2021.
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 and

in the

2021 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 Quarterly Report

on Form 10-Q

contains statements

that are not

historical in

nature and

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

(Exchange

Act").

The

words

"may,"

"will,"

"anticipate,"

"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,
but

are

not

limited

to,

statements

related

to

our

projected

growth,

anticipated

future

financial

performance,

and

management's long-term performance



goals, as

well as

statements relating

to the

anticipated effects on

results of

operations
and

financial

condition

from

expected

developments

or

events,

or

business

and

growth

strategies,

including

anticipated
internal growth.
These forward-looking statements involve significant risks and uncertainties
that could cause our actual results to differ
materially from those anticipated in such statements.

Potential risks and uncertainties include, but are not



limited to:
•

the strength of the United States economy

in general and the strength of the local



economies in which we conduct
operations;
•

the continuation

of COVID-19

pandemic and

its impact

on us,

our employees,

customers and

third-party

service

providers, and the ultimate extent of the impacts of the

pandemic and related government stimulus programs;

•

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 credit loss reserve and deferred tax asset valuation allowance; •

the efficiency and effectiveness of our



internal control environment;
•

our ability

to comply

with the

extensive laws

and regulations

to which

we are

subject, including

the laws

for each
jurisdiction where we operate;
•

legislative or regulatory

changes and changes

in accounting

principles, policies,

practices or guidelines,

including

the effects of the forthcoming implementation



of the Current Expected Credit Losses ("CECL") standard;
•

the effects

of our

lack of

a diversified

loan portfolio

and concentration

in the

South Florida

market, including

the
risks

of geographic,

depositor,

and

industry concentrations,

including our

concentration

in

loans secured

by real
estate;
•

the concentration of ownership of our Class A common

stock;

•

fluctuations in the price of our Class A 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;

•

increased competition and its effect on the pricing

of our products and services as well as our interest rate margin;

•

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 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


  Table of Contents


33

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
under the federal securities laws. You

should also review the risk factors

described in the reports the Company



filed or will
file with the

SEC and,

for periods

prior to

the completion

of the bank

holding company

reorganization in

December 2021,
U.S. Century Bank ("Bank") filed with the Federal Depository

Institution Corporation ("FDIC").
Non-GAAP Financial Measures
This Quarterly

Report on

Form 10-Q

includes financial

information determined

by methods

other than

in accordance
with generally accepted

accounting principles

("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

'Reconciliation

and

Management

Explanation of Non-GAAP Financial Measures'



included in this Form 10-Q.
Overview
The Company,

the holding

company of

the Bank,

reported net

income

of

$5.3 million

or $0.26

per diluted

share for
class A common stock for the three months

ended June 30, 2022, compared

with net income of

$4.1 million or $0.64

and
$0.13 per

diluted share

for Class

A and

Class B

common stock,

respectively, for

the same

period in

2021. In

December

2021, the Company agreed to exchange all the outstanding



shares of Class B common stock for Class A common stock at
a ratio

of 5

to 1.

As of June 30,

2022 and December 31,

2021, the Company's

only class of

securities issued and

outstanding
was Class A

common stock.
During the

first quarter

in 2022,

the Board

of Directors

(the "Board")

approved a

share repurchase

program

of up

to

750,000 shares of Class A common stock.



Under the repurchase program,

the Company may

purchase shares of Class A
common

stock

on

a discretionary

basis from

time to

time. As

of June

30,

2022,

the

Company

had

not

repurchased

any
shares.
In

evaluating

our

financial

performance,

we

consider

the

level

of

and

trends

in

net

interest

income,

the

net

interest
margin, the cost of deposits,

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 comparisons in

the bullet points below are calculated



for the quarter ended June 30, 2022
compared to the quarter ended June 30, 2021 and annualized

where appropriate:
•

Net

interest

income

increased

$3.2

million

or

25.4%

to

$15.6 million

from

$12.5

million

for

the

quarter

ended
June 30, 2021.
•

Net interest margin ("NIM") increased to 3.37% from 3.14%

for the second quarter of 2021.

•

Total assets exceeded $2.0 billion, an increase of $161.1

million or 8.7%, compared to December 31, 2021.

•

Total loans grew to $1.4 billion, an increase of $182.7 million

or 15.3%, compared to December 31, 2021.

•

Total deposits increased $148.3 million or 9.3% to $1.7

billion from $1.6 billion at December 31, 2021.

•

Annualized return on average assets was 1.08% compared



to 0.98% at June 30, 2021.
•

Annualized return on average stockholders' equity was 11.38% compared



to 9.74% at June 30, 2021.
•

The allowance

for credit

losses to

total loans

ratio decreased

to 1.15%

at June

30, 2022

from 1.30%

at June 30,
2021.
•

Non-performing loans to total loans was 0.00% at June



30, 2022 and 2021.
•

The Company and

the Bank exceeded

all regulatory

capital requirements

and remained

significantly above

"well-

capitalized" guidelines. At June 30, 2022, total risk-based capital ratio for the Company and the Bank were 13.74% and 13.67%, respectively.


  Table of Contents


34

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
•

Tangible book value

per common share

(a Non-GAAP financial

measure) was $9.00

as of June 30,

2022, compared
to $27.71

at June

30,

2021. The

decline

was

primarily

driven by

an

increase

in

issued

and

outstanding

Class A
common shares as result of the exchange and redemption of preferred

shares combined with the completion of the
IPO

in

2021.

See

"Reconciliation

and

Management

Explanation

for

Non-GAAP

Financial

Measures"

for

a
reconciliation of this non-GAAP financial measure.
Critical Accounting Policies and Estimates
The

consolidated

financial

statements

are

prepared

based

on

the

application

of

U.S.

GAAP,

the

most

significant

of

which are described in Note 1 "Summary of Significant Accounting Policies" of



the Company's 2021 Form 10-K. To prepare
financial

statements

in

conformity

with

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 in understanding our financial statements. Management has presented the application of these policies

to the audit and risk committee of our Board.



Allowance for Credit Losses
The allowance for credit

losses ("ACL") is

a valuation allowance that

is established through charges



to earnings in the
form of

a provision for

credit losses. The

amount of the

ACL is

affected by the

following: (i) charge-offs

of loans that

decrease
the allowance;

(ii) subsequent

recoveries on

loans previously

charged off

that increase

the allowance;

and (iii)

provisions
for credit losses charged to

income that increase the allowance.

Management considers the policies



related to the ACL as
the most critical to

the financial statement

presentation. The total

ACL includes activity

related to allowances

calculated in
accordance with Accounting Standards Codification ("ASC")

310, Receivables, and ASC 450, Contingencies.
Throughout the year,

management estimates the probable

incurred losses in the loan portfolio



to determine if the ACL
is adequate to absorb such losses. The ACL

consists of specific and general components.



The specific component relates
to loans that are

individually classified as

impaired. We follow

a loan review program

to evaluate the credit

risk in the loan
portfolio. Loans

that have

been identified

as impaired

are reviewed

on a

quarterly basis

in order

to determine

whether a
specific reserve is

required. The general

component covers

non-impaired loans

and is based

on industry and

our specific
historical loan

loss experience,

volume, growth

and composition

of the

loan portfolio,

the evaluation

of our

loan portfolio
through our

internal

loan review

process, general

current

economic

conditions

both

internal and

external to

us that

may

affect the borrower's ability to pay,

value of collateral and other qualitative relevant risk factors. Based on



a review of these
estimates, we

adjust the ACL

to a

level determined by

management to be

adequate. Estimates of

credit losses are

inherently
subjective as they involve an exercise of judgment.
The

CARES

Act,

as

amended

by

the

Consolidated

Appropriations

Act,

2021,

specified

that

COVID-19

related

loan
modifications executed

between March 1,

2020 and

the earlier

of (i)

60 days

after the

date of

termination

of the

national

emergency declared by President Trump and (ii) January 1, 2022, on loans

that were current as of December 31, 2019,

are

not TDRs. Additionally,

under guidance from the federal banking agencies,



other short-term modifications made on a good
faith basis

in response

to COVID-19

to borrowers

that were

current prior

to any

relief are

not TDRs

under ASC

Subtopic
310-40,

"Troubled

Debt

Restructurings

by

Creditors."

These

modifications

include

short-term

(i.e.,

up

to

six

months)
modifications

such

as

payment

deferrals,

fee

waivers,

extensions

of

repayment

terms,

or

delays

in

payment

that

are

insignificant. The Company's charge-off policy is to continuously

review all impaired loans to monitor the Company's ability to collect them in full at the applicable maturity date and/or in accordance



with terms of any restructurings. For loans which
are collateral dependent,

or deemed to

be uncollectible, any

shortfall in the

fair value of

the collateral relative to

the recorded
investment in the loan is charged off. The amount charged

-off conforms to the amount necessary



to comply with GAAP.
Income Taxes
Deferred tax

assets and

liabilities are

recognized for

the future

tax consequences

attributable to

differences

between

the financial statement carrying amounts of

existing assets and liabilities and their



respective tax bases and operating loss
and tax credit carryforwards. Deferred tax

assets and liabilities are measured

using enacted tax rates expected



to apply to
taxable income

in the

years in

which those

temporary differences

are expected

to be

recovered or

settled. The

effect

on

deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


















































  Table of Contents


35

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
Management is required to assess whether a valuation allowance should be
established on the net deferred tax assets
based on the

consideration of

all available evidence

using a more

likely than not

standard. In its

evaluation, management
considers taxable loss

carry-back availability, expectation of sufficient



taxable income, trends

in earnings, the

future reversal
of temporary differences, and available tax planning

strategies.

The Company recognizes positions taken

or expected to be

taken in a tax



return in accordance with existing accounting
guidance on

income taxes

which prescribes

a recognition threshold

and measurement

process. Interest

and penalties

on

tax liabilities, if any, would

be recorded in interest expense and other operating non-interest



expense, respectively.
Segment Reporting
Management monitors the revenue streams for all its various

products and services. The identifiable segments are not
material

and

operations

are

managed

and

financial

performance

is

evaluated

on

an

overall

Company-wide

basis.
Accordingly, all

the financial service

operations are

considered by management

to be

aggregated in one

reportable operating
segment.
Results of Operations
General
The following

tables present

selected balance

sheet, income

statement, and

profitability ratios

for the

dates indicated
(in thousands, except ratios):
June 30, 2022
December 31, 2021
Consolidated Balance Sheets:
Total

assets
$
2,016,086
$
1,853,939
Total

loans
(1)
$
1,372,733
$
1,190,081
Total

deposits
$
1,738,720
$
1,590,379
Total

stockholders' equity
$
180,068
$
203,897
(1)

Loan amounts include deferred fees/costs.
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
15,642
$
12,474
$
30,021
$
24,949
Total

non-interest income
$
1,617
$
1,516
$
3,562
$
3,837
Total

non-interest expense
$
9,551
$
8,674
$
19,163
$
17,351
Net income

$
5,295
$
4,053
$
10,149
$
8,834
Net income available to common stockholders
$
5,295
$
3,299
$
10,149
$
7,299
Profitability:
Efficiency ratio
55.34%
62.00%
57.06%
60.28%
Net interest margin

3.37%
3.14%
3.30%
3.24%
The Company's results

of operations

depend substantially on

net interest income

and non-interest income.

Other factors
contributing

to

the

results

of

operations

include

our

provision

for

credit

losses,

non-interest

expenses,

and

provision

for
income taxes.
Three months ended June 30, 2022 compared to the three months

ended June 30, 2021

Net income increased

to $5.3 million

for the three

months ended June

30, 2022 from

$4.1 million for

the same period
in 2021.

Net income

available to

common stockholders

increased $2.0

million for

the three

months ended

June 30, 2022
compared to

the same

period in

2021 primarily

because of

increase in

net interest

income and

no dividend

payments in
2022.

Six months ended June 30, 2022 compared to six months

ended June 30, 2021

Net income increased to $10.1 million for

the six months ended June 30, 2022

from $8.8 million for the same period



in
2021.

Net

income

available

to

common

stockholders

increased

$2.9

million

for

the

six

months

ended

June 30,

2022
  Table of Contents


36

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
compared to

the same

period in

2021 primarily

because of

increase in

net interest

income and

no dividend

payments in
2022.
Net Interest Income
Net

interest

income

is

the

difference

between

interest

earned

on

interest-earning

assets

and

interest

incurred

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 rates

earned on interest-earning assets

and rates paid on interest-bearing



liabilities. Net interest
margin is

equal to

the annualized

net interest

income

divided by

average interest

-earning assets.

Because

non-interest-

bearing sources of funds, such as non-interest-bearing deposits

and stockholders' equity, also fund



interest-earning assets,
net interest margin includes the indirect benefit of these

non-interest-bearing sources.
Changes in

the 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


37

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
The following table contains information related

to average balance sheet, average yields



on assets, and average costs
of liabilities for the periods indicated (in thousands):
Three Months Ended June 30,
2022
2021
Average
Balance
(1)
Interest
Yield/Rate
(2)

Average
Balance
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
1,296,476
$
14,053
4.35
%
$
1,088,492
$
11,538
4.19
%
Investment securities
(4)
493,352
2,510
2.04
%
385,090
1,968
2.04
%
Other interest earnings assets
69,503
121
0.70
%
101,134
23
0.09
%
Total

interest-earning assets
1,859,331
16,684
3.60
%
1,574,716
13,529
3.41
%
Non-interest earning assets
109,050


85,344
Total

assets
$
1,968,381


$
1,660,060

Liabilities and stockholders' equity

Interest-bearing liabilities:





Interest-bearing demand deposits
$
66,349
17
0.10
%
$
52,620
15
0.11
%
Saving and money market deposits
781,076
615
0.32
%
607,752
523
0.35
%
Time deposits
224,284
271
0.48
%
235,899
379
0.65
%
Total

interest-bearing deposits
1,071,709
903
0.34
%
896,271
917
0.41
%
Borrowings and repurchase agreements
36,330
139
1.53
%
36,000
138
1.52
%
Total

interest-bearing liabilities
1,108,039
1,042
0.38
%
932,271
1,055
0.45
%
Non-interest bearing demand deposits
644,975

535,894


Other non-interest-bearing liabilities
28,770


24,964
Total

liabilities
1,781,784


1,493,129
Stockholders' equity
186,597


166,931
Total

liabilities and stockholders' equity
$
1,968,381


$
1,660,060
Net interest income

$
15,642

$
12,474
Net interest spread
(5)
3.23
%
2.96
%
Net interest margin
(6)
3.37
%
3.14
%
(1)

Average balances - Daily average balances are used



to calculate yields/rates.
(2)

Annualized.
(3)

Average loan balances include non-accrual loans. Interest income

on loans includes accretion of deferred



loan fees, net of deferred loan costs.
(4)

At fair value except for securities held to maturity. Includes FHLB stock. (5)

Net interest spread is the average yield on

total interest-earning assets minus the 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


38

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
Six Months Ended June 30,
2022
2021
Average
Balance
(1)
Interest
Yield/Rate
(2)
Average
Balance
(1)
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
1,254,189
$
27,035
4.35
%
$
1,080,183
$
23,406
4.31
%
Investment securities
(4)
501,758
4,839
1.94
%
361,394
3,812
2.11
%
Other interest-earnings assets
79,763
152
0.38
%
89,914
39
0.90
%
Total

interest-earning assets
1,835,710
32,026
3.52
%
1,531,491
27,257
3.54
%
Non-interest earning assets
105,374
85,718
Total

assets
$
1,941,084
$
1,617,209
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
65,398
33
0.10
%
$
48,607
29
0.12
%
Saving and money market deposits
758,729
1,166
0.31
%
588,282
1,071
0.37
%
Time deposits
223,781
530
0.48
%
241,993
933
0.78
%
Total

interest-bearing deposits
1,047,908
1,729
0.33
%
878,882
2,033
0.47
%
Borrowings and repurchase agreements
36,171
276
1.54
%
36,000
275
1.52
%
Total

interest-bearing liabilities
1,084,079
2,005
0.37
%
914,882
2,308
0.51
%
Non-interest bearing demand deposits
635,740
509,283
Other non-interest-bearing liabilities
27,079
23,803
Total

liabilities
1,746,898
1,447,968
Stockholders' equity
194,186
169,241
Total

liabilities and stockholders' equity
$
1,941,084
$
1,617,209
Net interest income
$
30,021
$
24,949
Net interest spread
(5)
3.15
%
3.03
%
Net interest margin
(6)
3.30
%
3.24
%
(1)

Average balances - Daily average balances are used



to calculate yields/rates.
(2)

Annualized.
(3)

Average loan balances include non-accrual loans. Interest income

on loans includes accretion of deferred loan



fees, net of deferred loan costs.
(4)

At fair value except for securities held to maturity. Includes FHLB stock. (5)

Net interest spread is the average yield on

total interest-earning assets minus the average



rate on total interest-bearing liabilities.
(6)

Net interest margin is the ratio of net interest



income to average total interest-earning assets.
Three months ended June 30, 2022 compared to the three months

ended June 30, 2021

Net interest income before the provision

for credit losses was $15.6 million

for the three months ended June



30, 2022,
an increase of $3.2 million or

25.4%, from $12.5 million for

the same period in 2021.



This increase was primarily attributable
to higher income from larger loan and investment portfolio

s

combined with an increase in the weighted average

loan yield.

Included with loan interest

income are PPP loan

fees totaling $484 thousand

and $925 thousand for



the three months
ended June 30, 2022 and 2021, respectively.

PPP loan fees are recognized upon loan forgiveness by the SBA



.

Net interest margin

increased to 3.37%

for the quarter

ended June 30, 2022

from 3.14%

for the same

period in 2021.
The yield for loans and other interest-earning assets increased

,

while the overall interest-bearing deposits cost decreased

Six months ended June 30, 2022 compared to six months



ended June 30, 2021
Net interest

income before

the provision

for credit

losses

was $30.0

million for

the six

months ended

June 30,

2022, an
increase of $5.1 million or 20.3%, from $24.9 million for the same period in

2021. This increase was primarily attributable to
higher income from larger loan and investment portfolios combined

with a decrease in the average deposit cost.



Included with loan

interest income are PPP

loan fees totaling $1.5

million and $2.4 million

for the six

months ended June 30,
2022 and 2021, respectively. PPP loan fees are recognized upon

loan forgiveness by the SBA.

Net

interest

margin

increased

to

3.30%

at

June 30,

2022

from

3.24%

in

the

same

period

in

2021.

The

overall

interest-

bearing liabilities yields decreased.







































  Table of Contents


39

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
Provision for Credit

Losses
The ACL

represents probable incurred losses in our portfolio. We maintain an adequate
ACL

that can mitigate probable
losses inherent

in the

loan portfolio.

The ACL is increased

by the

provision for

credit losses

and is

decreased by

charge-
offs,

net

of

recoveries

on

prior

loan

charge-offs.

There

are

multiple

credit

quality

metrics

that

we

use

to

base

our
determination of

the amount

of the ACL

and corresponding

provision for

credit losses.

These credit

metrics evaluate

the
credit

quality

and

level

of

credit

risk

inherent

in

our

loan

portfolio,

assess

non-performing

loans

and

charge-offs

levels,

considers statistical and historical trends and economic conditions

and other applicable factors.

Three months ended June 30, 2022 compared to the three months



ended June 30, 2021

The

provision

for credit

loss

was

$705

thousand

for

the

three

months

ended

June 30,

2022 compared

no

provision

recorded for the same period in 2021. The primary driver of the provision

expense was attributed to loan growth.

Six months ended June 30, 2022 compared to six months



ended June 30, 2021

The provision for

credit loss

was $705 thousand

for the six

months ended

June 30, 2022

compared a

net recovery of
$160 thousand for the same period in 2021. The primary driver of the provision
expense was attributed to loan growth. The
ACL as a percentage of total

loans decreased to 1.15%

at June 30, 2022 compared

to 1.30% at June 30,

2021 due to the
growth of the loan portfolio.
See "Allowance for Credit Losses" below for further discussion

on how the ACL is calculated.

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 our swap and SBA

programs. In addition, we own and are beneficiaries of the life
insurance policies

on some

of our

employees and

generate income

on the

increase in

the cash

surrender value

of these
policies.
The following table presents the components of non-interest

income for the dates indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Service fees
$
1,083
$
903
$
1,983
$
1,792
Gain (loss) on sale of securities available for sale, net
(3)
187
18
249
Gain on sale of loans held for sale, net
22
23
356
987
Loan settlement
-
-
161
-
Other non-interest income
515
403
1,044
809
Total

non-interest income
$
1,617
$
1,516
$
3,562
$
3,837
Three months ended June 30, 2022 compared to the three months

ended June 30, 2021

Non-interest

income for

the

three months

ended June

30, 2022

increased

$101 thousand

or 6.7%,

compared

to the
same period in 2021. This increase was primarily driven by higher

services fees.
Six months ended June 30, 2022 compared to the six

months ended June 30, 2021

Non-interest income for the

six months ended June 30,

2022 decreased $275 thousand

or 7.2%, compared to



the same
period in 2021. This decrease was primarily driven by fewer loan sales

resulting in reduced gains.
















































  Table of Contents


40

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
Non-Interest Expense
The following table presents the components of non-interest

expense for the dates indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Salaries and employee benefits
$
5,913
$
5,213
$
11,788
$
10,491
Occupancy
1,251
1,411
2,521
2,798
Regulatory assessment and fees
226
195
439
373
Consulting and legal fees
398
373
915
558
Network and information technology services
448
332
835
840
Other operating
1,315
1,150
2,665
2,291
Total

non-interest expense
$
9,551
$
8,674
$
19,163
$
17,351
Three months ended June 30, 2022 compared to the three months

ended June 30, 2021

Non-interest expense for the

three months ended June 30,

2022 increased $877 thousand

or 10.1%, compared to

the

same period in 2021. The increase

was primarily driven by higher salaries

and employee benefits due to



new hires, salary
compensation, and seasonal payroll taxes.
Six months ended June 30, 2022 compared to the six

months ended June 30, 2021

Non-interest expense for the six months

ended June 30, 2022 increased $1.8

million or 10.4%, compared to the



same
period

in

2021.

The

increase

was

primarily

driven

by

higher

salaries

and

employee

benefits

due

to

new

hires,

salary
compensation, and seasonal payroll taxes.
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. Surrender value of

bank-owned life insurance policies

covering key employees, purchasing



municipal bonds, and
overall levels of taxable income will be important elements in

determining our effective tax rate.
Three months ended June 30, 2022 compared to the three months

ended June 30, 2021

Income tax expense for the three months

ended June 30, 2022 increased to $1.7 million from

$1.3 million for the same
period in 2021. The effective tax

rate for the three months ended June 30, 2022

was 24.4% and for the three months

ended


2021 was 23.8%.
Six months ended June 30, 2022 compared to the six

months ended June 30, 2021

Income tax

expense for

the six

months ended

June 30, 2022

increased to

$3.6 million

from $2.8 million

for the

same

period in 2021. The Company's effective tax rate was 26.0% compared



to 23.8% for the same period in 2021.
For a further discussion

on income taxes, see

Note 4 "Income Taxes" to

the Consolidated Financial

Statements in this
Form 10-Q.
Analysis of Financial Condition
Total

assets at June 30, 2022 were

$2.0 billion, an increase of

$162.1 million, or 8.7%,

over total assets of $1.9

billion
at December

31, 2021. Total

loans increased

$182.7 million,

or 15.3%,

to $1.4 billion

at June 30,

2022 compared

to $1.2
billion at December 31,

2021. Total deposits increased by $148.3 million,



or 9.3%, to $1.7

billion at June 30, 2022

compared
to December 31, 2021.
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
  Table of Contents


41

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
consideration the Company's

risk appetite and

tolerance, manage

the asset composition

and diversification,

and maintain
adequate risk-based capital ratios.
The

investment

portfolio

is

managed

in

accordance

with

the

Asset

and

Liability

Management

("ALM")

policy,

which
includes an

investment guideline,

approved by

the Board.

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 ALCO. The portfolio of investments 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 U.S. government-sponsored agencies,

U.S.

agency
mortgage-backed securities,

collateralized mortgage

obligation securities,

municipal securities,

and other

debt securities, all with varying contractual maturities and coupons. Due to the optionality embedded in these securities, the final maturities do not



necessarily represent the

expected life of

the portfolio. Some

of these

securities will be

called or paid

down depending
on capital market conditions and expectations. The investment portfolio is
regularly reviewed by the Chief Financial Officer,
Treasurer,

or the

ALCO of

the Company

to ensure

an appropriate

risk and

return profile

as well

as for

adherence to

the
investment policy.
As of June 30, 2022, the

investment portfolio consisted

of available-for-sale ("AFS") and



held-to-maturity ("HTM") debt
securities. During the year ended December 31, 2021,

there were 28 investment securities that were transferred from AFS
to HTM with an

amortized cost basis

and fair value amount

of $67.6 million and

$68.7 million, respectively.

On the date of
transfer, these securities had a total net unrealized gain of $1.1

million. The transfer of debt securities from the AFS



to HTM
category was

made at

fair value

at the

date of

transfer.

The unrealized

gain or

loss

at the

date of

transfer is

retained in
accumulated other

comprehensive income

and in

the carrying

value of

the HTM

securities. Such

amounts are

amortized
over the remaining life of

the security.

There was no immediate

impact to net income on

the date of transfer.

Two of these
transferred securities totaling $2.0 million matured during

the second quarter of 2022.

The book value of the AFS securities is adjusted monthly

for unrealized gain or loss as a valuation allowance,



and any
gain

or

loss

is

reported

on

an

after-tax

basis

as

a

component

of

other

comprehensive

income

in

stockholders'

equity.
Periodically,

we

may

need

to

assess

whether

there

have

been

any

events

or

unexpected

economic

circumstances

to
indicate that

a security

on which

there is

an unrealized

loss is

impaired on

an other-than-temporary

basis ("OTTI").

If the
impairment

is

deemed

to

be

permanent,

an

analysis

is

then

made

considering

many

factors,

including

the

severity

and

duration of the impairment, the severity

of the event, our intent and

ability to hold the security for a



period of time sufficient
for a

recovery in

value, recent

events specific

to the

issuer or

industry,

any related

credit events,

and for

debt securities,
external

credit

ratings

and

recent

downgrades

related

to

deterioration

of

credit

quality.

Securities

on

which

there

is

an
unrealized loss

that is

deemed to

be OTTI

are written

down to

fair value,

with the

write-down recorded

as a

realized loss
under line item

"Gain (loss) on

sale of securities

available-for-sale,

net" of the Consolidated

Statements of Operations.

As

of June 30, 2022, there are no securities

which management has classified as OTTI



.

For further discussion of our analysis
on impaired investment securities for OTTI, see Note 2 "Investment Securities"
to the Consolidated Financial Statements in
this Form 10-Q.
AFS

and

HTM

investment

securities

decreased

$68.1 million

or

13.0%

to

$456.1 million

at

June 30,

2022

from
$524.2 million

at December

31, 2021.

Investment

securities

decreased

due to

payments received

and higher

unrealized
losses.

Management

reinvested

excess

cash

balances

into

high

credit

quality

investments

to

increase

the

Company's

profitability and modify the Company's balance sheet duration according

to the ALM policy. As of June



30, 2022, corporate
bond securities with a market value

of $23.6 million were pledged to secure

public deposits. The investment portfolio

does

not have any tax-exempt securities.



























































































































































































































  Table of Contents


42

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
The

following

table

presents

the

amortized

cost

and

fair

value

of

investment

securities

for

the

dates

indicated

(in
thousands):
June 30, 2022
December 31, 2021
Available-for-sale:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Government Agency
$
27,816
$
25,850
$
10,564
$
10,520
U.S. Treasury
2,468
2,437
-
-
Collateralized mortgage obligations
155,340
133,820
160,506
156,829
Mortgage-backed securities - residential
111,708
95,982
120,643
118,842
Mortgage-backed securities - commercial
44,670
40,121
49,905
50,117
Municipal securities
25,124
19,602
25,164
24,276
Bank subordinated debt securities
16,503
15,972
27,003
28,408
Corporate bonds
6,062
5,680
12,068
12,550
$
389,691
$
339,464
$
405,853
$
401,542
Held-to-maturity:
U.S. Government Agency
$
34,100
$
29,408
$
34,505
$
33,904
Collateralized mortgage obligations
40,806
35,293
44,820
43,799
Mortgage-backed securities - residential
27,478
23,524
26,920
26,352
Mortgage-backed securities - commercial
3,095
2,692
3,103
3,013
Corporate bonds
11,192
10,150
13,310
13,089
$
116,671
$
101,067
$
122,658
$
120,157
The following

table shows

the weighted

average yields,

categorized by

contractual maturity,

for investment

securities

as of June 30, 2022 (in thousands,



except ratios):

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
$
-
0.00%
$
4,810
2.76%
$
2,015
2.84%
$
20,991
2.82%
$
27,816
2.81%
U.S. Treasury
-
0.00%
2,468
2.32%
-
0.00%
-
0.00%
2,468
2.32%
Collateralized mortgage obligations
-
0.00%
-
0.00%
-
0.00%
155,340
1.49%
155,340
1.49%
MBS - residential
-
0.00%
-
0.00%
-
0.00%
111,708
1.61%
111,708
1.61%
MBS - commercial
-
0.00%
-
0.00%
-
0.00%
44,670
1.99%
44,670
1.99%
Municipal securities

-
0.00%
-
0.00%
1,000
2.05%
24,124
1.72%
25,124
1.73%
Bank subordinated debt securities
-
0.00%
-
0.00%
16,503
4.71%
-
0.00%
16,503
4.71%
Corporate bonds
-
0.00%
6,062
2.59%
-
0.00%
-
0.00%
6,062
2.59%
$
-
$
13,340
$
19,518
$
356,833
$
389,691
1.85%
Held-to-maturity:
U.S. Government Agency
$
-
0.00%
$
7,890
1.03%
$
18,540
1.32%
$
7,670
1.58%
$
34,100
1.31%
Collateralized mortgage obligations
-
0.00%
-
0.00%
-
0.00%
40,806
1.42%
40,806
1.42%
MBS - residential
-
0.00%
1,354
2.63%
9,224
1.61%
16,900
2.05%
27,478
1.93%
MBS - commercial
-
0.00%
-
0.00%
3,095
1.62%
-
0.00%
3,095
1.62%
Corporate bonds
-
0.00%
11,192
2.71%
-
0.00%
-
0.00%
11,192
2.71%
$
-
$
20,436
$
30,859
$
65,376
$
116,671
1.64%
Loans
Loans

are

the

largest

category

of

interest-earning

assets

on

the

Consolidated

Balance

Sheets,

and

usually

provide
higher yields

than the

rest of

the interest-earning

assets. Higher

yields typically

carry 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


43

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
The following table shows the loan portfolio composition

as of the dates indicated (in thousands):

June 30, 2022
December 31, 2021
Total
Percent of
Total
Total
Percent of
Total
Residential Real Estate
$
203,662
14.8
%
$
201,359
16.9
%
Commercial Real Estate
843,445
61.5
%
704,988
59.2
%
Commercial and Industrial
131,271
9.5
%
146,592
12.3
%
Foreign Banks
84,770
6.2
%
59,491
5.0
%
Consumer and Other

109,250
8.0
%
79,229
6.6
%
Total

gross loans
1,372,398
100.0
%
1,191,659
100.0
%
Less: Deferred fees (cost)
(335)
1,578
Total

loans net of deferred fees (cost)
1,372,733
1,190,081
Less: Allowance for credit losses
15,786
15,057
Total

net loans
$
1,356,947
$
1,175,024
Total

gross

loans

increased

by

$180.7 million

or

15.2%

at

June 30,

2022

compared

to

December 31,

2021.

The
commercial real estate

and to

a lesser

extent, foreign banks

and consumer and

other loan

segments had the

most significant
growth partially offset by declines in the commercial and industrial loan
segment. Commercial and industrial loans declined
primarily because of continuing PPP loan forgiveness.
Our

loan

portfolio

continues

to

grow,

with

commercial

real

estate

lending

as

the

primary

focus

which

represented
approximately 61.5%

of the total

gross loan portfolio

as of June 30,

2022. We

do not expect

any significant changes

over
the foreseeable

future in

the composition

of our

loan portfolio

or in

our emphasis

on commercial

real estate

lending. Our
loan growth

strategy

since

inception

has been

reflective

of the

market in

which

we operate

and

of

our strategic

plan

as
approved by the Board.
Most of the

commercial real estate

exposure represents

loans to commercial

businesses secured

by owner-occupied
real estate.

The growth

experienced in

recent years

is primarily

due to

implementation of

our relationship-based

banking
model and

the success

of our

relationship managers

in competing

for new

business

in a

highly competitive

metropolitan
area. Many

of our

larger loan

clients have

leng-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 for the loan portfolio at June 30,
2022 (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
$
10,471
$
26,776
$
79,213
$
87,202
$
203,662
Commercial Real Estate
41,993
186,681
610,145
4,626
843,445
Commercial and Industrial
20,660
37,175
29,233
44,203
131,271
Foreign Banks
84,770
-
-
-
84,770
Consumer and Other
1,338
3,732
11,856
92,324
109,250
Total

gross loans
$
159,232
$
254,364
$
730,447
$
228,355
$
1,372,398
Interest rate sensitivity:
Fixed interest rates
$
125,693
$
179,013
$
140,784
$
115,986
$
561,476
Floating or adjustable rates
33,539
75,351
589,663
112,369
810,922
Total

gross loans
$
159,232
$
254,364
$
730,447
$
228,355
$
1,372,398
The information

presented

in the

table above

is based

upon the

contractual

maturities of

the individual

loans, which
may be

subject to

renewal at

their contractual

maturity.

Renewals will

depend on

approval by

our credit

department and
balance sheet

composition at the

time of

the analysis,

as well

as any

modification of terms

at the

loan's maturity. Additionally,
maturity

concentrations,

loan

duration,

prepayment

speeds

and

other

interest

rate

sensitivity

measures

are

discussed,

reviewed, and analyzed by the ALCO. Decisions on term

rate modifications are discussed as well.



As of

June 30,

2022, approximately

59.1% of

the loans

have adjustable/variable

rates and

40.9% of

the loans

have
fixed

rates.

The

adjustable/variable

loans

re-price

to

different

benchmarks

and

tenors

in

different

periods

of

time.

By
























































































  Table of Contents


44

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
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 and positions us to gain in the scenario of higher interest

rates.
Asset Quality

Our asset quality grading

analysis estimates the capability of



the borrower to repay

the contractual obligation of

the loan
agreement as scheduled or at all. The Company's internal credit risk grading
system is based on experiences with similarly
graded loans. Internal credit

risk grades are reviewed

at least once a

year, and

more frequently as

needed. Internal credit
risk ratings

may change

based on

management's

assessment of

the results

from the

annual review,

portfolio monitoring,
and other developments observed with borrowers.

The internal credit risk grades used by the Company to

assess the credit worthiness of a loan are shown below: Pass - Loans indicate different levels of satisfactory

financial condition and performance.

Special Mention

- Loans classified as special mention have a potential weakness



that deserves management's
close attention. If left uncorrected, these potential weaknesses

may result in deterioration of the repayment
prospects for the loan or of the institution's

credit position at some future date.

Substandard

- Loans classified as substandard are inadequately protected



by the current net worth and paying
capacity of the obligator or of the collateral pledged, if

any. Loans so classified



have a well-defined weakness or
weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are

not corrected.

Doubtful

- Loans classified as doubtful have all the weaknesses inherent



in those classified at substandard, with
the added characteristic that the weaknesses make collection

or liquidation in full on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss

- Loans classified as loss are considered uncollectible. Loan credit exposures by internally assigned grades are

as follows for the dates indicated (in thousands):

June 30, 2022
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
203,662
$
-
$
-
$
-
$
203,662
Commercial Real Estate
841,842
1,197
406
-
843,445
Commercial and Industrial
130,809
-
462
-
131,271
Foreign Banks
84,770
-
-
-
84,770
Consumer and Other

109,040
-
210
-
109,250
$
1,370,123
$
1,197
$
1,078
$
-
$
1,372,398
December 31, 2021
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
196,778
$
-
$
4,581
$
-
$
201,359
Commercial Real Estate
703,349
1,222
417
-
704,988
Commercial and Industrial
146,039
-
553
-
146,592
Foreign Banks
59,491
-
-
-
59,491
Consumer and Other

79,005
-
224
-
79,229
$
1,184,662
$
1,222
$
5,775
$
-
$
1,191,659





































































































  Table of Contents


45

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
Non-Performing Assets
The following table presents non-performing assets as

of the dates shown (in thousands,



except ratios):
June 30, 2022
December 31, 2021
Non-accrual loans, less non-accrual TDR loans
$
-
$
1,190
Non-accrual TDRs
-
-
Loans past due over 90 days and still accruing
-
-
Total

non-performing loans
-
1,190
Other real estate owned
-
-
Total

non-performing assets
$
-
$
1,190
Asset quality ratios:
Allowance for credit losses to total loans
1.15%
1.27%
Allowance for credit losses to non-performing loans
0%
1,265%
Non-performing loans to total loans
0%
0.10%
Non-performing

assets include

all loans

categorized as

non-accrual or

restructured,

impaired securities,

non-accrual
troubled debt restructuring

("TDRs"), 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 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.
A TDR is

a debtor

that is experiencing

financial difficulties

and to whom

the Company grants

a loan concession.

This
determination

is performed

during the

annual

review

process

or whenever

problems

are surfacing

regarding

the client's
ability to repay in accordance with

the original terms of the loan

or line of credit. In general,



a borrower that can obtain funds
from sources

other than

the Company

at market

interest rates

at or

near those

for non-troubled

debt is

not involved

in a
troubled debt

restructuring.

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.
The following tables present performing and non-performing

TDRs at the dates indicated (in thousands):
June 30, 2022
December 31, 2021
Accrual Status
Non-Accrual
Status
Total TDRs
Accrual Status
Non-Accrual
Status
Total TDRs
Residential real estate
$
7,307
$
-
$
7,307
$
7,815
$
-
$
7,815
Commercial real estate
594
-
594
696
-
696
Commercial and industrial
99
-
99
141
-
141
Consumer and other

210
-
210
224
-
224
Total
$
8,210
$
-
$
8,210
$
8,876
$
-
$
8,876
The Company allocated

$319 thousand and $360

thousand of specific

allowance for TDR loans

at June 30, 2022 and
December 31,

2021, respectively.

There

was

no

commitment

to

lend additional

funds to

these

TDR

customers

at either
date.

During the

quarter ended

June 30, 2022

and 2021,

there were

no defaults

on TDR

loans within

the prior

12 months.
Additionally, the Company

did not have any new TDR loans during the three months



ended June 30, 2022 and 2021.
The

Company

provided

financial

relief

to

borrowers

impacted

by

COVID-19

and

provided

modifications

to

include
interest

only

deferral

or

principal

and

interest

deferral.

These

modifications

are

excluded

from

TDR,

classification

under

Section 4013 of the CARES Act or under applicable interagency

guidance of the federal banking regulators.



  Table of Contents


46

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
For further

discussion on

non-performing loans,

see Note

3 "Loans"

to the Consolidated

Financial Statements

on this
Form 10-Q.
Allowance for Credit Losses
In

determining

the

balance

of

the

allowance

account,

loans

are

pooled

by

product

segments

with

similar

risk

characteristics and management



evaluates the ACL on

each segment and on

a regular basis to maintain

the allowance at
an

adequate

level

based

on

factors

which,

in

management's

judgment,

deserve

current

recognition

in

estimating

credit
losses.

Such

factors

include

changes

in

prevailing

economic

conditions,

historical

loss

experience,

delinquency

trends,

changes in the composition and size of the loan portfolio



and the overall credit worthiness of the borrowers.
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.






































































































































































































































  Table of Contents


47

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
The following table presents ACL and net charge-offs to average loans by

type for the periods indicated (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Foreign

Banks
Consumer
and Other
Total
Three Months Ended June 30, 2022












Beginning balance
$
2,357
$
9,183
$
2,355
$
491
$
688
$
15,074
Provision for credit losses
9
107
311
160
118
705
Recoveries
-
-
5
-
3
8
Charge-offs
-
-
-
-
(1)
(1)
Ending Balance

$
2,366
$
9,290
$
2,671
$
651
$
808
$
15,786
Average loans
$
198,812
799,846
126,434
76,968
94,416
1,296,476
Net charge-offs to average loans

0.00%
0.00%
-0.02%
0.00%
-0.01%
0.00%

Six Months Ended June 30, 2022








Beginning balance
$
2,498
$
8,758
$
2,775
$
457
$
569
$
15,057
Provision for credit losses
(148)
532
(115)
194
242
705
Recoveries
32
-
11
-
3
46
Charge-offs
(16)
-
-
-
(6)
(22)
Ending Balance

$
2,366
$
9,290
$
2,671
$
651
$
808
$
15,786
Average loans
$
198,453
769,978
133,009
68,400
84,349
1,254,189
Charge-offs
-0.02%
0.00%
-0.02%
0.00%
0.01%
0.00%
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Foreign

Banks
Consumer
and Other
Total
Three Months Ended June 30, 2021












Beginning balance
$
3,087
$
9,320
$
2,005
$
407
$
190
$
15,009
Provision for credit losses
(322)
(568)
398
147
345
-
Recoveries
4
-
64.00
-
1
69
Charge-offs
(229)
-
-
-
(1)
(230)
Ending Balance

$
2,540
$
8,752
$
2,467
$
554
$
535
$
14,848
Average loans
$
216,190
$
650,871
$
160,968
$
48,551
$
11,912
$
1,088,492
Net charge-offs to average loans

0.42%
0.00%
-0.16%
0.00%
0.00%
0.06%

Six Months Ended June 30, 2021








Beginning balance
$
3,408
$
9,453
$
1,689
$
348
$
188
$
15,086
Provision for credit losses
(647)
(701)
627
206
355
(160)
Recoveries
8
-
151
-
2
161
Charge-offs
(229)
-
-
-
(10)
(239)
Ending Balance

$
2,540
$
8,752
$
2,467
$
554
$
535
$
14,848

Average loans
$
223,628
$
638,444
$
163,922
$
45,432
$
8,757
$
1,080,183
Net charge-offs to average loans
0.20%
0.00%
-0.19%
0.00%
0.18%
0.01%
Bank-Owned Life Insurance
As of June 30,

2022, the combined

cash surrender value

of all bank-owned

life insurance ("BOLI")

policies was $42.2
million. Changes in

cash surrender value

are recorded to

non-interest income in

the Consolidated Statements

of Operations.
The Company had BOLI policies with five insurance carriers.

The Company is the beneficiary of these policies.
Deposits
Customer deposits are the

primary funding source for

the Bank's growth.

Through our network of

banking centers, we
offer a competitive array of deposit

accounts and treasury management services designed



to meet our customers' business
needs.

Our

primary

deposit

customers

are

small-to-medium

sized

businesses

("SMBs"),

and

the

personal

business

of

owners and operators of these SMBs, as well as the retail/consumer

relationships of the employees of these businesses.





































































  Table of Contents


48

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
The following table

presents the daily

average balance and

average rate paid

on deposits by

category for

the periods
presented (in thousands, except ratios):
Three Months Ended June 30,
2022
2021
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest-bearing demand deposits
$
644,975
0.00%
$
535,894
0.00%
Interest-bearing demand deposits
66,349
0.10%
52,620
0.11%
Saving and money market deposits
781,076
0.32%
607,752
0.35%
Time deposits
224,284
0.48%
235,899
0.65%
$
1,716,684
0.21%
$
1,432,165
0.26%
The

uninsured

deposits

are

estimated

based

on

the

FDIC

deposit

insurance

limit

of

$250 thousand

for

all

deposit
accounts at

the Bank

per account

holder. Total estimated uninsured deposits

were $1.0 billion and

$897.8 million at June 30,
2022 and December 31, 2021, respectively.

The following table shows scheduled maturities of uninsured



time deposits as of June 30, 2022 (in thousands):
June 30, 2022
Three months or less
$
27,087
Over three through six months
22,393
Over six though twelve months
31,622
Over twelve months
23,301
$
104,403
Other Liabilities
The Company collects from commercial 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 recognized as other liabilities.

As of June 30, 2022 escrow balances totaled $10.2 million



compared to $4.0 million at December 31, 2021.
Borrowings
As a

member of

the FHLB, we

are eligible for

advances with various

terms and conditions.

This accessibility of

additional
funding allows

us to

efficiently

and timely

meet both

expected and

unexpected outgoing

cash flows

and collateral

needs

without adversely affecting either daily operations or the financial condition



of the Company.
As of June 30,

2022 we had

$66.0 million of

fixed-rate advances outstanding



from the FHLB

with a weighted

average

rate of 1.55%. Most of the advances are due in the first

two calendar quarters of 2025.

The following table presents the FHLB fixed rate advances



as of June 30, 2022 (in thousands):
Interest Rate
Type of Rate
Maturity Date
Amount
0.81%
Fixed
August 17, 2023
$
5,000
1.04%
Fixed
July 30, 2024
5,000
2.05%
Fixed
March 27, 2025
10,000
1.91%
Fixed
March 28, 2025
5,000
1.81%
Fixed
April 17, 2025
5,000
1.07%
Fixed
July 18, 2025
6,000
1.58%
Fixed
July 14, 2022
30,000
$
66,000
We

have

also

established

Fed

Funds

lines

of

credit

with

our

upstream

correspondent

banks

to

manage

temporary

fluctuations in our daily cash balances.

As of June 30, 2022, there

were no outstanding balances with



the Fed Funds lines
of credit.



















  Table of Contents


49

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
Off-Balance Sheet Arrangements
We engage

in various financial

transactions in

our operations

that, under GAAP,

may not be

included on

the balance
sheet. To

meet the financing needs

of our customers we may

include commitments to extend



credit and standby letters

of
credit. To

a varying

degree, such

commitments involve

elements of

credit, market,

and interest

rate risk

in excess

of the
amount recognized

in the

balance sheet.

We use

more conservative

credit and

collateral policies

in making

these credit
commitments than

we do

for on-balance

sheet items.

We are

not aware

of any accounting

loss to

be incurred

by funding
these commitments;

however,

we

maintain

an

allowance

for

off-balance

sheet

credit

risk

which

is recorded

under

other
liabilities on the Consolidated Balance Sheets.
Since commitments associated with letters of

credit and commitments to extend

credit may expire unused, the



amounts
shown

do

not

necessarily

reflect

actual

future

cash

funding

requirements.

The

following

table

presents

lending

related

commitments outstanding as of the dates indicated (in thousands

June 30, 2022
December 31, 2021
Commitments to grant loans and unfunded lines of credit
$
142,498
$
134,877
Standby and commercial letters of credit
3,843
6,420
$
146,341
$
141,297
Commitments to extend credit are agreements to lend funds to a client, as long
as there is no violation of any condition
established

in

the

contract,

for

a

specific

purpose.

Commitments

generally

have

variable

interest

rates,

fixed

expiration
dates or

other

termination

clauses

and

may require

payment

of

a fee.

Since many

of the

commitments

are

expected to
expire without being

fully drawn, the

total commitment

amounts disclosed

above do not

necessarily represent

future cash
requirements.
Unfunded lines of credit represent unused portions of credit facilities to our
current borrowers that represent no change
in credit risk in our portfolio. Lines

of credit generally have variable interest

rates. The maximum potential amount



of future
payments we could

be required to

make is represented

by the contractual

amount of the

commitment, less

the amount of
any advances made.
Letters of credit are

conditional commitments issued



by us to guarantee

the performance of a

client to a third

party.

In

the event of nonperformance by

the client in accordance with the

terms of the agreement with the



third party,

we would be
required to fund

the commitment.

If the commitment

is funded, we

would be entitled

to seek recovery

from the client

from
the underlying collateral,

which can include

commercial real estate,

physical plant and

property, inventory, receivables, cash
or marketable securities.
Asset and Liability Management Committee
Members

of

senior

management

and

our

Board

make

up

the

asset

and

liability

management

committee,

or

ALCO.

Senior management is responsible for ensuring that Board

approved strategies, policies, and procedures 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 IRR ("Interest

Rate Risk") is

inherent to the banking

business, we

believe our ALCO

has put in
place 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,

deposits

volatility

and

reduced earnings or outright losses could adversely affect

the Company's liquidity,



performance, and capital adequacy.
Income simulations

are used

to assess

the impact

of changing

rates on

earnings under

different rates

scenarios and
time horizons.

These simulations

utilize both

instantaneous and

parallel changes

in the

level of

interest rates,

as well

as

non-parallel changes such as changing slopes (flat and steeping) 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 analysis



is also
utilized to have a

more comprehensive assessment



on IRR. This simulation

relies on detailed

assumptions outlined in

our

budget and strategic plan, and in assumptions regarding changes in

existing lines of business, new business, management strategies and client expected behavior.


  Table of Contents


50

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
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 last ALCO model run as of June 30, 2022, we are an

asset-sensitive company for years one and two.
This 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. 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,

pricing correlations,
deposit truncations and decay rates, and key 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

EVEs do not include actions that management may
undertake to manage the risks in response to anticipated changes in interest
rates or client deposit behavior. As part of our
ALM strategy

and

policy,

management

has the

ability

to modify

the

balance sheet

to

either increase

asset

duration

and
decrease liability

duration to reduce

asset sensitivity,

or to decrease

asset duration and

increase liability duration

in order
to increase asset sensitivity.
According to our model,

as of June 30,

2022, NIM should

increase for static rate

scenarios (-400 basis

points or +400
basis points).

For the static

forecast in year

one, the

estimated NIM

will remain

stable from

the

base case

scenario to

a

+400 basis points scenario. 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

of rates

will

have

a

negative

impact on the EVE. Results and analysis are presented quarterly



to the Board, and strategies are defined.
We have also

been reducing asset

sensitivity by extending

asset duration, which

has lowered our

net interest income
volatility and allowed us to keep the net interest income

consistent with ALCO objectives.
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),

and contingent liquidity events.
Changes in macroeconomic conditions, as well as exposure

to credit, market, operational, legal and reputational



risks,
such as

cybersecurity risk,

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 and ALM

policy.

Critical elements of our liquidity

risk management include: effective corporate governance consisting of



oversight by the
Board 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



























































































































  Table of Contents


51

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
and

potential

future

funding

sources;

adequate

levels

of

highly

liquid

marketable

securities

free

of

legal,

regulatory,

or
operational

impediments,

that

can

be

used

to

meet

liquidity

needs

in

stressful

situations;

comprehensive

contingency
funding plans

that sufficiently address

potential adverse liquidity

events and emergency

cash flow

requirements; and internal
controls

and

internal

audit

processes

sufficient

to

determine

the

adequacy

of

the

institution's

liquidity

risk

management
process.
We

expect

funds

to

be

available

from

several

basic

banking

activity

sources,

including

the

core

deposit

base,

the

repayment and maturity of loans and investment security

cash flows. Other potential funding sources include



federal funds
purchased, brokered certificates

of deposit, listing

certificates of deposit,

and borrowings

from the FHLB.

Accordingly,

our
liquidity

resources

were

adequate

to

fund

loans

and

meet

other

cash

needs

as

necessary.

We

do

not

expect

liquidity
resources to be compromised at this time.
Capital Adequacy
As

of

June 30,

2022,

the

Bank

was

well

capitalized

under

the

FDIC's

prompt

corrective

action

framework.

We

also

follow the capital conservation



buffer framework,

and as of June

30, 2022, we

exceeded the capital

conversation buffer

in

all capital ratios, according to our actual ratios. The following table presents the



capital ratios for both the Company and the
Bank at the dates indicated (in thousands,

except ratios):
Actual
Minimum Capital
Requirements

To be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
June 30, 2022:
Total

risk-based capital:
USCB Financial Holdings, Inc.
$
202,417
13.74
%
$
117,842
8.00
%
$
147,302
10.00
%
U.S. Century Bank
$
201,314
13.67
%
$
117,842
8.00
%
$
147,302
10.00
%
Tier 1 risk-based capital:






USCB Financial Holdings, Inc.
$
186,384
12.65
%
$
88,381
6.00
%
$
117,842
8.00
%
U.S. Century Bank
$
185,281
12.58
%
$
88,381
6.00
%
$
117,842
8.00
%
Common equity tier 1 capital:
USCB Financial Holdings, Inc.
$
186,384
12.65
%
$
66,286
4.50
%
$
95,746
6.50
%
U.S. Century Bank
$
185,281
12.58
%
$
66,286
4.50
%
$
95,746
6.50
%
Leverage ratio:






USCB Financial Holdings, Inc.
$
186,384
9.43
%
$
79,040
4.00
%
$
98,800
5.00
%
U.S. Century Bank
$
185,281
9.38
%
$
79,040
4.00
%
$
98,800
5.00
%
December 31, 2021:
(1)
Total

risk-based capital
$
186,735
14.92
%
$
100,125
8.00
%
$
125,157
10.00
%
Tier 1 risk-based capital
$
171,484
13.70
%
$
75,094
6.00
%
$
100,125
8.00
%
Common equity tier 1 capital
$
171,484
13.70
%
$
56,321
4.50
%
$
81,352
6.50
%
Leverage ratio
$
171,484
9.55
%
$
71,825
4.00
%
$
89,781
5.00
%
(1)

As of December 31, 2021, the regulatory capital

ratios for both USCB Financial Holdings, Inc. and

U.S. Century Bank were the same since there
was no activity between both of these entities.

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

reflected in the
increased cost of operations.

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 do the

effects of general levels

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.



As market interest rates

rise or fall in relation

to the rates earned

on loans and investments,
the

value

of

these

assets

decreases

or

increases

respectively.

Inflation

can

also

impact

core

non-interest

expenses

associated with delivering the Company's services. Recently Issued Accounting Pronouncements























































































































































  Table of Contents


52

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
Recently issued accounting

pronouncements are discussed

in Note 1 "Summary

of Significant Accounting Policies"

the Consolidated Financial Statements on this 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 stockholders for the periods presented (in thousands,



except per share data):
As of or For the Three Months Ended
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Pre-Tax Pre-Provision ("PTPP") Income:
(1)

Net income

$
5,295
$
4,854
$
5,650
$
6,593
$
4,053

Plus: Provision for income taxes
1,708
1,858
$
1,751
$
2,088
$
1,263

Plus: Provision for (recovery of) credit losses
705
-
$
-
$
-
$
-

PTPP income
$
7,708
$
6,712
$
7,401
$
8,681
$
5,316
PTPP Return on Average Assets:
(1)

PTPP income
$
7,708
$
6,712
$
7,401
$
8,681
$
5,316

Average assets
$
1,968,381
$
1,913,484
$
1,828,037
$
1,741,423
$
1,660,060

PTPP return on average assets
(2)
1.57%
$
1.42%
$
1.61%
$
1.98%
$
1.28%
Operating Net Income:

Net income
$
5,295
$
4,854
$
5,650
$
6,593
$
4,053

Less: Net gains (losses) on sale of



securities
(3)
$
21
$
35
$
(70)
$
187

Less: Tax effect on sale of securities
1
$
(5)
$
(9)
$
17
$
(46)

Operating net income
$
5,297
$
4,838
$
5,624
$
6,646
$
3,912
Operating PTPP Income:
(1)

PTPP income
$
7,708
$
6,712
$
7,401
$
8,681
$
5,316

Less: Net gains (losses) on sale of



securities
(3)
$
21
$
35
$
(70)
$
187

Operating PTPP Income
$
7,711
$
6,691
$
7,366
$
8,751
$
5,129
Operating PTPP Return on Average Assets:
(1)

Operating PTPP income
$
7,711
$
6,691
$
7,366
$
8,751
$
5,129

Average assets
$
1,968,381
$
1,913,484
$
1,828,037
$
1,741,423
$
1,660,060

Operating PTPP Return on average assets
(2)
1.57%
$
1.42%
$
1.60%
$
1.99%
$
1.24%
Operating Return on Average Assets:
(1)

Operating net income
$
5,297
$
4,838
$
5,624
$
6,646
$
3,912

Average assets
$
1,968,381
$
1,913,484
$
1,828,037
$
1,741,423
$
1,660,060

Operating return on average assets
(2)
1.08%
$
1.03%
$
1.22%
$
1.51%
$
0.95%
(1)

The Company believes these non-GAAP measurements

are a key indicator of the ongoing earnings



power of the Company.
(2) Annualized.





































































































































































































































  Table of Contents


53

USCB Financial Holdings, Inc.



Q2 2022 Form 10-Q
As of or For the Three Months Ended
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity (GAAP)
$
180,068
$
192,039
$
203,897
$
201,918
$
166,302
Less: Intangible assets
-
-
-
-
-
Less: Preferred stock
-
-
-
-
24,616
Tangible stockholders' equity (non-GAAP)
$
180,068
$
192,039
$
203,897
$
201,918
$
141,686
Total shares issued and outstanding (at period-end):
(2)
Class A common shares
20,000,753
20,000,753
19,991,753
18,767,541
3,889,469
Class B common shares
-
-
-
1,224,212
1,224,212
Total common shares issued and outstanding
20,000,753
20,000,753
19,991,753
19,991,753
5,113,681
Tangible book value per common share (non-GAAP)
$
9.00
$
9.60
$
10.20
$
10.10
$
27.71





Operating net income available to common stockholders:
(1)
Net income (GAAP)
$
5,295
$
4,854
$
5,650
$
6,593
$
4,053
Less: Preferred dividends
-
-
-
542
754
Less: Exchange and redemption of preferred shares
-
-
-
89,585
-
Net income (loss) available to common stockholders

(GAAP)
5,295
4,854
5,650
(83,534)
3,299

Add back: Exchange and redemption of preferred



shares
-
-
-
89,585
-

Operating net income avail. to common stock (non-GAAP)

$
5,295
$
4,854
$
5,650
$
6,051
$
3,299

Allocation of operating net income per common



stock class:





Class A common stock
$
5,295
$
4,854
$
5,650
$
5,598
$
2,509
Class B common stock
$
-
$
-
$
-
$
453
$
790
Weighted average shares outstanding:
Class A common stock





Basic
20,000,753
19,994,953
18,913,914
15,121,460
3,889,469
Diluted
20,171,261
20,109,783
19,023,686
15,187,729
3,933,636
Class B common stock
Basic
-
-
-
6,121,052
6,121,052
Diluted
-
-
-
6,121,052
6,121,052
Diluted EPS:
(3) (4)





Class A common stock
Net income (loss) per diluted share (GAAP)
$
0.26
$
0.24
$
0.30
$
(5.11)
$
0.64
Add back: Exchange and redemption of preferred

shares
-
-
-
5.48
-
Operating net income per diluted share (non-GAAP)
$
0.26
$
0.24
$
0.30
$
0.37
$
0.64
Class B common stock
Net income (loss) per diluted share (GAAP)
$
-
$
-
$
-
$
(1.02)
$
0.13
Add back: Exchange and redemption of preferred

shares
-
-
-
1.09
-
Operating net income per diluted share (non-GAAP)
$
-
$
-
$
-
$
0.07
$
0.13
(1)

The Company believes these non-GAAP measurements are

a key indicator of the ongoing earnings power



of the Company.
(2)

During the quarter ended September 30, 2021,

47,473 shares of Class C preferred stock and



11,061,552 shares of Class D preferred stock were
exchanged for an aggregate of 10,278,072 shares

of Class A common stock. Additionally, the Bank completed the initial



public offering of its Class A
common stock on July 27, 2021, in which it

issued 4,600,000 shares of Class A common stock.

As such, the total shares issued and outstanding of Class A common stock was 18,767,541 shares



at September 30, 2021.
(3)

During the quarter ended September 30, 2021,

basic net loss per share is the same as

diluted net loss per share as the inclusion of all

potential

common shares outstanding would have been antidilutive.

(4)

During the quarter ended December 31, 2021,

the Company entered into agreements with

the Class B shareholders to exchange all

outstanding

shares of Class B non-voting stock for Class A

voting common stock at a ratio of 5 to 1.

In calculating net income (loss) per diluted



share for the prior
quarters presented, the allocation of operating net income

available to common stockholders was based



on the weighted average shares outstanding
per common share class to the total weighted average

shares outstanding during each period. The

operating net income allocation was calculated using the weighted average shares outstanding of Class

B common stock on a as-converted basis.


  Table of Contents


54

USCB Financial Holdings, Inc.

Q2 2022 Form 10-Q
Item 3.

Latest news about USCB Financial Holdings, Inc.

Keefe, Bruyette & Woods Adjusts Price Target on U.S. Century Bank to $15 From $14, Maintains Outperform Rating	Jan. 30	MT
USCB Financial Holdings Unveils Inaugural Dividend of $0.05 per Class A Common Share, Payable March 5 to Holders as of Feb. 15	Jan. 30	MT
USCB Financial Holdings, Inc. Announces Inaugural Quarterly Cash Dividend for the First Quarter of 2024, Payable on March 5, 2024	Jan. 29	CI
Raymond James Adjusts Price Target on U.S. Century Bank to $13 From $12, Keeps Outperform Rating	Jan. 29	MT
Transcript : USCB Financial Holdings, Inc., Q4 2023 Earnings Call, Jan 26, 2024	Jan. 26
Earnings Flash (USCB) USCB FINANCIAL HOLDINGS Reports Q4 Revenue $16.6M, vs. Street Est of $17.3M	Jan. 25	MT
Earnings Flash (USCB) USCB FINANCIAL HOLDINGS Reports Q4 EPS $0.17, vs. Street Est of $0.22	Jan. 25	MT
USCB Financial Holdings, Inc. Reports Earnings Results for the Fourth Quarter and Full Year Ended December 31, 2023	Jan. 25	CI
Tranche Update on USCB Financial Holdings, Inc.'s Equity Buyback Plan announced on January 27, 2022.	Jan. 25	CI
USCB Financial Holdings, Inc. Announces Management Changes	Nov. 02	CI
Transcript : USCB Financial Holdings, Inc., Q3 2023 Earnings Call, Oct 27, 2023	23-10-27
Earnings Flash (USCB) U.S. CENTURY BANK Reports Q3 Revenue $17.1M, vs. Street Est of $16.8M	23-10-26	MT
Earnings Flash (USCB) U.S. CENTURY BANK Reports Q3 EPS $0.19, vs. Street Est of $0.20	23-10-26	MT
Tranche Update on USCB Financial Holdings, Inc.'s Equity Buyback Plan announced on January 27, 2022.	23-10-26	CI
USCB Financial Holdings, Inc. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	23-10-26	CI
USCB Financial Holdings, Inc.(NasdaqGM:USCB) dropped from S&P Global BMI Index	23-09-18	CI
Transcript : USCB Financial Holdings, Inc., Q2 2023 Earnings Call, Jul 28, 2023	23-07-28
Earnings Flash (USCB) U.S. CENTURY BANK Reports Q2 EPS $0.21, vs. Street Est of $0.24	23-07-27	MT
Earnings Flash (USCB) U.S. CENTURY BANK Reports Q2 Revenue $16M, vs. Street Est of $17.6M	23-07-27	MT
USCB Financial Holdings, Inc. Reports Unaudited Net Charge-Offs for the Second Quarter Ended June 30, 2023	23-07-27	CI
Tranche Update on USCB Financial Holdings, Inc.'s Equity Buyback Plan announced on January 27, 2022.	23-07-27	CI
USCB Financial Holdings, Inc. Reports Earnings Results for the Second Quarter and Six Months Ended June 30, 2023	23-07-27	CI
Janney Starts USCB Financial Holdings at Neutral, $11.75 Price Target	23-07-11	MT
USCB Financial Appoints Luis de la Aguilera as Board Chairman	23-06-29	MT
USCB Financial Holdings, Inc. Announces Executive Changes	23-06-28	CI

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USCB Financial Holdings, Inc. is a bank holding company for U.S. Century Bank (the Bank). The Bank is a Florida state-chartered, non-Federal Reserve System member bank. It is focused on serving small-to-medium sized businesses (SMBs) and catering to the needs of local business owners, entrepreneurs, and professionals in South Florida. It provides a wide range of personal and business banking products and services. Its specialty banking offerings include small business administration (SBA) lending, yacht lending, homeowner association (HOA) services and global banking services. Its specialty banking offerings include Small Business Administration (SBA) lending, where the Company's SBA platform originates loans under Sections 7(a) and 504 of the SBA programs; yacht lending vertical provides yacht financing for larger vessels; Homeowner Association (HOA) services; Jurist Advantage and Private Client Group services, and Global Banking services.

Sector

Banks

Calendar

2024-04-24 - Q1 2024 Earnings Release

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Ratings for USCB Financial Holdings, Inc.

Trading Rating

Investor Rating

ESG Refinitiv

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Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

10.51 USD

Average target price

13.62 USD

Spread / Average Target

+29.64%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

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USCB Financial Holdings, Inc.

Equities

USCB

US90355N1019

Banks

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Latest news about USCB Financial Holdings, Inc.

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Analysts' Consensus

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Quarterly earnings - Rate of surprise

Sector Other Banks