USCB Financial Holdings Inc.
03/13/2026 | Press release | Distributed by Public on 03/13/2026 11:19
Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Conditionand Results of Operations
Management'sdiscussionandanalysisoffinancialconditionandresultsofoperationsanalyzestheconsolidated
financial condition and results of operations of the Company andthe Bank, its wholly owned subsidiary, for the years ended
December 31,2025and2024.Thisdiscussionandanalysisis bestreadinconjunctionwiththeConsolidatedFinancial
Statements and relatedfootnotes of the Companypresented in Item8 "Financial Statementsand Supplementary Data"of
this Annual Report on Form10-K. In addition tohistorical information, thisdiscussion contains forward-lookingstatements
thatinvolverisks,uncertaintiesandassumptionsthatcouldcauseactualresultstodiffermateriallyfrommanagement's
expectations.Factorsthatcouldcausesuchdifferencesarediscussedinthesectionsentitled"Forward-Looking
Statements" and Item 1A "Risk Factors" of this Annual Report.
In this Annual Report on Form 10-K, unless the context indicated otherwise, references to "we," "us,", and "our" refer to
the Company and the Bank, as the contest dictates.
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53USCB Financial Holdings, Inc.2025 10-K
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
ThisAnnualReportonForm10-Kcontainsstatementsthatarenothistoricalinnatureareintendedtobe,andare
hereby identified as, forward-lookingstatements for purposes ofthe safe harbor provided bySection 21E of the Securities
Exchange Actof 1934,as amended.The words"may," "will," "anticipate," "could,""should," "would," "believe,""contemplate,"
"expect,""aim,""plan,""estimate,""seek,""continue,"and"intend,"thenegativeoftheseterms,aswellasothersimilar
words and expressions of thefuture, are intended to identify forward-looking statements.These forward-looking statements
include statements related toour projected growth, anticipatedfuture financial performance, andmanagement's long-term
performance goals, as well as statementsrelating to the anticipated effectson results of operations and financial condition
fromexpecteddevelopmentsorevents,orbusinessandgrowthstrategies,includinganticipatedinternalgrowthand
potential future additional balance sheet restructuring.
These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ
materially from those anticipated in such statements.Potential risks and uncertainties include, but are notlimited to:
•
the strength of the United States economyin general and the strength of the localeconomies in which we conduct
operations;
•
our ability to successfully manage interest rate risk, creditrisk, 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 ourinternal control procedures and processes;
•
our abilityto complywith theextensive lawsand regulationsto whichwe aresubject, includingthe lawsfor each
jurisdiction where we operate;
•
adversechangesorconditionsinthecapitalandfinancialmarkets,includingactualorpotentialstressesinthe
banking industry;
•
deposit attrition and the level of our uninsured deposits;
•
legislative orregulatory changes andchanges including theenactment of theOne Big BeautifulBill Actand changes
in accounting principles, policies, practices or guidelines,including the on-going effects of the CECL standard;
•
the lack of a significantly diversified loan portfolio and concentration in the South Florida market, including the risks
of geographic, depositor,and industry concentrations,including our concentrationin loans secured byreal 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 attractiverates and terms and manage our growth, both organic
growth as well as growth through other means, such asfuture acquisitions;
•
inflation, interest rate, unemployment rate, market, and monetaryfluctuations;
•
the effects of potential new or increased tariffs,retaliatory tariffs and trade restrictions;
•
impacts of international hostilities and geopolitical events;
•
increasedcompetitionanditseffectonthepricingofourproductsandservicesaswellasournetinterestrate
spread and net interest margin;
•
the loss of key employees;
•
the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client,
employee, or third-party fraud and security breaches; and
•
other risks described in this Annual Report on Form 10-Kand other filings we make with the SEC.
Allforward-lookingstatementsarenecessarilyonlyestimatesoffutureresults,andtherecanbenoassurancethat
actual results willnot differmaterially from expectations.Therefore, you arecautioned not toplace undue relianceon any
forward-lookingstatements.Further,forward-lookingstatementsincluded inthisAnnual Reporton Form10-K aremade
onlyas ofthedatehereof,andweundertakenoobligationtoupdateorreviseany forward-lookingstatementto reflect
events or circumstances after the date on which the statement is made or to reflect theoccurrence of unanticipated events,
unless required to do so underthe federal securities laws. Youshould also review the riskfactors described in this Annual
Report on Form 10-K and in the reports theCompany filed or will file with the SEC.
Non-GAAP Financial Measures
This Annual Report on Form 10-K includesfinancial information determined by methodsother than in accordance with
generallyacceptedaccountingprinciples("GAAP").Thisfinancialinformationincludescertainoperatingperformance
measures. Management has included these non-GAAPmeasures because it believes these measures mayprovide useful
supplemental informationfor evaluatingthe Company'sunderlying performancetrends. Further,management usesthese
measuresinmanagingandevaluatingtheCompany'sbusinessandintendstorefertothemindiscussionsaboutour
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54USCB Financial Holdings, Inc.2025 10-K
operations and performance.Operating performancemeasures should beviewed in additionto, and notas an alternative
to orsubstitutefor,measuresdeterminedinaccordancewithGAAP,andarenotnecessarilycomparableto non-GAAP
measuresthatmaybepresentedbyothercompanies.Totheextentapplicable,reconciliationsofthesenon-GAAP
measures to the most directlycomparable GAAP measures can be foundin the 'Non-GAAP Reconciliation Tables' included
in this Annual Report on form 10-K.
Overview
For the year ended December 31, 2025, the Company reported net income of$26.1 million compared with net income
of $24.7 million for the year ended December 31, 2024.
Inevaluatingourfinancialperformance,weconsiderthelevelofandtrendsinnetinterestincome,thenetinterest
margin, thecost ofdeposits, growthand compositionof ourloan portfolio,levels andcomposition ofnon-interest income
and non-interestexpense,performanceratios,assetquality ratios,regulatorycapitalratios,and anysignificantevent or
transaction.
The following significant highlights are of note for the yearended December 31, 2025:
•
Net interest incomebefore provisionfor credit lossestotaled $83.6million, anincrease of $13.7million or 19.6%,
compared to $69.9 million for the year ended December31, 2024.
•
Net interest margin ("NIM") was 3.20% for the yearended December 31, 2025, an improvement from 2.94% for the
year ended December 31, 2024.
•
Total assetsgrew to$2.8 billionat December 31,2025,an increaseof $210.3million or8.1%, comparedto $2.6
billion at December 31, 2024.
•
Total loans held for investmentgrew to $2.2 billionat December 31, 2025,an increase of $216.4million or 11.0%,
compared to $2.0 billion at December 31, 2024.
•
Return on average assets for the year ended December31, 2025 was 0.96% compared to 0.99%for 2024.
•
Return on averagestockholders' equity forthe year endedDecember 31, 2025was 11.79% comparedto 12.11%
for 2024.
•
Nonperforming assets totaled $3.1 million at December31, 2025 compared to $2.7 million at December 31, 2024.
•
TheBankmaintaineditsstrongcapitalposition.AsofDecember 31,2025,theBankwaswell-capitalizedfor
regulatory capital purposes,with atotal risk-based capitalratio of 13.67%,a tier 1risk-based capital ratioof 12.47%,
acommonequitytier1capitalratioof12.47%,andaleverageratioof9.65%. AsofDecember 31,2025and
December 31, 2024, all of the Bank's regulatory capital ratios exceeded the thresholds to be well-capitalized under
the applicablebank regulatoryrequirements. TheCompany,as asmallbank holdingcompany,is notsubjectto
regulatory capital requirements.
•
On August 14,2025, theCompany enteredinto aSubordinated NotePurchase Agreementwith certainqualified
institutional buyers pursuant to which theCompany sold and issued $40.0 millionin aggregate principal amount of
its 7.625%fixed-to-floating ratesubordinated notesdue August 15,2035 ina privateplacement transaction.This
transaction wasconducted underthe provisionsof RegulationD promulgatedunder theSecurities Act 1933. The
subordinated notes were issued bythe Company to thepurchasers at a price equalto 100% of their faceamount.
The majority ofthe net proceedswere used torepurchase 2.0 millionshares of ClassAcommon stock inSeptember
2025, from certain institutional shareholders through privately negotiated transactions, at a weighted average price
per shareof $17.19.The aggregatepurchaseprice forthese transactionswasapproximately$34.4 million.The
repurchasesweresupplementalandnotpartoftheCompany'stwopreviouslyannouncedstockrepurchase
programs.
•
During the fourth quarterof 2025 the Companyexecuted a portfolio restructuringstrategy which resulted ina sale
of $44.6million ofits lower-yieldingavailable-for salesecurities fora pre-taxloss of$7.5 million.The majorityof
proceeds from the sale were reinvested into loans at quarter-end.
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55USCB Financial Holdings, Inc.2025 10-K
Critical Accounting Policies and Estimates
TheconsolidatedfinancialstatementsarepreparedbasedontheapplicationofU.S.GAAP,themostsignificantof
which are describedin Note 1 "Summaryof Significant AccountingPolicies" to ourConsolidated Financial Statements.To
prepare financial statements in conformity with GAAP,management makes estimates, assumptions,and judgments based
onavailableinformation.Theseestimates,assumptions,andjudgmentsaffecttheamountsreportedinthefinancial
statements and accompanying notes. These estimates, assumptions, and judgments are based oninformation available as
ofthedateofthefinancialstatementsand,asthisinformationchanges,actualresultscoulddifferfromtheestimates,
assumptionsandjudgmentsreflectedinthefinancialstatements.Inparticular,managementhasidentifiedaccounting
policies that, due tothe estimates, assumptionsand judgments inherentin those policies, arecritical in understandingour
financial statements.Managementhas presentedthe applicationof thesepoliciesto theaudit andrisk committeeof our
Board.
Allowance for Credit Losses - Loans
The allowance for creditlosses ("ACL") isa valuation allowance thatis established through chargesto earnings in the
form ofa provision forcredit losses. Theamount of theACL isaffected by thefollowing: (i) charge-offsof loans thatdecrease
the allowance;(ii) subsequentrecoveries onloans previouslycharged offthat increasethe allowance;and (iii)provisions
for credit losses charged to income that increase or decrease the allowance. Management considers the policies related to
the ACL as the most critical to the Company's financial statement presentation.
ACL is calculated usingCECL methodology.The CECL methodologymeasures expected creditlosses and applies to
financial assets measured at amortized cost, including loan receivables andheld-to-maturity debt securities. It also applies
to off-balancesheetcreditexposuresnotaccountedforas insurance(e.g.,loancommitments,standbylettersof credit,
financial guarantees,and similarinstruments), aswell asnet investmentsin leasesrecognized bylessors inaccordance
withTopic842onleases.TheCompanyestimatestheallowanceforcreditlossesbyutilizingpertinentavailabledata,
sourced both internallyand externally, relating topast events, currentconditions, and reasonableand supportable forecasts.
Historicalcreditlossesprovidethefoundationfortheestimationofexpectedcreditlosses.Qualitativeadjustmentsare
applied to the estimatedexpected credit lossesfor the loan portfolioto account forpotential constraints ofthe quantitative
model. Managementemploysa scorecardto facilitatethe evaluationof qualitativefactor adjustmentsmade toexpected
credit losses.
The estimation'squantitative aspectrelies onthe statisticalcorrelation betweenthe anticipatedvalue ofan economic
indicator and thehistorical lossexperience impliedwithin aselected groupof peers.The Company conductedregression
analyses usingpeer data,inclusive ofthe Companyitself, whereobserved creditlosses and choseneconomic indicators
were utilized to identifyappropriate drivers formodeling the lifetimeprobability of default ("PD")rates. A loss givendefault
rate ("LGD") is assigned to each poolof loans for each period based onthese PD outcomes. The modelprimarily employs
an expecteddiscounted cashflow ("DCF")analysis forsegments withinthe loanportfolio. ThisDCF analysisoperates at
theindividualinstrumentlevelandincorporatesvariousloan-specificdatapointsandsegment-specificassumptionsto
ascertain the lifetime expectedloss associated with eachinstrument. An implicit "hypotheticalloss" is determined foreach
period of the DCF,aiding in establishing thepresent value of futurecash flows for eachperiod. The reserve allocatedto a
particular loan represents the disparitybetween the sum of thepresent value of future cashflows and the book balanceof
the loan at the measurement date.
ManagementusestheRemainingLife("WARM")methodologyforfivesegmentswithintheloanportfolio.Foreach
segment,along-termaveragelossrateiscomputedandappliedquarterlythroughouttheremaininglifeofthepool.
Qualitative assessmentsare conductedto adjust foreconomic expectations.Toestimate the remaininglife, management
employed a software solution utilizing an attrition-based calculation. This software conducts quarterly cohort-based attrition
measurements based on the loan portfolio.
Portfoliosegmentsrepresentthelevelatwhichlossassumptionsareappliedtoapool ofloans,determinedbythe
similarity ofrisk characteristics inherentin theincluded instruments, basedon collateralcodes andFFIEC Call Reportcodes.
Currently,the Company segmentsthe portfolio based oncollateral codes to establishreserves. Each segmentis linked to
regressionmodels(LossDriverAnalyses)usingpeerdataforloanswithsimilarriskcharacteristics.TheCompanyhas
established connectionsbetweeninternal portfoliosegmentation andFFIEC CallReport codesfor thispurpose. Theloss
driverforeachloanportfoliosegmentisderivedfromareadilyavailableandreasonableeconomicforecast,including
FederalReserveBankprojectionsoftheU.S.civilianunemploymentrateandyear-over-yearrealGDPgrowth.Forthe
residentialloansegment,HousePriceIndex("HPI")projectionspublishedbyFannieMae'sEconomicandStrategic
Research Group are utilized for the forecast. Forecasts are applied for the firstfour quarters of the credit loss estimate and
then linearly revert to the historical mean of the economic indicatorover the expected life of the loans.
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56USCB Financial Holdings, Inc.2025 10-K
The model integrates qualitativefactor adjustments tofine-tune risk calibrationfor each portfoliosegment, addressing
aspects that quantitative analysis maynot fully capture. Decisions concerningqualitative adjustments reflect management's
anticipation of loss conditions deviating from those already accountedfor in the quantitative aspect of the model.
Our ACLincluded residentialloans. Toassess thepotential impactof changesin qualitativefactors relatedto these
loans,managementperformeda sensitivityanalysis.The Companyevaluatedtheimpactof theHPIusedin calculating
expected losses on the residential loan segment.As of December 31, 2025, for every100 basis points increase in the HPI
index, theforecast reducesreserves byapproximately $398thousand andabout 2basis pointsto thereserve coverage
ratio, everything else beingconstant. This sensitivity analysisprovides a hypothetical resultto assess the sensitivityof the
ACL and does not represent a change in management'sjudgement.
As ofDecember 31, 2025,we stresstested twoqualitative factorsin ourcommercial realestate loanpool, asit's the
largest segmentin ourportfolio. Weevaluated theimpact ofa changein thequalitative factorsfrom norisk tomaximum
loss tomeasure thesensitivity ofthe qualitativefactors. Thechange resultedin a$10.3 millionor 39.6%increase inthe
ACL. This sensitivityanalysis provides ahypothetical result toassess the sensitivityof the ACLand doesnot represent a
change in management's judgement.
The Company calculates a reserve for unfunded commitments, distinct fromthe allowance for credit losses reported in
accrued interestand other liabilities.This reserveis determinedusing both quantitativeand qualitativefactors identicalto
those applied to the collectively evaluated loan portfolio.
Results of Operations
General
The following tablespresent selected balance sheet, income statement, and profitability ratios for the dates and for the
periods indicated (in thousands, except ratios):
As of December 31,
2025
2024
Consolidated Balance Sheets:
Totalassets
$
2,791,540
$
2,581,216
Totalloans held for investment
(1)
$
2,189,257
$
1,972,848
Totaldeposits
$
2,345,080
$
2,174,004
Totalstockholders' equity
$
217,183
$
215,388
(1)Loan amounts include deferred fees/costs.
Years Ended December 31,
2025
2024
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
83,630
$
69,936
Provision for credit losses
$
2,297
$
3,157
Totalnon-interest income
$
6,592
$
12,740
Totalnon-interest expense
$
52,009
$
47,042
Net income
$
26,100
$
24,674
Net income available to common stockholders
$
26,100
$
24,674
Profitability:
Efficiency ratio
57.65%
56.90%
Net interest margin
3.20%
2.94%
The Company's resultsof operationsdepend substantially onnet interest incomeand non-interest income.Other factors
contributing to theresults of operationsinclude our provisionfor credit losses,non-interest expense, andthe provision for
income taxes.
Net incomefor theyear endedDecember 31, 2025was $26.1 million,compared withnet incomeof $24.7 millionfor
the sameperiod in2024. The Companyreportednet incomeper dilutedshare forthe yearended December 31,2025 of
$1.33 compared to net income per diluted share for thesame period in 2024 of $1.24.
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57USCB Financial Holdings, Inc.2025 10-K
Net Interest Income
Netinterestincomeisthedifferencebetweeninterestearnedoninterest-earningassetsandinterestincurredon
interest-bearing liabilities andis theprimary driver ofcore earnings. Interestincome is generatedfrom interest anddividends
oninterest-earningassets,includingloans,investmentsecuritiesandothershort-terminvestments.Interestexpenseis
incurredfrominterestpaidoninterest-bearingliabilities,includinginterest-bearingdeposits,FHLBadvancesandother
borrowings.
To evaluate netinterest income, wemeasure and monitor(i) yields onloans and otherinterest-earning assets, (ii)the
costs of depositsand other fundingsources, (iii) netinterest spread, and(iv) net interest margin.Net interest spread isequal
to thedifference betweenthe weightedaverage yieldsearned on interest-earning assetsand the weightedaverage rates
paid oninterest-bearing liabilities.Net interestmargin isequal tonet interestincome dividedby averageinterest-earning
assets. Because non-interest-bearingsources of funds,such as non-interest-bearingdeposits and stockholders'equity, also
fund interest-earning assets, net interest margin includesthe benefit of these non-interest-bearing sources.
Changes inthe marketinterest ratesand interestrates weearn oninterest-earning assetsor pay oninterest-bearing
liabilities, as wellas the volumeand types ofinterest-earning assets and interest-bearingand non-interest-bearing liabilities,
are usually thelargest drivers ofperiodic changes innet interest spread,net interest marginand net interestincome. The
Asset-Liability Committee ("ALCO") has in place asset-liability management techniques to manage major factors that affect
net interest income and net interest margin.
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58USCB Financial Holdings, Inc.2025 10-K
The following tablecontains informationrelated to averagebalances, averageyields on assets,and averagecosts of
liabilities for the periods indicated (in thousands).
Years Ended December 31,
2025
2024
Average
Balance
(1)
Interest
Yield/Rate
Average
Balance
(1)
Interest
Yield/Rate
Assets
Interest-earning assets:
Loans
(2)
$
2,069,039
$
128,160
6.19
%
$
1,862,013
$
115,236
6.19
%
Investment securities
(3)
460,089
13,715
2.98
%
427,567
11,480
2.68
%
Other interest-earning assets
86,183
3,612
4.19
%
88,758
4,517
5.09
%
Totalinterest-earning assets
2,615,311
145,487
5.56
%
2,378,338
131,233
5.52
%
Non-interest earning assets
105,874
108,215
Totalassets
$
2,721,185
$
2,486,553
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
51,803
1,283
2.48
%
$
54,667
1,509
2.76
%
Savings and money market deposits
1,255,719
38,027
3.03
%
1,109,853
40,098
3.61
%
Time deposits
470,213
18,104
3.85
%
326,373
13,354
4.09
%
Totalinterest-bearing deposits
1,777,735
57,414
3.23
%
1,490,893
54,961
3.69
%
FHLB advances
86,382
3,238
3.75
%
158,484
6,336
4.00
%
Subordinated notes
16,463
1,205
7.32
%
-
-
-
%
Totalinterest-bearing liabilities
1,880,580
61,857
3.29
%
1,649,377
61,297
3.72
%
Non-interest-bearing demand deposits
577,232
596,073
Other non-interest-bearing liabilities
41,955
37,399
Totalliabilities
2,499,767
2,282,849
Stockholders' equity
221,418
203,704
Totalliabilities and stockholders' equity
$
2,721,185
$
2,486,553
Net interest income
$
83,630
$
69,936
Net interest spread
(4)
2.27
%
1.80
%
Net interest margin
(5)
3.20
%
2.94
%
(1)Average balances - Daily average balances are usedto calculate yields/rates.
(2)Average loan balances include non-accrual loans. Interest incomeon loans includes accretion of deferredloan fees, net of deferred loan costs.
(3)At fair value except for securities held to maturity. This amount includesFHLB stock.
(4)Net interest spread is the weighted averageyield earned on total interest-earning assetsminus the weighted average rate paid on total interest-
bearing liabilities.
(5)Net interest margin is the ratio of net interestincome to average total interest-earning assets.
Net interestincome beforethe provisionfor creditlosses was$83.6 million forthe yearended December 31,2025, a
increase of $13.7million or 19.6%,from $69.9 millionfor the yearended December 31,2024. The increasewas primarily
driven by a decrease in the weighted
-
average rates paid on interest
-
bearing liabilities, which lowered overall funding costs,
combined with higher weighted
-
average yields on interest
-
earning assets. In addition, growth in theloan portfolio increased
the volume of interest
-
earning assets, further contributing to the increase in netinterest income.
Thenetinterestmargin("NIM")was3.20%fortheyearendedDecember 31,2025and2.94%fortheyearended
December 31, 2024. The NIM increasedprimarily due to a decreasein the weighted average ratepaid on interest-bearing
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59USCB Financial Holdings, Inc.2025 10-K
liabilities, inparticular adecrease inweighted averagerate paidon savingand moneymarket deposits.The decreasein
our cost of funds was primarily due to the interest ratemarket.
Provision for Credit Losses
ACL represents expectedcredit lossesin ourportfolio asthe measurementdate. Wemaintain anadequate ACL that
canmitigateexpectedcreditlossesintheloanportfolio.The ACLisincreasedbytheprovisionforcreditlossesandis
decreased by charge-offs, netof recoveries on priorloan charge-offs. There aremultiple credit quality metricsthat we use
to baseour determinationof theamountof theACL andcorrespondingprovisionforcreditlosses. Thesecredit metrics
evaluate thecredit qualityand levelof creditrisk inherentin ourloan portfolio,assess non-performingloans andcharge-
offs levels, consider statistical trends and economic conditionsand other applicable factors.
TheprovisionforcreditlossfortheyearendedDecember 31,2025,was$2.3millioncomparedto$3.2millionin
provision expense for thesame period in 2024. The ACL as apercentage of totalloans was 1.16%at December 31, 2025
compared to 1.22% at December31, 2024. The ratio of ACL to total loans decreased dueto several payoffs of individually
reservedloans during 2025 and the improvement of the expected lossrate for various categories of pooled loans.
See "Allowancefor CreditLosses" belowfor furtherdiscussion onhow theACL wascalculated forthe periodspresented.
Non-Interest Income
Net interest incomeand other types ofrecurring non-interestincome are generatedfrom our operations.Our services
and products generate service charges andfees, mainly from our depository accounts.We also generate income fromour
interestswapprogramandfromthegainonsaleofloansthoughourSBA program.Inaddition,weownlifeinsurance
policies on severalkey employees andgenerate income reflectingthe increase inthe cash surrendervalue of thesepolicies.
The following table presents the components of non-interestincome for the periods indicated (in thousands):
Years Ended December 31,
2025
2024
Service fees
$
9,603
$
8,839
(Loss) gain on sale of securities available for sale, net
(7,526)
Gain on sale of loans held for sale, net
1,001
Other non-interest income
3,514
3,140
Totalnon-interest income
$
6,592
$
12,740
Non-interest incomefor theyear endedDecember 31, 2025was $6.6million comparedto $12.7million forthe same
period in2024. Thisdecrease wasprimarily drivenby a$7.5 millionloss onsale ofsecurities availablefor saleresulting
from a portfolio restructuring strategyapproved by the Board ofDirectors and implemented in December 2025.The portfolio
restructuring strategyresulted inthe sale oflower-yielding available-for-salesecurities ata loss inorder to betterposition
our securities portfolio.Proceeds from the saletransactions were primarilyreinvested in assetsbearing higher yieldsthan
those on the securities that weresold. Service fees increased $764thousand or 8.6%, primarily dueto title insurance fees
and prepaymentpenalties.The gainon saleof SBA 7aloans increased$254 thousandor 34.0%,and othernon-interest
incomeincreased$374thousandor11.9%,primarilyduetoincreasesinthecashsurrendervaluesofbank-ownedlife
insurance policies.
Non-Interest Expense
The following table presents the components of non-interestexpense for the periods indicated (in thousands):
Years Ended December 31,
2025
2024
Salaries and employee benefits
$
32,167
$
28,793
Occupancy
5,330
5,258
Regulatory assessment and fees
1,637
1,766
Consulting and legal fees
1,941
1,568
Network and information technology services
2,324
1,993
Other operating
8,610
7,664
Totalnon-interest expense
$
52,009
$
47,042
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60USCB Financial Holdings, Inc.2025 10-K
Non-interest expensefor theyear endedDecember 31, 2025increased $5.0 millionor 10.6%,compared tothe year
ended December 31, 2024.The increase isprimarily due to$3.4 million or11.7% increase insalaries and employeebenefits
consisting of a $2.2million or 11.0% increasedue to meritpromotions and new hires,a $455 thousand or13.6% increase
in benefits(health insurance)and payrolltaxes,and a$876 thousandincrease instock-basedcompensation dueto the
Company's favorable financial performance in 2025. Other operatingexpense had an increase of $946 thousand or 12.3%
consisting ofan increaseof $204thousand initem processing,$146 thousandin internetbanking fees,a $169thousand
increaseinpromotionalexpense,a$207thousandincreaseindirectorfees,anda$220thousandinotheroperating
expenses.
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 expense for income tax purposes.Therefore, future decisions on the investments wechoose will affect our effective tax
rate. Changes in thecash surrender valueof bank-owned lifeinsurance policies forkey employees, purchasingmunicipal
bonds, and overall taxable income will be important elementsin determining our effective tax rate.
Income taxexpense forthe yearended December31, 2025was$9.8 million,comparedto $7.8 millionfor theyear
ended December 31,2024. The effectivetax rateincreased to 27.3%for the yearended December 31,2025 from 24.0%
for theyear endedDecember 31, 2024.The increasein effectivetax ratein 2025was dueprimarily tothe recognitionof
$1.1 million of state tax liability expense for the year ended December 31, 2024. The state tax liabilityexpense was related
to taxes due on interest income on loans whose collateralis located outside the State of Florida.
The Company did not have any tax-exempt securitiesat both December 31, 2025 and December 31, 2024.
For a furtherdiscussion on income taxes, seeNote 6 "Income Taxes"to the Consolidated Financial Statementsset forth
in Item 8 of this Annual Report on Form 10-K.
Rate/Volume Analysis
Thetablebelowsetsforthinformationregardingchangesininterestincomeandinterestexpensefortheperiods
indicated (in thousands).For each category ofinterest-earning assets and interest-bearing liabilities,information is provided
on changes attributable to (i) changes in rate (changes in rate multiplied by old volume); (ii) changes in volume (changes in
volume multiplied by old rate); and (iii) changes in rate-volume (change inrate multiplied by change in volume). Changes in
rate-volume are proportionately allocated between rate and volumevariance (in thousands).
Years Ended 2025 vs. 2024
Years Ended 2024 vs. 2023
Increase (decrease) due to change in
Increase (decrease) due to change in
Volume
Rate
Net
Change
Volume
Rate
Net
Change
Interest-earning assets:
Loans
(1)
$
12,812
$
$
12,924
$
13,949
$
13,403
$
27,352
Investment securities
(2)
1,362
2,235
1,378
1,468
Other interest-earning assets
(130)
(775)
(905)
1,077
1,396
Total increase in interest income
$
13,555
$
$
14,254
$
15,116
$
15,100
$
30,216
Interest-bearing liabilities:
Interest-bearing demand deposits
$
(79)
$
(147)
$
(226)
$
$
$
Savings and money market deposits
5,270
(7,341)
(2,071)
4,498
5,942
10,440
Time deposits
5,885
(1,135)
4,750
1,824
3,030
4,854
FHLB advances
(2,882)
(216)
(3,098)
2,269
2,946
Subordinated notes
1,205
-
1,205
-
-
-
Total increase (decrease) in interest expense
9,399
(8,839)
8,614
10,235
18,848
Increase in net interest income
$
4,156
$
9,538
$
13,694
$
6,502
$
4,865
$
11,368
(1)Average loan balances include non-accrual loans. Interest incomeon loans includes accretion of deferredloan fees, net of deferred loan costs.
(2)At fair value except for securities held to maturity. This amount includesFHLB stock.
Table of Contents
61USCB Financial Holdings, Inc.2025 10-K
DuringtheyearendedDecember 31,2025averageratespaidoninterest-bearingliabilitiesdecreased,whileyields
earnedoninterest-earningassetsincreasedslightly.TheCompanywasabletorepriceitsinterest-bearingliabilities
downward more rapidly than its interest-earning assets.
Analysis of Financial Condition
Totalassets at December 31,2025, were $2.8 billion,an increase of $210.3million, or 8.1%, overtotal assets of $2.6
billionatDecember 31,2024.Totalloansheldforinvestmentincreased$216.4million,or11.0%,to$2.2billionat
December 31, 2025compared to$2.0 billionat December 31,2024. Totaldeposits increasedby $171.1million, or7.9%,
to $2.3billion at December 31, 2025 compared to $2.2billion at December 31, 2024.
Investment Securities
The investment portfoliois used andmanaged to provideliquidity through cashflows, marketabilityand, if necessary,
collateral forborrowings. Theinvestment portfoliois alsoused asa toolto manageinterest raterisk andthe Company's
capital market risk exposure. Theoperating philosophy of the portfolio isto maximize the Company's profitability,taking into
consideration theCompany's riskappetite andtolerance, manageit's assetcomposition anddiversification, andmaintain
adequate risk-based capital ratios.
TheinvestmentportfolioismanagedinaccordancewiththeAssetandLiabilityManagement("ALM")policy,which
includesinvestmentguidelines,approvedbytheBoard.Suchpolicyisreviewedatleastannuallyormorefrequentlyif
deemed necessary,depending onmarketconditionsand/orunexpectedevents.The investmentportfoliocompositionis
subjecttochangedependingonthefundingandliquidityneedsoftheCompany,andtheinterestriskmanagement
objectives 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 anticipatedfuture cash flows (uses and sources) and all available
sources of credit.
OurinvestmentportfolioconsistsprimarilyofsecuritiesissuedbyU.S.government-sponsoredagencies,agency
mortgage-backed securities,collateralized mortgageobligation securities,municipal securities,and otherdebt securities,
all with varying contractual maturities and coupons. Due to the optionality embedded in these securities, the final maturities
do notnecessarily represent theexpected life ofthe portfolio. Someof thesesecurities will becalled or paiddown depending
on capital market conditions and expectations. The investment portfolio is regularly reviewed by the Chief Financial Officer,
Treasurer, and/or the ALCO of the Company to ensure an appropriate risk and return profile aswell as for adherence to the
Company's investment policy.
As of December 31, 2025, the investment portfolio consisted of available-for-sale("AFS") and held-to-maturity ("HTM")
debt securities. In 2022, the Company transferred investment securities fromAFS to HTM with an amortized cost basis and
fair valueamount of$74.4 millionand $63.8million, respectively.On thedate oftransfer,these securitieshad atotal net
unrealized loss of $10.6 million. The transfer of the debt securities from the AFS to HTMcategory 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 loss
and in the carrying valueof the HTM securities. Suchamounts are amortized overthe remaining life of the security.There
was no impactto net income onthe date of transfer. There wereno securities transferred fromAFS to HTMin 2025 or 2024.
The book value of the AFS securities is adjusted quarterly forunrealized gain or loss as a valuation allowance, and any
gain or loss is reported on an after-tax basis as a componentof other comprehensive loss in stockholders' equity.
CECL requires a loss reserve for securitiesclassified as HTM. The reserve should reflecthistorical credit performance
as well as the impact of projected economic forecast.For U.S. Government bonds and U.S. Agency issuedbonds in HTM,
the explicit guarantee of the U.S.Government is sufficient to conclude that acredit loss reserve is not required.The reserve
requirementisfor threeprimaryassetsgroups:municipalbonds,corporatebonds,andnon-agencysecuritizations.The
Company calculates quarterly the loss reserveutilizing Moody's ImpairmentStudio. The CECL measurement for investment
securitiesincorporateshistoricaldata,containingdefaultsandrecoveriesinformation,andMoody'sbaselineeconomic
forecast. Thesolution usesprobability ofdefault/lossgiven default("PD/LGD")approach. PDrepresents thelikelihood a
borrower willdefault.Within theMoody'smodel, thisis determinedusing historicaldefault data,adjusted forthe current
economic environment. LGD projects the expected lossif a borrower were to default.
The Companymonitors the creditquality of HTMsecurities through theuse ofcredit ratings. Creditratings are monitored
by the Companyon at leasta quarterly basis.As of December31, 2025 andDecember 31, 2024,all HTM securitiesheld
by the Company were rated investment grade.
Table of Contents
62USCB Financial Holdings, Inc.2025 10-K
At December 31, 2025, HTM securities included $144.9million of U.S. Government and U.S.Agency issued bonds and
mortgage-backedsecurities.Becauseoftheexplicitand/orimplicitguaranteeonthesebonds,theCompanyholdsno
reservesontheseholdings.TheremainingportionoftheHTMportfolioismadeupof$9.0millionininvestmentgrade
corporate bonds. The required reserve for theseholdings 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 methodologyto estimate
a $2 thousandACL as ofDecember 31, 2025. Thebook value fordebt securities classifiedas HTM representsamortized
cost less ACL.
As of December 31, 2025, securities with a fair value of $43.5million were pledged to secure public deposits.
Table of Contents
63USCB Financial Holdings, Inc.2025 10-K
Thefollowingtablepresentstheamortizedcostandfairvalueofinvestmentsecuritiesforthedatesindicated(in
thousands):
December 31, 2025
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
15,169
$
$
(1,043)
$
14,144
Collateralized mortgage obligations
92,871
-
(17,043)
75,828
Mortgage-backed securities - residential
35,865
(6,083)
29,917
Mortgage-backed securities - commercial
174,622
(6,861)
168,108
Municipal securities
5,196
-
(933)
4,263
Bank subordinated debt securities
15,284
(243)
15,230
$
339,007
$
$
(32,206)
$
307,490
December 31, 2025
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
41,158
$
$
(3,279)
$
37,970
Collateralized mortgage obligations
51,431
(5,499)
46,786
Mortgage-backed securities - residential
37,221
(3,263)
34,718
Mortgage-backed securities - commercial
15,088
-
(1,037)
14,051
Corporate bonds
9,045
-
(62)
8,983
$
153,943
$
1,705
$
(13,140)
$
142,508
Allowance for credit losses - securities held-to-maturity
(2)
Securities held-to maturity, net of allowance for credit losses
$
153,941
December 31, 2024
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
14,279
$
$
(1,668)
$
12,625
Collateralized mortgage obligations
101,808
(22,918)
78,905
Mortgage-backed securities - residential
58,995
(12,063)
46,933
Mortgage-backed securities - commercial
86,604
(7,905)
78,739
Municipal securities
24,925
-
(5,614)
19,311
Bank subordinated debt securities
24,314
(1,044)
23,708
$
310,925
$
$
(51,212)
$
260,221
December 31, 2024
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
(7,785)
49,259
Mortgage-backed securities - residential
40,681
(4,613)
36,121
Mortgage-backed securities - commercial
15,272
-
(1,385)
13,887
Corporate bonds
9,222
-
(393)
8,829
164,700
$
$
(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
Table of Contents
64USCB Financial Holdings, Inc.2025 10-K
AFS andHTM investmentsecurities inaggregate increased$36.5 millionor 8.6%to $461.4million atDecember 31,
2025 from $424.9 million at December 31, 2024.
The followingtable showsthe weightedaverage yields,categorized bycontractual maturity,for investmentsecurities
as of December 31, 2025 (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
$
-
-
$
-
-
$
-
-
15,169
4.00%
$
15,169
4.00%
Collateralized mortgage obligations
-
-
-
-
-
-
92,871
1.74%
92,871
1.74%
Mortgage-backed securities - residential
-
-
-
-
-
-
35,865
2.41%
35,865
2.41%
Mortgage-backed securities - commercial
-
-
-
-
-
-
174,622
4.02%
174,622
4.02%
Municipal securities
-
-
-
-
5,196
1.87%
-
-
5,196
1.87%
Bank subordinated debt securities
-
-
4,473
8.14%
10,811
5.65%
-
-
15,284
6.38%
$
-
-
$
4,473
8.14%
$
16,007
4.42%
$
318,527
3.17%
$
339,006
3.30%
Held-to-maturity:
U.S. Government Agency
$
2,999
0.64%
$
19,773
1.25%
$
5,001
1.99%
$
13,385
1.85
$
41,158
1.49%
Collateralized mortgage obligations
-
-
-
-
-
-
51,431
1.67%
51,431
1.67%
Mortgage-backed securities - residential
2.96%
3,888
1.66%
5,051
1.62%
27,607
2.18%
37,221
2.06%
Mortgage-backed securities - commercial
-
-
3,042
1.63%
-
-
12,046
2.56%
15,088
2.37%
Corporate bonds
9,045
2.82%
-
-
-
-
-
-
9,045
2.82%
$
12,719
2.31%
$
26,703
1.35%
$
10,052
1.81%
$
104,469
1.92%
$
153,943
1.85%
The Company did not have any tax-exempt securitiesat both December 31, 2025 and 2024.
Loans
Loans arethe largestcategory ofinterest-earning assetson theConsolidatedBalance Sheets,and usuallyprovides
higher yields than the remainder of the Company'sinterest-earning assets. Higher yields typically carryinherent credit and
liquidity risks incomparison to loweryielding assets. TheCompany manages andmitigates such risksin accordance with
the credit and ALM policies, risk tolerance and balancesheet composition.
The following table shows the loan portfolio compositionas of the dates indicated (in thousands):
December 31, 2025
December 31, 2024
Total
Percent of
Total
Total
Percent of
Total
Residential Real Estate
$
307,692
14.1
%
$
289,961
14.8
%
Commercial Real Estate
1,244,835
57.0
%
1,136,417
57.8
%
Commercial and Industrial
295,548
13.5
%
258,311
13.1
%
Correspondent Banks
127,968
5.9
%
82,438
4.2
%
Consumer and Other
207,215
9.5
%
198,091
10.1
%
Totalgross loans
2,183,258
100.0
%
1,965,218
100.0
%
Plus: Deferred costs/fees
5,999
7,630
Totalloans held for investment, net of deferred costs/fees
2,189,257
1,972,848
Less: Allowance for credit losses
25,500
24,070
Totalloans held for investment, net of allowance
$
2,163,757
$
1,948,778
Totalloans held for investment netof deferred costs/fees increasedby $216.4 million or 11.0%at December 31, 2025
compared to December 31,2024. The mostsignificant growth wasin the commercialreal estate andcorrespondent bank
loan pools.Commercial real estate continues tobe the main category ofour portfolio, reflective of themarket in which we
operate. We continueto grow our non-CREloan pools to furtherdiversify the loan portfoliooverall composition, but wedo
not expect any significant changes over the foreseeablefuture in the composition of our loan portfolio.
Table of Contents
65USCB Financial Holdings, Inc.2025 10-K
Thegrowthexperiencedoverthelastcoupleofyearsisprimarilyduetoimplementationofourrelationship-based
bankingmodel,ourdiversifiedbusinessverticals,andthesuccessofourrelationshipmanagersincompetingfornew
business in a highly competitive metropolitan area.
From aliquidity perspective,our loanportfolio providesus withadditionalliquidity dueto repaymentsor unexpected
prepayments.Thefollowingtableshowsmaturitiesandsensitivitytointerestratechangesfortheloanportfolioat
December 31, 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
$
8,435
$
61,279
$
66,063
$
171,915
$
307,692
Commercial Real Estate
69,664
527,784
641,905
5,482
1,244,835
Commercial and Industrial
10,369
120,412
120,845
43,922
295,548
Correspondent Banks
127,968
-
-
-
127,968
Consumer and Other
2,493
1,152
24,760
178,810
207,215
Totalgross loans
$
218,929
$
710,627
$
853,573
$
400,129
$
2,183,258
Interest rate sensitivity:
Fixed interest rates
$
176,933
$
188,621
$
164,498
$
310,107
$
840,159
Floating or adjustable rates
41,996
522,006
689,075
90,022
1,343,099
Totalgross loans
$
218,929
$
710,627
$
853,573
$
400,129
$
2,183,258
The informationpresented inthe tableabove isbased uponcontractual maturitiesof theindividual loans,which may
be subject to renewal at their contractual maturity. Renewals will depend on approval by our credit department and balance
sheet compositionat thetime ofthe analysis,as wellas anymodification ofterms atthe loan's maturity. Additionally, maturity
concentrations,loan duration,prepaymentspeedsandother interestratesensitivitymeasuresare discussed,reviewed,
and analyzed by the ALCO. Decisions on term and ratemodifications are discussed as well.
As ofDecember 31,2025,approximately61.5%of theloanshave adjustable/variableratesand38.5%of theloans
have fixed rates.The adjustable/variableloans re-price todifferent benchmarksand tenors indifferent periodsof time. By
contractual characteristics, there are nomaterial concentrations on anniversary repricing. Additionally, it isimportant to note
that mostof ourloans haveinterest ratefloors. Thisembedded optionprotects theCompany froma decreasein interest
rates and positions us to gain in the scenario of higher interestrates.
As ofDecember 31, 2025, thecommercial real estateportfolio was $1.2billion or 57.0%of thetotal gross loansportfolio.
Atsuchdate,$193.0millionofoutstandingbalancesarecharacterizedasowneroccupiedand$1.05billionare
characterized as non-owner occupied.The retail sectorwas the largestsegment comprising $320.1 millionof the non-owner
occupied commercial real estate portfolio.
Thefollowingtableisasummaryofthedistributionofnon-owneroccupiedcommercialrealestateloansheldfor
investment by loan type (dollars in thousands):
December 31, 2025
Balance
# of Notes
% of Total
Gross Loans
Average Loan Size
Non-Accruals
Weighted Avg
LTV
(1)
Retail
$
320,132
15%
$
2,208
$
-
56%
Multifamily
252,041
12%
1,279
-
64%
Warehouse
134,190
6%
1,973
-
54%
Office
122,887
6%
2,083
-
49%
Hotels/Motels
117,226
5%
2,254
-
63%
Construction/Land
73,080
3%
3,322
-
46%
Other
32,272
1%
1,153
-
59%
$
1,051,828
48%
$
1,842
$
-
$
57%
(1) Loan-to-value is calculated based on the real estate value at the time of origination, renewal, or update, whichever is more recent.
Table of Contents
66USCB Financial Holdings, Inc.2025 10-K
The following table is a summary of non-owner occupied commercial real estate loans held for investment by collateral
geographical location (dollars in thousands):
December 31, 2025
South Florida
(1)
Rest of Florida
(2)
Outside Florida
(3)
Balance
% of Non-
Owner
Occupied
CRE Loans
Balance
% of Non-
Owner
Occupied
CRE Loans
Balance
% of Non-
Owner
Occupied
CRE Loans
Retail
$
220,390
21%
$
46,268
4%
$
53,475
5%
Multifamily
177,152
17%
74,888
7%
-
0%
Warehouse
70,399
7%
59,465
6%
4,326
0%
Office
90,470
9%
26,788
3%
5,629
1%
Hotels/Motels
89,754
9%
27,472
3%
-
0%
Construction/Land
59,039
6%
14,041
1%
-
0%
Other
17,112
2%
11,659
1%
3,500
0%
$
724,316
71%
$
260,581
25%
$
66,930
6%
(1) Miami-Dade, Broward, and West Palm Beach counties
(2) All other Florida counties
(3) Within the U.S.
As ofDecember 31, 2025,71% ofthe non-owneroccupied CREportfolio werelocated withinSouth Florida.26 loan
notes with anoutstanding principalbalance of$66.9 millionare locatedoutside Florida.Balances ofnon-owner occupied
CRE loans outsideFlorida were: $44.2million in NewYork,$7.3 million inGeorgia,$7.1 million inIndiana, $4.3 millionin
Arkansas, and $4.1 million in North Carolina.
Asset Quality
Our asset quality gradinganalysis estimates the capability ofthe borrower to repaythe contractual obligation ofthe loan
agreement as scheduled or at all. The Company's internal credit risk grading system is based on experiences with similarly
graded loans. Internalcredit riskgrades are evaluatedat least annually,or more frequentlyif deemed necessary.Internal
creditriskratingsmaychangebasedonmanagement'sassessmentoftheresultsfromtheannualreview,portfolio
monitoring and other developments observed with borrowers.
The internal credit risk grades used by the Company toassess the credit worthiness of a loan are shown below:
Pass
- Loans indicate different levels of satisfactoryfinancial condition and performance.
Special Mention
- Loans classified as special mention have a potential weaknessthat deserves management's
close attention. If left uncorrected, these potential weaknessesmay result in deterioration of the repayment
prospects for the loan or of the institution'scredit position at some future date.
Substandard
- Loans classified as substandard are inadequately protectedby the current net worth and paying
capacity of the obligator or of the collateral pledged, ifany. Loans so classifiedhave 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 arenot corrected.
Doubtful
- Loans classified as doubtful have all the weaknesses inherentin those classified at substandard, with
the added characteristic that the weaknesses make collectionor 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
67USCB Financial Holdings, Inc.2025 10-K
Loan credit exposures by internally assigned grades areas follows for the dates indicated (in thousands):
December 31, 2025
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
304,276
$
$
2,500
$
-
$
307,692
Commercial Real Estate
1,230,823
11,613
2,399
-
1,244,835
Commercial and Industrial
293,169
1,472
-
295,548
Correspondent Banks
127,968
-
-
-
127,968
Consumer and Other
207,215
-
-
-
207,215
$
2,163,451
$
13,436
$
6,371
$
-
$
2,183,258
December 31, 2024
Pass
Special Mention
Substandard
Doubtful
Total
Residential Real Estate
$
289,401
$
-
$
$
-
$
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
Non-Performing Assets
The following table presents non-performing assets asof December 31, 2025 and 2024 (in thousands, exceptratios):
2025
2024
Totalnon-performing loans
$
3,138
$
2,707
Other real estate owned
-
-
Totalnon-performing assets
3,138
2,707
Asset quality ratios:
Allowance for credit losses to total loans
1.16%
1.22%
Allowance for credit losses to non-performing loans
813%
889%
Non-performing loans to total loans
0.14%
0.14%
Non-performingassetsincludeallloanscategorizedas non-accrualor restructured,impairedsecurities,OREOand
other repossessed assets. Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on
non-accrualstatus.Thisdeterminationisbasedoncurrentexistingfactsconcerningcollateralvaluesandthepaying
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 withincreased credit risk.
If theprincipal orinterest ona commercialloan becomesdue andunpaid for90 daysor more,the loanis placedon
non-accrual status as ofthe date it becomes90 days past dueand remains in non-accrualstatus until it meetsthe criteria
for restoration to accrual status.Residential loans, onthe other hand, are placedon non-accrual status whenthe principal
or interestbecomes dueand unpaidfor 120days ormore and remainsin non-accrualstatus untilit meetsthe criteriafor
restorationtoaccrualstatus.Restoringaloantoaccrualstatusispossiblewhentheborrowerresumespaymentofall
principal and interest payments for a period of six consecutive months and the Companyhas a documented expectation of
repayment of the remaining contractual principal and interest or the loan becomes secured and in the process of collection.
TheCompanymaygrantaloanconcessiontoaborrowerexperiencingfinancialdifficulties.Thisdeterminationis
performed duringthe annualreview processor wheneverproblems aresurfacing regardingthe client'sability torepay in
accordance withthe originalterms ofthe loanor lineof credit.The concessionsare givento thedebtor invarious forms,
including interest ratereductions, principal forgiveness, extensionof maturity date,waiver, or deferral ofpayments and other
concessions intended to minimize potential losses.
For further discussion on non-performing loans, see Note3 "Loans" to the Consolidated Financial Statementsset forth
in Item 8 of this Annual Report on Form 10-K.
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68USCB Financial Holdings, Inc.2025 10-K
Allowance for Credit Losses
The ACLrepresentsan amountthat,inmanagement'sevaluation,is adequateto providecoverageforallexpected
future credit losses on outstanding loans as of the measurement date. Additionally, qualitative adjustments are made to the
ACL when,based onmanagement's judgment,there arefactors impactingthe allowanceestimate notconsidered bythe
quantitative calculations.See Note 3"Loans" to theConsolidated FinancialStatements set forthin Item 8of Part 1of this
Annual Report as Form 10-K for more information on theallowance for credit losses.
The following table presents ACL and net charge-offs to average loans bytype for the periods indicated (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Correspondent
Banks
Consumer
and Other
Total
December, 31, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
$
4,874
$
24,070
Provision for credit losses
(1)
2,119
Recoveries
-
-
Charge-offs
-
-
-
-
(732)
(732)
Ending Balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Average loans
$
307,199
$
1,186,105
$
266,095
$
99,580
$
210,060
$
2,069,039
Net charge-offs (recoveries) to
average loans
(0.01)%
-
(0.01)%
-
0.35%
0.03%
December, 31, 2024
Beginning balance
$
2,695
$
10,366
$
3,974
$
$
3,138
$
21,084
Provision for credit losses
(2)
2,403
(1,578)
(257)
1,752
2,960
Recoveries
-
-
Charge-offs
-
-
-
-
(19)
(19)
Ending Balance
$
5,121
$
8,788
$
4,633
$
$
4,874
$
24,070
Average loans
$
256,112
$
1,068,574
$
238,266
$
103,345
$
195,716
$
1,862,013
Net charge-offs (recoveries) to
average loans
(0.01)%
-
(0.01)%
-
0.01%
(0.00)%
(1) Provision for credit losses excludes $182 thousand provision for unfunded commitments included in accrued interest and other
liabilities and $4 thousand release for investment securities held to maturity.
(2) Provision for credit losses excludes $199 thousand provision for unfunded commitments included in accrued interest and other
liabilities and $2 thousand release for investment securities held to maturity.
ThefollowingtablepresentsACLbytypeanditsindividualpercentagetototalloansfortheperiodsindicated(in
thousands):
December 31,
2025
2024
Loan Category
Allowance
% of Loans in
Each Category to
Total Loans
Allowance
% of Loans in
Each Category to
Total Loans
Residential Real Estate
$
5,908
14.1
%
$
5,121
14.8
%
Commercial Real Estate
9,476
57.0
%
8,788
57.8
%
Commercial and Industrial
4,814
13.5
%
4,633
13.1
%
Correspondent Banks
1,015
5.9
%
4.2
%
Consumer and Other
4,287
9.5
%
4,874
10.1
%
Total
$
25,500
100.0
%
$
24,070
100.0
%
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69USCB Financial Holdings, Inc.2025 10-K
Bank-Owned Life Insurance
AtDecember 31,2025,thecombinedcashsurrendervalueofallbank-ownedlifeinsurance("BOLI")policieswas
$59.4 million.Changesincashsurrendervaluearerecordedinnon-interestincomeontheConsolidatedStatementsof
Operations. In2025, the Companymaintained BOLIpolicies withfive insurancecarriers. TheCompany isthe beneficiary
of these policies.
Deposits
Customer deposits are theprimary funding source forthe Bank's growth.Through our network ofbanking centers, we
offer a competitive array of depositaccounts and treasury management services designedto meet our customers' business
needs. Our primarydeposit customersare SMBs,and the personalbusiness of ownersand operatorsof these SMBs,as
well as the retail/consumer relationships of the employeesof these businesses. Our focus on quality and customerservice
has created a strong brand recognition withinour depositors, which reflects in the compositionof our deposits; most of our
funding sources are customerdeposits. In additionto our banking centersnetwork, we have developedbusiness verticals
to diversify ourportfolio in different specialty industriesand we offer publicfund deposit products tomunicipalities and public
agencies in our geographical footprint.
Furthermore, ourpersonal andprivate bankingmanagementline ofbusiness isfocused onthe needsof theowners
and operators ofour business customers,offering a suiteof checking, savings,money market andtime deposit accounts,
and utilizing superiorclient serviceto build andexpand client relationships.A unique aspectof our businessmodel is our
ability to offer correspondent services to banks inCentral America and the Caribbean.
The followingtable presentsthe dailyaverage balanceand averagerate paidon depositsby categoryfor theyears
ended December 31, 2025 and 2024 (in thousands, exceptratios):
Years Ended December 31,
2025
2024
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest bearing demand deposits
$
577,232
0.00%
$
596,073
0.00%
Interest-bearing demand deposits
51,803
2.48%
54,667
2.76%
Savings and money market deposits
1,255,719
3.03%
1,109,853
3.61%
Time deposits
470,213
3.85%
326,373
4.09%
$
2,354,967
2.44%
$
2,086,966
2.63%
Total average deposits for the year ended December 31, 2025 was $2.4 billion,an increase of $268.0 million,or 12.8%
over totalaverage depositsof $2.1 billionfor thesame periodin 2024.The greatestincrease wasin savingsand money
market deposits whichincreased by$145.9 million, or13.1%. Non-interest-bearingdemand depositsdecreased by$18.8
million or 3.2%.
TheuninsureddepositsareestimatedbasedontheFDICdepositinsurancelimitof$250 thousandforalldeposit
accounts at the Bank per account holder. Totalestimated uninsured deposits was $1.2 billion at December 31, 2025 and at
December 31, 2024. As of December 31, 2025,49% of our deposits were estimated tobe FDIC-insured.At December 31,
2025, ourdeposit portfolioincluded 7%of totaldeposits werepublic funds(partially collateralized),11%of totaldeposits
werebrokereddeposits(FDIC-insured),and8%weredepositsinICS/CDARsdepositprograms(FDIC-insured).The
estimated averageaccount sizeof our depositportfolio is$113thousand. Timedeposits withbalances of$250 thousand
or more totaled $111.5million and $94.0 million at December 31, 2025 and 2024,respectively. At December31, 2025, our
top 10 depositors held 15.59% of ourtotal deposit portfolio. At December 31, 2024, our top 10depositors held 16.7% of our
total deposit portfolio.
Critical elements of our liquidityrisk management include: effective corporate governance consisting ofoversight by the
Board and ALCO andinvolvement by senior management;appropriate strategies, policies,procedures, and limitsused to
identifyandmitigateliquidityrisk;comprehensiveliquidityriskmeasurementandmonitoringsystems(including
assessmentsofthecurrentandprospectivecashflowsorsourcesandusesoffunds)thatarecommensuratewiththe
complexity and businessactivities of theCompany; management of intradayliquidity and collateral;an appropriately diverse
mixofexistingandpotentialfuturefundingsources;adequatelevelsofhighlyliquidmarketablesecuritiesfreeoflegal,
regulatory,oroperationalimpediments,thatcanbeusedtomeetliquidityneedsinstressfulsituations;comprehensive
contingencyfundingplansthatsufficientlyaddresspotentialadverseliquidityeventsandemergencycashflow
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70USCB Financial Holdings, Inc.2025 10-K
requirements;andinternalcontrols andinternalauditprocessessufficienttodeterminetheadequacyoftheinstitution's
liquidity risk management process.
Weexpectfundstobeavailablefromseveralbasicbankingactivitysources,includingthecoredepositbase,the
repayment and maturity of loans and investment securitycash flows. Other potential funding sources includefederal funds
purchased, brokered certificates of deposit, listing services certificates of deposit, Fed Funds lines and borrowings from the
FHLBAtlanta.Accordingly,our liquidityresourceswereat sufficientlevelsto fundloansandmeetothercashneeds as
necessary.
The following table shows scheduled maturities of uninsuredtime deposits as of December 31, 2025 (in thousands):
Total
Three months or less
$
59,593
Over three through six months
16,190
Over six through twelve months
9,552
Over twelve months
26,146
$
111,481
Borrowings
FHLB Advances
AsamemberoftheFHLBAtlanta,weareeligibletoobtainadvanceswithvarioustermsandconditions.This
accessibility of additionalfunding allows usto efficiently andtimely meet bothexpected and unexpectedoutgoing cash flows
and collateral needs without adversely affectingeither daily operations or the financial conditionof the Company.
Outstanding fixed-rateadvances from theFHLB wereat $158.3 millionand $163.0 million,as of December31, 2025,
andDecember 31,2024,respectively.TheweightedaveragerateforoutstandingFHLBadvanceswas3.8%asof
December 31, 2025 and 2024.
The following table presents the FHLB fixed-rate advancesas of December 31, 2025 (in thousands):
December, 31, 2025
Interest Rate
Type of Rate
Maturity Date
Amount
3.77%
Fixed
March 16, 2026
$
104,750
3.88%
Variable
May 22, 2026
42,500
3.76%
Fixed
January 24, 2028
11,000
$
158,250
December, 31, 2024
Interest Rate
Type of Rate
Maturity Date
Amount
2.05%
Fixed
March 27, 2025
$
10,000
1.07%
Fixed
July 18, 2025
6,000
3.76%
Fixed
January 24, 2028
11,000
3.77%
Fixed
April 25, 2028
50,000
3.68%
Fixed
September 13, 2027
21,000
3.79%
Fixed
March 23, 2026
20,000
4.65%
Fixed
February 13, 2025
45,000
$
163,000
WehavealsoestablishedFedFundslinesofcreditwithourupstreamcorrespondentbankstomanagetemporary
fluctuations in our dailycash balances. As ofDecember 31, 2025, there were nooutstanding balances under the FedFunds
lines of credit.
The Boardof Governorsof the FederalReserve System,on March12, 2023,announced thecreation ofa newBank
TermFunding Program ("BTFP"). The BTFP offered loans of up to one year in length to banks, savings associations, credit
unions,andothereligibledepositoryinstitutionspledgingU.S.Treasuries,U.S.agencydebtandmortgage-backed
securities, and other qualifying assets as collateral. TheBTFP program ceased making new loans as of March2024.
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71USCB Financial Holdings, Inc.2025 10-K
The Company paid off $80 million in borrowings under the BTFPprogram during the third quarter of 2024. The original
maturity of this borrowing by the Bank under the BTFP program was January 2025, and there are no remaining borrowings
under this program.
Subordinated Notes
OnAugust14,2025,theCompanyenteredintoaSubordinatedNotePurchaseAgreementwithcertainqualified
institutionalbuyerspursuanttowhichtheCompanysoldandissued$40.0millioninaggregateprincipalamountofits
7.625% Fixed-to-FloatingRate SubordinatedNotes due 2035.The Notes wereissued by theCompany to thepurchasers
at aprice equalto 100%of theirface amount.The Noteswere offeredand soldby theCompany ina privateplacement
transaction in relianceon exemptions fromthe registrationrequirements of theSecurities Act,pursuant toSection 4(a)(2)
of the SecuritiesAct andRule 506(b) ofRegulation D thereunder. For additionalinformation, see theForm 8-K theCompany
filed on August 14, 2025.The subordinated debt was originally issued at a cost of $760 thousand. The carrying value of the
issuancecosthasbeenreducedto$700thousand,reflectingthescheduledexpenserecognitionoverthetermofthe
subordinateddebt.Thesubordinatednotesarepresentednetofthesecostsontheconsolidatedbalancesheet.At
December 31, 2025, the outstanding balance of subordinatednotes, net of costs, totaled $39.3 million.
Off-Balance Sheet Arrangements
We engagein various financialtransactions inour operationsthat, under GAAP,may not beincluded onthe balance
sheet. Tomeet the financing needsof our customers we mayinclude commitments to extendcredit and standby lettersof
credit. Toa varyingdegree, suchcommitments involveelements ofcredit, market,and interestrate riskin excessof the
amount recognizedin thebalance sheet.We usemore conservativecredit andcollateral policiesin makingthese credit
commitments as wedo for on-balance sheetitems. We are notaware of any accountingloss to beincurred by fundingthese
commitments; however, we maintain an allowance for off-balance sheetcredit risk which is recordedunder accrued interest
and other liabilities on the Consolidated Balance Sheets.
Since commitments associated with letters ofcredit and commitments to extendcredit may expire unused, theamounts
shown do not necessarilyreflect the actualfuture cash funding requirements.The following tablepresents lending related
commitments outstanding as of December 31, 2025 and2024 (in thousands):
December 31, 2025
December 31, 2024
Commitments to grant loans and unfunded lines of credit
$
161,606
$
122,578
Standby and commercial letters of credit
2,700
5,389
Total
$
164,306
$
127,967
Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition
establishedinthecontract,foraspecificpurpose.Commitmentsgenerallyhavevariableinterestrates,fixedexpiration
dates orotherterminationclausesandmay requirepaymentofa fee.Since manyof thecommitmentsareexpected to
expire without beingfully drawn, thetotal commitmentamounts disclosedabove do notnecessarily representfuture 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 creditgenerally have variable interest rates. Themaximum potential number of future
payments we couldbe required tomake is representedby the contractualamount of thecommitment, lessthe amount of
any advances made.
Letters of credit areconditional commitments issuedby us to guaranteethe performance of aclient to a thirdparty.In
the event of nonperformance bythe client in accordance with theterms of the agreement with thethird party,we would be
required to fundthe commitment.If the commitmentis funded, wewould be entitledto seek recoveryfrom the clientfrom
the underlying collateral,which can includecommercial real estate,physical plant andproperty, inventory, receivables, cash
or marketable securities.
Asset and Liability Management Committee
The asset and liability management committee of our Company, or ALCO, consists of members of senior management
and our Board. Senior management is responsible forensuring in a timely manner that Boardapproved strategies, policies,
and proceduresfor managingand mitigatingrisks areappropriately executedwithin thedesignated linesof authorityand
responsibility.
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72USCB Financial Holdings, Inc.2025 10-K
ALCOoverseestheestablishment,approval,implementation,andreviewofinterestraterisk,management,and
mitigation strategies, ALM related policies, ALCO proceduresand risk tolerances and appetite.
While some degree of interestrate risk ("IRR") exposure is inherentto the banking business, our ALCOhas established
what it believes are sound risk management practicesin place to identify,measure, monitor and mitigate IRR exposures.
When assessing the scopeof IRR exposure andimpact on the consolidatedbalance sheet, cash flowsand statement
of operations,management considersboth earningsand economicimpacts. Asset pricevariations, depositsvolatility and
reduced earnings or outright losses could adversely affectthe Company's liquidity,performance, and capital adequacy.
Income simulationsare usedto assessthe impactof changingrates onearnings underdifferent ratesscenarios and
time horizons.These simulationsutilize bothinstantaneous andparallel changesin thelevel ofinterest rates,as wellas
non-parallel changes such as changing slopes (flat and steeping) andtwists of the yield curve, Static simulation models are
based on current exposures andassume a constant balance sheet withno new growth. Dynamic simulation analysisis also
utilized to have amore comprehensive assessmenton IRR. This simulationrelies on detailedassumptions outlined inour
budget and strategic plan, and in assumptions regarding changes inexisting lines of business, new business, management
strategies and client expected behavior.
Tohave a more completepicture of IRR, the Companyalso evaluates the economicvalue of equity.This assessment
allowsustomeasurethedegreetowhichtheeconomicvalueswillchangeunderdifferentinterestratescenarios.The
economic value of equity 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, theanalysis shows a snapshot in time of the risk inherentin the balance sheet.
Market and Interest Rate Risk Management
As of December 31, 2025, both thestatic and dynamic scenarios of theALCO model indicate that the Bank'sbalance
sheet isliabilitysensitiveinyearone.This meansthatour liabilitiesrepricemorequickly thanourassets,resulting ina
favorable expansion in net interest income(NII) when market interest ratesdecline. For year two, the staticmodel shifts to
a neutral position, while the dynamic model reflects an asset sensitiveposture, driven primarily by projected balance sheet
growth.Thisdivergenceisexpected,asthedynamicmodelincorporatesforwardlookingassumptionsthatincludeloan
growth andmix shiftsover time.Many assumptionsare used tocalculate theimpact ofinterest ratevariations onour net
interestincome,suchasassetprepaymentspeeds,non-maturitydepositpricesensitivity,pricingcorrelations,deposit
truncations and decay rates, and key interest rate drivers.
Because of the inherent useof these estimates andassumptions in the model,our actual results may,and most likely
will, differ from static measures results. In addition, static measures like the economic value of equitydo not include actions
that management may undertake tomanage the risks in responseto anticipated changes in interestrates or client deposit
behavior. As part of our ALM strategy andpolicy, management has the ability to modify the balance sheetto either increase
or decreaseassetdurationandincreaseor decreaseliabilitydurationtomodifythe balancesheetsensitivityto interest
rates.
Additionally, utilizing an EVE approach, we analyze the risk to capital from the effectsof various interest rate scenarios
through a long-term discountedcash flow model. Thismeasures the differencebetween the economic valueof our assets
andtheeconomicvalueofourliabilities,whichisaproxyforourliquidationvalue.Accordingtoourbalancesheet
composition, andas expected,our modelstipulates thatan increaseof interestrates willhave anegative impacton the
EVE. Results andanalysis are presentedquarterly to theALCO, and strategiesare reviewed andrefined. The Bankremains
within policy limits for long-term interestrate risk based on EVEresults as of December 31, 2025. Thebalance sheet shows
larger EVE swingswhen rates goup than whenrates go down.This happens because,in rising ratescenarios, the value
of our longerterm assetsfalls morequickly,especially whenloan prepaymentsslow while ourliabilities donot reprice as
fast. In contrast,when ratesdecline, fasterloan prepaymentsand quickerasset repricinghelp soften theimpact onEVE.
Additionally, during 2025, we have been taking actions to reduceour asset sensitivity by extending asset duration. This has
reduced our NIIvolatility for thefirst and secondyear in theanalysis and hashelped us tomaintain the NIIin accordance
with ALCO expectations.
Liquidity
Liquidity isdefined asa Company's capacityto meetits cashand collateralobligations ata reasonablecost. Maintaining
an adequate level of liquidity depends on the Company's ability toefficiently meet both expected and unexpected cash flow
and collateral needs without adversely affectingeither daily operations or the financial condition of theCompany.
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73USCB Financial Holdings, Inc.2025 10-K
Liquidity riskis therisk thatwe willbe unableto meetour short-termand long-termobligations asthey becomedue
because of aninability to liquidateassets or obtainadequate funding onacceptable terms ina timely matter. TheCompany's
obligations, and the funding sources used to meet them, depend significantlyon our business mix, balance sheet structure
and composition, credit quality ofour assets, interest rateenvironment and the cash flowprofiles of our on- andoff-balance
sheet obligations.
Inmanagingcashinflowsandoutflows,managementregularlymonitorssituationsthatcangiverisetoincreased
liquidity risk.These includefunding mismatches, marketconstraints onthe abilityto convertassets (particularly investments)
into cash or inaccessing sources offunds (i.e., marketliquidity), and contingentliquidity events. Managementpresents to
the ALCO,on aquarterly basis, liquiditystress tests followingthe scenariosdescribed inthe Company's contingencyfunding
plan.
Changesinmacroeconomicconditions,exposuretocreditdeterioration,market,operational,legalandreputational
risks, including cybersecurity risk andsocial media events couldalso affect the Company's liquidity riskprofile unexpectedly
and are considered in the assessment of liquidity and ALMframework.
Management has establisheda comprehensive andholistic management process foridentifying, measuring, monitoring
andmitigatingliquidityrisk.DuetoitscriticalimportancetotheviabilityoftheCompany,liquidityriskmanagementis
integrated into our risk management processes, ContingencyFunding Plan and ALM policy.
Critical elements of our liquidityrisk management include: effective corporate governance consisting ofoversight by the
Board and ALCO andinvolvement by senior management;strategies, policies, procedures,and limits used toidentify and
mitigateliquidityrisk;comprehensiveliquidityriskmeasurementandmonitoringsystems(includingassessmentsofthe
current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity andbusiness
activitiesof theCompany;managementof intradayliquidity andcollateral;a diversemix ofexistingandpotentialfuture
funding sources; adequate levels of highly liquid marketable securities freeof legal, regulatory, or operational impediments,
that canbe usedto meetliquidity needsin stressful situations;comprehensive contingencyfunding plansthat sufficiently
address potential adverseliquidity events andemergency cashflow requirements; andinternal controls andinternal audit
processes sufficient to determine the adequacyof the institution's liquidity risk managementprocess.
Weexpectfundstobeavailablefromseveralbasicbankingactivitysources,includingthecoredepositbase,the
repayment and maturity of loans and investment securitycash flows. Other potential funding sources includefederal funds
purchased, brokeredcertificates ofdeposit, listingcertificates ofdeposit, FedFunds linesand borrowingsfrom theFHLB
Atlanta. Accordingly, our liquidity resources were at sufficient levels tofund loans and meet othercash needs as necessary.
At December 31, 2025, theCompany had $321.4million in available liquidityon balance sheet, including$286.9 million in
unpledged securities available touse as collateral and$34.5 million inexcess cash. The Companyhad an additional $349.0
million in off-balance sheet liquidity including excess FHLB Atlanta borrowingcapacity, the Federal ReserveBank discount
window and FedFund lines of credit, excludingaccess to brokered depositsand other off-balance sheet sourcesof funding.
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74USCB Financial Holdings, Inc.2025 10-K
Capital Adequacy
AsofDecember 31,2025,theBankwaswellcapitalizedundertheFDIC'spromptcorrectiveactionframework.
Additionally,we follow the capital conservationbuffer framework, and according toour actual ratios, the Bankexceeds the
capital conversationbuffer inall capital ratiosas of December31, 2025. TheCompany is notsubject to regulatorycapital
requirements because it is deemed by the Federal Reserveto be a small bank holding company.
ThefollowingtablepresentsthecapitalratiosfortheBankatDecember 31,2025and2024(inthousands,except
ratios):
Actual
Minimum Capital
Requirements
To be Well Capitalized Under
Prompt Corrective Action
Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
December 31, 2025
Totalrisk-based capital:
$
299,596
13.67%
$
175,387
8.00%
219,234
10.00%
Tier 1 risk-based capital:
$
273,342
12.47%
$
131,541
6.00%
175,387
8.00%
Common equity tier 1 capital:
$
273,342
12.47%
$
98,655
4.50%
142,502
6.50%
Leverage ratio:
$
273,342
9.65%
$
113,296
4.00%
141,620
5.00%
December 31, 2024
Totalrisk-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%
Impact of Inflation
Our ConsolidatedFinancial Statementsand relatednotes have beenprepared inaccordance with U.S.GAAP,which
requires themeasurement offinancial positionand operatingresults interms ofhistorical dollars,without consideringthe
changesintherelativepurchasingpowerofmoneyovertime duetoinflation.Theimpactofinflationisreflectedinthe
increased cost of operations.Unlike most industrial companies,nearly all our assets andliabilities are monetary innature.
As a result,interest rates have agreater impact on ourperformance than do theeffects of general levelsof inflation. Periods
of high inflationare often accompaniedby relatively higherinterest rates, andperiods of lowinflation are accompaniedby
relatively lower interest rates.As market interest ratesrise or fall in relationto the rates earnedon loans and investments,
the value of these assets decreases or increases respectively.
Recently Issued Accounting Pronouncements
Recently issued accountingpronouncements are discussedin Note 1 "Summaryof Significant AccountingPolicies" in
the Consolidated Financial Statements of this Annual Reporton Form 10-K.
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75USCB Financial Holdings, Inc.2025 10-K
Reconciliation and Management Explanation of Non-GAAP Financial Measures
Management has includedthe non-GAAP measuresset forth belowbecause it believesthese measures mayprovide
useful supplemental informationfor evaluating the Company'sunderlying performance trends.Further, managementuses
these measures in managing and evaluating the Company's business and intends to refer to them in discussions about our
operations and performance.Operating performancemeasures should beviewed in additionto, and notas an alternative
to orsubstitutefor,measuresdeterminedinaccordancewithGAAP,andarenotnecessarilycomparableto non-GAAP
measuresthatmay bepresentedby othercompanies.The Companybelievesthesenon-GAAPmeasurementsare key
indicators of theearnings powerof the Company.The followingtable reconcilesthe non-GAAPfinancial measurementof
operating net income available to common stockholdersfor the periods presented (in thousands,except per share data):
As of and for the years ended December 31,
2025
2024
Pre-Tax Pre-Provision ("PTPP") income: (1)
Net income (GAAP)
$
26,100
$
24,674
Plus: Provision for income taxes
9,816
7,803
Plus: Provision for credit losses
2,297
3,157
PTPP income
$
38,213
$
35,634
Operating net income: (1)
Net income (GAAP)
$
26,100
$
24,674
Less: Net gain (loss) on sale of securities
(7,526)
Less: Taxeffect on sale of securities
1,908
(4)
Plus: Taxliability expenses from prior periods
-
Operating net income
$
32,482
$
24,664
Operating revenue: (1)
Net interest income
$
83,630
$
69,936
Non-interest income
6,592
12,740
Less: Net gain (losses) on sale of securities
(7,526)
Operating revenue
$
97,748
$
82,662
Operating efficency ratio: (1)
Totalnon-interest expense
$
52,009
47,042
Operating revenue
$
97,748
82,662
Operating efficency ratio
53.21%
56.91%
(1) The Company believes these non-GAAP measurements are key indicators of the ongoing earnings power of the Company.
USCB Financial Holdings Inc. published this content on March 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 13, 2026 at 17:20 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]