UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission File Number:
001-41196
USCB Financial Holdings, Inc.
(Exact name of registrant as specified in its charter)
Florida
87-4070846
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2301 N.W. 87th Avenue
,
Doral
,
FL
33172
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code:
(
305
)
715-5200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $1.00 par value per share
USCB
The Nasdaq Stock Market LLC
Indicate by checkmark whether theregistrant (1) hasfiled all reportsrequired to befiled by Section13 or 15(d)of the SecuritiesExchange
Act of 1934 during the preceding 12 months(or for such shorter period that the registrant wasrequired to file such reports), and (2)has
been subject to such filing requirements for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive DataFile required to be submitted pursuant
to Rule 405of Regulation S-T(§232.405 of thischapter) during thepreceding 12 months(or for suchshorter period thatthe registrant
was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
companyoranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“non-acceleratedfiler,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☒
Emerging growth company
☒
If anemerging growthcompany, indicate bycheck markif theregistrant has electednot touse theextended transitionperiod forcomplying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of April 30, 2026, the registrant had
18,263,900
shares of Class
A
common stock outstanding.
3USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
PARTI
Item 1.Financial Statements
USCB FINANCIAL HOLDINGS, INC
Consolidated Balance Sheets – Unaudited
(Dollars in thousands, except share data)
March 31, 2026
December 31, 2025
ASSETS:
Cash and due from banks
$
6,598
$
6,027
Interest-bearing deposits in banks
72,365
32,450
Total cash and cash equivalents
78,963
38,477
Investment securities held to maturity, net of allowance of $
0
and $
2
, respectively (fair value of
$
137,714
and $
142,508
, respectively)
149,931
153,941
Investment securities available for sale, at fair value
277,160
307,490
Federal Home Loan Bank stock, at cost
4,470
9,323
Loans held for investment, net of allowance of$
26,102
and $
25,500
, respectively
2,214,949
2,163,757
Accrued interest receivable
11,773
11,661
Premises and equipment, net
4,401
4,247
Bank owned life insurance
59,920
59,424
Deferred tax assets, net
19,649
18,046
Lease right-of-use asset
4,756
5,519
Other assets
19,763
19,655
Total assets
$
2,845,735
$
2,791,540
LIABILITIES:
Deposits:
Non-interest bearing demand deposits
$
620,714
$
583,860
Savings and money market deposits
1,263,248
1,186,422
Interest-bearing demand deposits
57,444
46,989
Time deposits
552,174
527,809
Total deposits
2,493,580
2,345,080
Federal Home Loan Bank advances
53,000
158,250
Subordinated notes, net
39,338
39,300
Lease liability
4,756
5,519
Accrued interest and other liabilities
31,815
26,208
Total liabilities
2,622,489
2,574,357
Commitments and contingencies (See Notes 5and 10)
(nil)
(nil)
STOCKHOLDERS' EQUITY:
Preferred stock - Class C; $
1.00
par value; $
1,000
per share liquidation preference;
52,748
shares
authorized;
0
and
0
issued and outstanding as of March 31, 2026and December 31, 2025
-
-
Preferred stock - Class D; $
1.00
par value; $
5.00
per share liquidation preference;
12,309,480
shares
authorized;
0
and
0
issued and outstanding as of March 31, 2026and December 31, 2025
-
-
Preferred stock - Class E; $
1.00
par value; $
1,000
per share liquidation preference;
3,185,024
shares
authorized;
0
and
0
issued and outstanding as of March 31, 2026and December 31, 2025
-
-
Common stock - Class A Voting; $
1.00
par value;
45,000,000
shares authorized;
18,257,400
issued and
outstanding as of March 31, 2026,
18,137,885
issued and outstanding as of December31, 2025
18,257
18,138
Common stock - Class B Non-voting; $
1.00
par value;
8,000,000
shares authorized;
0
and
0
issued and
outstanding as of March 31, 2026 and December31, 2025
-
-
Additional paid-in capital on common stock
278,812
278,852
Accumulated deficit
(42,473)
(49,542)
Accumulated other comprehensive loss
(31,350)
(30,265)
Total stockholders' equity
223,246
217,183
Total liabilities and stockholders' equity
$
2,845,735
$
2,791,540
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
4USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Unaudited
(Dollars in thousands,except per share data)
Three Months Ended March 31,
2026
2025
Interest income:
Loans, including fees
$
32,789
$
30,245
Investment securities
3,411
3,024
Interest-bearing deposits in financial institutions
832
709
Total interest income
37,032
33,978
Interest expense:
Interest-bearing demand deposits
310
338
Savings and money market deposits
8,133
9,335
Time deposits
4,700
3,918
Federal Home Loan Bank advances
1,040
1,272
Subordinated notes
801
-
Total interest expense
14,984
14,863
Net interest income before provision forcredit losses
22,048
19,115
Provision for credit losses
801
681
Net interest income after provision forcredit losses
21,247
18,434
Non-interest income:
Service fees
3,100
2,331
Gain on sale of securities available for sale, net
14
-
Gain on sale of loans held for sale, net
106
525
Other non-interest income
930
860
Total non-interest income
4,150
3,716
Non-interest expense:
Salaries and employee benefits
8,570
7,636
Occupancy
1,316
1,284
Regulatory assessments and fees
484
421
Consulting and legal fees
561
193
Network and information technology services
560
505
Other operating expense
2,220
2,013
Total non-interest expense
13,711
12,052
Income before income tax expense
11,686
10,098
Income tax expense
2,335
2,440
Net income
$
9,351
$
7,658
Per share information:
Earnings per share, basic
$
0.51
$
0.38
Earnings per share, diluted
$
0.51
$
0.38
Cash dividends declared
$
0.125
$
0.10
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
5USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Comprehensive Income- Unaudited
(Dollars in thousands)
Three Months Ended
March 31,
2026
2025
Net income
$
9,351
$
7,658
Other comprehensive (loss) income:
Unrealized (loss) gain on investment securities
(2,207)
4,673
Reclassification adjustment for amortization of netunrealized losses on securities transferred from available-
for-sale to held-to-maturity
68
67
Reclassification adjustment for realized gains includedin net income
(14)
-
Unrealized gain (loss) on cash flow hedge
97
(158)
Tax effect
971
(1,161)
Total other comprehensive (loss) income, net of tax
(1,085)
3,421
Total comprehensive income
$
8,266
$
11,079
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
6USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Changes in Stockholders’Equity - Unaudited
(Dollars in thousands,except per share data)
Common Stock
Additional Paid-in
Capital on Common
Stock
Accumulated
Deficit
Accumulated Other
Comprehensive
Loss
Shares
Par Value
Total
Stockholders'
Equity
Balance at December 31, 2025
18,137,885
$
18,138
$
278,852
$
(49,542)
$
(30,265)
$
217,183
Net income
-
-
-
9,351
-
9,351
Other comprehensive loss
-
-
-
-
(1,085)
(1,085)
Repurchase of Class A common stock
(53,475)
(53)
(948)
-
-
(1,001)
Restricted stock issued
147,490
147
(147)
-
-
-
Exercise of stock options
25,500
25
166
-
-
191
Dividend payment
-
-
-
(2,282)
-
(2,282)
Stock-based compensation
-
-
889
-
-
889
Balance at March 31, 2026
18,257,400
$
18,257
$
278,812
$
(42,473)
$
(31,350)
$
223,246
Balance at December 31, 2024
19,924,632
$
19,925
$
307,810
$
(67,813)
$
(44,534)
$
215,388
Net income
-
-
-
7,658
-
7,658
Other comprehensive income
-
-
-
-
3,421
3,421
Repurchase of Class A common stock
(9,671)
(10)
(164)
-
-
(174)
Restricted stock issued
124,424
124
(124)
-
-
-
Exercise of stock options
9,000
9
83
-
-
92
Dividend payment
-
-
-
(2,005)
-
(2,005)
Stock-based compensation
-
-
708
-
-
708
Balance at March 31, 2025
20,048,385
$
20,048
$
308,313
$
(62,160)
$
(41,113)
$
225,088
The accompanying notes are an integralpart of these consolidated financial statements.
7USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
Three Months Ended March 31,
2026
2025
Cash flows from operating activities:
Net income
$
9,351
$
7,658
Adjustments to reconcile net incometo net cash provided by operating activities:
Provision for credit losses
801
681
Depreciation and amortization
166
148
Accretion of premiums on securities, net
(374)
(212)
Amortization of deferred loan fees, net
269
126
Stock-based compensation
889
708
Gain on sale of available for sale securities,net
(14)
-
Gain on sale of loans held for sale, net
(106)
(525)
Proceeds from the sale of loans held for sale
1,329
7,719
Origination of loans held for sale
(1,223)
(7,194)
Increase in cash surrender value of bank ownedlife insurance
(496)
(471)
Amortization of subordinated debt issuancecosts
38
-
Deferred income tax expense (benefit)
(581)
2,440
Net change in operating assets and liabilities:
Accrued interest receivable
(112)
(79)
Other assets
(62)
(3,005)
Accrued interest and other liabilities
5,401
6,634
Net cash provided by operating activities
15,276
14,628
Cash flows from investing activities:
Proceeds from maturities and pay-downs of investmentsecurities held to maturity
4,063
2,955
Purchase of investment securities availablefor sale
(13,631)
(14,123)
Proceeds from maturities and pay-downs of investmentsecurities available for sale
4,964
4,106
Proceeds from sales of investment securitiesavailable for sale
37,181
-
Net increase in loans held for investment
(7,968)
(43,503)
Purchase of loans held for investment
(44,090)
(19,989)
Additions to premises and equipment
(320)
(46)
Purchase of bank owned life insurance
-
(4,000)
Proceeds from the redemption of FederalHome Loan Bank stock
6,994
2,612
Purchase of Federal Home Loan Bank stock
(2,141)
(169)
Net cash used in investment activities
(14,948)
(72,157)
Cash flows from financing activities:
Proceeds from issuance of Class A commonstock, net
191
92
Cash dividends paid
(2,282)
(2,005)
Repurchase of Class A common stock
(1,001)
(174)
Net increase in deposits
148,500
135,565
Proceeds from FHLB advances
42,000
-
Repayments on Federal Home Loan Bank advances
(147,250)
(55,000)
Net cash provided by financing activities
40,158
78,478
Net increase in cash and cash equivalents
40,486
20,949
Cash and cash equivalents at beginningof period
38,477
77,035
Cash and cash equivalents at end of period
$
78,963
$
97,984
Supplemental disclosure of cash flowinformation:
Interest paid
$
14,673
$
14,454
The accompanying notes are an integralpart of these unaudited consolidated financialstatements.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
8USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
1.SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
Overview
USCB Financial Holdings,Inc., a Floridacorporation incorporatedin 2021, isa bank holdingcompany with
one
direct
wholly owned subsidiary,U.S. Century Bank (the “Bank”), together referred to as “the Company”.The Bank, established in
2002, is a Florida state-chartered,non-member financial institution providingfinancial services through itsbanking centers
located in South Florida.
The Bankowns asubsidiary,Florida PeninsulaTitle LLC,that offersour clientstitle insurancepolicies forreal estate
transactions closed at the Bank. Licensed in the State of Florida and approved by the Department of Insurance Regulation,
Florida Peninsula Title LLC began operationsin 2021.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to
Form 10-Q anddo not include allthe information andfootnotes required by U.S.generally accepted accountingprinciples
(“U.S.GAAP”)forcompletefinancialstatements.Alladjustmentsconsistingofnormallyrecurringaccrualsthat,inthe
opinionofmanagement,arenecessaryforafairpresentationofthefinancialpositionandresultsofoperationsforthe
periods presentedhave beenincluded. Theseunaudited consolidatedfinancial statementsshould beread inconjunction
with the Company’s auditedconsolidated financial statements andrelated notes appearing inthe Company’s Annual Report
on Form 10-K for the year ended December 31, 2025.
Principles of Consolidation
TheCompanyconsolidatesentitiesinwhichithasacontrollingfinancialinterest.Intercompanytransactionsand
balances are eliminated in consolidation.
Use of Estimates
ToprepareconsolidatedfinancialstatementsinconformitywithU.S.GAAP,managementmakesestimatesand
assumptionsbasedonavailableinformation.Theseestimatesandassumptionsaffecttheamountsreportedinthe
consolidated financial statements.The mostsignificant estimate impactingthe Company’s consolidatedfinancial statements
is the allowance for credit losses (“ACL”).
Reclassifications
Certainamountsinpriorperiodconsolidatedfinancialstatementshavebeenreclassifiedtoconformtothecurrent
presentation. Reclassifications had no impact on prior periodnet income or stockholders’ equity.
Recently Issued Accounting Standards
There were norecently issued accountingstandards adopted orissued during theperiod that areexpected to havea
material impact on the Company’s consolidated financialstatements.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
9USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
2.INVESTMENT SECURITIES
The followingtables presenta summaryof the amortizedcost, unrealizedor unrecognizedgains andlosses,and fair
value of investment securities at the dates indicated (inthousands):
March 31, 2026
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
12,568
$
-
$
(970)
$
11,598
Collateralized mortgage obligations
86,307
-
(17,727)
68,580
Mortgage-backed securities - residential
35,364
98
(6,190)
29,272
Mortgage-backed securities - commercial
156,895
145
(8,005)
149,035
Municipal securities
5,194
-
(995)
4,199
Bank subordinated debt securities
14,570
163
(257)
14,476
$
310,898
$
406
$
(34,144)
$
277,160
March 31, 2026
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
40,748
$
78
$
(3,319)
$
37,507
Collateralized mortgage obligations
50,175
664
(5,768)
45,071
Mortgage-backed securities - residential
35,963
659
(3,359)
33,263
Mortgage-backed securities - commercial
15,041
-
(1,163)
13,878
Corporate bonds
8,004
-
(9)
7,995
$
149,931
$
1,401
$
(13,618)
$
137,714
Allowance for credit losses - securities held-to-maturity
-
Securities held-to maturity, net of allowance for credit losses
$
149,931
December 31, 2025
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
15,169
$
18
$
(1,043)
$
14,144
Collateralized mortgage obligations
92,871
-
(17,043)
75,828
Mortgage-backed securities - residential
35,865
135
(6,083)
29,917
Mortgage-backed securities - commercial
174,622
347
(6,861)
168,108
Municipal securities
5,196
-
(933)
4,263
Bank subordinated debt securities
15,284
189
(243)
15,230
$
339,007
$
689
$
(32,206)
$
307,490
December 31, 2025
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
41,158
$
91
$
(3,279)
$
37,970
Collateralized mortgage obligations
51,431
854
(5,499)
46,786
Mortgage-backed securities - residential
37,221
760
(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
Transfers of debtsecurities into the held-to-maturity (“HTM”) categoryfrom the available forsale (“AFS”) categoryare
made at fairvalue as ofthe date oftransfer. Theunrealized gain orloss at thedate of transferis retained inaccumulated
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
10USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
other comprehensiveloss (“AOCL”) andin the carryingvalue of theHTM securitiesand there isno impact tonet income.
Such amountsare amortizedover theremaining lifeof the security.The Companymade
two
transfers fromAFS toHTM
portfolios in 2022.
During the quarter ended March 31, 2026, there were
no
investment securities that were transferred from AFS to HTM.
For three months ended March 31, 2026, total amortizationout of AOCL for net unrealized losses on securitiestransferred
in 2022 from AFS to HTMwas $
68
thousand and $
67
thousand for the three monthsended March 31, 2025. AtMarch 31,
2026, the fair valueof the transferred securitieswas $
96.1
million and the balanceof the remaining unamortizedloss was
$
8.9
million.
The measurement of expected credit losses under the current expected credit loss (“CECL”) methodology is applicable
to financial assets measured at amortized cost, includingloan receivables and HTM debt securities.
CECL requires a loss reserve for securitiesclassified as HTM. The reserve should reflecthistorical credit performance
as wellas the impactof projectedeconomic forecasts. ForU.S. Government bondsand U.S.Agency issued bondsclassified
as HTM, the explicit guarantee of theU.S. Government is sufficientto conclude that an allowance forcredit loss reserve is
notrequired.Thereserverequirementisforthreeprimaryassetsgroups:municipalbonds,corporatebonds,andnon-
agency securitizations. The Companycalculates quarterly the loss reserveutilizing Moody’s ImpairmentStudio.The CECL
measurementforinvestmentsecuritiesincorporateshistoricaldata,containingdefaultsandrecoveriesinformation,and
Moody’s baselineeconomic forecast.The solutionuses the probabilityof default/lossgiven default (“PD/LGD”)approach.
PD representsthe likelihooda borrowerwill default.Within theMoody’s model,this isdetermined usinghistorical default
data, adjusted for the current economic environment. LGD projectsthe expected loss if a borrower were to default.
The Companymonitors the creditquality of HTMsecurities through theuse ofcredit ratings. Creditratings are monitored
by the Company on at leasta quarterly basis. As of March 31, 2026and December 31, 2025, all HTM securities held bythe
Company were rated investment grade.
At March 31,2026, HTMsecuritiesincluded $
141.9
million ofU.S. Governmentand U.S.Agency issuedbonds and
mortgage-backedsecurities.Becauseoftheexplicitand/orimplicitguaranteeonthesebonds,theCompanyholds
no
reserveson theseholdings.The remainingportion ofthe HTMportfoliois madeup of$
8.0
millionin investmentgrade
corporate bonds that mature in May of2026. The required reserve for these holdingsis determined each quarter using the
modeldescribedabove.FortheportionoftheHTMexposedtonon-governmentcreditrisk,theCompanyutilizedthe
PD/LGD methodologyto estimatea $
0
ACL asof March31, 2026.The bookvalue fordebt securitiesclassified asHTM
represents amortized cost less the ACL related to these securities.
The Company’s investment portfolioincludes AFS debt securities, whichare carried at fair value with unrealizedgains
and lossesrecognizedinAOCL, netof applicabletaxes.The Companyevaluateswhether thedeclinesin fairvalueare
attributable to credit losses or other factors like interest rate risk, using both quantitative and qualitativeanalyses, including
company performance analysis, reviewof credit ratings, bondvintage, remaining payment terms,prepayment speeds and
analysisofmacro-economicconditions.WhenthefairvalueofanAFSsecurityislessthanitsamortizedcostandthe
decline is attributableto credit-relatedfactors, an ACLis recorded. Asa result ofthis evaluation, theCompany concluded
that no allowance was required on AFS securities as ofMarch 31, 2026.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
11USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Information pertainingto investmentsecurities withgross unrealizedlosses, aggregatedby investmentcategoryand
length oftime thatthoseindividual securitieshave beenin acontinuousloss position,are presentedas ofthe following
dates (in thousands):
March 31, 2026
Less than 12 months
12 months or more
Total
Available-for-Sale:
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
5,909
$
(88)
$
5,689
$
(882)
$
11,598
$
(970)
Collateralized mortgage obligations
3,898
(116)
64,682
(17,611)
68,580
(17,727)
Mortgage-backed securities - residential
-
-
22,164
(6,190)
22,164
(6,190)
Mortgage-backed securities - commercial
73,867
(977)
55,483
(7,028)
129,350
(8,005)
Municipal securities
-
-
4,199
(995)
4,199
(995)
Bank subordinated debt securities
2,722
(12)
6,245
(246)
8,967
(257)
$
86,396
$
(1,193)
$
158,462
$
(32,952)
$
244,858
$
(34,144)
December 31, 2025
Less than 12 months
12 months or more
Total
Available-for-sale:
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
5,937
$
(59)
$
5,649
$
(984)
$
11,586
$
(1,043)
Collateralized mortgage obligations
8,929
(93)
66,899
(16,950)
75,828
(17,043)
Mortgage-backed securities - residential
-
-
22,695
(6,083)
22,695
(6,083)
Mortgage-backed securities - commercial
59,655
(477)
56,852
(6,384)
116,507
(6,861)
Municipal securities
-
-
4,263
(933)
4,263
(933)
Bank subordinated debt securities
2,020
(4)
7,234
(239)
9,254
(243)
$
76,541
$
(633)
$
163,592
$
(31,573)
$
240,133
$
(32,206)
The contractualcash flowsassociated withU.S. GovernmentAgency securities,collateralizedmortgage obligations,
and residentialand commercialmortgage-backedsecuritiesare guaranteedby U.S.government-sponsoredenterprises,
thereby minimizingcredit risk.Municipal bondsare ofhigh creditquality,and theobserved declinesin fairvalue arenot
attributabletoadeteriorationinthecreditworthiness.Similarly,thedecreaseinfairvalueofbanksubordinateddebt
securitiesisprimarilydrivenbychangesinmarketinterestratesratherthancreditconcerns.Basedonmanagement’s
evaluationof thesefactors,managementbelievesthatthe unrealizedlosseson thesedebtsecuritiesare attributableto
fluctuations in market spreads and interest rate movements, rather than adverse changes in the underlying credit quality of
the issuers.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
12USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Gainsandlossesonthesaleofsecuritiesarerecordedonthetradedateandaredeterminedonthespecific
identification basis. The following table presents the proceeds, realized gross gains and realized gross losses on sales and
calls of AFS debt securities for the three months endedMarch 31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
Available-for-sale:
2026
2025
Proceeds from sale and call of securities
$
38,181
$
-
Gross gains
$
82
$
-
Gross losses
(68)
-
Net realized gain
$
14
$
-
The amortizedcostandfairvalue ofinvestmentsecurities,by contractualmaturity,are shownbelowas ofthe date
indicated (in thousands).Actual maturities maydiffer from contractualmaturities because borrowersmay have the rightto
call or prepayobligations with orwithout call orprepayment penalties. Securities notdue at asingle maturity date areshown
separately.
Available-for-sale
Held-to-maturity
March 31, 2026:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Due within one year
$
-
$
-
$
8,004
$
7,995
Due after one year through five years
2,000
1,984
-
-
Due after five years through ten years
17,764
16,691
-
-
Due after ten years
-
-
-
-
U.S. Government Agency
12,568
11,598
40,748
37,507
Collateralized mortgage obligations
86,307
68,580
50,175
45,071
Mortgage-backed securities - residential
35,364
29,272
35,963
33,263
Mortgage-backed securities - commercial
156,895
149,035
15,041
13,878
$
310,898
$
277,160
$
149,931
$
137,714
At March 31, 2026, there were no securities held in the portfolio from anyone issuer in an amount greater than 10% of
totalstockholders’equityotherthantheU.S.GovernmentandU.S.GovernmentAgencyissuedsecurities.Allthe
collateralized mortgage obligationsand mortgage-backedsecurities atMarch 31, 2026 andDecember 31, 2025 wereissued
by U.S. Government entities.
The Bank is a Qualified Public Depository (“QPD”) with the State of Florida. As a QPD, the Bankhas the legal authority
tomaintainpublicdepositsfromcities,municipalities,andtheStateofFlorida.Thesepublicdepositsaresecuredby
securities pledged to theState of Florida ata ratio of
25
% of thequarter daily average balancefor quarters ended March 31,
2026 andDecember 31, 2025.The Bankmust alsomaintain aminimum amountof pledgedsecurities tobe in thepublic
funds program.
As of March 31,2026, theBank had atotal of $
220.8
million in depositsunder the publicfunds program andpledged
to the State of Florida for these public funds were
twenty
bonds with an aggregate fair value of $
55.1
million.
As ofDecember 31, 2025, theBank hada totalof $
167.7
million indeposits under thepublic funds programand pledged
to the State of Florida for these public funds were
fifteen
bonds with an aggregate fair value of $
43.5
million.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
13USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
3.LOANS
The following table is a summary of the distribution of loansheld for investment by type (dollars in thousands):
March 31, 2026
December 31, 2025
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
346,917
15.5
%
$
307,692
14.1
%
Commercial real estate
1,259,642
56.4
%
1,244,835
57.0
%
Commercial and industrial
291,333
13.0
%
295,548
13.5
%
Correspondent banks
128,722
5.8
%
127,968
5.9
%
Consumer and other
207,794
9.3
%
207,215
9.5
%
Totalgross loans
2,234,408
100.0
%
2,183,258
100.0
%
Plus: Deferred fees/costs
6,643
5,999
Totalloans net of deferred fees/costs
2,241,051
2,189,257
Less: Allowance for credit losses
26,102
25,500
Totalnet loans
$
2,214,949
$
2,163,757
AtMarch 31,2026andDecember 31,2025,theCompanyhad$
599.7
millionand$
561.4
million,respectively,of
commercial real estate and residential mortgageloans pledged as collateral for linesof credit with the Federal Home Loan
Bank (“FHLB”) of Atlanta and the Federal Reserve Bankof Atlanta.
Allowance for Credit Losses
Ingeneral,theCompanyutilizestheDiscountedCashFlow(“DCF”)methodortheWeighted-AverageRemaining
Maturity (“WARM”) methodology to estimate thequantitative portion of the ACLfor loan pools. TheDCF method uses a loss
driver analysis(“LDA”) andDCF analysis.Management engagedadvisors andconsultantswith expertisein CECL model
development toassist indevelopment ofa LDAbased onregression modelsand supportableforecast. Peergroup data
obtainedfromFFIECCallReportfilingsisused toinformregressionanalysestoquantifytheimpactof reasonableand
supportableforecastsinprojectivemodels.Economicforecastsappliedtoregressionmodelstoestimateprobabilityof
default for loan receivables use at leastone of the following economic indicators: civilian unemployment rate (national), real
gross domesticproduct growth(national GDP)or theHouse PriceIndex (“HPI”).For eachof thesegmentsin whichthe
WARM methodology is used,the long-term averageloss rate iscalculated and appliedon a quarterlybasis for theremaining
life of the pool. Adjustments for economic expectations aremade through qualitative factors.
Qualitative factors (“Q-Factors”) used in the ACL methodologyinclude:
•
Changes in lending policies, procedures, and strategies
•
Changes in international, national, regional, and local economicconditions
•
Changes in nature and volume of the portfolio
•
Changes in the volume and severity of past due loansand other similar conditions
•
Concentration risk
•
Changes in the value of underlying collateral
•
The effect of other external factors: e.g., competition,legal, and regulatory requirements
•
Changes in lending management, among others
•
Changes in the loan review system
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
14USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Changes in the ACL for the three months ended March31, 2026 and 2025 were as follows (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended March 31, 2026
Beginning balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Provision for credit losses
(1)
(644)
456
512
3
271
598
Recoveries
6
-
4
-
-
10
Charge-offs
-
-
-
-
(6)
(6)
Ending Balance
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
(1) Provision for credit losses excludes a $
205
thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $
2
thousand release related to investment securities held to maturity.
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended March 31, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(1)
(12)
409
(204)
163
316
672
Recoveries
6
-
5
-
-
11
Charge-offs
-
-
-
-
(13)
(13)
Ending Balance
$
5,115
$
9,197
$
4,434
$
817
$
5,177
$
24,740
(1) Provision for credit losses excludes a $
10
thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $
1
thousand release related to investment securities held to maturity.
At March 31,2026, theACL forloans was$
26.1
million comparedto $
25.5
million atDecember 31, 2025.The $
602
thousand increase in the ACL wasprimarily attributable to loan portfolio growth, partially offset bylower expected loss rates
resulting from improvements in the economic forecast.
Charge offsrelated toloans for thethree monthsended March 31,2026 were$
6
thousand andwere alloriginated in
2026.
Charge-offs for the three months ended March31, 2025 totaled $
13
thousand and were all originated in 2025.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
15USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The ACL and the outstandingbalances in the specifiedloan categories as of March31, 2026 and December 31,2025
are as follows (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Correspondent
Banks
Consumer
and Other
Total
March 31, 2026:
Allowance for credit losses:
Individually evaluated
$
24
$
-
$
16
$
-
$
-
$
40
Collectively evaluated
5,246
9,932
5,314
1,018
4,552
26,062
Balances, end of period
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
Loans:
Individually evaluated
$
6,023
$
-
$
1,288
$
-
$
-
$
7,311
Collectively evaluated
340,894
1,259,642
290,045
128,722
207,794
2,227,097
Balances, end of period
$
346,917
$
1,259,642
$
291,333
$
128,722
$
207,794
$
2,234,408
December 31, 2025:
Allowance for credit losses:
Individually evaluated
$
27
$
-
$
84
$
-
$
-
$
111
Collectively evaluated
5,881
9,476
4,730
1,015
4,287
25,389
Balances, end of period
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Loans:
Individually evaluated
$
5,583
$
-
$
1,265
$
-
$
-
$
6,848
Collectively evaluated
302,109
1,244,835
294,283
127,968
207,215
2,176,410
Balances, end of period
$
307,692
$
1,244,835
$
295,548
$
127,968
$
207,215
$
2,183,258
Credit Quality Indicators
The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the
loan agreement basedon relevant informationwhich mayinclude: current financialinformation on theborrower,historical
paymentexperience,creditdocumentationandothercurrenteconomictrends.Internalcreditriskgradesareevaluated
periodically.
The Company's internally assigned credit risk grades are as follows:
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.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
16USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Loan credit exposures by internally assigned grades arepresented below for the periods indicated (in thousands):
As of March 31, 2026
Term Loans by Origination Year
Revolving
Loans
Total
2026
2025
2024
2023
2022
Prior
Residential real estate
Pass
$
52,271
$
63,410
$
81,292
$
31,652
$
23,244
$
71,610
$
19,989
$
343,468
Special Mention
-
488
-
-
-
-
-
488
Substandard
-
370
1,015
1,468
-
108
-
2,961
Total
52,271
64,268
82,307
33,120
23,244
71,718
19,989
346,917
Commercial real estate
Pass
74,914
243,124
175,333
99,617
269,282
372,973
5,861
1,241,104
Special Mention
-
-
2,933
10,083
-
3,137
-
16,153
Substandard
-
-
-
-
-
2,385
-
2,385
Total
74,914
243,124
178,266
109,700
269,282
378,495
5,861
1,259,642
Commercial and
industrial
Pass
4,473
72,274
62,037
56,211
31,367
39,343
23,336
289,041
Special Mention
-
-
-
-
-
805
-
805
Substandard
-
-
72
378
-
1,037
-
1,487
Total
4,473
72,274
62,109
56,589
31,367
41,185
23,336
291,333
Correspondent banks
Pass
55,661
73,061
-
-
-
-
-
128,722
Total
55,661
73,061
-
-
-
-
-
128,722
Consumer and other
Pass
2,623
58,516
34,010
36,516
50,584
21,819
3,726
207,794
Total
2,623
58,516
34,010
36,516
50,584
21,819
3,726
207,794
TotalLoans
Pass
189,942
510,385
352,672
223,996
374,477
505,745
52,912
2,210,129
Special Mention
-
488
2,933
10,083
-
3,942
-
17,446
Substandard
-
370
1,087
1,846
-
3,530
-
6,833
Total
$
189,942
$
511,243
$
356,692
$
235,925
$
374,477
$
513,217
$
52,912
$
2,234,408
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
17USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
As of December 31, 2025
Term Loans by Origination Year
Revolving
Loans
Total
2025
2024
2023
2022
2021
Prior
Residential real estate
Pass
$
65,582
$
83,426
$
32,139
$
23,685
$
21,056
$
58,220
$
20,168
$
304,276
Special Mention
128
-
-
587
-
201
-
916
Substandard
-
917
1,468
-
-
115
-
2,500
Total
65,710
84,343
33,607
24,272
21,056
58,536
20,168
307,692
Commercial real estate
Pass
241,028
184,323
109,465
281,985
134,663
273,483
5,876
1,230,823
Special Mention
-
-
8,451
-
-
3,162
-
11,613
Substandard
-
-
-
-
1,724
675
-
2,399
Total
241,028
184,323
117,916
281,985
136,387
277,320
5,876
1,244,835
Commercial and
industrial
Pass
75,867
63,178
58,060
32,118
28,090
12,314
23,542
293,169
Special Mention
-
72
-
-
835
-
-
907
Substandard
-
-
389
-
445
638
-
1,472
Total
75,867
63,250
58,449
32,118
29,370
12,952
23,542
295,548
Correspondent banks
Pass
127,968
-
-
-
-
-
-
127,968
Total
127,968
-
-
-
-
-
-
127,968
Consumer and other
Pass
59,276
34,309
36,808
51,091
23,214
747
1,770
207,215
Total
59,276
34,309
36,808
51,091
23,214
747
1,770
207,215
TotalLoans
Pass
569,721
365,236
236,472
388,879
207,023
344,764
51,356
2,163,451
Special Mention
128
72
8,451
587
835
3,363
-
13,436
Substandard
-
917
1,857
-
2,169
1,428
-
6,371
Total
$
569,849
$
366,225
$
246,780
$
389,466
$
210,027
$
349,555
$
51,356
$
2,183,258
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
18USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Loan Aging
The Companyalso considers theperformance of loansin gradingand inevaluating thecredit qualityof theloan portfolio.
The Companyanalyzes creditquality andloan grades basedon paymentperformance andthe aging statusof the loans.
The followingtables includean aginganalysisof accruingloans andtotal non-accruingloans asof March 31,2026 and
December 31, 2025 (in thousands):
Accruing
As of March 31, 2026
Current
Past Due 30-
89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
1,848
$
-
$
-
$
1,848
$
-
$
1,848
1-4 family residential
259,121
1,257
-
260,378
2,732
263,110
Condo residential
79,585
2,145
-
81,730
229
81,959
340,554
3,402
-
343,956
2,961
346,917
Commercial real estate:
Land and construction
65,423
-
-
65,423
-
65,423
Multi-family residential
265,267
4,583
-
269,850
-
269,850
Condo commercial
63,777
-
-
63,777
-
63,777
Commercial property
858,500
2,092
-
860,592
-
860,592
1,252,967
6,675
-
1,259,642
-
1,259,642
Commercial and industrial:
Secured
269,120
23
-
269,143
679
269,822
Unsecured
21,511
-
-
21,511
-
21,511
290,631
23
-
290,654
679
291,333
Correspondent banks
128,722
-
-
128,722
-
128,722
Consumer and other
207,794
-
-
207,794
-
207,794
Total
$
2,220,668
$
10,100
$
-
$
2,230,768
$
3,640
$
2,234,408
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
19USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Accruing
As of December 31, 2025:
Current
Past Due
30-89 Days
Past Due 90
Days or >
and Still
Accruing
Total
Accruing
Non-Accrual
Total Loans
Residential real estate:
Home equity lines of credit and other
$
1,538
$
-
$
-
$
1,538
$
-
$
1,538
1-4 family residential
238,852
1,150
-
240,002
2,385
242,387
Condo residential
62,364
1,288
-
63,652
115
63,767
302,754
2,438
-
305,192
2,500
307,692
Commercial real estate:
Land and construction
83,305
-
-
83,305
-
83,305
Multi-family residential
254,562
-
-
254,562
-
254,562
Condo commercial
61,525
-
-
61,525
-
61,525
Commercial property
845,003
440
-
845,443
-
845,443
1,244,395
440
-
1,244,835
-
1,244,835
Commercial and industrial:
Secured
272,900
71
-
272,971
638
273,609
Unsecured
21,939
-
-
21,939
-
21,939
294,839
71
-
294,910
638
295,548
Correspondent banks
127,968
-
-
127,968
-
127,968
Consumer and other
207,215
-
-
207,215
-
207,215
Total
$
2,177,171
$
2,949
$
-
$
2,180,120
$
3,138
$
2,183,258
Non-accrual Status
The followingtable includesthe amortizedcost basisof loanson non-accrualstatus asof March 31,2026 andas of
December 31, 2025 (in thousands):
March 31, 2026
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
2,961
$
-
$
2,961
Commercial and industrial
679
-
679
Total
$
3,640
$
-
$
3,640
December 31, 2025
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
2,500
$
-
$
2,500
Commercial and industrial
563
75
638
Total
$
3,063
$
75
$
3,138
Accrued interestreceivable isexcluded fromthe estimateof creditlosses. Therewas
no
interest incomerecognized
attributable to non-accrual loans outstanding during the threemonths ended March 31, 2026 and 2025. Interest income on
these loans for the three months ended March31, 2026 and 2025, would have beenapproximately $
60
thousand and $
52
thousand, respectively,had these loans performed in accordance with theiroriginal terms.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
20USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Collateral-Dependent Loans
Aloaniscollateraldependentwhentheborrowerisexperiencingfinancialdifficultyandrepaymentoftheloanis
expected to be provided substantially through the saleor operation of the collateral.
The followingtable includesthe amortized costbasis ofcollateral dependentloans relatedto borrowersexperiencing
financial difficulty by type of collateral as of March31, 2026 and December 31, 2025 (in thousands):
March 31, 2026
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
3,063
$
-
Commercial and industrial
72
-
Total
$
3,135
$
-
December 31, 2025
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
2,583
$
-
Total
$
2,583
$
-
Management evaluateson an individualbasis collateraldependent loansusing the fairvalue of thecollateral method
to determineif aallowance forcredit lossreserve isnecessary.The ACLis measuredbased onthe differenceof thefair
value ofthe collateraland amortizedcost basisof theloan. Ifthe finalcollateral valuationis lessthan theamortized cost
basis ofthe loan,a reserveamount iscalculated. Ifthe collateralvaluation isequal toor greaterthan theamortized cost
basis of the loan, no reserve is determined.
Loan Modifications to Borrowers Experiencing FinancialDifficulties
TheCompanyhad
one
newmodificationtoborrowersexperiencingfinancialdifficultiesforthethreemonthsended
March 31, 2026.The Company had
no
new modifications toborrowers experiencing financialdifficulties for thethree months
ended March 31, 2025.The following tablepresents newly restructuredloans, bytype of modification,which occurred during
the three months ended March 31, 2026 (in thousands):
Amortized Cost Basis Prior to Modification
Amortized Cost Basis After Modification
Number of
Loans
Combination
Modifications
Total
Modifications
Number of
Loans
Combination
Modifications
Total
Modifications
Commercial and industrial
1
$
418
$
418
1
$
350
$
350
Total
1
$
418
$
418
1
$
350
$
350
TheloanmodificationfortheborrowerexperiencingfinancialdifficultyatMarch31,2026includeda combinationof
principal and maturity modifications. There wasa principal reduction of $
68
thousand and a two-year extension ofthe loan
maturity.
There were
no
existing loan modifications that subsequentlydefaulted during the three monthsended March 31, 2026
and 2025.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
21USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
4.INCOME TAXES
The Company’s income tax expense is presentedin the following table for the periods indicated (in thousands):
Three Months Ended March 31,
2026
2025
Pre-tax income:
Domestic
$
11,686
$
10,098
Total pre-tax income
$
11,686
$
10,098
Current tax expense:
Federal
$
2,833
$
-
State
83
-
Totalcurrent
2,916
-
Deferred tax expense:
Federal
(799)
1,914
State
218
526
Deferred income tax expense (benefit)
(581)
2,440
Totalincome tax expense
$
2,335
$
2,440
The actualincometaxexpensefor thethreemonthsended March31,2026 and2025differsfromthestatutorytax
expense for the periods (computed by applying the U.S.federal corporate tax rate of
21
% for both 2026 and 2025periods
to income before income tax expense) as follows (in thousands):
Three Months Ended March 31,
2026
2025
Amount
% Pre-tax
Income
Amount
% Pre-tax
Income
Computed tax at the statutory federal income tax rate
$
2,454
21.00%
$
2,120
21.00%
Increase (decrease) resulting from:
State income taxes, net of federal tax benefit
(1)
631
5.40%
439
4.34%
Bank owned life insurance income
(131)
(1.12%)
(119)
(1.18%)
Benefit from stock-based compensation
(166)
(1.42%)
-
-
Section 162(m) limitation
83
0.71%
-
-
Other adjustments, net
(536)
(4.59%)
-
-
Totaltax expense
$
2,335
19.98%
$
2,440
24.16%
(1) Taxesin Florida made up the majority (greater than 50%) of the tax effect in this category.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
22USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The Company’s deferred tax assets and deferredtax liabilities as of the dates indicated were (inthousands):
March 31, 2026
December 31, 2025
Deferred tax assets:
Net operating loss
$
618
$
1,039
Allowance for credit losses
6,891
6,463
Lease liability
1,256
1,399
Unrealized losses on available for sale securities
11,266
10,270
Equity compensation
878
973
Accruals
174
721
Cash flow hedge
21
(5)
Other, net
1,771
268
Deferred tax assets:
22,875
21,128
Deferred tax liabilities:
Deferred loan cost
(1,754)
(1,520)
Lease right of use asset
(1,256)
(1,399)
Deferred expenses
(194)
(154)
Depreciable property
(22)
(9)
Other, net
-
-
Deferred tax liabilities
(3,226)
(3,082)
Net deferred tax assets
$
19,649
$
18,046
The Companyhas approximately$
17.4
million ofstate netoperating losscarryforwards expiringin variousamounts
between 2032 and 2036 and which are limited to offset,to the extent permitted, future taxable earnings of theCompany.
In assessing the realizability of deferred tax assets, management considerswhether it is more likely than not that some
portion orall ofthe deferredtax assetswill notbe realized.The ultimaterealizationof deferredtax assetsis dependent
upon the generation offuture taxable incomeduring the periodsin which those temporarydifferences become deductible.
Management considers the scheduled reversalof deferred tax liabilities, projected future taxableincome, and tax planning
strategies in making this assessment.
The major taxjurisdictions where theCompany files incometax returns arethe U.S. federaljurisdiction andthe State
of Florida. With few exceptions, the Company is no longer subject to U.S. federal and state income tax return examinations
by tax authorities for years before 2022.
For the three monthsended March 31, 2026and 2025 theCompany did
no
t have anyunrecognized tax benefitsas a
result oftax positionstaken duringa priorperiod orduring thecurrent period.Additionally,
no
interest orpenaltieswere
recorded as a result of tax uncertainties.
5.OFF-BALANCE SHEET ARRANGEMENTS
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to
meet the financialneeds ofits customersand to reduceits ownexposure tofluctuations ininterest rates.These financial
instrumentsincludeunfundedcommitmentsunderlinesofcredit,commitmentstoextendcredit,andstandbyand
commercial lettersof credit.Those instruments involve,to varyingdegrees, elements ofcredit andinterest raterisk inexcess
of the amount recognizedin the Company’sConsolidated Balance Sheets.The Company uses thesame credit policies in
making commitments and conditional obligations as itdoes for on-balance sheet instruments.
The Company's exposureto credit lossin the eventof nonperformance bythe other partyto the financialinstruments
for unused lines of credit and standby letters of credit isrepresented by the contractual amount of these commitments.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
23USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
AsummaryoftheamountsoftheCompany'sfinancialinstrumentswithoff-balancesheetriskareshownbelowat
March 31, 2026 and December 31, 2025 (in thousands):
March 31, 2026
December 31, 2025
Commitments to grant loans and unfunded lines of credit
$
179,642
$
161,606
Standby and commercial letters of credit
3,073
2,700
Total
$
182,715
$
164,306
Commitments toextend creditare agreementsto lendto acustomer aslong asthere isno violationof anycondition
established in the contract. Commitments generally havefixed expiration dates or other termination clauses.
Unfunded lines ofcredit and revolvingcredit lines arecommitments for possiblefuture extensionsof credit toexisting
customers. These lines ofcredit are uncollateralized andusually do not containa specified maturity dateand ultimately may
not be drawn upon to the total extent to which the Companycommitted.
StandbyandcommerciallettersofcreditareconditionalcommitmentsissuedbytheCompanytoguaranteethe
performance of acustomer toa thirdparty. Those letters ofcredit areprimarily issued tosupport public andprivate borrowing
arrangements. Essentially all letters of credit have fixed maturity dates and sincemany of them expire without being drawn
upon, they do not generally present a significant liquidityrisk to the Company.
6.DERIVATIVES
The Company utilizes interest rate swap agreementsas part of its asset-liability management strategy to helpmanage
its interest raterisk exposure. The notionalamount of the interestrate swaps does notrepresent actual amounts exchanged
by theparties.The amountsexchangedare determinedby referenceto thenotional amountand theothertermsof the
individual interest rate swap agreements.
Interest Rate Swaps Designated as a Cash Flow Hedge
As of March31, 2026,the Companyhad
two
costless collarhedges witha notionalamount of$
100
million thatwere
designated as cash flow hedges of two three-month brokered CDs. The derivativesare based on the USD SOFR overnight
index andhave aweighted averagecap rateof
4.50
% andweighted averagefloor rateof
1.763
%, effectivelycreating a
defined range of interest rate outcomes without requiring an upfront premium. Thecostless collar hedges have an average
maturity of
1.29
years.
As ofDecember 31,2025, theCompanyhad
two
costlesscollar hedgeswitha notionalamount of$
100
millionthat
weredesignatedascashflowhedgeoftwothree-monthbrokeredCDs.ThederivativesarebasedontheUSDSOFR
overnightindex andhavea weightedaverage caprate of
4.50
% andweightedaverage floorrateof
1.763
%, effectively
creating a defined range of interest rate outcomes without requiring an upfrontpremium. The costless collar hedges had an
average maturity of
1.54
years.
As ofMarch 31, 2026,the Companyhad
one
interest rateswap agreementwith anotional aggregateamount of$
25
million thatwas designatedas acash flowhedge ofa certificateof deposit.Under theagreement, theCompany paysa
fixed rateof
3.47
% andreceives avariable ratebased onthe weighted
‑
average three
‑
months compoundedUSD SOFR.
The swap has a remaining maturity of
0.12
years.
As ofDecember 31,2025, theCompany had
one
interest rateswap agreementwith anotional aggregateamount of
$
25
million that was designatedas cash flow hedgeof a certificate of deposit.Under the agreement, theCompany pays a
fixed rateof
3.47
% andreceives avariable ratebased onthe weighted
‑
average three
‑
months compoundedUSD SOFR.
The swap had a maturity of
0.42
years. The Company unwound
one
interest rate swap designated as a cash flow hedge of
certificateofdepositwithnotionalamountof$
25
millionduringthequarterendedDecember31,2025.Thedecisionto
unwindthisswapwasdriven bychangesininterestrateforecastsandasset-liabilitymanagementstrategies.Theearly
termination income tounwind the fair valueswaps totaled $
5
thousand. The originalmaturity of the cashflow interest rate
swap was April 2026.
The changesin fairvalue ofthese interestrate swapsare recordedin otherassets oraccrued interestand otherliabilities
withacorrespondingrecognitioninothercomprehensiveincome(loss)andsubsequentlyreclassifiedtoearningswhen
gains or losses are realized.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
24USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Interest Rate Swaps
The Company enters intointerest rate swapswith its loancustomers. The Company had
113
and
94
interest rate swaps
withloancustomerswithanaggregatenotionalamountof$
370.1
millionand$
310.8
millionatMarch 31,2026and
December 31,2025,respectively.AtMarch 31,2026,theseinterestrateswapsmaturebetween2026and2051.The
Company enteredinto correspondingand offsettingderivatives withthird parties.The fairvalue ofthe liabilitycreated by
these derivatives requires the Company toprovide the counterparty with funds to beheld as collateral which the Company
reports as other assets under the Consolidated BalanceSheets. While these derivatives represent economichedges, they
do not qualify as hedges for accounting purposes.
The following table reflects the Company’sinterest rate swaps at the dates indicated (in thousands):
Fair Value
Notional
Amount
Collateral
Amount
Balance Sheet Location
Asset
Liability
March 31, 2026:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
125,000
$
-
Other assets/Accrued interest and
other liabilities
$
78
$
-
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
370,106
$
6,972
Other assets/Accrued interest and
other liabilities
$
8,837
$
8,837
December 31, 2025:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
125,000
$
-
Other assets/Accrued interest and
other liabilities
$
14
$
33
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
310,761
$
5,769
Other assets/Accrued interest and
other liabilities
$
9,753
$
9,753
7.FAIR VALUEMEASUREMENTS
Determination of Fair Value
The Companyusesfair valuemeasurementsto recordfair-valueadjustmentsto certainassetsand liabilitiesand to
determine fair valuedisclosures. In accordancewith the fairvalue measurementsaccounting guidance, thefair value ofa
financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between marketparticipantsat themeasurementdate.Fair valueis bestdetermined basedupon quotedmarket prices.
However, inmany instances, thereare no quotedmarket prices for theCompany's various financialinstruments. In cases
where quotedmarket pricesare notavailable, fairvalues arebased onestimates usingpresent valueor othervaluation
techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates
of future cash flows. Accordingly, the fair value estimates may not be realized inan immediate settlement of the instrument.
The fairvalue guidance providesa consistent definitionof fairvalue, which focuseson exitprice inan orderly transaction
(that is,not aforcedliquidationor distressedsale) betweenmarket participantsat themeasurementdateunder current
market conditions.If therehas beena significantdecreasein thevolumeand levelof activityfor theassetor liability,a
change invaluation technique orthe useof multiplevaluation techniques maybe appropriate.In suchinstances, determining
thepriceatwhichwillingmarketparticipantswouldtransactatthemeasurementdateundercurrentmarketconditions
depends on the factsand circumstances andrequires the use ofsignificant judgment. The fairvalue is a reasonablepoint
within the range that is most representative of fair value undercurrent market conditions.
Fair Value Hierarchy
In accordance withthis guidance, theCompany groups itsfinancial assetsand financial liabilitiesgenerally measured
at fairvalue inthreelevels, basedon themarketsin whichthe assetsand liabilitiesare traded,and thereliabilityof the
assumptions used to determine fair value.
Level 1
- Valuationis basedon quotedprices inactive marketsfor identicalassets orliabilities thatthe reporting
entity hasthe abilityto accessat the measurementdate. Level1 assetsand liabilitiesgenerally includedebt and
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
25USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
equity securities thatare traded inan active exchangemarket. Valuations are obtained fromreadily available pricing
sources for market transactions involving identical assetsor liabilities.
Level 2
- Valuationis based on inputs otherthan quoted prices includedwithin Level 1 that areobservable for the
assetorliability,eitherdirectlyorindirectly.Thevaluationmaybebasedonquotedpricesforsimilarassetsor
liabilities; quotedprices inmarkets that arenot active;or other inputsthat are observableor can becorroborated
by observable market data for substantially the full term of theasset or liability.
Level 3
- Valuationis based onunobservable inputs thatare supportedby little orno market activityand that are
significanttothefairvalueoftheassetsorliabilities.Level3assetsandliabilitiesincludefinancialinstruments
whose valueis determinedusing pricingmodels, discountedcashflowmethodologies,or similartechniques,as
well as instruments for which determination of fair valuerequires significant management judgment or estimation.
Afinancialinstrument'scategorizationwithinthevaluationhierarchyisbaseduponthelowestlevelofinputthatis
significant to the fair value measurement.
Items Measured at Fair Valueon a Recurring Basis
AFS investment securities:
When instruments are traded insecondary markets and quoted marketprices do not exist
for such securities,management generally relieson prices obtainedfrom independent vendorsor third-party broker-dealers.
Management reviews pricing methodologies provided by the vendors and third-party broker-dealers in order to determine if
observable market information is being utilized. Securities measured with pricing provided by independent vendors orthird-
party broker-dealersare classified withinLevel 2 ofthe hierarchyand ofteninvolve using quotedmarket pricesfor similar
securities, pricing models or discounted cash flow analysesutilizing inputs observable in the market where available.
Derivatives:
Thefairvaluesofderivativesaremeasuredwithpricingprovidedbythird-partyparticipantsandare
classified within Level 2 of the hierarchy.
ThefollowingtablerepresentstheCompany'sassetsandliabilitiesmeasuredatfairvalueonarecurringbasisat
March 31, 2026 and December 31, 2025 for each of thefair value hierarchy levels (in thousands):
March 31, 2026
December 31, 2025
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Investment securities available for sale:
U.S. Government Agency
$
-
$
11,598
$
-
$
11,598
$
-
$
14,144
$
-
$
14,144
Collateralized mortgage obligations
-
68,580
-
68,580
-
75,828
-
75,828
Mortgage-backed securities - residential
-
29,272
-
29,272
-
29,917
-
29,917
Mortgage-backed securities - commercial
-
149,035
-
149,035
-
168,108
-
168,108
Municipal securities
-
4,199
-
4,199
-
4,263
-
4,263
Bank subordinated debt securities
-
14,476
-
14,476
-
15,230
-
15,230
Total
-
277,160
-
277,160
-
307,490
-
307,490
Derivative assets
-
8,915
-
8,915
-
9,767
-
9,767
Total assets at fair value
$
-
$
286,075
$
-
$
286,075
$
-
$
317,257
$
-
$
317,257
Derivative liabilities
$
-
$
8,837
$
-
$
8,837
$
-
$
9,786
$
-
$
9,786
Total liabilities at fair value
$
-
$
8,837
$
-
$
8,837
$
-
$
9,786
$
-
$
9,786
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
26USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Fair Value Measurementson a Nonrecurring Basis
At March 31, 2026 andDecember 31, 2025, theCompany did
no
t have any assetsor liabilities measured atfair value
on a nonrecurring basis.
Items Not Measured at Fair Value
The following tablepresents the carryingamounts and estimatedfair values offinancial instrumentsnot carried at fair
value as of March 31, 2026 and December 31, 2025 (inthousands):
Fair Value Hierarchy
Carrying
Amount
Level 1
Level 2
Level 3
Fair Value
Amount
March 31, 2026:
Financial Assets:
Cash and due from banks
$
6,598
$
6,598
$
-
$
-
$
6,598
Interest-bearing deposits in banks
$
72,365
$
72,365
$
-
$
-
$
72,365
Investment securities held to maturity, net
$
149,931
$
-
$
137,714
$
-
$
137,714
Loans held for investment, net
$
2,214,949
$
-
$
-
$
2,266,736
$
2,266,736
Accrued interest receivable
$
11,773
$
-
$
1,331
$
10,442
$
11,773
Financial Liabilities:
Non-interest bearing demand deposits
$
620,714
$
620,714
$
-
$
-
$
620,714
Savings and money market deposits
$
1,263,248
$
1,263,248
$
-
$
-
$
1,263,248
Interest-bearing demand deposits
$
57,444
$
57,444
$
-
$
-
$
57,444
Time deposits
$
552,174
$
-
$
551,253
$
-
$
551,253
FHLB advances
$
53,000
$
-
$
52,989
$
-
$
52,989
Subordinated notes, net
$
39,338
$
-
$
39,454
$
-
$
39,454
Accrued interest payable
$
2,436
$
-
$
2,436
$
-
$
2,436
December 31, 2025:
Financial Assets:
Cash and due from banks
$
6,027
$
6,027
$
-
$
-
$
6,027
Interest-bearing deposits in banks
$
32,450
$
32,450
$
-
$
-
$
32,450
Investment securities held to maturity, net
$
153,941
$
-
$
142,508
$
-
$
142,508
Loans held for investment, net
$
2,163,757
$
-
$
-
$
2,210,781
$
2,210,781
Accrued interest receivable
$
11,661
$
-
$
1,443
$
10,218
$
11,661
Financial Liabilities:
Non-interest bearing demand deposits
$
583,860
$
583,860
$
-
$
-
$
583,860
Savings and money market deposits
$
1,186,422
$
1,186,422
$
-
$
-
$
1,186,422
Interest-bearing demand deposits
$
46,989
$
46,989
$
-
$
-
$
46,989
Time deposits
$
527,809
$
-
$
527,575
$
-
$
527,575
FHLB advances
$
158,250
$
-
$
158,342
$
-
$
158,342
Subordinated notes, net
$
39,300
$
-
$
40,131
$
-
$
40,131
Accrued interest payable
$
3,984
$
-
$
3,984
$
-
$
3,984
Collateral Dependent Loans Measured forExpected Credit Losses:
Fair values of collateral-dependent yachtloans
and real estate loansare based on recentboat and real estateappraisals less estimated costs ofsale, repossession, and/or
holding costs.Appraisalsare madeby athirdparty,andits evaluationmay useeither acomparativesales, costand/or
income approach or a combination of methodologies.
The fair value of collateral dependent loans considered Level3 in the fair value hierarchy was $
0
with
no
reserve as of
March 31, 2026 and $
2.6
million with
no
specific reserve as of December 31, 2025.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
27USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
8.STOCKHOLDERS’ EQUITY
Common Stock
During the threemonths endedMarch 31, 2026,the Company repurchased
53,475
shares ofClass A commonstock
at a weightedaverage costper shareof $
18.74
. Theaggregate purchaseprice forthese transactionswas approximately
$
1.0
million,including transactioncosts. Theserepurchaseswere madepursuantto theCompany’spubliclyannounced
repurchase programs.As ofMarch 31,2026,
474,834
shares remainedauthorizedfor repurchaseunder theCompany’s
the 2024 share repurchase program. The Company’s2022 share repurchase program has been fully utilized.
During the three months ended March 31,2025, the Company repurchased
9,671
shares of Class A common stockat
a weighted average costper share of $
17.91
. The aggregate purchase pricefor these transactions was approximately $
174
thousand,includingtransactioncosts.TheserepurchasesweremadepursuanttotheCompany’spubliclyannounced
repurchase programs.As ofMarch 31, 2025,
528,309
shares remainedauthorizedfor repurchaseunder theCompany’s
two stock repurchase programs.
DuringthethreemonthsendedMarch 31,2026,theCompanyissued
147,490
sharesofClasscommonstockto
employees as restricted stock awards pursuant to the Company’s2015 equity incentive plan.
DuringthethreemonthsendedMarch 31,2025,theCompanyissued
124,424
sharesofClassA commonstockto
employees as restricted stock awards pursuant to the Company’s2015 equity incentive plan.
The numberof sharesof theCompany’sClassA commonstockissuedandoutstandingas ofMarch 31,2026 and
December 31, 2025 were
18,257,400
and
18,137,885
, respectively.
Dividends
Declaration ofdividends bythe Boardof Directorsis requiredbefore dividendpayments aremade. TheCompany is
limited inthe amountof cashdividends thatit maypay.Payment ofdividends isgenerally limitedto theCompany’snet
income for the current year combined with the Company’sretained income for the preceding two years, as defined by state
bankingregulations.However,foranydividenddeclaration,theCompanymustconsideradditionalfactorssuchasthe
amount of currentperiod net income,liquidity,asset quality,capital adequacyand economicconditions at theBank since
the Bank is theprimary source offunds to fund dividendspaid by the Company.It is likely thatthese factors wouldfurther
limit theamount ofdividends whichthe Companycould legallydeclare. Inaddition, bankregulators havethe authorityto
prohibit banks and bank holding companiesfrom paying dividends if they deem suchpayment to be an unsafe or unsound
practice.
As of March 31, 2026, theCompany was not subject to anyformal supervisory restrictions on its abilityto pay dividends
but will notify the FederalReserve Bank of Atlantain advance of any proposeddividend to the Company'sstockholders in
light of the Bank's negative retained earnings. In addition, under applicable FDIC regulations and policy,because the Bank
has negative retainedearnings, it mustobtain the priorapproval of theFDIC before effecting acash dividend or othercapital
distribution from the Bank to the Company.
The following table details the dividends declared and paid bythe Company for the periods presented:
Three Months Ended March 31, 2026
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
January 20, 2026
February 17, 2026
March 5, 2026
$
0.125
$
2.3
million
Three Months Ended March 31, 2025
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
January 21, 2025
February 14, 2025
March 5, 2025
$
0.10
$
2.0
million
TheCompanyandtheBankexceededallregulatorycapitalrequirementsandremainedabove“well-capitalized”
guidelines as of March 31, 2026 and December 31, 2025.At March 31, 2026, the total risk-based capital ratiofor the Bank
was
13.96
%.TheCompanyisnotsubjecttoregulatorycapitalratiosimposedbyBaselIIIonbankholdingcompanies
because the Company is deemed to be a small bank holdingcompany.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
28USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
See Note 11, SubsequentEvents, for information regarding dividends declared in April 2026.
9.EARNINGS PER SHARE
Earningspershare(“EPS”)forcommonstockiscalculatedusingthetwo-classmethodrequiredforparticipating
securities.BasicEPSiscalculatedbydividingnetincomeavailabletocommonshareholdersbytheweighted-average
number of common shares outstanding forthe period, without consideration for commonstock equivalents. Diluted EPS is
computed by dividingnet incomeavailable to commonshareholders by theweighted-average numberof common shares
outstanding forthe periodand theweighted-average number ofdilutive common stockequivalents outstandingfor theperiod
determined using the treasury-stockmethod. For purposes of thiscalculation, common stock equivalentsinclude common
stock options which are only included in the calculationof diluted EPS when their effect is dilutive.
The following table reflects the calculation of net incomeavailable to common shareholders for the three months ended
March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
2026
2025
Net Income
$
9,351
$
7,658
Net income available to common shareholders
$
9,351
$
7,658
The following table reflectsthe calculation of basic anddiluted earnings per commonshare class for thethree months
ended March 31, 2026 and 2025 (in thousands, exceptshare amounts):
Three Months Ended March 31,
2026
2025
Class A
Basic EPS
Numerator:
Net income available to common shares
$
9,351
$
7,658
Denominator:
Weighted average shares outstanding
18,214,041
20,020,933
Earnings per share, basic
$
0.51
$
0.38
Diluted EPS
Numerator:
Net income available to common shares
$
9,351
$
7,658
Denominator:
Weighted average shares outstanding for basic EPS
18,214,041
20,020,933
Add: Dilutive effects of assumed exercises of stockoptions
239,965
298,602
Weighted avg. shares including dilutive potential commonshares
18,454,006
20,319,535
Earnings per share, diluted
$
0.51
$
0.38
Anti-dilutive stock options excluded from dilutedEPS
-
-
Net income has not been allocated to unvestedrestricted stock awards that are participatingsecurities because the amounts that would be allocatedare
not material to earnings per share of common stock.Unvested restricted stock awards that are participatingsecurities represent less than one percent of
all of the outstanding shares of common stock foreach of the periods presented.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
29USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
10.LOSS CONTINGENCIES
Loss contingencies,including claimsand legal actionsmay arise inthe ordinarycourse ofbusiness. Inthe opinionof
management, noneof theseactions, eitherindividually orin the aggregate,is expected tohave amaterial adverseeffect
on the Company’s Consolidated Financial Statements
.
11.SUBSEQUENT EVENTS
Dividends
On April20, 2026, theCompany announced thatits Boardof Directorsdeclared its quarterlycash dividend.The dividend
is in the amount of $
0.125
per share of Class A commonstock and will be paidon June 5, 2026, to stockholdersof record
as of the close of business on May 15, 2026.
30USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Item 2.Management's Discussion and Analysis of Financial Conditionand Results of Operations
Thefollowingdiscussionandanalysisisdesignedtoprovideabetterunderstandingoftheconsolidatedfinancial
condition and resultsof operations ofthe Company andthe Bank, itswholly owned subsidiary,as ofand for thethree months
ended March 31,2026. Thisdiscussion and analysisis best readin conjunctionwith the unauditedconsolidated financial
statements and relatednotes included inthis QuarterlyReport on Form10-Q (“Form 10-Q”)and the auditedconsolidated
financialstatementsandrelatednotesincludedintheAnnualReportonForm10-K(“2025Form10-K”)filedwiththe
Securities and Exchange Commission (“SEC”) for the year endedDecember 31, 2025.
This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause
actual results to differ materiallyfrom management's expectations. Factors that could causesuch differences are discussed
in the sectionsentitled "Forward-LookingStatements" and Item1A “Risk Factors"belowin Part IIhereof and inthe 2025
Form 10-K filed with the SEC which is available at theSEC’s website www.sec.gov.
Throughoutthisdocument,referencesto“we,”“us,”“our,”and“theCompany”generallyrefertoUSCBFinancial
Holdings, Inc.
Forward-Looking Statements
This Form 10-Qcontains statementsthat are nothistorical innature areintended tobe, and arehereby identifiedas,
forward-looking statements for purposesof the safeharbor provided bySection 21E ofthe Securities Exchange Actof 1934,
as amended. Thewords “may,” “will,” “anticipate,” “could,” “should,”“would,” “believe,” “contemplate,” “expect,”“aim,” “plan,”
“estimate,” “seek,”“continue,” and“intend,” aswell asother similarwords andexpressions ofthe future,are intendedto
identify forward-looking statements.These forward-looking statementsinclude statements related toour projected growth,
anticipated futurefinancial performance,and management’slong-term performancegoals, aswell asstatements relating
to the anticipatedeffects on resultsof operations andfinancial condition fromexpected developments orevents, or business
and growth strategies, including anticipated internal growthand 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 allowance
for credit losses 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;
•
adverse changes or conditions in capital and financial markets, including actual or potential stresses inthe banking
industry;
•
deposit attrition and the level of our uninsured deposits;
•
legislative or regulatory changes, including the enactmentof the One Big Beautiful Bill, and changes in accounting
principles, policies,practices orguidelines, includingthe on-goingeffects ofthe CurrentExpected CreditLosses
(“CECL”) standard;
•
the lack of asignificantly diversified loanportfolio and our concentrationin the South Floridamarket, including the
risksof geographic,depositor,andindustry concentrations,including ourconcentrationinloans securedby real
estate, in particular, commercial realestate;
•
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;
•
the impacts of international hostilities and geopolitical events;
•
increased competition and itseffect on the pricingof our products and servicesas well as our interestrate 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
31USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
•
other risks described in this Form 10-Q, the 2025 Form10-K and 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-looking statements.Further,forward-looking statementsincluded inthis Form10-Q aremade onlyas of thedate
hereof, and we undertakeno obligation to updateor revise any forward-lookingstatement to reflect eventsor circumstances
after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so
under the federalsecurities laws. You should also review therisk factors described inthe 2025 Form 10-Kand in thereports
the Company has filed or will file with the SEC.
Overview
The Companyreported netincome of$9.4 millionor $0.51per dilutedshare ofcommon stockfor thethreemonths
ended March 31,2026 comparedto $7.7million or$0.38 perdiluted shareof commonstock forthe threemonths ended
March 31, 2025.
In evaluating our financialperformance, the Companyconsiders the level ofand trends in netinterest income, thenet
interestmargin,thecostofdepositsandborrowings,thelevel andcompositionof non-interestincomeandnon-interest
expense, performance ratios,asset quality ratios, regulatory capital ratios, and anysignificant event or transaction.
Unless otherwisestated, allperiod comparisonsin thebullet pointsbelow arecalculated ator forthe quarterended
March 31, 2026comparedto ator forthequarter endedMarch 31,2025 andas ofDecember 31,2025and annualized
where appropriate:
•
Net interestincome beforeprovision forcredit lossesfor the threemonths endedMarch 31, 2026increased $2.9
million or 15.3% to $22.0 million from $19.1 million for thequarter ended March 31, 2025.
•
Net interest margin (“NIM”) expanded to 3.27% for the three months ended March 31, 2026 compared to 3.10% for
the three months ended March 31, 2025.
•
Total assetswere $2.85billion atMarch 31, 2026,representing anincrease of$168.4 millionor 6.3%from March 31,
2025 and an increase of $54.2 million or 7.9% annualized fromDecember 31, 2025.
•
Total loansheld forinvestment (netof deferredcost/fees)were $2.24billion atMarch 31, 2026,representingan
increase of $204.8 million or 10.1% from March 31, 2025 and an increase of $51.8 million or 9.6% annualized from
December 31, 2025.
•
Totaldepositswere$2.49billionatMarch 31,2026,representinganincreaseof$184.0millionor8.0%from
March 31, 2025 and an increase of $148.5 million or25.7% annualized from December 31, 2025.
•
Annualized return on average assets for the quarterended March 31, 2026 was 1.34% compared to1.19% for the
quarter ended March 31, 2025.
•
Annualized return on average stockholders’ equity for the quarter ended March 31, 2026 was 17.07% compared to
14.15% for quarter ended March 31, 2025.
•
The ACL to total loans was 1.16% at March 31, 2026 and at December 31, 2025.
•
Non-performing loans to total loans was 0.16% at March31, 2026 and 0.14% at December 31, 2025.
•
At March 31,2026,thetotal risk-based capitalratiosfor theCompanyandtheBank were14.09%and 13.96%,
respectively.
•
Tangible bookvalue percommon share(a non-GAAPmeasure) was$12.23 atMarch 31, 2026,representing an
increase of $1.00 or8.9% annualized from$11.23 at March31, 2025. At March 31, 2026,tangible book valueper
common share wasnegatively affected by($1.72) due toan accumulated comprehensiveloss of $31.4million. At
March 31, 2025, tangible book value per common share was negatively affected by ($2.05) due to an accumulated
comprehensive lossof $41.1million. See“Reconciliationand ManagementExplanation forNon-GAAP Financial
Measures” included in this Form 10-Q for a reconciliationof this non-GAAP financial measure.
32USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Critical Accounting Policies and Estimates
The consolidatedfinancial statementsare preparedbased onthe applicationof U.S.Generally AcceptedAccounting
Practices (“GAAP”),the most significantof which aredescribed in Note1 “Summaryof Significant AccountingPolicies” in
the Company’s 2025Form 10-K and“Summary of SignificantAccounting Policies”in Part I inthis Form 10-Q.Toprepare
consolidatedfinancialstatementsinconformitywithUSGAAP,managementmakesestimates,assumptions,and
judgments basedon availableinformation. Theseestimates, assumptions,and judgmentsaffect theamounts reportedin
the consolidated financialstatements and accompanyingnotes. These estimates,assumptions, and judgmentsare based
on informationavailable asof thedate ofthe financialstatements and,as thisinformation changes,actual resultscould
differfromtheestimates,assumptionsandjudgmentsreflectedintheconsolidatedfinancialstatements.Inparticular,
management hasidentified accountingpolicies that,due tothe estimates,assumptions andjudgments inherentin those
policies,arecriticaltoanunderstandingofourconsolidatedfinancialstatements.Managementhaspresentedthe
application of these policies to the Audit and Risk Committee ofour Board of Directors.
Non-GAAP Financial Measures
ThisForm10-QincludesfinancialinformationdeterminedbymethodsotherthaninaccordancewithGAAP.This
financialinformationincludescertainoperatingperformancemeasures.Managementhasincludedthesenon-GAAP
measures because it believes these measuresmay provide useful supplemental informationfor evaluating the Company’s
underlying performancetrends. Further,managementuses thesemeasures inmanaging andevaluatingthe Company’s
businessandintendstorefertothemindiscussionsaboutouroperationsandperformance.Operatingperformance
measures should beviewed in addition to,and not asan alternative toor substitute for, measures determined inaccordance
with GAAP,and arenot necessarilycomparable tonon-GAAP measuresthat maybe presentedby othercompanies. To
the extent applicable,reconciliations ofthese non-GAAPmeasures to themost directly comparableGAAP measurescan
be foundin thesection “Reconciliationand ManagementExplanation ofNon-GAAP FinancialMeasures” includedin this
Form 10-Q.
Segment Reporting
Management monitors the revenue streams for all its variousproducts and services. The identifiable segments are not
materialandoperationsaremanagedandfinancialperformanceisevaluatedonanoverallCompany-widebasis.
Accordingly, allthe financial serviceoperations areconsidered by managementto beaggregated in onereportable operating
segment.
Results of Operations
General
The following tables present selectedbalance sheet, income statement, andprofitability ratios for the datesand periods
indicated (in thousands, except ratios):
March 31, 2026
December 31, 2025
Consolidated Balance Sheets:
Totalassets
$
2,845,735
$
2,791,540
Totalloans
(1)
$
2,241,051
$
2,189,257
Totaldeposits
$
2,493,580
$
2,345,080
Totalstockholders' equity
$
223,246
$
217,183
(1)Loan amounts include deferred fees/costs.
33USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Three Months Ended March 31,
2026
2025
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
22,048
$
19,115
Totalnon-interest income
$
4,150
$
3,716
Totalnon-interest expense
$
13,711
$
12,052
Net income
$
9,351
$
7,658
Profitability:
Efficiency ratio
52.34%
52.79%
Net interest margin
3.27%
3.10%
The Company’sresultsofoperationsdependsubstantiallyonthelevelsofournetinterestincomeandnon-interest
income. Other factors contributingto the results ofoperations include our provision forcredit losses, the levelof non-interest
expense, and the provision for income taxes.
Three months ended March 31, 2026 compared to the threemonths ended March 31, 2025
Net income increased$1.7 million to$9.4 million for thethree months endedMarch 31, 2026
from $7.7 millionfor the
same periodin 2025. The$1.7 millionor 22.1%increase inthe netincome wasprimarily drivenby higherincome froma
larger loan portfolio combined with a reductionon rates paid of interest-bearing liabilitiesbetween periods. The increase in
net interest income was partially offset by an increase innon-interest expense between periods.
Net Interest Income
Net interest incomeis the differencebetween interestearned on interest-earningassets and interestpaid on interest-
bearing liabilitiesand isthe primarydriver ofcore earnings.Interest incomeis generatedfrom interestand dividendson
interest-earningassets,includingloans,investmentsecuritiesandothershort-terminvestments.Interestexpenseis
incurred from interest paid on interest-bearing liabilities, including interest-bearing deposits, FHLB advances,subordinated
debt, and other 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 the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest
margin isequal tothe annualizednet interestincomedivided byaverage interest-earning assets.Becausenon-interest-
bearing sourcesof funds, such as non-interest-bearing deposits andstockholders’ equity, also fund interest-earning assets,
net interest margin includes the indirect benefit of thesenon-interest-bearing funding sources.
Changesinmarketinterestratesandinterestratesweearnoninterest-earningassetsorpayoninterest-bearing
liabilities, as wellas the volumeand types ofinterest-earning assets and interest-bearingand non-interest-bearing liabilities,
are usually thelargest driversof periodic changesin net interestspread, net interestmargin and netinterest income.Our
asset liability committee(“ALCO”) hasin place asset-liabilitymanagement techniquesto manage majorfactors thataffect
net interest income and net interest margin.
34USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The followingtable containsinformation relatedto averagebalances, averageyields earnedon assets,and average
costs of liabilities for the periods indicated (dollars inthousands):
Three Months Ended March 31,
2026
2025
Average
(1)
Balance
Interest
Yield/Rate
(2)
Average
(1)
Balance
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans
(3)
$
2,177,734
$
32,789
6.11%
$
1,986,856
$
30,245
6.17%
Investment securities
(4)
454,262
3,411
3.05%
436,935
3,024
2.81%
Other interest-earnings assets
105,457
832
3.20%
75,182
709
3.82%
Total interest-earning assets
2,737,453
37,032
5.49%
2,498,973
33,978
5.51%
Non-interest-earning assets
97,264
107,620
Total assets
$
2,834,717
$
2,606,593
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
52,099
310
2.41%
$
53,611
338
2.56%
Saving and money market deposits
1,256,418
8,133
2.63%
1,199,027
9,335
3.16%
Time deposits
533,766
4,700
3.57%
399,509
3,918
3.98%
Total interest-bearing deposits
1,842,283
13,143
2.89%
1,652,147
13,591
3.34%
FHLB advances
110,045
1,040
3.83%
138,944
1,272
3.71%
Subordinated notes
39,313
801
8.26%
-
-
- %
Total interest-bearing liabilities
1,991,641
14,984
3.05%
1,791,091
14,863
3.37%
Non-interest-bearing demand deposits
584,784
563,040
Other non-interest-bearing liabilities
36,066
32,957
Total liabilities
2,612,491
2,387,088
Stockholders' equity
222,226
219,505
Total liabilities and stockholders' equity
$
2,834,717
$
2,606,593
Net interest income
$
22,048
$
19,115
Net interest spread
(5)
2.44%
2.14%
Net interest margin
(6)
3.27%
3.10%
(1)Average balances - Daily average balances are usedto calculate yields/rates.
(2)Annualized.
(3)Average loan balances includedeferred fees/costs and non-accrual loans.Interest income on loans includes accretionof deferred loan fees, net of
deferred loan costs.
(4)At fair value except for securities held to maturity. This amount includesFHLB stock.
(5)Net interest spread is the weighted averageyield on total interest-earning assets minus the weightedaverage rate on total interest-bearing liabilities.
(6)Net interest margin is the ratio of net interestincome to average total interest-earning assets.
Three months ended March 31, 2026 compared to the three monthsended March 31, 2025
Net interest income before the provision forcredit losses was $22.0 million for thethree months ended March 31, 2026,
an increaseof $2.9million or15.3%, from$19.1 millionfor thesame periodin 2025. Thisgrowth wasprimarily drivenby
higher income from alarger loan portfolioand a reduction inthe weighted averagerates paid on interest-bearingliabilities
between periods.
The NIMwas3.27%for thethree monthsendedMarch 31,2026 and3.10%forthe sameperiodin 2025.The NIM
expansion of 17 basispoints reflects primarilythe increase in theloan portfolio average balance,along with a decreasein
the weighted average interest rate paid on interest-bearingliabilities, particularly in savings and money market deposits.
Provision for Credit Losses
The provision for credit losses represents a charge toearnings necessary to maintain an allowance forcredit losses at
a level that,in management's evaluation,is adequate toprovide coverage forall expected creditlosses. The provision for
credit losses is impacted by variations in the size and composition of our loan and debt securities portfolio, recent historical
andprojectedfutureeconomicconditions,ourinternalassessmentofthecreditqualityoftheloananddebtsecurities
portfolios and net charge-offs.
35USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Three months ended March 31, 2026 compared to the three monthsended March 31, 2025
Theprovisionforcreditlosseswas$801thousandforthethreemonthsendedMarch 31,2026comparedto$681
thousand for the same period in 2025. The increase in the provisionfor credit losses was due to loan portfolio growth.
Non-Interest Income
Our services and products generate service charges and fees, mainly from our depositoryaccounts. We also generate
income from gain onsale of loans thoughthe SBA 7a loan programand the monetizationof fees earned throughour loan
swap program. Inaddition, we ownand are beneficiariesof thelife insurance policiescovering certain ofour key employees,
which policies generate income from the increase in thecash surrender values.
The following table presents the components of non-interestincome for the periods indicated (in thousands):
Three Months Ended March 31,
2026
2025
Service fees
$
3,100
$
2,331
Gain on sale of securities available for sale, net
14
-
Gain on sale of loans held for sale, net
106
525
Other non-interest income
930
860
Totalnon-interest income
$
4,150
$
3,716
Three months ended March 31, 2026 compared to the three monthsended March 31, 2025
Non-interest income for thethree months ended March31, 2026 increased $434thousand or 11.7%, compared tothe
same period in 2025. This increasewas primarily driven by $1.5 million increase in incomegenerated by the Company loan
swap program reported under service fees in the ConsolidatedStatements of Operations.
Non-Interest Expense
The following table presents the components of non-interestexpense for the dates indicated (in thousands):
Three Months Ended March 31,
2026
2025
Salaries and employee benefits
$
8,570
$
7,636
Occupancy
1,316
1,284
Regulatory assessment and fees
484
421
Consulting and legal fees
561
193
Network and information technology services
560
505
Other operating
2,220
2,013
Totalnon-interest expense
$
13,711
$
12,052
Three months ended March 31, 2026 compared to the three months endedMarch 31, 2025
Non-interest expensefor thethree monthsended March31, 2026increased $1.7million or13.8%, comparedto the
same period in 2025.The increase was primarily driven byan increase of $934thousand in salaries and employeebenefits,
consistingof$412thousandrelatedtomeritincreasesandnewfull-timeemployeesalaries,$342thousandincreasein
payroll taxes,and $181thousandincrease inadditionalstock-basedcompensationexpense. Inaddition, consultingand
legal feesincreased $368thousand,primarily dueto modelvalidation-related consultingexpenses andhuman resources
consultingcosts. Othernon-interestexpensesincreasedby $207thousand,driven bya $60thousandincreasein FDIC
insurance expense and $183 thousand increase in promotionalexpenses between periods.
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 forincome tax purposes.Therefore, futuredecisions on theinvestments we choosewill affect oureffective
tax rate.The cashsurrender valueof bank-ownedlife insurancepolicies coveringkey employees,purchasing municipal
bonds, and overall levels of taxable income will be importantelements in determining our effective tax rate.
36USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Three months ended March 31, 2026 compared to the three months endedMarch 31, 2025
Income tax expensefor the threemonths endedMarch 31, 2026was $2.3 millionas compared to$2.4 million forthe
same periodin 2025.TheCompany recognizeda non-recurring$619 thousandincome taxbenefit inthe firstquarter of
2026 due to anadjustment to the deferred taxasset calculation from December 31,2025. The effectivetax rate for thethree
months ended March 31, 2026 was 19.98% compared to 24.16%for the same period in 2025.
Forafurtherdiscussionofincometaxes,seeNote4“IncomeTaxes”totheunauditedConsolidatedFinancial
Statements in Item 1 of Part I of this Form 10-Q.
Analysis of Financial Condition
Totalassets atMarch 31, 2026were $2.85 billion,an increase of$54.2 million,or 7.9% annualized,over total assets
of $2.79 billion at December 31, 2025. Totalloans, net of deferred fees/costs, increased $51.8 million, or 9.6% annualized,
to $2.24billion atMarch 31, 2026comparedto $2.19billionat December31, 2025.Totaldepositsincreasedby $148.5
million, or 25.7% annualized, to $2.49 billion at March31, 2026 compared to $2.35 billion at December 31, 2025.
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
capitalmarketriskexposure.ThephilosophyoftheportfolioistomaximizetheCompany’sprofitabilitytakinginto
consideration theCompany’s riskappetite andtolerance, manageits assetcomposition anddiversification, andmaintain
adequate risk-based capital ratios.
The investment portfoliois managed in accordancewith the Board approvedAsset and LiabilityManagement (“ALM”)
policy,whichincludesinvestmentguidelines.Suchpolicyisreviewedatleastannuallyormorefrequentlyifdeemed
necessary,depending onmarket conditionsand/or unexpectedevents. The investmentportfolio compositionis subject to
change depending on the funding and liquidity needs of the Company, and the interest risk management objective directed
bytheAsset-LiabilityCommittee(“ALCO”).Theportfolioofinvestmentsalsocanbeusedtomodifythedurationofthe
balancesheet.Theallocationofcashintosecuritiestakesintoconsiderationanticipatedfuturecashflows(usesand
sources) and all available sources of credit.
Our investment portfolio consists primarily ofsecurities issued by the U.S.Government and U.S. Government Agencies
andmortgage-backedsecurities,collateralizedmortgageobligations,corporatebonds,municipalsecurities,otherdebt
securitiesallwithvaryingcontractualmaturitiesandcoupons.Duetotheoptionalityembeddedinthesesecurities,the
contractual maturities do not necessarily represent theexpected life of the portfolio. Some of these securitieswill be called
or paid downprior to maturitydepending on capital marketconditions and expectations. Theinvestment portfolio isregularly
reviewed by the Chief Financial Officer,Treasurer,and the ALCO of the Company to ensure an appropriate risk and return
profile as well as for adherence to the Company’sinvestment policies.
When evaluating AFSdebt securities underASC Topic326, the Companyevaluateswhether the declinein fair value
is attributableto credit lossesor otherfactors like interestrate risk,using both quantitativeand qualitativeanalyses, including
company performance analysis, review of credit ratings, vintage bonds, remaining payment terms, prepayment speeds and
analysisofmacro-economicconditions.Asaresultofthisevaluation,theCompanyconcludedthatnoallowancewas
required on AFS securities as of March 31, 2026.
Atquarterend,HTMsecuritiesincluded$141.9millionofU.S.GovernmentandU.S.GovernmentAgenciesissued
bonds andmortgage-backedsecurities.Becauseof theexplicit and/orimplicitguaranteeon thesebonds,theCompany
holds no reserveson these holdings.The remaining portionof the HTMportfolio is madeup of $8.0million in investment
grade corporatebonds thatmature inMay of2026. Usingthe PD/LGDmethodology andconsidering theshort remaining
maturity ofthe HTMsecurities exposed tonon
‑
government credit risk,the Companyestimated anallowance for creditlosses
(“ACL”) of$0 asof March 31,2026. Thebook valuefor debtsecurities classifiedas HTMrepresents amortizedcost less
ACL.
AggregateAFSandHTMinvestmentsecuritiesdecreased$34.3 millionto$427.1 millionatMarch 31,2026from
$461.4 million at December 31, 2025. The decrease was primarily attributable to $38.2 millionof AFS securities sold during
the quarter ended March 31, 2026.
37USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
As ofMarch 31, 2026, investmentsecurities with amarket value of$55.1 million were pledgedto secure publicdeposits.
The investment portfolio does not contain any tax-exemptsecurities.
The following tablepresents the amortizedcost and fairvalue of investmentsecurities forthe dates indicated(dollars
in thousands):
March 31, 2026
December 31, 2025
Available-for-sale:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Government Agency
$
12,568
$
11,598
$
15,169
$
14,144
Collateralized mortgage obligations
86,307
68,580
92,871
75,828
Mortgage-backed securities - residential
35,364
29,272
35,865
29,917
Mortgage-backed securities - commercial
156,895
149,035
174,622
168,108
Municipal securities
5,194
4,199
5,196
4,263
Bank subordinated debt securities
14,570
14,476
15,284
15,230
$
310,898
$
277,160
$
339,007
$
307,490
Held-to-maturity:
U.S. Government Agency
$
40,748
$
37,507
$
41,158
$
37,970
Collateralized mortgage obligations
50,175
45,071
51,431
46,786
Mortgage-backed securities - residential
35,963
33,263
37,221
34,718
Mortgage-backed securities - commercial
15,041
13,878
15,088
14,051
Corporate bonds
8,004
7,995
9,045
8,983
$
149,931
$
137,714
$
153,943
$
142,508
Allowance for credit losses - securities held-to-maturity
-
(2)
Securities held-to maturity, net of allowance for credit losses
$
149,931
$
153,941
The followingtable showsthe weightedaverage yields,categorized bycontractual maturity,for investmentsecurities
as of March 31, 2026 (in thousands, except yields):
Within 1 year
After 1 year
through 5 years
After 5 years
through 10 years
After 10 years
Total
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Available-for-sale:
U.S. Government Agency
$
-
-
$
-
-
$
-
-
$
12,568
2.73%
$
12,568
2.73%
Collateralized mortgage obligations
-
-
-
-
-
-
86,307
1.58%
86,307
1.58%
MBS - residential
-
-
-
-
-
-
35,365
2.43%
35,364
2.43%
MBS - commercial
-
-
-
-
-
-
156,895
4.08%
156,895
4.08%
Municipal securities
-
-
-
-
5,194
1.87%
-
-
5,194
1.87%
Bank subordinated debt securities
-
-
2,000
7.86%
12,570
5.74%
-
-
14,570
6.03%
$
-
-
$
2,000
7.86%
$
17,764
4.61%
$
291,135
3.08%
$
310,898
3.20%
Held-to-maturity:
U.S. Government Agency
$
7,982
1.02%
$
18,034
1.27%
$
1,478
2.39%
$
13,254
2.10%
$
40,748
1.53%
Collateralized mortgage obligations
-
-
-
-
-
-
50,175
1.66%
50,175
1.66%
MBS - residential
30
2.96%
8,918
1.64%
-
-
27,015
2.32%
35,963
2.15%
MBS - commercial
-
-
3,038
1.63%
-
-
12,003
2.56%
15,041
2.37%
Corporate bonds
8,004
2.97%
-
-
-
-
-
-
8,004
2.97%
$
16,016
2.00%
$
29,990
1.42%
$
1,478
2.39%
$
102,447
2.00%
$
149,931
1.88%
Loans
Loans are thelargest category ofinterest-earning assetson the unauditedConsolidated BalanceSheets, and usually
provide higher yields than theremainder of the interest-earning assets. Higher yieldstypically carry greaterinherent 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 balancesheet composition.
38USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The following table shows the loan portfolio compositionas of the dates indicated (in thousands):
March 31, 2026
December 31, 2025
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
346,917
15.5
%
$
307,692
14.1
%
Commercial real estate
1,259,642
56.4
%
1,244,835
57.0
%
Commercial and industrial
291,333
13.0
%
295,548
13.5
%
Correspondent banks
128,722
5.8
%
127,968
5.9
%
Consumer and other
207,794
9.3
%
207,215
9.5
%
Totalgross loans
2,234,408
100.0
%
2,183,258
100.0
%
Plus: Deferred fees/costs
6,643
5,999
Totalloans net of deferred fees/costs
2,241,051
2,189,257
Less: Allowance for credit losses
26,102
25,500
Totalnet loans
$
2,214,949
$
2,163,757
Totalloans,net ofdeferredfees/costs,increasedby $51.8million,or 9.6%annualizedto $2.24billion, atMarch 31,
2026 compared to December 31, 2025. The residential real estate loan segment had the mostsignificant balance increase
compared to December 31, 2025.
Our loanportfolio continuesto grow,with commercialreal estatelending beingthe primaryfocus whichrepresented
approximately 56.4%of thetotal grossloan portfolioas ofMarch 31, 2026.Our loangrowth strategysince inceptionhas
been reflective of the market in which we operate andof our strategic plan as approved by the Board.
The growth experienced in recentyears is primarily due toimplementation of our relationship-based banking modeland
the success of our relationship managers in competing for new business in a highly competitive metropolitan area. Many of
ourlargerloanclientshavelong-termrelationshipswithmembersofourseniormanagementteamorourrelationship
managers that date back to former institutions.
From aliquidity perspective,our loanportfolio providesus withadditionalliquidity dueto repaymentsor unexpected
prepayments. The following table shows maturities and sensitivity to interest rate changes of the loan portfolio at March 31,
2026 (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
$
7,403
$
69,792
$
61,936
$
207,786
$
346,917
Commercial real estate
62,790
573,987
617,411
5,454
1,259,642
Commercial and industrial
11,107
117,619
119,110
43,497
291,333
Correspondent banks
128,722
-
-
-
128,722
Consumer and other
4,096
1,267
22,625
179,806
207,794
Totalgross loans
$
214,118
$
762,665
$
821,082
$
436,543
$
2,234,408
Interest rate sensitivity:
Fixed interest rates
$
175,825
$
197,208
$
145,518
$
306,009
$
824,560
Floating or adjustable rates
38,293
565,457
675,564
130,534
1,409,848
Totalgross loans
$
214,118
$
762,665
$
821,082
$
436,543
$
2,234,408
The informationpresentedin thetable aboveis basedupon thecontractualmaturities ofthe individualloans, which
may besubject torenewal attheir contractualmaturity.Renewals willdepend onapproval byour creditdepartment and
balance sheetcomposition at thetime ofthe analysis,as wellas anymodification of termsat theloan’s maturity. Additionally,
maturityconcentrations,loanduration,prepaymentspeedsandotherinterestratesensitivitymeasuresarediscussed,
reviewed, and analyzed by the ALCO. Decisions on term/rate modifications are discussed as well.
As ofMarch 31, 2026,approximately 63.1%of theloan portfoliohas adjustable/variablerates and36.9% ofthe loan
portfoliohasfixedrates.Theadjustable/variablerateloansre-pricetodifferentbenchmarksandtenorsandindifferent
periods of time. By contractual characteristics, there are nomaterial concentrations on anniversary repricing.
39USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
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. Internal creditrisk grades are reviewedat least once ayear, andmore frequently asneeded. Internal credit
risk ratingsmay changebased onmanagement’sassessment ofthe resultsfrom theannual review,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.
Loan credit exposures by internally assigned grades areas follows for the dates indicated (in thousands):
March 31, 2026
Pass
Special Mention
Substandard
Doubtful
Total
Residential real estate
$
343,468
$
488
$
2,961
$
-
$
346,917
Commercial real estate
1,241,104
16,153
2,385
-
1,259,642
Commercial and industrial
289,041
805
1,487
-
291,333
Correspondent banks
128,722
-
-
-
128,722
Consumer and other
207,794
-
-
-
207,794
$
2,210,129
$
17,446
$
6,833
$
-
$
2,234,408
December 31, 2025
Pass
Special Mention
Substandard
Doubtful
Total
Residential real estate
$
304,276
$
916
$
2,500
$
-
$
307,692
Commercial real estate
1,230,823
11,613
2,399
-
1,244,835
Commercial and industrial
293,169
907
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
40USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Non-Performing Assets
The following table presents non-performing assets asof the dates shown (in thousands,except ratios):
March 31, 2026
December 31, 2025
Non-accrual loans
$
3,640
$
3,138
Loans past due over 90 days and still accruing
-
-
Totalnon-performing loans
$
3,640
$
3,138
Other real estate owned
-
-
Totalnon-performing assets
$
3,640
$
3,138
Asset quality ratios:
Allowance for credit losses to total loans
1.16%
1.16%
Allowance for credit losses to non-performing loans
717%
813%
Non-performing loans to total loans
0.16%
0.14%
Non-performingassetsincludeallloanscategorizedasnon-accrual,otherrealestateowned(“OREO”)andother
repossessed assets. Problem loans forwhich the collection orliquidation in full isreasonably uncertain are placed ona non-
accrual status. This determination is based on current existing facts concerning collateral values and the payingcapacity of
theborrower.Whenthecollectionofthefullcontractualbalanceisunlikely,theloanisplacedonnon-accrualtoavoid
overstating the Company’s income for a loanwith increased 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
performedduringtheannualreviewprocessorwheneverproblemssurfaceregardingtheborrower’sabilitytorepayin
accordance withthe originalterms ofthe loanor lineof credit.The concessionsare givento thedebtor invarious forms,
including interest rate reductions, principalforgiveness, extension of maturity date,waiver or deferral ofpayments and other
concessions intended to minimize potential losses.
For further discussion ofnon-performing loans andborrowers experiencing financialdifficulties, seeNote 3 “Loans” to
the unaudited Consolidated Financial Statements in Item1 of Part 1 of this Form 10-Q.
Allowance for Credit Losses
TheACLonloansrepresentsanamountthat,inmanagement'sevaluation,isadequatetoprovidecoverageforall
expected future credit losses on outstanding loans. Additionally,qualitative adjustments are made to the ACL when, based
onmanagement’sjudgment,therearefactorsimpactingtheallowanceestimatenotconsideredbythequantitative
calculations. See Note 3 “Loans” in Item 1 of Part 1 ofthis Form 10-Q for more information on the ACL.
41USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The followingtable presentsACL onloans andnet charge-offsto averageloans bytype forthe periodsindicated (in
thousands):
Residential
Real
Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended March 31, 2026
Beginning balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Provision for credit losses
(1)
(644)
456
512
3
271
598
Recoveries
6
-
4
-
-
10
Charge-offs
-
-
-
-
(6)
(6)
Ending Balance
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
Average loans
$
304,162
$
1,267,713
$
235,352
$
128,849
$
241,658
$
2,177,734
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
-
(0.01)%
-
0.01%
(0.00)%
(1) Provision for credit losses excludes a $205 thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $2 thousand release related to investment securities held to maturity.
(2) Annualized.
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended March 31, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(1)
(12)
409
(204)
163
316
672
Recoveries
6
-
5
-
-
11
Charge-offs
-
-
-
-
(13)
(13)
Ending Balance
$
5,115
$
9,197
$
4,434
$
817
$
5,177
$
24,740
Average loans
$
301,230
$
1,142,985
$
257,241
$
87,214
$
198,186
$
1,986,856
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
-
(0.01)%
-
0.03%
0.00%
(1) Provision for credit losses excludes a $10 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $1 thousand release related to investment securities held to maturity.
(2) Annualized.
42USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
TheFederalOpenMarketCommittee(“FOMC”)economicforecastsasofMarch 31,2026,showedmoderate
improvement inthe forecastfor realGDP anda slightimprovement inthe unemploymentrate. FannieMae HousePrice
Index (“HPI”) forecast reflected an improvement in nationalhousing prices. The Company continued to adjustthe HPI index
effect onthe 1-4Family loanportfolio witha qualitativefactor becauseFlorida housingprices areperforming betterthan
national levels.The Q-factorscorecard wasupdated basedon thelatest portfoliostress testand theresulting maximum
loss calculation.
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 March 31,2026, for every 100 basis points increase in the HPI, the
forecastreducesreservesbyapproximately$239thousandandabout1basispointstothereservecoverageratio,
everything else beingconstant. This sensitivityanalysis provides ahypothetical result toassess the sensitivityof the ACL
and doesnot representa changein management’sjudgement. Forcomparative purposes,in priorperiods theCompany
stress testedthe commercialreal estateloan subcategorybased on collateralcode (1stlien, commercialproperty) rather
than the non
‑
owner
‑
occupied subsegment.
As of March 31, 2026, the Company stress testedtwo qualitative factors within the non
‑
owner
‑
occupied subsegment of
thecommercialrealestateloan portfolio,asitrepresentsthelargestsegmentoftheCompany’sportfolio.Theanalysis
evaluatedtheimpactofchangingthequalitativefactorsfromnorisktomaximumlosstoassessthesensitivityofthe
allowance for credit losses (“ACL”). Thisstress resulted in a hypothetical increaseof $6.7 million, or 25.7%,in the ACL. The
sensitivity analysis is intended solely to illustrate the responsivenessof the ACL to changes in qualitative assumptions and
does not representa change inmanagement’s judgment.For comparative purposes,in prior periodsthe Company stress
tested the commercial real estate loan subcategory based on collateral code (1st lien, commercial property) rather than the
non
‑
owner
‑
occupied subsegment.
Bank-Owned Life Insurance
As of March 31, 2026, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was$59.9
million.Changesincashsurrendervaluearerecordedtoothernon-interestincomeintheunauditedConsolidated
Statements of Operations. The Company hasBOLI policies with five insurance carriers. The Company is the 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 small-to-mediumsized businesses (“SMBs”),and the personalbusiness of the
owners and operators of these SMBs, as well as the retail/consumerrelationships of the employees of these businesses.
The following tablepresents the dailyaverage balance andaverage rate paidon deposits bycategory forthe periods
presented (in thousands, except ratios):
Three Months Ended March 31,
2026
2025
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest bearing demand deposits
$
584,784
0.00%
$
563,040
0.00%
Interest-bearing demand deposits
52,099
2.41%
53,611
2.56%
Saving and money market deposits
1,256,418
2.63%
1,199,027
3.16%
Time deposits
533,766
3.57%
399,509
3.98%
Total
$
2,427,067
2.20%
$
2,215,187
2.49%
43USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
The Company has agranular deposit portfoliowith outstanding balancescomprised of 55.7% incommercial deposits,
26.9% inpersonaldeposits,8.9% inpublic funds(which arepartially collateralized)and 8.6%in brokereddeposits. The
brokered deposits balance at March 31, 2026 was $215.0million and $256.8 million at December 31, 2025.
As of March 31, 2026, the Company has approximately21 thousand deposit accounts with the majorityofwhich were
personal accounts, approximately12 thousand or 59.6%.The estimated average accountsize in our depositportfolio was
approximately $120 thousand as of March 31, 2026.
TheamountofuninsureddepositsareestimatedbasedontheFDICdepositinsurancelimitof$250thousandper
account holder for all deposit accounts at the Company.The total estimated percentage of uninsured depositswas 54% at
March 31,2026and51%atDecember 31,2025.TheCompanyoffersInsuredCashSweep(“ICS”)andCertificate
of
Deposit AccountRegistryService(“CDARS”)depositproductstofullyinsureourclients.Thedepositbalancein
ICS/CDARS was $186.5 million at March 31, 2026 and was$183.2 million at December 31, 2025.
The following table shows scheduled maturities of uninsuredtime deposits as of March 31, 2026 (in thousands):
March 31, 2026
Three months or less
$
24,318
Over three through six months
55,400
Over six through twelve months
16,536
Over twelve months
101,211
$
197,465
Other Liabilities
The Company collects from commercial and residential loan customersfunds which are held in escrow for future
payment of real estate taxes and insurance. These escrowfunds are disbursed by the Company directly to theinsurance
companies and taxing authority of the borrower.Escrow funds are recorded as accrued interest and otherliabilities in the
consolidated balance sheet.
As of March 31, 2026, escrow balances totaled $15.4million compared to $8.1 million at December 31, 2025.The
increase reflects the normal growth in escrow accountspending tax and insurance payments.
Borrowings
FHLB Advances
AsamemberoftheFHLBofAtlanta,weareeligibletoobtainadvanceswithvarioustermsandconditions.This
accessibility to additionalfunding allows usto efficiently andtimely meet bothexpected and unexpectedoutgoing cash flows
and collateral needs without adversely affectingeither daily operations or the financial condition of theCompany.
As of March 31, 2026, we had$11.0 million of fixed-rate advances and $42.0 million of daily-rate advances outstanding
withtheFHLB,withweightedaverageinterestratesof3.76%and3.88%,maturinginJanuary2028andMay2026,
respectively, as detailedin the table below.
The following table presents the FHLB advances as ofMarch 31, 2026 (in thousands):
March 31, 2026
Interest Rate
Type of Rate
Maturity Date
Amount
3.76%
Fixed
January 24, 2028
11,000
3.88%
Fixed
May 22, 2026
42,000
$
53,000
TheCompanyhasalsoestablishedFederalFundslinesofcreditwithourupstreamcorrespondentbanksandthe
FederalReserveBankofAtlantaDiscountWindowtomanagetemporaryfluctuationsinourdailycashbalances.Asof
March 31, 2026, there were no outstanding balances withany of these additional liquidity sources.
44USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Subordinated Notes
OnAugust14,2025,theCompanyenteredintoaSubordinatedNotePurchaseAgreementwithcertainqualified
institutionalbuyerspursuanttowhichtheCompanysoldandissued$40.0millioninaggregateprincipalamountofits
7.625% Fixed-to-Floating RateSubordinated Notes due 2035.The Notes were issued bythe Company to the purchasers
at a price equal to 100% of their face amount. The subordinated debt was originally issued at a cost of $760 thousand. The
subordinated debt,net ofamortizedexpenses,was $39.3million, reflectingthescheduled expenserecognitionover the
term of the instruments.The subordinated notesare presented net ofthese costs on theconsolidated balance sheet.The
NoteswereofferedandsoldbytheCompanyinaprivateplacementtransactioninrelianceonexemptionsfromthe
registration requirements of the Securities Act of1933, as amended (the “Securities Act”), pursuantto Section 4(a)(2) of the
Securities Act and Rule 506(b) of Regulation D thereunder.For additional information, see the Company Form8-K filed on
August 14, 2025.
Off-Balance Sheet Arrangements
We engagein various financialtransactions inour operationsthat, under GAAP,may not beincluded onthe balance
sheet. Tomeet the financing needs of our customers,we may include commitments to extend credit and standbyletters of
credit. Toa varyingdegree, suchcommitments involveelements ofcredit, market,and interestrate riskin excessof the
amount recognized in the consolidated balance sheets. We maintain an allowance for off-balancesheet credit risk which is
recorded underaccrued interestand otherliabilities onthe unauditedConsolidatedBalance Sheets.The ACLrelated to
unfunded commitmentsat March 31,2026 was$957thousand andat December 31,2025 was$752 thousand.The increase
was primarily driven by an increase in unfunded commitments.
Since commitments associated with letters ofcredit and commitments to extendcredit may expire unused, theamounts
showndonotnecessarilyreflectactualfuturecashfundingrequirements.Thefollowingtablepresentslendingrelated
commitments outstanding as of the dates indicated (in thousands):
March 31, 2026
December 31, 2025
Commitments to grant loans and unfunded lines of credit
$
179,642
$
161,606
Standby and commercial letters of credit
3,073
2,700
Total
$
182,715
$
164,306
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. Linesof credit generally have variable interestrates. The maximum potential amountof 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
MembersofseniormanagementandourBoardmakeuptheassetandliabilitymanagementcommittee,orALCO.
Senior managementis responsiblefor ensuringthat Boardapproved strategiesand policiesfor managingand mitigating
risks are appropriately executed within the designatedlines of authority and responsibility in a timely manner.
ALCOoverseestheestablishment,approval,implementation,andreviewofinterestraterisk,management,and
mitigation strategies, ALM related policies, ALCO proceduresand risk tolerances and appetite.
While some degree of Interest Rate Risk (“IRR”) is inherent to the banking business, we believe our ALCO implements
sound risk management practices to identify,quantify,monitor, and limit IRR exposures.
45USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
When assessing thescope of IRRexposure and impacton theconsolidated balance sheet,cash flows andconsolidated
statementofoperations,managementconsidersbothearningsandeconomicimpacts.Assetpricevariations,deposit
volatility and reducedearnings or outrightlosses could adverselyaffect the Company’sliquidity,performance, andcapital
adequacy.
Income simulations areused to assessthe impactof changing rateson earnings underdifferent interest ratesscenarios,
yield curveshapesandtimehorizons.Thesesimulationsutilizebothinstantaneousandparallelchangesinthelevel of
interest rates, as well asnon-parallel changes such aschanging slopes (flat and steepening)and twists of the yieldcurve.
Staticsimulationmodelsarebasedoncurrentexposuresandassumeaconstantbalancesheetwithnonewgrowth.
Dynamic simulationis alsoutilized tohave amore comprehensiveassessmenton IRR.This simulationrelies on,and in
assumptions regardingchanges inexisting linesof business,new business,management strategiesand clientexpected
behavior.
TohaveamorecompletepictureofIRR,theCompanyalsoevaluatestheeconomicvalueofequity(“EVE”).This
assessmentallowsustomeasurethedegreetowhichtheeconomicvalueswillchangeunderdifferentinterestrate
scenarios (parallel and non-parallel). The economic value approach focuses on a longer-term time horizon and captures all
future cash flows expectedfrom existing assets andliabilities. The economic valuemodel utilizes a staticapproach in that
the analysisdoes notincorporate newbusiness; rather,the analysisshows asnapshot intime ofthe riskinherent inthe
balance sheet.
Market and Interest Rate Risk Management
According toour ALCOmodel, Asof March31, 2026,both thestatic anddynamic ALMsimulations indicatethat the
Bank’s balance sheet remains liability
‑
sensitive in Year 1, positioning the Bank to benefit in a declining rate environment as
liabilities reprice morequickly than assets,resulting in favorableNet Interest Income(NII) outcomes. Beginningin Year2,
both models transition towardan asset
‑
sensitive posture, reflecting projectedbalance
‑
sheet growth, continued variable
‑
rate
loanproduction,andchangesinbalance
‑
sheetmixovertime.Thisprogressionisconsistentwithmanagement’s
forward
‑
looking assumptions embedded in the dynamic model.
Management’sinterestratepositioningreflectsadeliberatebalancebetweenearningsstabilityandbalancesheet
flexibility,particularlygiven theBank’s relationshipdriven depositbase andvariable ratelending profilewithin theSouth
Florida market.
Modeled NII and Economic Value of Equity (EVE) outcomes remain well within ALCO policy limits across all rate shock
scenarios. TheALM modelincorporates awide rangeof assumptions,including assetprepayment speeds,non
‑
maturity
depositbetaanddecayassumptions,pricingcorrelations,deposittruncations,andkeyinterestratedrivers.Giventhe
inherent estimation involvedin these assumptions,actual results maydiffer frommodeled outcomes, particularlyas static
measuresdonotincorporatepotentialmanagementactionsinresponsetochangesinmarketconditionsorcustomer
behavior.
EVE sensitivity remains compliant with policy guidelines, with greater volatility observed in rising
‑
rate scenarios, driven
byassetandliabilityconvexity.Inhigher
‑
rateenvironments,thevalueoflonger
‑
termassetsdeclinesmorerapidly,
particularly as loan prepayments slow, while certain funding sources reprice less immediately. Conversely,in declining
‑
rate
scenarios, faster prepayments andquicker asset repricinghelp mitigate downside EVEexposure. Importantly, EVE volatility
declined quarter over quarter, reflecting balance
‑
sheet actions taken during the period and an overallreduction in structural
interest rate risk.
The improvement in the Bank’sIRR profile was driven primarily by areduction in asset duration, while liabilityduration
remainedrelativelystable.Increasedvariable
‑
rateloanproduction,higherprepaymentactivity,andtargetedportfolio
repositioning contributed to a shorter effectiveasset duration and reduced optionality risk.
Overall,theBankremainswellpositionedtomanagecurrentinterestratevolatility,withlimitedexposureunder
rising
‑
rate scenariosand favorablepositioning ina declining
‑
rate environment.Management continuesto activelyreview
ALMresultsandretainstheflexibility,consistentwithALCOpolicy,toadjustassetandliabilitydurationthrough
balance
‑
sheet strategies as market conditions evolve. Resultsand related strategies are reviewed quarterlywith ALCO and
adjusted as appropriate.
46USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Liquidity
Liquidity is definedas a Company’scapacity to meetits cash andcollateral obligations ata reasonable cost.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.
Liquidity riskis therisk thatwe willbe unableto meetour short-termand long-termobligations asthey becomedue
because of an inabilityto liquidate assets orobtain relatively adequate funding. TheCompany’s obligations, and the funding
sourcesusedtomeetthem,dependsignificantlyonourbusinessmix,balancesheetstructureandcomposition,credit
quality of our assets and the cash flow profiles of our on-and off-balance sheet obligations.
In managinginflows andoutflows,managementregularlymonitors situationsthat cangive riseto increasedliquidity
risk. Theseinclude fundingmismatches, marketconstraints onthe abilityto convertassets (particularlyinvestments) into
cash or in accessing sources of funds (i.e., market liquidity),pledging assets and contingent liquidity events.
Changes in macroeconomic conditions, as well as exposure to credit, market, operational, legal, cybersecurity risk and
reputationalrisks,couldhaveanunexpectedimpactontheCompany’sliquidityriskprofileandarefactoredintothe
assessment of liquidity and the ALM framework.
Management has establisheda comprehensive andholistic management process foridentifying, measuring, monitoring
andmitigatingliquidityrisk.LiquiditymanagementalsoreflectstheBank’sgranularmixofconsumerandcommercial
relationships,whichmanagementbelievesenhancesfundingstabilityandmitigatesrelianceonmoreratesensitive
wholesalefundingsources.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 andALCO, andactive involvementof seniormanagement; appropriatestrategies, policies,procedures,and limits
usedtoidentifyandmitigateliquidityrisk;comprehensiveliquidityriskmeasurementandmonitoringsystems(including
assessmentsofthecurrentandprospectivecashflowsorsourcesandusesoffunds)thatarecommensuratewiththe
complexity and business activities of the Company; active management of intraday liquidity and collateral; an appropriately
diverse mixof existingand potentialfuture fundingsources; adequatelevels ofhighly liquidmarketable securitiesfree of
legal, regulatory, or operational impediments,that can beused to meetliquidity needs instressful situations; comprehensive
contingencyfundingplansthatsufficientlyaddresspotentialadverseliquidityeventsandemergencycashflow
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, 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.
AsofMarch31,2026,theCompanyhad$336millioninavailableliquidityonbalancesheet,including$261millionin
unpledged securities(excludingUnencumberedHTM securities)available touse ascollateraland$79 millionin excess
cash. The Company had anadditional $457 millionin off-balance sheet liquidity, excluding access to brokered deposits and
other off-balance sheet sources of funding.
Management believes current liquidity levels remain appropriate relativeto the Bank’s risk appetite, balance sheetsize,
and anticipated funding needs under both base case and stressedscenarios.
47USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Capital Adequacy
As ofMarch 31, 2026,the Bankwas wellcapitalizedunder theFDIC’sprompt correctiveaction framework.We also
follow the capital conservation buffer framework, and as of March 31, 2026, we exceeded the capital conversation bufferin
all capitalratios,accordingtoour actualratios.ThefollowingtablepresentsthecapitalratiosfortheBankat thedates
indicated (in thousands, except ratios).
Actual
Minimum Capital
Requirements
To be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
March 31, 2026
Totalrisk-based capital
$
309,408
13.96
%
$
177,286
8.00
%
$
221,607
10.00
%
Tier 1 risk-based capital
$
282,348
12.74
%
$
132,964
6.00
%
$
177,286
8.00
%
Common equity tier 1 capital
$
282,348
12.74
%
$
99,723
4.50
%
$
144,045
6.50
%
Leverage ratio
$
282,348
9.88
%
$
114,333
4.00
%
$
142,917
5.00
%
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
%
The Company isnot subject toregulatory capital ratiosimposed by BaselIII on bankholding companies becausethe
Company is deemed to be a small bank holding company.
Impact of Inflation
OurConsolidatedFinancialStatementsandrelatednoteshavebeenpreparedinaccordancewithU.S.GAAP,
which require the measurement of financialposition and operating results in termsof historical dollars, without considering
the changes in the relative purchasing power of money overtime due to inflation. The impact of inflation is mostly reflected
in the increased cost of operations; inflation can negatively impact overhead expenses and other variableexpenses. Unlike
most industrialcompanies,nearly allourassetsand liabilitiesare monetaryin nature.As aresult,interestrateshave a
greater impact on our performance than the effects of inflation. Periods of high inflation are often accompanied by relatively
higher interest rates, andperiods of low inflationare accompanied by relativelylower interest rates. Inflationaryconditions
may also influence customerdeposit behavior,loan demand, and pricingdynamics, which managementconsiders as part
of its ongoing balance
‑
sheet and earnings planning processes.
48USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Reconciliation and Management Explanation of Non-GAAP Financial Measures
Managementhasincludedthesenon-GAAPmeasuresbecauseitbelievesthesemeasuresmayprovideuseful
supplemental informationfor evaluatingthe Company’sunderlying performancetrends. Further,management usesthese
measuresinmanagingandevaluatingtheCompany’sbusinessandintendstorefertothemindiscussionsaboutour
operations and performance.Operating performancemeasures should beviewed in additionto, and notas an alternative
to orsubstitutefor,measuresdeterminedinaccordancewithGAAP,andarenotnecessarilycomparableto non-GAAP
measures that may be presented by othercompanies. The following table reconciles the non-GAAP financial measurement
of operating net income available tocommon shareholders for the periods presented (in thousands,except per share data):
USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands)
As of or For the Three Months Ended
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
9,351
$
1,363
$
8,939
$
8,140
$
7,658
Plus: Income tax expense
2,335
1,911
2,866
2,599
2,440
Plus: Provision for credit losses
801
480
105
1,031
681
PTPP income
$
12,487
$
3,754
$
11,910
$
11,770
$
10,779
PTPP return on average assets:
(1)
PTPP income
$
12,487
$
3,754
$
11,910
$
11,770
$
10,779
Average assets
$
2,834,717
$
2,799,863
$
2,798,115
$
2,677,198
$
2,606,593
PTPP return on average assets
(2)
1.79%
0.53%
1.69%
1.76%
1.68%
Operating net income:
(1)
Net income
$
9,351
$
1,363
$
8,939
$
8,140
$
7,658
Less: Net gains (losses) on sale of securities
14
(7,498)
(28)
-
-
Less: Tax effect on sale of securities
(4)
1,900
7
-
-
Plus: Tax (benefit) liability expense from prior periods
(619)
(3)
1,096
(4)
-
-
-
Operating net income
$
8,722
$
8,057
$
8,960
$
8,140
$
7,658
Operating return on average assets:
(1)
Operating net income
$
8,722
$
8,057
$
8,960
$
8,140
$
7,658
Average assets
$
2,834,717
$
2,799,863
$
2,798,115
$
2,677,198
$
2,606,593
Operating return on average assets
(2)
1.25%
1.14%
1.27%
1.22%
1.19%
Operating return on average equity:
(1)
Operating net income
$
8,722
$
8,057
$
8,960
$
8,140
$
7,658
Average equity
$
222,226
$
212,393
$
225,316
$
228,492
$
219,505
Operating return on average equity
(2)
15.92%
15.05%
15.78%
14.29%
14.15%
Operating Revenue:
(1)
Net interest income
$
22,048
$
22,207
$
21,274
$
21,034
$
19,115
Plus: Non-interest income
4,150
(4,178)
3,684
3,370
3,716
Less: Net gains (losses) on sale ofsecurities
14
(7,498)
(28)
-
-
Operating revenue
$
26,184
$
25,527
$
24,986
$
24,404
$
22,831
Operating Efficiency Ratio:
(1)
Total non-interest expense
$
13,711
$
14,275
$
13,048
$
12,634
$
12,052
Operating revenue
$
26,184
$
25,527
$
24,986
$
24,404
$
22,831
Operating efficiency ratio
52.36%
55.92%
52.22%
51.77%
52.79%
(1)The Company believes these non-GAAP measurements arekey indicators of the ongoing earnings powerof the Company.
(2)Annualized.
(3) The Company recognized a $619 thousandincome tax benefit in first quarter of 2026 dueto an adjustment to the deferred tax asset calculationfrom
2025.
(4) State tax liability expenses for 2024 and forthe first three quarters of 2025 were recognizedduring the fourth quarter of 2025. The statetax expense
is related to taxes due on interest income onloans whose collateral are located outside ofthe State of Florida.
49USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands, except per share data)
As of or For the Three Months Ended
3/31/2026
12/31/2025
9/30/2025
6/30/2025
3/31/2025
Tangible book value per common share (at period-end):
(1)
Total stockholders' equity
$
223,246
$
217,183
$
209,095
$
231,583
$
225,088
Less: Intangible assets
-
-
-
-
-
Tangible stockholders' equity
(2)
$
223,246
$
217,183
$
209,095
$
231,583
$
225,088
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
18,257,400
18,137,885
18,107,385
20,078,385
20,048,385
Tangible book value per common share
(3)
$
12.23
$
11.97
$
11.55
$
11.53
$
11.23
Operating diluted net income per common share:
(1)
Operating net income
$
8,722
$
8,057
$
8,960
$
8,140
$
7,658
Total weighted average diluted shares of common stock
18,454,006
18,348,725
19,755,820
20,295,794
20,319,535
Operating diluted net income per common share:
$
0.47
$
0.44
$
0.45
$
0.40
$
0.38
Tangible Common Equity/Tangible Assets
(1)
Tangible stockholders' equity
$
223,246
$
217,183
$
209,095
$
231,583
$
225,088
Tangible total assets
(2)
$
2,845,735
$
2,791,540
$
2,767,945
$
2,719,474
$
2,677,382
Tangible Common Equity/TangibleAssets
7.84%
7.78%
7.55%
8.52%
8.41%
(1)The Company believes these non-GAAP measurements arekey indicators of the ongoing earnings powerof the Company.
(2)Since the Company has no intangible assets,tangible stockholders’ equity and tangible totalassets are the same amounts as stockholders’ equity
and total assets, respectively, as calculated under GAAP.
(3)Excludes the dilutive effect, if any, of shares of common stock issuable upon exerciseof outstanding stock options.
50USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Item 3.Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company,we are not required to provide the information requiredby this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under thesupervision and withthe participation ofour management, includingour President andChief Executive Officer
and ourChief FinancialOfficer,we evaluatedthe effectivenessof thedesign andoperation ofthe Company’sdisclosure
controlsandprocedures(asdefinedinRules13a-15(e)and15d-15(e)undertheSecuritiesExchangeActof1934
(“Exchange Act”)) asof March 31, 2026.Based on thatevaluation, management believesthat, as of theend of the period
coveredbythisForm10-Q,theCompany'sdisclosurecontrolsandprocedureswereeffectivetocollect,process,and
disclose the information requiredto be disclosed inthe reports filed orsubmitted under the ExchangeAct within therequired
time periods.
Changes in Internal Control Over Financial Reporting
There has beenno change inour internal controlover financial reporting(as defined inRules 13a-15(f) and15d-15(f)
under the Exchange Act) during the period covered by this Form 10-Q that hasmaterially affected, or is reasonably likely to
materially affect, our internal control over financialreporting.
Limitations on Effectiveness of Controls and Procedures
Indesigningandevaluatingthedisclosurecontrolsandprocedures,managementrecognizesthatanycontrolsand
procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving
the desired control objectives.In addition, the designof disclosure controls andprocedures must reflect thefact that there
are resource constraints and that management is required to applyjudgment in evaluating the benefits of possible controls
and procedures relative to their costs.
51USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
PART II
Item 1.Legal Proceedings
We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation
arisingintheordinarycourseofbusiness.Theseclaimsandlitigationmayinclude,amongotherthings,allegationsof
violation of banking and other applicable regulations, competitionlaw, labor laws and consumerprotection laws, as well as
claims orlitigationrelatingto intellectualproperty,securities, breachof contractand tort.Weintend todefend ourselves
vigorously against any pending or future claims and litigation.
There can be noassurance that anyfuture legal proceedingsto which we area party will notbe decided adverselyto
our interests and have a material adverse effecton our financial condition and operations.
Item 1A. Risk Factors
For detailed information about certain risk factors that could materially affect our business, financialcondition, or future
results, see “Part I, Item 1A – Risk Factors” of the 2025 Form10-K.There have been no material changes t this riskfactors
disclosed in the 2025 Form 10-K.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) Not applicable.
(c) The Company’s repurchases of equity securitiesfor the three months ended March 31, 2026 were asfollows:
Total
Number of
Shares
Purchased
Average
Price Paid
Per Share
Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs (1)
Maximum Number
of Shares that
May
Yet Be Purchased
Under Plans or
Programs (1)
Period
January 1 - 31, 2026
30,889
$
19.17
30,889
497,420
February 1 - 28, 2026
-
$
-
-
497,420
March 1 - 31, 2026
22,586
$
18.12
22,586
474,834
Total
53,475
$
18.73
53,475
(1) As of March 31, 2026 there were 474,834number of shares available for repurchase underthe outstanding share repurchase program:
- On January 24, 2022, the Company announcedits initial stock repurchase program to repurchaseup to 750,000 shares of Class A commonstock.
The Company completed the repurchase of allremaining shares authorized under this programduring the quarter ended March 31, 2026.
- On April 22, 2024, the Company announced theadoption of a second repurchase program to repurchaseup to 500,000 shares of Class A common
stock to commence upon completion of its firstrepurchase program.
Item 3.Defaults Upon Senior Securities
(a)
Not applicable
(b)
Not applicable
Item 4.Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)
Not applicable
(b)
Not applicable
52USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
(c)
During the three months endedMarch 31, 2026, none of theCompany’s directors orSection 16 reporting persons
adopted
or
terminated
anyRule10b5-1tradingarrangementor
non-Rule
10b5-1
tradingarrangement(assuch
terms are defined in Item 408 of the SEC’s RegulationS-K).
53USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
Item 6. Exhibits
Exhibit No.
Description of Exhibit
Form 8-K (File No. 001-41196) filed with the Securities and Exchange Commission on August 14, 2025).
Form 8-K (File No. 001-41196) filed with the Securities and Exchange Commission on August 14, 2025).
**
**
***
***
101
The followingfinancial statementsfrom theCompany’s QuarterlyReport onForm 10-Qfor thequarter endedMarch 31,
2026 formattedin InlineXBRL: (i)Consolidated BalanceSheets (unaudited),(ii) ConsolidatedStatements ofOperations
(unaudited), (iii) ConsolidatedStatementsof ComprehensiveIncome (unaudited), (iv)Consolidated Statementsof Changes
in Stockholders’Equity (unaudited),(v) ConsolidatedStatements ofCash Flows(unaudited), (vi)Notes toConsolidated
Financial Statements (unaudited).
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
**
Management Contract or Compensatory plan or arrangement.
Filed herewith.
***
Furnished hereby.
54USCB Financial Holdings, Inc.Q1 2026 Form 10-Q
SIGNATURES
Pursuant to therequirements ofthe Securities ExchangeAct of 1934,the registrant hasduly caused thisreport to be
signed on its behalf by the undersigned thereunto duly authorized.
USCB FINANCIAL HOLDINGS, INC.
(Registrant)
Signature
Title
Date
/s/ Luis de la Aguilera
Chairman, President and Chief Executive
Officer
May 8, 2026
Luis de la Aguilera
(Principal Executive Officer)
/s/ Robert Anderson
Executive Vice President and Chief Financial
Officer
May 8, 2026
Robert Anderson
(Principal Financial Officer and Principal
Accounting Officer)