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
June 30, 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 July 31, 2026, the registrant had
18,474,470
shares of Class
A
common stock outstanding.
FORM 10-Q
June 30, 2026
TABLE OF CONTENTS
3USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
PARTI
Item 1.Financial Statements
USCB FINANCIAL HOLDINGS, INC
Consolidated Balance Sheets – Unaudited
(Dollars in thousands, except share data)
June 30, 2026
December 31, 2025
ASSETS:
Cash and due from banks
$
7,892
$
6,027
Interest-bearing deposits in banks
110,262
32,450
Total cash and cash equivalents
118,154
38,477
Investment securities held to maturity, net of allowance of $
0
and $
2
, respectively (fair value of
$
124,177
and $
142,508
, respectively)
136,127
153,941
Investment securities available for sale, at fair value
332,859
307,490
Federal Home Loan Bank stock, at cost
13,395
9,323
Loans held for investment, net of allowance of$
26,701
and $
25,500
, respectively
2,295,684
2,163,757
Accrued interest receivable
11,670
11,661
Premises and equipment, net
4,664
4,247
Bank owned life insurance
60,427
59,424
Deferred tax assets, net
17,512
18,046
Lease right-of-use asset
12,625
5,519
Other assets
16,584
19,655
Total assets
$
3,019,701
$
2,791,540
LIABILITIES:
Deposits:
Non-interest bearing demand deposits
$
618,062
$
583,860
Savings and money market deposits
1,251,598
1,186,422
Interest-bearing demand deposits
49,721
46,989
Time deposits
532,890
527,809
Total deposits
2,452,271
2,345,080
Federal Home Loan Bank advances
240,900
158,250
Subordinated notes, net
39,376
39,300
Lease liability
12,625
5,519
Accrued interest and other liabilities
41,291
26,208
Total liabilities
2,786,463
2,574,357
Commitments and contingencies (See Notes 6and 11)
(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 June 30, 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 June 30, 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 June 30, 2026and December 31, 2025
-
-
Common stock - Class A Voting; $
1.00
par value;
45,000,000
shares authorized;
18,459,470
issued and
outstanding as of June 30, 2026,
18,137,885
issued and outstanding as of December 31,2025
18,459
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 June 30, 2026 and December31, 2025
-
-
Additional paid-in capital on common stock
281,864
278,852
Accumulated deficit
(35,690)
(49,542)
Accumulated other comprehensive loss
(31,395)
(30,265)
Total stockholders' equity
233,238
217,183
Total liabilities and stockholders' equity
$
3,019,701
$
2,791,540
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
4USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Unaudited
(Dollars in thousands,except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Interest income:
Loans, including fees
$
34,899
$
31,946
$
67,688
$
62,191
Investment securities
3,858
3,432
7,269
6,456
Interest-bearing deposits in financial institutions
823
776
1,655
1,485
Total interest income
39,580
36,154
76,612
70,132
Interest expense:
Interest-bearing demand deposits
311
285
621
623
Savings and money market deposits
8,478
9,410
16,611
18,745
Time deposits
4,628
4,343
9,328
8,261
Federal Home Loan Bank advances
976
1,082
2,016
2,354
Subordinated notes
800
-
1,601
-
Total interest expense
15,193
15,120
30,177
29,983
Net interest income before provision forcredit losses
24,387
21,034
46,435
40,149
Provision for credit losses
1,267
1,031
2,068
1,712
Net interest income after provision forcredit losses
23,120
20,003
44,367
38,437
Non-interest income:
Service fees
2,601
2,402
5,701
4,733
Gain on sale of securities available for sale, net
-
-
14
-
Gain on sale of loans held for sale, net
-
151
106
676
Other non-interest income
959
817
1,889
1,677
Total non-interest income
3,560
3,370
7,710
7,086
Non-interest expense:
Salaries and employee benefits
8,537
7,954
17,107
15,590
Occupancy
1,369
1,337
2,685
2,621
Regulatory assessments and fees
397
396
881
817
Consulting and legal fees
583
263
1,144
456
Network and information technology services
524
564
1,084
1,069
Other operating expense
2,556
2,120
4,776
4,133
Total non-interest expense
13,966
12,634
27,677
24,686
Income before income tax expense
12,714
10,739
24,400
20,837
Income tax expense
3,636
2,599
5,971
5,039
Net income
$
9,078
$
8,140
$
18,429
$
15,798
Per share information:
Earnings per share, basic
$
0.49
$
0.41
$
1.01
$
0.79
Earnings per share, diluted
$
0.49
$
0.40
$
1.00
$
0.78
Cash dividends declared
$
0.125
$
0.10
$
0.250
$
0.20
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
5USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Comprehensive Income- Unaudited
(Dollars in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Net income
$
9,078
$
8,140
$
18,429
$
15,798
Other comprehensive (loss) income:
Unrealized gain (loss) on investment securities availablefor sale
286
(895)
(1,922)
3,778
Reclassification adjustment for amortization of netunrealized losses
on securities transferred from available-for-sale to held-to-maturity
99
67
167
134
Reclassification adjustment for realized gains includedin net income
-
-
(14)
-
Unrealized gain (loss) on cash flow hedge
14
(28)
111
(186)
Tax effect
(444)
217
528
(944)
Total other comprehensive (loss) income, net of tax
(45)
(639)
(1,130)
2,782
Total comprehensive income
$
9,033
$
7,501
$
17,299
$
18,580
The accompanying notes are an integral part ofthese unaudited consolidated financial statements.
6USCB Financial Holdings, Inc.Q2 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 March 31, 2026
18,257,400
$
18,257
$
278,812
$
(42,473)
$
(31,350)
$
223,246
Net income
-
-
-
9,078
-
9,078
Other comprehensive loss
-
-
-
-
(45)
(45)
Exercise of stock options
202,070
202
2,178
-
-
2,380
Dividend payment
-
-
-
(2,295)
-
(2,295)
Stock-based compensation
-
-
874
-
-
874
Balance at June 30, 2026
18,459,470
$
18,459
$
281,864
$
(35,690)
$
(31,395)
$
233,238
Balance at March 31, 2025
20,048,385
$
20,048
$
308,313
$
(62,160)
$
(41,113)
$
225,088
Net income
-
-
-
8,140
-
8,140
Other comprehensive loss
-
-
-
-
(639)
(639)
Exercise of stock options
30,000
30
195
-
-
225
Dividend payment
-
-
-
(2,005)
-
(2,005)
Stock-based compensation
-
-
774
-
-
774
Balance at June 30, 2025
20,078,385
$
20,078
$
309,282
$
(56,025)
$
(41,752)
$
231,583
The accompanying notes are an integralpart of these consolidated financial statements.
7USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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
-
-
-
18,429
-
18,429
Other comprehensive loss
-
-
-
-
(1,130)
(1,130)
Repurchase of Class A common stock
(53,475)
(53)
(948)
-
-
(1,001)
Restricted stock issued
147,490
147
(147)
-
-
-
Exercise of stock options
227,570
227
2,344
-
-
2,571
Dividend payment
-
-
-
(4,577)
-
(4,577)
Stock-based compensation
-
-
1,763
-
-
1,763
Balance at June 30, 2026
18,459,470
$
18,459
$
281,864
$
(35,690)
$
(31,395)
$
233,238
Balance at December 31, 2024
19,924,632
$
19,925
$
307,810
$
(67,813)
$
(44,534)
$
215,388
Net income
-
-
-
15,798
-
15,798
Other comprehensive income
-
-
-
-
2,782
2,782
Repurchase of Class A common stock
(9,671)
(10)
(164)
-
-
(174)
Restricted stock issued
124,424
124
(124)
-
-
-
Exercise of stock options
39,000
39
278
-
-
317
Dividend payment
-
-
-
(4,010)
-
(4,010)
Stock-based compensation
-
-
1,482
-
-
1,482
Balance at June 30, 2025
20,078,385
$
20,078
$
309,282
$
(56,025)
$
(41,752)
$
231,583
The accompanying notes are an integralpart of these consolidated financial statements.
8USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
USCB FINANCIAL HOLDINGS, INC.
Consolidated Statements of Cash Flows - Unaudited
(Dollars in thousands)
Six Months Ended June 30,
2026
2025
Cash flows from operating activities:
Net income
$
18,429
$
15,798
Adjustments to reconcile net incometo net cash provided by operating activities:
Provision for credit losses
2,068
1,712
Depreciation and amortization
345
298
Accretion of premiums on investment securities,net
(784)
(728)
Amortization of deferred loan fees, net
314
280
Stock-based compensation
1,763
1,482
Gain on sale of available for sale securities,net
(14)
-
Gain on sale of loans held for sale, net
(106)
(676)
Proceeds from the sale of loans held for sale
1,329
9,745
Origination of loans held for sale
(1,223)
(9,069)
Increase in cash surrender value of bank ownedlife insurance
(1,003)
(955)
Amortization of subordinated debt issuancecosts
76
-
Deferred income tax expense
1,168
5,039
Net change in operating assets and liabilities:
Accrued interest receivable
(9)
(340)
Other assets
3,075
(6,585)
Accrued interest and other liabilities
14,498
16,667
Net cash provided by operating activities
39,926
32,668
Cash flows from investing activities:
Proceeds from maturities and pay-downs of investmentsecurities held to maturity
17,950
6,044
Purchase of investment securities availablefor sale
(75,083)
(31,676)
Proceeds from maturities and pay-downs of investmentsecurities available for sale
11,428
11,063
Proceeds from sales of investment securitiesavailable for sale
37,181
-
Net increase in loans held for investment
(89,635)
(71,439)
Purchase of loans held for investment
(44,090)
(70,015)
Additions to premises and equipment
(762)
(94)
Purchase of bank owned life insurance
-
(4,000)
Proceeds from the redemption of FederalHome Loan Bank stock
16,167
8,170
Purchase of Federal Home Loan Bank stock
(20,239)
(5,727)
Net cash used in investment activities
(147,083)
(157,674)
Cash flows from financing activities:
Proceeds from issuance of Class A commonstock, net
2,571
317
Cash dividends paid
(4,577)
(4,010)
Repurchase of Class A common stock
(1,001)
(174)
Net increase in deposits
107,191
161,657
Proceeds from FHLB advances
448,500
117,000
Repayments on Federal Home Loan Bank advances
(365,850)
(172,000)
Net cash provided by financing activities
186,834
102,790
Net increase (decrease) in cash andcash equivalents
79,677
(22,216)
Cash and cash equivalents at beginningof period
38,477
77,035
Cash and cash equivalents at end of period
$
118,154
$
54,819
Supplemental disclosure of cash flowinformation:
Interest paid
$
28,968
$
29,167
Taxes paid
$
532
$
-
Lease liabilities
$
7,106
$
-
The accompanying notes are an integralpart of these unaudited consolidated financialstatements.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
9USCB Financial Holdings, Inc.Q2 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
10USCB Financial Holdings, Inc.Q2 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):
June 30, 2026
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
11,883
$
-
$
(1,028)
$
10,855
Collateralized mortgage obligations
84,406
-
(17,307)
67,099
Mortgage-backed securities - residential
34,909
108
(6,026)
28,991
Mortgage-backed securities - commercial
215,345
171
(8,517)
206,999
Municipal securities
5,191
-
(966)
4,225
Bank subordinated debt securities
14,578
226
(114)
14,690
$
366,312
$
505
$
(33,958)
$
332,859
June 30, 2026
Held-to-maturity:
Amortized
Cost
Unrecognized
Gains
Unrecognized
Losses
Fair Value
U.S. Government Agency
$
37,328
$
67
$
(3,266)
$
34,129
Collateralized mortgage obligations
48,762
705
(5,646)
43,821
Mortgage-backed securities - residential
35,188
628
(3,294)
32,522
Mortgage-backed securities - commercial
14,849
-
(1,144)
13,705
$
136,127
$
1,400
$
(13,350)
$
124,177
Allowance for credit losses - securities held-to-maturity
-
Securities held-to maturity, net of allowance for credit losses
$
136,127
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
other comprehensiveloss (“AOCL”) andin the carryingvalue of theHTM securitiesand there isno impact tonet income.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
11USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Such amountsare amortizedover theremaining lifeof the security.The Companymade
two
transfers fromAFS toHTM
portfolios in 2022.
During the quarter endedJune 30, 2026, there were
no
investment securities thatwere transferred from AFSto HTM.
For thethree months endedJune 30, 2026, totalamortization out ofAOCL for netunrealized losses onsecurities transferred
in 2022from AFSto HTMwas $
99
thousand and$
67
thousand forthe threemonths endedJune 30, 2025.At June 30,
2026, the fair valueof the transferred securitieswas $
83.4
million and the balanceof the remaining unamortizedloss was
$
8.8
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 least a quarterly basis.As of June 30, 2026 and December31, 2025, all HTM securities held by the
Company were rated investment grade.
AtJune30,2026,theCompany'sHTMsecuritiesportfolioconsistedentirelyofU.S.governmentandU.S.agency-
issuedbondsandmortgage-backedsecuritieswithanamortizedcostof$
136.1
million.Duetotheexplicitorimplicit
guarantees associated with these securities,management determined that no ACL wasrequired as of June 30, 2026. The
Company utilizes aPD/LGD methodology toestimate expected creditlosses forHTM securities exposedto non-government
credit risk. Asof December 31,2025, the ACLfor HTM securitieswas $
2
thousand. The carryingvalue of HTMsecurities
represents amortized cost less the related ACL.
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 ofJune 30, 2026 and as of December 31, 2025.
Information pertainingto investmentsecurities withgross unrealizedlosses, aggregatedby investmentcategoryand
length oftime thatthoseindividual securitieshave beenin acontinuousloss position,are presentedas ofthe following
dates (in thousands):
June 30, 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
$
5,072
$
(129)
$
5,783
$
(899)
$
10,855
$
(1,028)
Collateralized mortgage obligations
3,760
(129)
63,339
(17,178)
67,099
(17,307)
Mortgage-backed securities - residential
-
-
21,886
(6,026)
21,886
(6,026)
Mortgage-backed securities - commercial
114,454
(1,368)
60,238
(7,149)
174,692
(8,517)
Municipal securities
-
-
4,225
(966)
4,225
(966)
Bank subordinated debt securities
1,731
(19)
6,396
(95)
8,127
(114)
$
125,017
$
(1,645)
$
161,867
$
(32,313)
$
286,884
$
(33,958)
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
12USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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. TheCompany doesnot intend tosell the investmentsbefore recoveryof its amortizedcost basis,which may
be at maturity,and it is more likely than not that the Company will notbe required to sell the securities before maturity.
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 and six monthsended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
Available-for-sale:
2026
2025
2026
2025
Proceeds from sale and call of securities
$
-
$
-
$
37,181
$
-
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
June 30, 2026:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Due within one year
$
-
$
-
$
-
$
-
Due after one year through five years
2,000
1,990
-
-
Due after five years through ten years
17,769
16,925
-
-
Due after ten years
-
-
-
-
U.S. Government Agency
11,883
10,855
37,328
34,129
Collateralized mortgage obligations
84,406
67,099
48,762
43,821
Mortgage-backed securities - residential
34,909
28,991
35,188
32,522
Mortgage-backed securities - commercial
215,345
206,999
14,849
13,705
$
366,312
$
332,859
$
136,127
$
124,177
At June 30, 2026, therewere no securitiesheld in theportfolio from anyone issuer inan amount greaterthan 10% of
totalstockholders’equityotherthantheU.S.GovernmentandU.S.GovernmentAgencyissuedsecurities.Allthe
collateralized mortgage obligations and mortgage-backed securities at June 30, 2026 and December 31, 2025 were issued
by U.S. Government entities.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
13USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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 the State of Florida at a ratio of
25
% of the quarter daily average balance for quarters ended June 30,
2026 andDecember 31, 2025.The Bankmust alsomaintain aminimum amountof pledgedsecurities tobe in thepublic
funds program.
As of June 30, 2026, the Bankhad a total of $
223.6
million in deposits under thepublic funds program and pledged to
the State of Florida for these public funds were
twenty-three
bonds with an aggregate fair value of $
56.3
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.
3.LOANS
The following table is a summary of the distribution of loansheld for investment by type (dollars in thousands):
June 30, 2026
December 31, 2025
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
356,747
15.4
%
$
307,692
14.1
%
Commercial real estate
1,314,367
56.6
%
1,244,835
57.0
%
Commercial and industrial
300,265
13.0
%
295,548
13.5
%
Correspondent banks
137,912
6.0
%
127,968
5.9
%
Consumer and other
207,404
9.0
%
207,215
9.5
%
Totalgross loans
2,316,695
100.0
%
2,183,258
100.0
%
Plus: Deferred fees/costs
5,690
5,999
Totalloans net of deferred fees/costs
2,322,385
2,189,257
Less: Allowance for credit losses
26,701
25,500
Totalnet loans
$
2,295,684
$
2,163,757
AtJune 30,2026andDecember 31,2025,theCompanyhad$
660.1
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
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
14USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
•
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
Changes in the ACL for the three and six months ended June30, 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 June 30, 2026
Beginning balance
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
Provision for credit losses
(1)
222
184
407
76
(2)
887
Recoveries
8
-
1
-
-
9
Charge-offs
(296)
-
-
-
(1)
(297)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Six Months Ended June 30, 2026
Beginning balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Provision for credit losses
(2)
(422)
640
919
79
269
1,485
Recoveries
14
-
5
-
-
19
Charge-offs
(296)
-
-
-
(7)
(303)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
(1) Provision for credit losses excludes a $
380
thousand provision due to unfunded commitments included in accrued interest and
other liabilities.
(2) Provision for credit losses excludes a $
585
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 June 30, 2025
Beginning balance
$
5,115
$
9,197
$
4,434
$
817
$
5,177
$
24,740
Provision for credit losses
(1)
356
294
73
57
115
895
Recoveries
6
-
1
-
1
8
Charge-offs
-
-
-
-
(710)
(710)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
Six Months Ended June 30, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(2)
344
703
(131)
220
431
1,567
Recoveries
12
-
6
-
1
19
Charge-offs
-
-
-
-
(723)
(723)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
(1) Provision for credit losses excludes a $
134
thousand provision due to unfunded commitments included in accrued interest and
other liabilities and a $
2
thousand provision related to investment securities held to maturity.
(2) Provision for credit losses excludes a $
144
thousand provision due to unfunded commitments included in accrued interest and
other liabilities a $
1
thousand provision related to investment securities held to maturity.
At June30, 2026,theACLfor loanswas$
26.7
million,comparedto $
25.5
millionat December31,2025.The $
1.2
millionincreasewasprimarilydrivenbygrowthintheloanportfolio,partiallyoffsetbyreductionsinqualitativefactor
adjustmentsresultingfromimprovedcreditqualitytrendsidentifiedthroughloanqualityreviews,particularlywithinthe
commercial real estate ("CRE") and commercial and industrial("C&I") portfolios.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
15USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Chargeoffsrelated toloansfor thethreemonthsended June30,2026 were$
297
thousand,of which$
1
thousand
related to loans originatedin 2026 and $
296
thousand related toloans originated in2025. Charge offsrelated to loansfor
the sixmonths endedJune 30, 2026were $
303
thousand, ofwhich $
7
thousand relatedto loansoriginated in2026 and
$
296
thousand related to loans originated in 2025.
Charge offs for the three months ended June 30, 2025 totaled $
710
thousand, of which $
709
thousand related to loans
originatedin2022and$
1
thousandrelatedtoloansoriginatedin2025.Chargeoffsrelatedtoloansfor thesixmonths
ended June 30, 2025 totaled $
723
thousand, of which $
709
thousand related to loans originated in 2022 and $
14
thousand
related to loans originated in 2025.
The ACLand theoutstanding balancesin thespecified loancategories asof June 30,2026 andDecember 31, 2025
are as follows (in thousands):
Residential
Real Estate
Commercial
Real Estate
Commercial
and Industrial
Correspondent
Banks
Consumer
and Other
Total
June 30, 2026:
Allowance for credit losses:
Individually evaluated
$
87
$
-
$
13
$
-
$
-
$
100
Collectively evaluated
5,117
10,116
5,725
1,094
4,549
26,601
Balances, end of period
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Loans:
Individually evaluated
$
4,550
$
-
$
1,218
$
-
$
-
$
5,768
Collectively evaluated
352,197
1,314,367
299,047
137,912
207,404
2,310,927
Balances, end of period
$
356,747
$
1,314,367
$
300,265
$
137,912
$
207,404
$
2,316,695
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.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
16USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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 arepresented below for the periods indicated (in thousands):
As of June 30, 2026
Term Loans by Origination Year
Revolving
Loans
Total
2026
2025
2024
2023
2022
Prior
Residential real estate
Pass
$
77,731
$
63,118
$
78,207
$
30,802
$
21,915
$
66,205
$
15,891
$
353,869
Special Mention
-
518
452
-
-
400
-
1,370
Substandard
-
415
989
-
-
104
-
1,508
Total
77,731
64,051
79,648
30,802
21,915
66,709
15,891
356,747
Commercial real estate
Pass
209,748
226,699
161,919
97,731
257,817
341,269
5,961
1,301,144
Special Mention
-
-
-
8,405
-
3,115
-
11,520
Substandard
-
-
-
-
-
1,703
-
1,703
Total
209,748
226,699
161,919
106,136
257,817
346,087
5,961
1,314,367
Commercial and
industrial
Pass
23,226
72,197
60,469
52,128
30,676
38,088
21,297
298,081
Special Mention
-
-
-
-
-
773
-
773
Substandard
-
-
72
356
-
983
-
1,411
Total
23,226
72,197
60,541
52,484
30,676
39,844
21,297
300,265
Correspondent banks
Pass
130,852
7,060
-
-
-
-
-
137,912
Total
130,852
7,060
-
-
-
-
-
137,912
Consumer and other
Pass
9,177
55,213
33,778
35,453
50,070
20,337
3,376
207,404
Total
9,177
55,213
33,778
35,453
50,070
20,337
3,376
207,404
TotalLoans
Pass
450,734
424,287
334,373
216,114
360,478
465,899
46,525
2,298,410
Special Mention
-
518
452
8,405
-
4,288
-
13,663
Substandard
-
415
1,061
356
-
2,790
-
4,622
Doubtful
-
-
-
-
-
-
-
-
Total
$
450,734
$
425,220
$
335,886
$
224,875
$
360,478
$
472,977
$
46,525
$
2,316,695
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
17USCB Financial Holdings, Inc.Q2 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
Doubtful
-
-
-
-
-
-
-
-
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.Q2 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.
Thefollowingtablesincludeanaginganalysisofaccruingloansandtotalnon-accruingloansasofJune 30,2026and
December 31, 2025 (in thousands):
Accruing
As of June 30, 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
$
2,876
$
-
$
-
$
2,876
$
-
$
2,876
1-4 family residential
271,352
1,228
-
272,580
1,284
273,864
Condo residential
79,783
-
-
79,783
224
80,007
354,011
1,228
-
355,239
1,508
356,747
Commercial real estate:
Land and construction
53,073
-
-
53,073
-
53,073
Multi-family residential
324,711
-
-
324,711
-
324,711
Condo commercial
68,666
-
-
68,666
-
68,666
Commercial property
867,917
-
-
867,917
-
867,917
1,314,367
-
-
1,314,367
-
1,314,367
Commercial and industrial:
Secured
280,212
-
-
280,212
640
280,852
Unsecured
19,413
-
-
19,413
-
19,413
299,625
-
-
299,625
640
300,265
Correspondent banks
137,912
-
-
137,912
-
137,912
Consumer and other
207,404
-
-
207,404
-
207,404
Total
$
2,313,319
$
1,228
$
-
$
2,314,547
$
2,148
$
2,316,695
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
19USCB Financial Holdings, Inc.Q2 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 followingtableincludesthe amortizedcostbasisof loansonnon-accrualstatusas ofJune 30,2026andas of
December 31, 2025 (in thousands):
June 30, 2026
Non-accrual
Loans With No
Related Allowance
Non-accrual
Loans With
Related Allowance
Total Non-
accruals
Residential real estate
$
1,444
$
64
$
1,508
Commercial and industrial
640
-
640
Total
$
2,084
$
64
$
2,148
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
attributabletonon-accrualloansoutstandingduringthethreeandsixmonthsendedJune 30,2026and2025.Interest
income on these loans for the three months ended June 30, 2026 and 2025, would have beenapproximately $
42
thousand
and $
29
thousand, respectively, had these loans performedin accordance withtheir original terms.Interest income onthese
loans for the six months ended June 30, 2026 and 2025, would have been approximately $
77
thousand and $
80
thousand,
respectively, hadthese loans performed in accordance with their originalterms.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
20USCB Financial Holdings, Inc.Q2 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 June30, 2026 and December 31, 2025 (in thousands):
June 30, 2026
Collateral Type
Residential Real Estate
Specific Reserve
Residential real estate
$
1,565
$
64
Commercial and industrial
72
-
Total
$
1,637
$
64
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 determine if anallowance for creditloss reserve isnecessary.The ACL is measuredbased on the differenceof the fair
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
no
newmodificationstoborrowersexperiencingfinancialdifficultiesforthethreemonthsended
June 30, 2026 and
one
new modification toborrowers experiencing financialdifficulties for thesix months ended June 30,
2026. The Company had
no
new modifications to borrowersexperiencing financial difficultiesfor the three andsix months
ended June 30, 2025. The following table presents newly restructured loans, bytype of modification, which occurred during
the six months ended June 30, 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
TheloanmodificationfortheborrowerexperiencingfinancialdifficultyatJune 30,2026includedacombinationof
principal and maturity modifications. There wasa principal reduction of $
68
thousand and a
two
-year extension of the loan
maturity. There was
no
commitment to lend additional funds to this customer.
There were
no
existing loan modifications thatsubsequently defaulted duringeither the three or thesix months ended
June 30, 2026 and 2025.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
21USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
4.LEASES
TheCompanyleasescertainbankingfacilitiesandofficespaceundernon-cancelableoperatingleaseagreements.
DuringthesixmonthsendedJune30,2026,theCompanyexercisedrenewaloptionsandmodifiedcertainlease
arrangements, includingextensions ofthe Coral Gablesbranch andDoral branch/headquartersleases foradditional
five
-
year terms. These lease modifications resulted in the remeasurement of operatinglease liabilities and corresponding right-
of-use assets. Operating leaseright-of-use assets and leaseliabilities totaled $
12.6
million at June 30, 2026,compared to
$
5.5
million at December 31, 2025. The lease modifications were measured using an incremental borrowing rate of
4.27
%.
The Company’s incremental borrowing rate is based on theFHLB advances rate matching or nearing the lease term.There
were no material changesto the Company's leaseaccounting policies from thosedisclosed in Note 4, Leases,included in
the Annual Report on Form 10-K for the year ended December31, 2025.
5.INCOME TAXES
The Company’s income tax expense is presentedin the following table for the periods indicated (in thousands):
Six Months Ended June 30,
2026
2025
Pre-tax income:
Domestic
$
24,400
$
20,837
Total pre-tax income
$
24,400
$
20,837
Current tax expense:
Federal
$
4,745
$
-
State
58
-
Totalcurrent
4,803
-
Deferred tax expense:
Federal
140
3,948
State
1,028
1,091
Deferred income tax expense
1,168
5,039
Totalincome tax expense
$
5,971
$
5,039
The actual income taxexpense for the sixmonths ended June 30, 2026 and2025 differs from the statutorytax 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):
Six Months Ended June 30,
2026
2025
Amount
% Pre-tax
Income
Amount
% Pre-tax
Income
Computed tax at the statutory federal income tax rate
$
5,124
21.00%
$
4,376
21.00%
Increase (decrease) resulting from:
State income taxes, net of federal tax benefit
(1)
1,122
4.60%
905
4.34%
Bank owned life insurance income
(257)
(1.05%)
(242)
(1.16%)
Benefit from stock-based compensation
(377)
(1.55%)
-
-
Section 162(m) limitation
322
1.32%
-
-
Other adjustments, net
37
0.15%
-
-
Totaltax expense
$
5,971
24.47%
$
5,039
24.18%
(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.Q2 2026 Form 10-Q
The Company’s deferred tax assets and deferredtax liabilities as of the dates indicated were (inthousands):
June 30, 2026
December 31, 2025
Deferred tax assets:
Net operating loss
$
191
$
1,039
Allowance for credit losses
6,831
6,463
Lease liability
3,230
1,399
Unrealized losses on available for sale securities
10,826
10,270
Equity compensation
948
973
Accruals
324
721
Other, net
163
268
Deferred tax assets:
22,513
21,133
Deferred tax liabilities:
Deferred loan cost
(1,456)
(1,520)
Lease right of use asset
(3,230)
(1,399)
Deferred expenses
(256)
(154)
Cash flow hedge
(24)
(5)
Depreciable property
(35)
(9)
Deferred tax liabilities
(5,001)
(3,087)
Net deferred tax assets
$
17,512
$
18,046
TheCompanyhasapproximately$
5.3
millionofstatenetoperatinglosscarryforwardsexpiringinvariousamounts
between 2032 and 2036 and which arelimited to offset, to the extent permitted, futuretaxable earnings for of the Company.
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 six months endedJune 30, 2026 and 2025 the Company did
no
t have any unrecognized tax benefits asa result
of tax positions taken during a prior period or duringthe current period. Additionally,
no
interest or penalties were recorded
as a result of tax uncertainties.
6.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.Q2 2026 Form 10-Q
AsummaryoftheamountsoftheCompany'sfinancialinstrumentswithoff-balancesheetriskareshownbelowat
June 30, 2026 and December 31, 2025 (in thousands):
June 30, 2026
December 31, 2025
Commitments to grant loans and unfunded lines of credit
$
205,573
$
161,606
Standby and commercial letters of credit
3,646
2,700
Total
$
209,219
$
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.
Changes in the ACL for the three and six months ended June30, 2026 and 2025 were as follows (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Beginning balance
$
957
$
581
$
752
$
571
Provision for credit losses - off-balance sheet arrangements
380
134
585
144
Total
$
1,337
$
715
$
1,337
$
715
7.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 ofJune 30, 2026,the Companyhad
two
costless collarhedgeswith anotionalamount of$
100
million thatwere
designated as cash flow hedges of two three-month brokered CDs. The derivatives are 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
1.04
years.
As ofDecember 31,2025, theCompanyhad
two
costlesscollar hedgeswitha notionalamount of$
100
million that
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.
During thethree monthsended June30, 2026,
one
interest rateswap agreementmatured. Asof June30, 2026,the
Company had
no
outstanding interest rate swap agreements.
As ofDecember 31,2025, theCompany had
one
interest rateswap agreementwith anotional aggregateamount of
$
25
million that wasdesignated as cashflow hedge ofa certificate ofdeposit. Under theagreement, the Companypaid a
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
24USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
fixed rateof
3.47
% andreceived avariable ratebased onthe weighted
‑
average three
‑
months compoundedUSD SOFR.
The swap had a maturity of
0.42
years.
During the quarterended December31, 2025, theCompany unwounda separateinterest rateswap designatedas a
cash flow hedgeof certificate ofdeposit with notionalamount of $
25
million. The decisionto unwind thisswap was driven
by changes in interest rate forecasts andasset-liability management strategies. The early termination income to unwind the
fair value swaps totaled $
5
thousand. The original maturity of the cash flow interest rate swap that was unwound during the
quarter was April 2026.
The changesin fairvalue ofthese interestrate swapsare recordedin otherassets oraccrued interestand otherliabilities
withacorrespondingrecognitioninothercomprehensiveincome(loss)andsubsequentlyreclassifiedtoearningswhen
gains or losses are realized.
Interest Rate Swaps
The Company enters intointerest rate swapswith its loancustomers. The Company had
122
and
94
interest rate swaps
withloancustomerswithanaggregatenotionalamountof$
401.9
millionand$
310.8
millionatJune 30,2026and
December 31,2025,respectively.AtJune 30,2026,theseinterestrateswapsmaturebetween2027and2051.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
June 30, 2026:
Derivatives designated as cash flow hedges:
Interest rate swaps
$
100,000
$
-
Other assets/Accrued
interest and other liabilities
$
92
$
-
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans
$
401,882
$
7,037
Other assets/Accrued
interest and other liabilities
$
6,615
$
6,615
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
8.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.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
25USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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
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 hierarchy andoften involve usingquoted marketprices for 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.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
26USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
ThefollowingtablerepresentstheCompany'sassetsandliabilitiesmeasuredatfairvalueonarecurringbasisat
June 30, 2026 and December 31, 2025 for each of thefair value hierarchy levels (in thousands):
June 30, 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
$
-
$
10,855
$
-
$
10,855
$
-
$
14,144
$
-
$
14,144
Collateralized mortgage obligations
-
67,099
-
67,099
-
75,828
-
75,828
Mortgage-backed securities - residential
-
28,991
-
28,991
-
29,917
-
29,917
Mortgage-backed securities - commercial
-
206,999
-
206,999
-
168,108
-
168,108
Municipal securities
-
4,225
-
4,225
-
4,263
-
4,263
Bank subordinated debt securities
-
14,690
-
14,690
-
15,230
-
15,230
Total
-
332,859
-
332,859
-
307,490
-
307,490
Derivative assets
-
6,707
-
6,707
-
9,767
-
9,767
Total assets at fair value
$
-
$
339,566
$
-
$
339,566
$
-
$
317,257
$
-
$
317,257
Derivative liabilities
$
-
$
6,615
$
-
$
6,615
$
-
$
9,786
$
-
$
9,786
Total liabilities at fair value
$
-
$
6,615
$
-
$
6,615
$
-
$
9,786
$
-
$
9,786
Fair Value Measurementson a Nonrecurring Basis
Collateral Dependent Loans Measured for Expected Credit Losses
: Fair values of collateral-dependent real estate
loans arebased onrecent real estateappraisals less estimatedcosts ofsale, repossession, and/orholding costs. Appraisals
are performed by independent third-party appraisers and may utilizea sales comparison approach, cost approach, income
approach, or a combination of these methodologies.
The following table presents quantitative informationabout Level 3 fair valuemeasurements for assets measured at fair
value on a nonrecurring basis at June 30, 2026 and December31, 2025:
June 30, 2026
Range
Weighted
Financial Instrument
Fair Value
Valuation Technique(s)
Unobservable Input(s)
Minimum
Maximum
average
Collateral dependent loans -
residential loans
$
-
Sales comparison approach
Third-party appraisals and
estimated valuation
adjustments for disposition
costs, senior liens, and SBA
participation interests.
10.0%
100.0%
100%
December 31, 2025
Range
Weighted
Financial Instrument
Fair Value
Valuation Technique(s)
Unobservable Input(s)
Minimum
Maximum
average
Collateral dependent loans -
residential loans
$
2,583
Sales comparison approach
Third party appraisals
0%
0%
0%
AtJune30,2026,theCompanymeasuredonecollateral-dependentresidentialrealestateloanatfairvalueona
nonrecurringbasis.Thefairvalueofthecollateral-dependentloanwasdeterminedusingtheappraisedvalueofthe
underlying real estate collateral,adjusted for the estimated impactof senior lien positions, SBAparticipation interests, and
estimated costs tosell. The applicationof these adjustmentsresulted ina fair valuebelow theamortized cost,which was
recognized througha charge-offand reflectedin thecarrying valueof theloan. Theresulting fairvalue attributableto the
Company'sexposurewasapproximatelyof $
0
. Theloan hadan outstandingamortizedcostbasis ofapproximately$
64
thousand and a specific reserve of $
64
thousand at June 30, 2026.
AsofDecember31,2025,collateral-dependentloansclassifiedwithinLevel3ofthefairvaluehierarchyhadan
aggregate fairvalue of$
2.6
million and
no
specific reserve,as theappraised valueof theunderlying collateralexceeded
the outstanding loan balance.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
27USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
As of June 30, 2026 and December 31, 2025, the Company did
no
t have any other assets or liabilities measured at fair
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 June 30, 2026 and December 31, 2025 (inthousands):
Fair Value Hierarchy
Carrying
Amount
Level 1
Level 2
Level 3
Fair Value
Amount
June 30, 2026:
Financial Assets:
Cash and due from banks
$
7,892
$
7,892
$
-
$
-
$
7,892
Interest-bearing deposits in banks
$
110,262
$
110,262
$
-
$
-
$
110,262
Investment securities held to maturity, net
$
136,127
$
-
$
124,177
$
-
$
124,177
Loans held for investment, net
$
2,295,684
$
-
$
-
$
2,335,350
$
2,335,350
Accrued interest receivable
$
11,670
$
-
$
1,512
$
10,158
$
11,670
Financial Liabilities:
Non-interest bearing demand deposits
$
618,062
$
618,062
$
-
$
-
$
618,062
Savings and money market deposits
$
1,251,598
$
1,251,598
$
-
$
-
$
1,251,598
Interest-bearing demand deposits
$
49,721
$
49,721
$
-
$
-
$
49,721
Time deposits
$
532,890
$
-
$
531,300
$
-
$
531,300
FHLB advances
$
240,900
$
-
$
240,622
$
-
$
240,622
Subordinated notes, net
$
39,376
$
-
$
35,785
$
-
$
35,785
Accrued interest payable
$
3,334
$
-
$
3,334
$
-
$
3,334
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
9.STOCKHOLDERS’ EQUITY
Common Stock
There were
no
stock repurchases during the three monthsended June 30, 2026. During thesix months ended June 30,
2026, the Company repurchased
53,475
shares of Class A common stock at a weighted average cost per share of $
18.74
.
The aggregatepurchasepricefor thesetransactionswasapproximately$
1.0
million,including transactioncosts.These
repurchaseswere madepursuant tothe Company’spublicly announcedshare repurchaseprograms. AtJune 30,2026,
474,834
shares remained authorizedfor repurchaseunder theCompany’s 2024 sharerepurchase program.The Company’s
2022 share repurchase program has been fully utilized.
There were
no
stock repurchases during the three monthsended June 30, 2025. During the sixmonths ended June 30,
2025, the Company repurchased
9,671
shares of ClassA common stock at aweighted average costper share of $
17.91
.
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
28USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
The aggregatepurchase pricefor thesetransactions wasapproximately $
174
thousand, includingtransaction costs.The
repurchasesweremadepursuanttotheCompany’spubliclyannouncedrepurchaseprograms.AsofJune 30,2025,
528,309
shares remained authorized for repurchase underthe Company’s two stock repurchase programs.
There were
no
restricted stock awards issuedin the three months endedJune 30, 2026. Duringthe six months ended
June 30, 2026,the Companyissued
147,490
shares ofClass common
A
stock toemployees asrestricted stockawards
pursuant to the Company’s 2015 equity incentiveplan.
There were
no
restricted stock awards issuedin the three months endedJune 30, 2025. Duringthe six months ended
June 30,2025, theCompany issued
124,424
shares ofClass Acommon stockto employeesas restrictedstock awards
pursuant to the Company’s 2015 equity incentiveplan.
ThenumberofsharesoftheCompany’sClassAcommonstockissuedandoutstandingasofJune 30,2026and
December 31, 2025 were
18,459,470
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 June 30, 2026, the Company was not subjectto any formal supervisory restrictions on itsability to 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:
Six Months Ended June 30, 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
April 20, 2026
May 15, 2026
June 5, 2026
$
0.125
$
2.3
million
Six Months Ended June 30, 2025
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
January 21, 2025
February 14, 2025
March 5, 2025
$
0.10
$
2.0
million
April 21, 2025
May 15, 2025
June 5, 2025
$
0.10
$
2.0
million
The Bank exceeded allregulatory capital requirements and remained above “well-capitalized” guidelines asof June 30,
2026 and December 31, 2025. At June 30, 2026, the totalrisk-based capital ratio for the Bank was
13.68
%.
See Note 12, Subsequent Events, for information regardingdividends declared in July 2026.
10.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
USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements - Unaudited
29USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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 reflectsthe calculation of basicand diluted earnings percommon share classfor the threeand six
months ended June 30, 2026 and 2025 (in thousands,except share amounts):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Class A
Class A
Basic EPS
Numerator:
Net income available to common shares
$
9,078
$
8,140
$
18,429
$
15,798
Denominator:
Weighted average shares outstanding
18,346,946
20,059,264
18,280,860
20,040,205
Earnings per share, basic
$
0.49
$
0.41
$
1.01
$
0.79
Diluted EPS
Numerator:
Net income available to common shares
$
9,078
$
8,140
$
18,429
$
15,798
Denominator:
Weighted average shares outstanding for basic EPS
18,346,946
20,059,264
18,280,860
20,040,205
Add: Dilutive effects of assumed exercises of stockoptions
162,626
236,530
162,626
259,380
Weighted avg. shares including dilutive potential commonshares
18,509,572
20,295,794
18,443,486
20,299,585
Earnings per share, diluted
$
0.49
$
0.40
$
1.00
$
0.78
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.
11.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.
12.SUBSEQUENT EVENTS
Dividends
On July 20,2026, the Companyannounced that itsBoard of Directorsdeclared its quarterlycash dividend. Thedividend
is in the amountof $
0.125
per share ofClass A commonstock and willbe paid onSeptember 4, 2026,to stockholdersof
record as of the close of business on August 17, 2026.
30USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Item 2.Management's Discussion and Analysis of Financial Conditionand Results of Operations
Thefollowingdiscussionandanalysisisdesignedtoprovideabetterunderstandingoftheconsolidatedfinancial
condition and results ofoperations of theCompany and the Bank,its wholly owned subsidiary,as of and forthe three and
six months ended June 30, 2026.This discussion and analysis isbest read in conjunction withthe unaudited consolidated
financialstatementsandrelatednotesincludedinthisQuarterlyReportonForm10-Q(“Form10-Q”)andtheaudited
consolidated financial statementsand related notesincluded in the AnnualReport on Form10-K (“2025 Form10-K”) filed
with the Securities and Exchange Commission (“SEC”)for the year ended December 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;
•
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 or guidelines;
•
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
•
other risks described in this Form 10-Q, the 2025 Form10-K and other filings we make with the SEC.
31USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Allforward-lookingstatementsarenecessarilyonlyestimatesoffutureresults,andtherecanbenoassurancethat
actual results willnot differmaterially from expectations.Therefore, you arecautioned not toplace undue relianceon any
forward-looking statements.Further,any forward-lookingstatements includedin thisForm 10-Qare madeonly asof the
datehereof,andweundertakenoobligationtoupdateorreviseanyforward-lookingstatementtoreflecteventsor
circumstances ocurring after the dateon which the statement ismade or to reflect the occurrenceof unanticipated events,
unless requiredto doso underthe federalsecurities laws.Youshould alsoreview therisk factorsdescribed inthe 2025
Form 10-K and in the reports the Company has filedor will file with the SEC.
Overview
The Companyreported netincome of$9.1 millionor $0.49per dilutedshare ofcommon stockfor thethreemonths
ended June30, 2026comparedto $8.1millionor $0.40per dilutedshare ofcommonstock forthethreemonths ended
June 30, 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
June 30, 2026 compared to at or for the quarter ended June 30, 2025 and as of December 31, 2025 and annualized where
appropriate:
•
Net interestincomebeforeprovision forcredit lossesfor thethree monthsendedJune 30,2026increased$3.4
million or 15.9% to $24.4 million from $21.0 million for thequarter ended June 30, 2025.
•
Net interest margin (“NIM”)expanded to 3.49% forthe three months endedJune 30, 2026 comparedto 3.28% for
the three months ended June 30, 2025.
•
Totalassetssurpassed$3.0billionatJune 30,2026,representinganincreaseof$300.2millionor11.0%from
June 30, 2025 and an increase of $228.2 million or 16.5%annualized from December 31, 2025.
•
Totalloansheldforinvestment(netofdeferredcost/fees)were$2.3billionatJune 30,2026,representingan
increase of $209.0 million or 9.9% from June 30, 2025 and an increase of $133.1 million or 12.3% annualized from
December 31, 2025.
•
Total deposits were $2.5 billion at June 30, 2026, representing an increase of $116.6 million or 5.0% from June30,
2025 and an increase of $107.2 million or 9.2% annualized fromDecember 31, 2025.
•
Annualized return onaverage assets forthe quarterended June 30,2026 was 1.26% compared to1.22% forthe
quarter ended June 30, 2025.
•
Annualized return onaverage stockholders’ equityfor the quarterended June 30, 2026was 15.90% comparedto
14.29%for quarter ended June 30, 2025.
•
The ACL to total loans was 1.15% at June 30, 2026 compared to 1.16% at December 31, 2025.
•
Non-performing loans to total loans was 0.09% at June30, 2026 and 0.14% at December 31, 2025.
•
AtJune 30,2026,thetotalrisk-basedcapitalratiosfortheCompanyandtheBankwere13.88%and13.68%,
respectively.
•
Tangiblebookvaluepercommonshare(anon-GAAPmeasure)was$12.64atJune 30,2026,representingan
increaseof$1.11or9.6%annualizedfrom$11.53atJune 30,2025. AtJune 30,2026, tangiblebookvalueper
common share wasnegatively affected by($1.70) due toan accumulated comprehensiveloss of $31.4million. At
June 30, 2025, tangiblebook value percommon share wasnegatively affected by($2.08) due toan accumulated
comprehensive lossof $41.8million. 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.Q2 2026 Form 10-Q
Critical Accounting Policies and Estimates
The consolidatedfinancial statementsare preparedbased onthe applicationof U.S.Generally AcceptedAccounting
Principles (“GAAP”), themost significant of whichare described in Note1 “Summary ofSignificant Accounting Policies”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):
June 30, 2026
December 31, 2025
Consolidated Balance Sheets:
Totalassets
$
3,019,701
$
2,791,540
Totalloans
(1)
$
2,322,385
$
2,189,257
Totaldeposits
$
2,452,271
$
2,345,080
Totalstockholders' equity
$
233,238
$
217,183
(1)Loan amounts include deferred fees/costs.
33USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Consolidated Statements of Operations:
Net interest income before provision for credit losses
$
24,387
$
21,034
$
46,435
$
40,149
Totalnon-interest income
$
3,560
$
3,370
$
7,710
$
7,086
Totalnon-interest expense
$
13,966
$
12,634
$
27,677
$
24,686
Net income
$
9,078
$
8,140
$
18,429
$
15,798
Profitability:
Efficiency ratio
49.97%
51.77%
51.12%
52.26%
Net interest margin
3.49%
3.28%
3.38%
3.18%
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 June 30, 2026 compared to the threemonths ended June 30, 2025
Net income increased $938 thousand to $9.1 million forthe three months ended June 30, 2026 from $8.1 million forthe
same periodin 2025. The$938 thousandor 11.5%increase innet incomewas primarilydriven bygrowth inthe average
loan portfolio andexpansion of netinterest margin resultingfrom lowerfunding costs. Thesebenefits werepartially offset
by higher non-interest expense, income tax expense, andprovision for credit losses.
Six months ended June 30, 2026 compared to the sixmonths ended June 30, 2025
Net incomeincreased $2.6million to$18.4 millionfor thesix monthsended June 30,2026
from $15.8million forthe
same periodin 2025. The$2.6 millionor 16.7%increase inthe netincome wasprimarily drivenby higherincome froma
larger loan portfolioand, to alesser extent, anincrease in servicefees. The increasein incomewas partially offsetby an
increase in non-interest expense, income tax expense,and provision for credit losses 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 sources of 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.Q2 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 June 30,
2026
2025
Average
(1)
Balance
Interest
Yield/Rate
(2)
Average
(1)
Balance
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans held for investment
(3)
$
2,258,965
$
34,899
6.20%
$
2,057,445
$
31,946
6.23%
Investment securities
(4)
461,849
3,858
3.35%
449,624
3,432
3.06%
Other interest-earnings assets
80,640
823
4.09%
63,974
776
4.87%
Total interest-earning assets
2,801,454
39,580
5.67%
2,571,043
36,154
5.64%
Non-interest-earning assets
99,271
106,155
Total assets
$
2,900,725
$
2,677,198
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
51,711
311
2.41%
$
46,694
285
2.45%
Savings and money market deposits
1,280,578
8,478
2.66%
1,211,513
9,410
3.12%
Time deposits
524,474
4,628
3.54%
452,361
4,343
3.85%
Total interest-bearing deposits
1,856,763
13,417
2.90%
1,710,568
14,038
3.29%
FHLB advances
100,685
976
3.89%
116,527
1,082
3.72%
Subordinated notes, net
39,351
800
8.15%
-
-
- %
Total interest-bearing liabilities
1,996,799
15,193
3.05%
1,827,095
15,120
3.32%
Non-interest-bearing demand deposits
632,198
580,121
Other non-interest-bearing liabilities
42,795
41,490
Total liabilities
2,671,792
2,448,706
Stockholders' equity
228,933
228,492
Total liabilities and stockholders' equity
$
2,900,725
$
2,677,198
Net interest income
$
24,387
$
21,034
Net interest spread
(5)
2.62%
2.32%
Net interest margin
(6)
3.49%
3.28%
(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.
35USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Six Months Ended June 30,
2026
2025
Average
Balance
(1)
Interest
Yield/Rate
(2)
Average
Balance
(1)
Interest
Yield/Rate
(2)
Assets
Interest-earning assets:
Loans held for investment
(3)
$
2,218,574
$
67,688
6.15
%
$
2,022,345
$
62,191
6.18
%
Investment securities
(4)
458,076
7,269
3.20
%
443,314
6,456
2.93
%
Other interest-earnings assets
92,980
1,655
3.59
%
69,547
1,485
4.29
%
Total interest-earning assets
2,769,630
76,612
5.58
%
2,535,206
70,132
5.56
%
Non-interest earning assets
98,273
106,885
Total assets
$
$2,867,903
$
2,642,091
$
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
51,904
$
621
2.41
%
$
50,133
$
623
2.50
%
Savings and money market deposits
1,268,565
16,611
2.64
%
1,205,305
18,745
3.13
%
Time deposits
529,094
9,328
3.56
%
426,081
8,261
3.90
%
Total interest-bearing deposits
1,849,563
26,560
2.90
%
1,681,519
27,629
3.30
%
FHLB advances
105,339
2,016
3.86
%
127,674
2,354
3.71
%
Subordinated notes, net
39,332
1,601
8.21
%
-
-
-
Total interest-bearing liabilities
1,994,234
30,177
3.05
%
1,809,193
29,983
3.33
%
Non-interest bearing demand deposits
608,622
571,627
Other non-interest-bearing liabilities
39,449
37,247
Total liabilities
2,642,305
2,418,067
Stockholders' equity
225,598
224,024
Total liabilities and stockholders' equity
$
$2,867,903
$
2,642,091
Net interest income
$
46,435
$
40,149
Net interest spread
(5)
2.53
%
2.23
%
Net interest margin
(6)
3.38
%
3.18
%
(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 June 30, 2026 compared to the threemonths ended June 30, 2025
Net interest income before the provisionfor credit losses was $24.4 millionfor the three months ended June30, 2026,
an increaseof $3.4million or15.9%, from$21.0 millionfor thesame periodin 2025. Thisgrowth wasprimarily drivenby
higher incomefrom alargerloan portfolioandlower ratespaidon interest-bearingdeposits. Thisincreasewaspartially
offset by interest expense associated with the subordinatednotes issued during 2025.
The NIM was 3.49%for the threemonths ended June 30,2026 and 3.28%for the same periodin 2025. The 21-basis
point increase in net interest margin was primarily attributable to areduction in the weighted average rates paid on interest-
bearing deposits, particularly savings and money market accounts,together with a favorable earning asset mix.
Six months ended June 30, 2026 compared to the six months endedJune 30, 2025
Net interest income before the provision for credit losses was $46.4 million for the six months ended June 30, 2026, an
increase of $6.3 million or15.7%, from $40.1 million for thesame period in 2025. Thisgrowth was primarily driven by higher
income from a larger loan portfolio and a reduction in the weighted average rates paid on interest-bearingdeposit between
periods.
36USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
The NIMwas 3.38%for thesix monthsended June 30, 2026and 3.18%for thesame periodin 2025.The NIMexpansion
of 20basis pointsreflects primarilythe decreasein theweighted averageinterest ratepaid oninterest-bearing deposits,
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 lossesis impactedby variationsin thesize andcomposition ofour loanand investmentsecurities portfolio,recent
historical and projected future economic conditions, our internal assessment of the credit quality of the loan and investment
securities portfolios and net charge-offs.
Three months ended June 30, 2026 compared to the threemonths ended June 30, 2025
The provision for credit losses was $1.3 million for the threemonths ended June 30, 2026 compared to $1.0million for
the same period in 2025.The increase in the provision for creditlosses primarily reflects growth in the loan portfolio andoff-
balance sheet arrangements,which increased the level of estimated expected credit lossesunder CECL.
Six months ended June 30, 2026 compared to the six months endedJune 30, 2025
The provisionfor creditlosses was$2.1 millionfor thesix monthsended June 30,2026 comparedto $1.7million for
the same period in 2025. The increase in the provision for credit lossesprimarily reflects growth in the loan portfolio, which
increased the level of estimated expected credit lossesunder CECL.
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 June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Service fees
$
2,601
$
2,402
$
5,701
$
4,733
Gain on sale of securities available for sale, net
-
-
14
-
Gain on sale of loans held for sale, net
-
151
106
676
Other non-interest income
959
817
1,889
1,677
Totalnon-interest income
$
3,560
$
3,370
$
7,710
$
7,086
Three months ended June 30, 2026 compared to the threemonths ended June 30, 2025
Non-interestincome forthethree monthsended June30, 2026increased$190thousand or5.6%, comparedto the
same period in 2025.This increase wasprimarily driven bya $322 thousandincrease in loanprepayment penalty income
reported under service fees compared to the sameperiod last year.
Six months ended June 30, 2026 compared to the six months endedJune 30, 2025
Non-interest income for the six months ended June 30, 2026 increased $624 thousand or 8.8%, compared tothe same
period in2025. Thisincrease wasprimarilydriven by$1.6 millionincrease inincomegeneratedby theCompany’sloan
swap program reported under service fees in the Consolidated Statements of Operations. This increase was partially offset
by a decrease in gain on sale of loans during the quarterended June 30, 2026.
37USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Non-Interest Expense
The following table presents the components of non-interestexpense for the dates indicated (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Salaries and employee benefits
$
8,537
$
7,954
$
17,107
$
15,590
Occupancy
1,369
1,337
2,685
2,621
Regulatory assessment and fees
397
396
881
817
Consulting and legal fees
583
263
1,144
456
Network and information technology services
524
564
1,084
1,069
Other operating
2,556
2,120
4,776
4,133
Totalnon-interest expense
$
13,966
$
12,634
$
27,677
$
24,686
Three months ended June 30, 2026 compared to the threemonths ended June 30, 2025
Non-interest expense forthe three monthsended June 30, 2026increased $1.3 millionor 10.5%, comparedto thesame
period in 2025. This increase wasprimarily driven by an increaseof $583 thousand in salariesand employee benefits due
to anincrease of $236thousand in salariesassociated with additionalfull-time employees andan increase of$228 thousand
inhealthinsuranceand401(k)expense. Additionally,consultingandlegalfeesincreaseby$320mainlydueto$290
thousand reimbursement of legal expenses recognized during the second quarterof 2025, which reduced legal expense in
theprior-yearperiod.Otheroperatingexpensesincreasedby$436thousandduemainlyto$312thousandexcisetax
expense paid in the quarter ended June 30, 2026.
Six months ended June 30, 2026 compared to the six months endedJune 30, 2025
Non-interest expense for the six monthsended June 30, 2026 increased $3.0million or 12.1%, compared to thesame
period in2025. Theincrease wasprimarily driven byan increase of$1.5 millionin salaries andemployee benefits, consisting
of$666thousandrelatedtomeritincreasesandnewfull-timeemployeesalaries,$580thousandincreaseinhealth
insurance and 401(k)expense,and a $349thousand increase inadditional stock-based compensation expense.In addition,
consulting and legal feesincreased $688 thousand,primarily due to anincrease of $405 thousandin legal fees due tothe
reimbursement of legal expenses recognized duringthe second quarter of 2025, which reducedlegal expense in the prior-
year period. Other non-interestexpenses increased by $643thousand,mainly due to increase of$285 thousand in excise
tax expense and increase of $83 thousand in ATM expense for the six months ended June30, 2026.
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.
Three months ended June 30, 2026 compared to the threemonths ended June 30, 2025
Income taxexpense forthe threemonths endedJune 30,2026 was$3.6 millionas comparedto $2.6million forthe
same period in 2025. The effectivetax rate for the three monthsended June 30, 2026 was 28.60% compared to 24.20% for
the same period in 2025.
Six months ended June 30, 2026 compared to the six months endedJune 30, 2025
Income tax expense for the six months ended June 30, 2026 was $6.0 million as compared to $5.0 million forthe same
period in 2025. The Company recognized a non-recurring $619 thousand income tax benefit in the first quarter of 2026 due
to anadjustment tothe deferredtax assetcalculation fromDecember 31,2025. Theeffective taxrate forthe sixmonths
ended June 30, 2026 was 24.47% compared to 24.18%for the same period in 2025.
Forafurtherdiscussionofincometaxes,seeNote5“IncomeTaxes”totheunauditedConsolidatedFinancial
Statements in Item 1 of Part I of this Form 10-Q.
38USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Analysis of Financial Condition
Totalassets at June 30, 2026 were$3.02 billion, an increaseof $228.2 million, or 16.5%annualized, over total assets
of$2.79billionatDecember 31,2025.Totalloans,netofdeferredfees/costs,increased$133.1million,or12.3%
annualized, to $2.32 billion at June 30,2026 compared to $2.19 billion at December31, 2025. Totaldeposits increased by
$107.2 million,or 9.2% annualized, to $2.45 billion at June 30, 2026 comparedto $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 June 30, 2026.
Atquarterend,HTMsecuritiesincluded$136.1millionofU.S.GovernmentandU.S.GovernmentAgenciesissued
bonds andmortgage-backedsecurities.Becauseof theexplicit and/orimplicitguaranteeon thesebonds,theCompany
holds noreserves onthese holdings.Using thePD/LGD methodologyand consideringthat thereare noHTM securities
exposed to non
‑
government credit risk, the Company estimated an allowance for credit losses (“ACL”) of $0 as of June 30,
2026. For periods wherethere was an ACLfor HTM securities recordedthe book value fordebt securities classified asHTM
represents amortized cost less ACL.
AggregateAFSandHTMinvestmentsecuritiesincreased$7.6 millionto$469.0 millionatJune 30,2026from
$461.4 million at December 31, 2025.
As of June 30, 2026,investment securities with a market value of $56.3 million were pledged to secure public deposits.
The investment portfolio does not contain any tax-exemptsecurities.
39USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
The following tablepresents the amortizedcost and fairvalue of investmentsecurities forthe dates indicated(dollars
in thousands):
June 30, 2026
December 31, 2025
Available-for-sale:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
U.S. Government Agency
$
11,883
$
10,855
$
15,169
$
14,144
Collateralized mortgage obligations
84,406
67,099
92,871
75,828
Mortgage-backed securities - residential
34,909
28,991
35,865
29,917
Mortgage-backed securities - commercial
215,345
206,999
174,622
168,108
Municipal securities
5,191
4,225
5,196
4,263
Bank subordinated debt securities
14,578
14,690
15,284
15,230
$
366,312
$
332,859
$
339,007
$
307,490
Held-to-maturity:
U.S. Government Agency
$
37,328
$
34,129
$
41,158
$
37,970
Collateralized mortgage obligations
48,762
43,821
51,431
46,786
Mortgage-backed securities - residential
35,188
32,522
37,221
34,718
Mortgage-backed securities - commercial
14,849
13,705
15,088
14,051
Corporate bonds
-
-
9,045
8,983
$
136,127
$
124,177
$
153,943
$
142,508
Allowance for credit losses - securities held-to-maturity
-
(2)
Securities held-to maturity, net of allowance for credit losses
$
136,127
$
153,941
The followingtable showsthe weightedaverage yields,categorized bycontractual maturity,for investmentsecurities
as of June 30, 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
$
-
-
$
-
-
$
-
-
$
11,883
3.43%
$
11,883
3.43%
Collateralized mortgage obligations
-
-
-
-
-
-
84,406
1.56%
84,406
1.56%
MBS - residential
-
-
-
-
-
-
34,909
2.43%
34,909
2.43%
MBS - commercial
-
-
4,996
4.55%
4,906
4.81%
205,443
4.38%
215,345
4.40%
Municipal securities
-
-
-
-
5,191
1.87%
-
-
5,191
1.87%
Bank subordinated debt securities
-
-
2,000
7.86%
12,578
5.81%
-
-
14,578
6.09%
$
-
-
$
6,996
5.50%
$
22,675
4.69%
$
336,641
3.44%
$
366,312
3.56%
Held-to-maturity:
U.S. Government Agency
$
4,988
1.24%
$
18,041
1.31%
$
1,483
2.85%
$
12,816
1.85%
$
37,328
1.55%
Collateralized mortgage obligations
-
-
-
-
-
-
48,762
1.65%
48,762
1.65%
MBS - residential
21
2.98%
8,874
1.65%
-
-
26,293
2.29%
35,188
2.13%
MBS - commercial
-
-
3,034
1.63%
-
-
11,815
2.57%
14,849
2.37%
$
5,009
1.25%
$
29,949
1.44%
$
1,483
2.85%
$
99,686
1.95%
$
136,127
1.83%
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.
40USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
The following table shows the loan portfolio compositionas of the dates indicated (in thousands):
June 30, 2026
December 31, 2025
Total
Percent of
Total
Total
Percent of
Total
Residential real estate
$
356,747
15.4
%
$
307,692
14.1
%
Commercial real estate
1,314,367
56.6
%
1,244,835
57.0
%
Commercial and industrial
300,265
13.0
%
295,548
13.5
%
Correspondent banks
137,912
6.0
%
127,968
5.9
%
Consumer and other
207,404
9.0
%
207,215
9.5
%
Totalgross loans
2,316,695
100.0
%
2,183,258
100.0
%
Plus: Deferred fees/costs
5,690
5,999
Totalloans net of deferred fees/costs
2,322,385
2,189,257
Less: Allowance for credit losses
26,701
25,500
Totalnet loans
$
2,295,684
$
2,163,757
Totalloans, netof deferredfees/costs, increasedby $133.1 million,or 12.3%annualized to$2.32 billion,at June 30,
2026 compared to December 31,2025. The commercial realestate loan segment hadthe most significant balance increase
compared to December 31, 2025.
Our loanportfolio continuesto grow,with commercialreal estatelending beingthe primaryfocus whichrepresented
approximately56.6%of thetotal grossloan portfolioas ofJune 30,2026. Ourloan growthstrategysinceinceptionhas
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 tableshows maturities and sensitivityto interest rate changesof the loan portfolioat June 30,
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
$
7,064
$
83,310
$
65,616
$
200,757
$
356,747
Commercial real estate
71,847
590,427
647,640
4,453
1,314,367
Commercial and industrial
12,401
111,248
133,331
43,285
300,265
Correspondent banks
137,912
-
-
-
137,912
Consumer and other
3,579
1,238
21,910
180,677
207,404
Totalgross loans
$
232,803
$
786,223
$
868,497
$
429,172
$
2,316,695
Interest rate sensitivity:
Fixed interest rates
$
187,594
$
201,973
$
159,167
$
302,650
$
851,384
Floating or adjustable rates
45,209
584,250
709,330
126,522
1,465,311
Totalgross loans
$
232,803
$
786,223
$
868,497
$
429,172
$
2,316,695
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 of June 30, 2026, approximately 63%of the loan portfolio hasadjustable/variable rates and 37% of theloan portfolio
has fixedrates. Theadjustable/variable rateloans re-priceto differentbenchmarksand tenorsand indifferent periodsof
time. By contractual characteristics, there are no materialconcentrations on anniversary repricing.
41USCB Financial Holdings, Inc.Q2 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):
June 30, 2026
Pass
Special Mention
Substandard
Doubtful
Total
Residential real estate
$
353,869
$
1,370
$
1,508
$
-
$
356,747
Commercial real estate
1,301,144
11,520
1,703
-
1,314,367
Commercial and industrial
298,081
773
1,411
-
300,265
Correspondent banks
137,912
-
-
-
137,912
Consumer and other
207,404
-
-
-
207,404
$
2,298,410
$
13,663
$
4,622
$
-
$
2,316,695
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
42USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Non-Performing Assets
The following table presents non-performing assets asof the dates shown (in thousands,except ratios):
June 30, 2026
December 31, 2025
Non-accrual loans
$
2,148
$
3,138
Loans past due over 90 days and still accruing
-
-
Totalnon-performing loans
$
2,148
$
3,138
Other real estate owned
-
-
Totalnon-performing assets
$
2,148
$
3,138
Asset quality ratios:
Allowance for credit losses to total loans
1.15%
1.16%
Allowance for credit losses to non-performing loans
1,243%
813%
Non-performing loans to total loans
0.09%
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,see Note 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.
43USCB Financial Holdings, Inc.Q2 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 June 30, 2026
Beginning balance
$
5,270
$
9,932
$
5,330
$
1,018
$
4,552
$
26,102
Provision for credit losses
(1)
222
184
407
76
(2)
887
Recoveries
8
-
1
-
-
9
Charge-offs
(296)
-
-
-
(1)
(297)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Average loans
$
354,678
$
1,275,161
$
292,088
$
128,762
$
208,276
$
2,258,965
Net charge-offs (recoveries) to average
loans
(2)
0.33%
- %
(0.00)%
- %
0.00%
0.05%
Six Months Ended June 30, 2026
Beginning balance
$
5,908
$
9,476
$
4,814
$
1,015
$
4,287
$
25,500
Provision for credit losses
(3)
(422)
640
919
79
269
1,485
Recoveries
14
-
5
-
-
19
Charge-offs
(296)
-
-
-
(7)
(303)
Ending Balance
$
5,204
$
10,116
$
5,738
$
1,094
$
4,549
$
26,701
Average loans
$
329,736
$
1,271,120
$
264,440
$
128,783
$
224,495
$
2,218,574
Net charge-offs (recoveries) to average
loans
(2)
0.17%
- %
(0.00)%
- %
0.01%
0.03%
(1) Provision for credit losses excludes a $380 thousand provision due to unfunded commitments included in accrued interest and
other liabilities.
(2) Annualized.
(3) Provision for credit losses excludes a $585 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.
44USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Residential
Real Estate
Commercial
Real Estate
Commercial
and
Industrial
Correspondent
Banks
Consumer
and Other
Total
Three Months Ended June 30, 2025
Beginning balance
$
5,115
$
9,197
$
4,434
$
817
$
5,177
$
24,740
Provision for credit losses
(1)
356
294
73
57
115
895
Recoveries
6
-
1
-
1
8
Charge-offs
-
-
-
-
(710)
(710)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
Average loans
$
299,857
$
1,167,698
$
265,465
$
101,776
$
222,649
$
2,057,445
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
- %
(0.00)%
- %
1.28%
0.14%
Six Months Ended June 30, 2025
Beginning balance
$
5,121
$
8,788
$
4,633
$
654
$
4,874
$
24,070
Provision for credit losses
(3)
344
703
(131)
220
431
1,567
Recoveries
12
-
6
-
1
19
Charge-offs
-
-
-
-
(723)
(723)
Ending Balance
$
5,477
$
9,491
$
4,508
$
874
$
4,583
$
24,933
Average loans
$
300,560
$
1,155,436
$
261,377
$
94,516
$
210,456
$
2,022,345
Net charge-offs (recoveries) to average
loans
(2)
(0.01)%
- %
(0.00)%
- %
0.69%
0.07%
(1) Provision for credit losses excludes a $134 thousand provision due to unfunded commitments included in accrued interest and other
liabilities and a $2 thousand provision related to investment securities held to maturity.
(2) Annualized.
(3) Provision for credit losses excludes $144 thousand provision due to unfunded commitments included in accrued interest and a $1
thousand provision related to investment securities held to maturity.
TheFederalOpenMarketCommittee(“FOMC”)economicforecastsasofJune 30,2026,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 losseson theresidential loansegment. Asof June 30,2026, forevery 100basis pointincrease inthe HPI,the
forecastreducesreservesbyapproximately$241thousandandabout1basispointstothereservecoverageratio,
everything else beingconstant. This sensitivityanalysis provides ahypothetical resultto assess thesensitivity of theACL
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 June 30, 2026,the Company stresstested two qualitative factorswithin the non
‑
owner
‑
occupied subsegment of
thecommercialrealestateloan portfolio,asitrepresentsthelargestsegmentoftheCompany’sportfolio.Theanalysis
evaluatedtheimpactofchangingthequalitativefactorsfromnorisktomaximumlosstoassessthesensitivityofthe
allowance for credit losses (“ACL”). Thisstress resulted in a hypothetical increaseof $6.0 million, or 22.3%, inthe 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.
45USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Bank-Owned Life Insurance
As of June 30,2026, the combinedcash surrender valueof all bank-ownedlife insurance (“BOLI”)policies was $60.4
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 June 30,
2026
2025
Average Balance
Average Rate
Paid
Average Balance
Average Rate
Paid
Non-interest bearing demand deposits
$
632,198
0.00%
$
580,121
0.00%
Interest-bearing demand deposits
51,711
2.41%
46,694
2.45%
Saving and money market deposits
1,280,578
2.66%
1,211,513
3.12%
Time deposits
524,474
3.54%
452,361
3.85%
Total
$
2,488,961
2.16%
$
2,290,689
2.46%
The Company has agranular deposit portfoliowith outstanding balancescomprised of 57.1% incommercial deposits,
26.0% inpersonaldeposits,9.1% inpublic funds(which arepartially collateralized)and 7.8%in brokereddeposits. The
brokered deposits balance at June 30, 2026 was $190.9million and $256.8 million at December 31, 2025.
As of June 30,2026, the Companyhas approximately21 thousand depositaccounts with themajority ofwhich were
personal accounts, approximately12 thousand or 58.6%.The estimated average accountsize in our depositportfolio was
approximately $118thousand as of June 30, 2026.
TheamountofuninsureddepositsareestimatedbasedontheFDICdepositinsurancelimitof$250thousandper
account holder for all deposit accounts at the Company.The total estimated percentage of uninsured depositswas 55% at
June 30,2026and51%atDecember 31,2025.TheCompanyoffersInsuredCashSweep(“ICS”)andCertificate
of
Deposit AccountRegistryService(“CDARS”)depositproductstofullyinsureourclients.Thedepositbalancein
ICS/CDARS was $176.1 million at June 30, 2026 andwas $183.2 million at December 31, 2025.
The following table shows scheduled maturities of uninsuredtime deposits as of June 30, 2026 (in thousands):
June 30, 2026
Three months or less
$
68,697
Over three through six months
17,702
Over six through twelve months
57,687
Over twelve months
51,597
$
195,683
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 June 30, 2026, escrow balances totaled $23.5 millioncompared to $8.1 million at December 31, 2025.The
increase reflects the normal growth in escrow accountspending tax and insurance payments.
46USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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 ofJune 30, 2026, wehad $112.0 million offixed-rate advances and$128.9 million ofdaily-rate advances outstanding
with the FHLB,with weighted averageinterest ratesof 3.82%and 3.88%, maturingin July 2026and September2026 for
the fixed-rate advances and May 2027 for the daily-rate advance,as detailed in the table below.
The following table presents the FHLB advances as ofJune 30, 2026 (in thousands):
June 30, 2026
Interest Rate
Type of Rate
Maturity Date
Amount
3.82%
Fixed
July 13, 2026
37,000
3.82%
Fixed
July 23, 2026
5,000
3.81%
Fixed
July 29, 2026
30,000
3.84%
Fixed
September 09, 2026
40,000
3.88%
Daily
May 24, 2027
128,900
$
240,900
TheCompanyhasalsoestablishedFederalFundslinesofcreditwithourupstreamcorrespondentbanksandthe
FederalReserveBankofAtlantaDiscountWindowtomanagetemporaryfluctuationsinourdailycashbalances.Asof
June 30, 2026, there were no outstanding balances with anyof these additional liquidity sources.
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 $39.4million, reflectingthescheduled expenserecognitionover the
term of the instruments.The subordinated notesare presented netof these costs onthe consolidated balancesheet. 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 June 30,2026 was$1.3 millionand atDecember 31,2025 was$752 thousand.The increase
was primarily driven by an increasein unfunded commitments.
47USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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):
June 30, 2026
December 31, 2025
Commitments to grant loans and unfunded lines of credit
$
205,573
$
161,606
Standby and commercial letters of credit
3,646
2,700
Total
$
209,219
$
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.
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.
DynamicsimulationisalsoutilizedtohaveamorecomprehensiveassessmentonIRR.Thissimulationrelieson
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.
48USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Market and Interest Rate Risk Management
AccordingtoourALCOmodel,as ofJune30,2026,boththestaticanddynamicALM simulationsindicatethatthe
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 toward an asset sensitive posture,reflecting projected balance sheet growth, continued variable rate
loan production,and changesin balancesheet mixover time.This progressionis consistentwith management’sforward
looking assumptions embedded in the dynamic model.
The Bank’sinterest raterisk profileis fairlyneutral, withno significantchange inoverall sensitivity.While thefunding
mixshiftedmodestly,coredepositsremainedessentiallyflat,andtheBank’sYear1liability-sensitivepositioningwas
unchanged. All modeled NII and EVE results continued to remain within ALCO policy limits across all rate shock scenarios.
Management’sinterestratepositioningreflectsadeliberatebalancebetweenearningsstabilityandbalancesheet
flexibility,particularlygiven theBank’s relationshipdriven depositbase andvariable ratelending profilewithin theSouth
Florida market.
The ALM modelincorporates a widerange of assumptions,including assetprepayment speeds,non maturitydeposit
betaanddecayassumptions,pricingcorrelations,deposittruncations,andkeyinterestratedrivers.Giventheinherent
estimation involved in these assumptions, actual results may differ from modeled outcomes, particularly as static measures
do not incorporate potential management actions in responseto changes in market conditions or customer behavior.
EVE sensitivity remains compliant with policy guidelines, with greater volatilityobserved in rising rate scenarios, driven
byassetandliabilityconvexity.Inhigherrateenvironments,thevalueoflongertermassetsdeclinesmorerapidly,
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 overall reduction in structural
interest rate risk.
Overall, theBank remainswell positionedto managecurrent interestrate volatility,with limited exposureunder rising
rate scenariosand favorablepositioningin adecliningrate environment.Managementcontinuesto activelyreview ALM
results andretains theflexibility,consistent withALCO policy,to adjustasset andliability durationthrough balancesheet
strategies asmarket conditionsevolve. Resultsand relatedstrategies arereviewed quarterlywith ALCOand adjustedas
appropriate.
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.
49USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
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.
AsofJune30,2026,theCompanyhad$428millioninavailableliquidityonbalancesheet,including$314millionin
unpledged securities(excluding UnencumberedHTM securities)available touse ascollateral and$114million inexcess
cash. The Company had anadditional $309 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.
50USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
Capital Adequacy
As of June 30, 2026,the Company andthe Bank werewell capitalized underthe FRB’s andFDIC’s prompt corrective
action framework.Wealsofollow thecapital conservationbufferframework,and asof June 30,2026, weexceeded the
capital conversation buffer in allcapital ratios, according to our actualratios. The following table presentsthe capital ratios
for the Company and the Bank at the dates indicated (inthousands, except ratios).
The Company's consolidated regulatory capital amounts and ratios:
Actual
Minimum Capital
Requirements
To be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
June 30, 2026
Totalrisk-based capital
$
325,362
13.88
%
$
187,482
8.00
%
$
234,352
10.00
%
Tier 1 risk-based capital
$
257,948
11.01
%
$
140,611
6.00
%
$
187,482
8.00
%
Common equity tier 1 capital
$
257,948
11.01
%
$
105,458
4.50
%
$
152,329
6.50
%
Leverage ratio
$
257,948
8.81
%
$
117,132
4.00
%
$
146,415
5.00
%
December 31, 2025
Totalrisk-based capital
$
305,225
13.91
%
$
175,565
8.00
%
$
219,457
10.00
%
Tier 1 risk-based capital
$
239,671
10.92
%
$
131,674
6.00
%
$
175,565
8.00
%
Common equity tier 1 capital
$
239,671
10.92
%
$
98,756
4.50
%
$
142,647
6.50
%
Leverage ratio
$
239,671
8.46
%
$
113,285
4.00
%
$
141,606
5.00
%
The Bank's regulatory capital amounts and ratios:
Actual
Minimum Capital
Requirements
To be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
June 30, 2026
Totalrisk-based capital
$
320,052
13.68
%
$
187,185
8.00
%
$
233,981
10.00
%
Tier 1 risk-based capital
$
292,014
12.48
%
$
140,389
6.00
%
$
187,185
8.00
%
Common equity tier 1 capital
$
292,014
12.48
%
$
105,291
4.50
%
$
152,088
6.50
%
Leverage ratio
$
292,014
9.97
%
$
117,144
4.00
%
$
146,430
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
%
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.
51USCB Financial Holdings, Inc.Q2 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
6/30/2026
3/31/2026
12/31/2025
9/30/2025
6/30/2025
Pre-tax pre-provision ("PTPP") income:
(1)
Net income
$
9,078
$
9,351
$
1,363
$
8,939
$
8,140
Plus: Income tax expense
3,636
2,335
1,911
2,866
2,599
Plus: Provision for credit losses
1,267
801
480
105
1,031
PTPP income
$
13,981
$
12,487
$
3,754
$
11,910
$
11,770
PTPP return on average assets:
(1)
PTPP income
$
13,981
$
12,487
$
3,754
$
11,910
$
11,770
Average assets
$
2,900,725
$
2,834,717
$
2,799,863
$
2,798,115
$
2,677,198
PTPP return on average assets
(2)
1.93%
1.79%
0.53%
1.69%
1.76%
Operating net income:
(1)
Net income
$
9,078
$
9,351
$
1,363
$
8,939
$
8,140
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
$
9,078
$
8,722
$
8,057
$
8,960
$
8,140
Operating return on average assets:
(1)
Operating net income
$
9,078
$
8,722
$
8,057
$
8,960
$
8,140
Average assets
$
2,900,725
$
2,834,717
$
2,799,863
$
2,798,115
$
2,677,198
Operating return on average assets
(2)
1.26%
1.25%
1.14%
1.27%
1.22%
Operating return on average equity:
(1)
Operating net income
$
9,078
$
8,722
$
8,057
$
8,960
$
8,140
Average equity
$
228,933
$
222,226
$
212,393
$
225,316
$
228,492
Operating return on average equity
(2)
15.90%
15.92%
15.05%
15.78%
14.29%
Operating Revenue:
(1)
Net interest income
$
24,387
$
22,048
$
22,207
$
21,274
$
21,034
Plus: Non-interest income
3,560
4,150
(4,178)
3,684
3,370
Less: Net gains (losses) on sale ofsecurities
-
14
(7,498)
(28)
-
Operating revenue
$
27,947
$
26,184
$
25,527
$
24,986
$
24,404
Operating Efficiency Ratio:
(1)
Total non-interest expense
$
13,966
$
13,711
$
14,275
$
13,048
$
12,634
Operating revenue
$
27,947
$
26,184
$
25,527
$
24,986
$
24,404
Operating efficiency ratio
49.97%
52.36%
55.92%
52.22%
51.77%
(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.
52USCB Financial Holdings, Inc.Q2 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
6/30/2026
3/31/2026
12/31/2025
9/30/2025
6/30/2025
Tangible book value per common share (at period-end):
(1)(4)
Total stockholders' equity
$
233,238
$
223,246
$
217,183
$
209,095
$
231,583
Less: Intangible assets
-
-
-
-
-
Tangible stockholders' equity
(3)
$
233,238
$
223,246
$
217,183
$
209,095
$
231,583
Total shares issued and outstanding (at period-end):
Total common shares issued and outstanding
18,459,470
18,257,400
18,137,885
18,107,385
20,078,385
Tangible book value per common share
(2)
$
12.64
$
12.23
$
11.97
$
11.55
$
11.53
Operating diluted net income per common share:
(1)
Operating net income
$
9,078
$
8,722
$
8,057
$
8,960
$
8,140
Total weighted average diluted shares of common stock
18,509,572
18,454,006
18,348,725
19,755,820
20,295,794
Operating diluted net income per common share:
$
0.49
$
0.47
$
0.44
$
0.45
$
0.40
Tangible Common Equity/Tangible Assets
(1)(4)
Tangible stockholders' equity
(3)
$
233,238
$
223,246
$
217,183
$
209,095
$
231,583
Tangible total assets
(3)
$
3,019,701
$
2,845,735
$
2,791,540
$
2,767,945
$
2,719,474
Tangible Common Equity/TangibleAssets
7.72%
7.84%
7.78%
7.55%
8.52%
(1)The Company believes these non-GAAP measurements arekey indicators of the ongoing earnings powerof the Company.
(2)Excludes the dilutive effect, if any, of shares of common stock issuable upon exerciseof outstanding stock options.
(3)Since the Company has no intangible assets,tangible stockholders’ equity and tangible totalassets are the same amounts as stockholders’ equity
and total assets,
(4)The decrease in total stockholders’ equity inSeptember 2025 was primarily driven by the repurchaseof 2.0 million shares of Class A common
stock, as previously
disclosed.
53USCB Financial Holdings, Inc.Q2 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”))as ofJune 30, 2026.Based onthat evaluation,management believesthat, asof theend ofthe 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.
54USCB Financial Holdings, Inc.Q2 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” ofthe 2025 Form 10-K.There have been no material changes to therisk factors
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 June 30, 2026 wereas follows:
Total
Number of
Shares
Purchased
Average
Price Paid
Per Share
Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs (1)
Maximum Number
of Shares that
May
Yet Be Purchased
Under Plans or
Programs (1)
Period
April 1 - 30, 2026
-
$
-
-
474,834
May 1 - 31, 2026
-
$
-
-
474,834
June 1 - 30, 2026
-
$
-
-
474,834
Total
-
$
-
-
(1) As of June 30, 2026 there were 474,834shares available for repurchase under the outstandingshare 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 June 30, 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
55USCB Financial Holdings, Inc.Q2 2026 Form 10-Q
(c)
During thethree monthsended June 30,2026, noneof the Company’sdirectors orSection 16reporting persons
adopted
or
terminated
anyRule10b5-1tradingarrangementor
non-Rule
10b5-1
tradingarrangement(assuch
terms are defined in Item 408 of the SEC’s RegulationS-K).
56USCB Financial Holdings, Inc.Q2 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 following financial statementsfrom the Company’s QuarterlyReport on Form10-Q for thequarter ended June 30,2026
formattedinInlineXBRL:(i)ConsolidatedBalanceSheets(unaudited),(ii)ConsolidatedStatementsofOperations
(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.
57USCB Financial Holdings, Inc.Q2 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
August 7, 2026
Luis de la Aguilera
(Principal Executive Officer)
/s/ Robert Anderson
Executive Vice President and Chief Financial
Officer
August 7, 2026
Robert Anderson
(Principal Financial Officer and Principal
Accounting Officer)