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What changed in USCB FINANCIAL HOLDINGS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of USCB FINANCIAL HOLDINGS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+414 added−424 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-14)

Top changes in USCB FINANCIAL HOLDINGS, INC.'s 2025 10-K

414 paragraphs added · 424 removed · 331 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

86 edited+19 added−16 removed180 unchanged
Biggest changeHowever, the Bank remains subject to independent auditor attestation required under FDIC regulations set forth at 12 C.F.R. §363.3(b). Table of Contents 20 USCB Financial Holdings, Inc. 2024 10-K Available Information Our website address is www.uscentury.com.
Biggest changeThe Company will no longer be an emerging growth company as of December 31, 2026 and is expected to be required to comply with the ICFR independent auditor attestation report. In addition, the Bank remains subject to independent auditor attestation required under FDIC regulations set forth at 12 C.F.R. §363.3(b). Available Information Our website address is www.uscentury.com.
Based upon our aggregate exposure to any given borrower relationship, we undertake a scaled review of loan originations that may involve senior credit officers, our Chief Credit Officer, our Credit Committee or, ultimately, our Board of Directors (“Board”).
Based upon our aggregate exposure to any given borrower relationship, we undertake a scaled review of loan originations that may involve our senior credit officers, our Chief Credit Officer, our Credit Committee or, ultimately, our Board of Directors (“Board”).
Anti-Money Laundering Regulation As a financial institution, we must maintain anti-money laundering programs that include established internal policies, procedures and controls, a designated compliance officer, an ongoing employee training program, and testing of the program by an independent audit function in accordance with the Bank Secrecy Act of 1970, as amended (“BSA”), and the regulations issued by the Department of the Treasury in 31 CFR Chapter X, FDIC Section 326.8 of the FDIC’s regulations and the Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act.
Anti-Money Laundering Regulation As a financial institution, we must maintain anti-money laundering programs that include established internal policies, procedures and controls, a designated compliance officer, an ongoing employee training program, and testing of the program by an independent audit function in accordance with the Bank Secrecy Act of 1970, as amended (“BSA”), and the regulations issued by the Department of the Treasury in 31 CFR Chapter X, Section 326.8 of the FDIC’s regulations and the Florida Control of Money Laundering and Terrorist Financing in Financial Institutions Act.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, such as us, having at least $1 billion in total assets that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, such as us, having at least $1.0 billion in total assets that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
Our loan operations are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act (“TILA”), and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial new requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act • the Home Mortgage Disclosure Act of 1975 and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities they serve; • the Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in extending credit; • the Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, and Regulation V, as well as the rules and regulations of the FDIC governing the use and provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies; and • the Real Estate Settlement Procedures Act, (“RESPA”), and Regulation X, which governs aspects of the settlement process for residential mortgage loans.
Our loan operations are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act, and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial new requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act • the Home Mortgage Disclosure Act of 1975 and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities they serve; • the Equal Credit Opportunity Act and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in extending credit; • the Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, and Regulation V, as well as the rules and regulations of the FDIC governing the use and provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies; and • the Real Estate Settlement Procedures Act, and Regulation X, which governs aspects of the settlement process for residential mortgage loans.
We will remain an EGC until the earliest to occur of (i) the end of the fiscal year following the fifth anniversary of the completion of the Bank’s initial public offering in 2021, (ii) the last day of the first fiscal year in which the Company's annual Table of Contents 7 USCB Financial Holdings, Inc. 2024 10-K gross revenues exceed $1.235 billion, (iii) the date that the Company becomes a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act which would occur if the market value of the Company's common stock that is held by non- affiliates exceeds $700 million as of the last business day of the Company’s most recently completed second fiscal quarter (June 30th for the Company), or (iv) the date on which the Company has issued more than $1 billion in non-convertible debt during the preceding three-year period.
We will remain an EGC until the earliest to occur of (i) the end of the fiscal year following the fifth anniversary of the completion of the Bank’s initial public offering in 2021, (ii) the last day of the first fiscal year in which the Company's annual gross revenues exceed $1.235 billion, (iii) the date that the Company becomes a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act which would occur if the market value of the Company's common stock that is held by non- affiliates exceeds $700 million as of the last business day of the Company’s most recently completed second fiscal quarter Table of Contents 7 USCB Financial Holdings, Inc. 2025 10-K (June 30th for the Company), or (iv) the date on which the Company has issued more than $1 billion in non-convertible debt during the preceding three-year period.
In June 2019, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5 billion that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions.
In June 2019, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5.0 billion that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions.
The GSICP Guidance provides that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.
The GSICP provides that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.
The new assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2% in order to support growth in the DIF in progressing toward the FDIC’s long-term goal of a 2% DRR. Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again when it reaches 2.5%.
The assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2% in order to support growth in the DIF in progressing toward the FDIC’s long-term goal of a 2% DRR. Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again when it reaches 2.5%.
We are taking steps to create programs to ensure that we are organized in a way where the unique contributions of each individual in our Company is recognized and supported. Each team member is to be treated fairly with equal access to opportunities and resources for success.
We continue taking steps to create programs to ensure that we are organized in a way where the unique contributions of each individual in our Company is recognized and supported. Each team member is to be treated fairly with equal access to opportunities and resources for success.
Except under limited circumstances, bank holding companies are prohibited from acquiring, without prior approval, control of any other bank or bank holding company or substantially all the assets thereof or more than 5% of the voting shares of a bank or bank holding company which is not already a subsidiary.
Except under limited circumstances, bank holding companies are prohibited from acquiring, without prior approval, control of any other bank or bank holding company or substantially all the assets thereof or more than 5% of the voting shares of a bank or bank holding company which is not already a subsidiary of such bank holding company.
These limitations require disclosure of privacy policies to consumers and, in some circumstances, require us to allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party and to not disclose account numbers or access codes to non-affiliated third parties for marketing purposes.
These limitations require disclosure of privacy policies to consumers and, in some circumstances, require us to allow consumers to prevent disclosure of certain personal information to a non-affiliated third party and to not disclose account numbers or access codes to non-affiliated third parties for marketing purposes.
As of December 31, 2024, the Bank continued to be a Preferred Lending Partner with the SBA which allows us to offer the full range of SBA loan products and to exercise lending authority at the local bank level, allowing us to make timely credit decisions for prospective clients. • Yacht lending: Our yacht lending vertical provides yacht financing for larger vessels; transactions range from $750 thousand to $7.5 million.
As of December 31, 2025, the Bank continued to be a Preferred Lending Partner with the SBA which allows us to offer the full range of SBA loan products and to exercise lending authority at the local bank level, allowing us to make timely credit decisions for prospective clients. • Yacht lending: Our yacht lending vertical provides yacht financing for larger vessels; transactions range from $750 thousand to $7.5 million.
We have further leveraged our success in Table of Contents 5 USCB Financial Holdings, Inc. 2024 10-K providing comprehensive banking solutions to SMBs to also secure the personal retail deposit relationships of the owners, operators, and employees of our commercial lending clients, which has been a cornerstone of our deposit growth strategy.
We have further leveraged our success in Table of Contents 5 USCB Financial Holdings, Inc. 2025 10-K providing comprehensive banking solutions to SMBs to also secure the personal retail deposit relationships of the owners, operators, and employees of our commercial lending clients, which has been a cornerstone of our deposit growth strategy.
Table of Contents 6 USCB Financial Holdings, Inc. 2024 10-K Title Services Florida Peninsula Title LLC is a subsidiary of the Bank that offers our clients title insurance policies for real estate transactions closed at the Bank. Licensed in the State of Florida and approved by the Florida Department of Insurance Regulation, Florida Peninsula Title LLC began operations in 2021.
Title Services Florida Peninsula Title LLC is a subsidiary of the Bank that offers our clients title insurance policies for real estate transactions closed at the Bank. Licensed in the State of Florida and approved by the Florida Department of Insurance Table of Contents 6 USCB Financial Holdings, Inc. 2025 10-K Regulation, Florida Peninsula Title LLC began operations in 2021.
See Note 15 “Regulatory Matters” of the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further details. Prompt Corrective Action Under the Federal Deposit Insurance Act (“FDIA”), the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions.
See Note 16 “Regulatory Matters” of the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further details. Prompt Corrective Action Under the Federal Deposit Insurance Act (“FDIA”), the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions.
The AML Act is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws.
The AML Act is intended to be a comprehensive reform and modernization of U.S. bank secrecy and anti-money laundering laws.
The Company meets the amended definition of an accelerated filer as of January 1, 2025 and would normally be required to provide an attestation report from its independent auditor assessing the effectiveness of its ICFR. However, as long it is an eligible emerging growth company, such auditor attestation requirement will not apply to the Company.
The Company meets the amended definition of an accelerated filer as of January 1, 2026 and would normally be required to provide an attestation report from its independent auditor assessing the effectiveness of its ICFR. However, as long as it is an eligible emerging growth company, such auditor attestation requirement will not apply to the Company.
As of December 31, 2024, the Company was not subject to any formal supervisory restrictions on its ability to pay dividends but will notify the Federal Reserve in advance of any proposed dividend to the Company's shareholders in light of the Bank's negative retained earnings.
As of December 31, 2025, the Company was not subject to any formal supervisory restrictions on its ability to pay dividends but will notify the Federal Reserve in advance of any proposed dividend to the Company's shareholders in light of the Bank's negative retained earnings.
The scope and content of the federal banking agencies’ policies on incentive compensation are continuing to develop and are likely to continue evolving, but the timeframe for finalization of such policies is not known at this time.
The scope and content of the federal banking agencies’ policies on incentive compensation are continuing to develop and are likely to continue evolving, but the timeframe for finalization, if finalized, of such policies is not known at this time.
This statutory provision is commonly called the “Volcker Rule.” At December 31, 2024, we are not subject to the Volcker Rule because of our asset size, which is below the $10.0 billion Volcker Rule threshold.
This statutory provision is commonly called the “Volcker Rule.” At December 31, 2025, we are not subject to the Volcker Rule because of our asset size, which is below the $10.0 billion Volcker Rule threshold.
Century Bank is a qualifying community banking organization, U.S. Century Bank has elected not to opt in to the CBLR framework at this time and will continue to follow the Basel III capital requirements as described above. As of December 31, 2024 and 2023, the U.S. Century Bank qualified as a “well capitalized” institution.
Although the Bank is a qualifying community banking organization, the Bank has elected not to opt in to the CBLR framework at this time and will continue to follow the Basel III capital requirements as described above. As of December 31, 2025 and 2024, the U.S. Century Bank qualified as a “well capitalized” institution.
However, non-qualifying capital instruments issued on or after May 19, 2010 do not qualify for Tier 1 capital treatment. At December 31, 2024, we had no such investments.
However, non-qualifying capital instruments issued on or after May 19, 2010 do not qualify for Tier 1 capital treatment. At December 31, 2025, we had no such investments.
Our strategy in becoming a publicly traded company and forming a BHC was to continue pursuing organic growth as well as strategic acquisitions if the opportunity arises, which efforts will be further facilitated by access to public capital and the added flexibility provided by a holding company structure.
Our strategy in becoming a publicly traded company and forming a BHC was to continue pursuing organic growth as well as strategic acquisitions if the opportunity arose, which efforts will be further facilitated by access to the public capital markets and the added flexibility provided by a holding company structure.
In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9%, less than $10.0 billion in total consolidated assets, off -balance sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets. Although U.S.
In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9%, less than $10.0 billion in total consolidated assets, off -balance sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets.
The rules adopted by the SEC under the SOA have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to USCB Financial Holdings, Inc.’s auditors and the audit committee of the Board of Directors about USCB Financial Holdings, Inc.’s internal control over financial reporting; and they have included information in USCB Financial Holdings, Inc.’s quarterly and annual reports about their evaluation and whether there have been changes in USCB Financial Holdings, Inc.’s internal control over financial reporting or in other factors that could materially affect USCB Financial Holdings, Inc.’s internal control over financial reporting.
The rules adopted by the SEC under the SOA have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to the Company’s auditors and the audit committee of the Board of Directors about the Company’s internal control over financial reporting; and they have included information in the Company’s quarterly and annual reports about their evaluation and whether there have been changes in the Company’s internal control over financial reporting or in other factors that could materially affect the Company’s internal control over financial reporting.
Our policy is that we do not discriminate on the basis of race, color, religion, sex, gender, sexual orientation, ancestry, pregnancy, medical condition, age, marital status, national origin, citizenship status, disability veteran status, gender identity, genetic information, or any other status protected by law. At December 31, 2024, we had 199 full-time equivalent employees.
Our policy is that we do not discriminate on the basis of race, color, religion, sex, gender, sexual orientation, ancestry, pregnancy, medical condition, age, marital status, national origin, citizenship status, disability veteran status, gender identity, genetic information, or any other status protected by law. At December 31, 2025, we had 205 full-time equivalent employees.
Our deposit operations are also subject to federal laws, such as: • the FDIA, which, among other things, limits the amount of deposit insurance available per account to $250,000 and imposes other limits on deposit-taking; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; Table of Contents 17 USCB Financial Holdings, Inc. 2024 10-K • Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • the Electronic Funds Transfer Act and Regulation E, which governs automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of ATMs and other electronic banking services; and • the Truth in Savings Act and Regulation DD, which requires depository institutions to provide disclosures so that consumers can make meaningful comparisons about depository institutions and accounts.
Our deposit operations are also subject to federal laws, such as: • the FDIA, which, among other things, limits the amount of deposit insurance available per account to $250,000 and imposes other limits on deposit-taking; • the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • the Electronic Funds Transfer Act and Regulation E, which governs automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of ATMs and other electronic banking services; and • the Truth in Savings Act and Regulation DD, which requires depository institutions to provide disclosures so that consumers can make meaningful comparisons about depository institutions and accounts.
The CFPB has the authority to supervise and examine depository institutions with more than $10.0 billion in assets for compliance with federal consumer laws. The authority to supervise and examine depository institutions with $10.0 billion or less in assets, such as U.S. Century Bank, for compliance with federal consumer laws remains largely with those institutions’ primary federal regulators.
The CFPB has the authority to supervise and examine depository institutions with more than $10.0 billion in assets for compliance with federal consumer laws. The authority to supervise and examine depository institutions with $10.0 billion or less in assets, such as the Bank, for compliance with federal consumer laws remains largely with those institutions’ primary federal regulators.
Under the regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in nature or incidental or complementary to a financial activity such as securities underwriting, insurance underwriting and merchant banking. USCB Financial Holdings, Inc. is not a financial holding company.
Under the regulations implementing the GLB Act, a financial holding company may engage in additional activities that are financial in nature or incidental or complementary to a financial activity such as securities underwriting, insurance underwriting and merchant banking. The Company is not a financial holding company.
Insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non- deposit creditors, including U.S. Century Bank, with respect to any extensions of credit they have made to such insured depository institution.
Insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non- deposit creditors, including the Bank, with respect to any extensions of credit they have made to such insured depository institution.
The Company is headquartered in Miami, Florida, and, through the Bank, its sole direct subsidiary, operates 10 banking centers in South Florida providing a wide range of personal and business banking products and services . As of December 31, 2024, the Company had total consolidated assets of $2.6 billion. U.S.
The Company is headquartered in Miami, Florida, and, through the Bank, its sole direct subsidiary, operates 10 banking centers in South Florida providing a wide range of personal and business banking products and services. As of December 31, 2025, the Company had total consolidated assets of $2.8 billion. U.S.
Furthermore, under applicable FDIC regulations and policy, because U.S. Century Bank has negative retained earnings, it must obtain the prior approval of the FDIC before effecting a cash dividend or other capital distribution.
Furthermore, under applicable FDIC regulations and policy, because the Bank has negative retained earnings, it must obtain the prior approval of the FDIC before effecting a cash dividend or other capital distribution.
However, the CFPB may participate in examinations of these smaller institutions on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators. As such, the CFPB may participate in examinations of U.S. Century Bank.
However, the CFPB may participate in examinations of these smaller institutions on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators. As such, the CFPB may participate in examinations of the Bank.
The information posted on our website is not incorporated into this Annual Report on Form 10-K. In addition, the FDIC and the SEC each maintains a website that contains reports and other information that is filed. Table of Contents 21 USCB Financial Holdings, Inc. 2024 10-K
The information posted on our website is not incorporated into this Annual Report on Form 10-K. In addition, the FDIC and the SEC each maintain a website that contains reports and other information that is filed. Table of Contents 21 USCB Financial Holdings, Inc. 2025 10-K
As a consequence, as of December 31, 2024, USCB Financial Holdings, Inc. was not required to comply with the requirements set forth above and will not be subject to such requirements until such time that its consolidated total assets exceed $3.0 billion or the Federal Reserve determines that USCB Financial Holdings, Inc. is no longer deemed to be a small bank holding company.
As a consequence, as of December 31, 2025, the Company was not required to comply with the requirements set forth above and will not be subject to such requirements until such time that its consolidated total assets exceed $3.0 billion or the Federal Reserve determines that the Company is no longer deemed to be a small bank holding company.
As directed by the SOA, USCB Financial Holdings, Inc.’s principal executive officer and principal financial officer are required to certify that the Company’s quarterly and annual reports do not contain any untrue statement of a material fact.
As directed by the SOA, the Company’s principal executive officer and principal financial officer are required to certify that the Company’s quarterly and annual reports do not contain any untrue statement of a material fact.
Our business, financial condition, results of operations or prospects may be adversely affected, perhaps materially, as a result of any such new legislation or regulations. Federal Securities Laws and the Sarbanes-Oxley Act USCB Financial Holdings, Inc.’s Class A common stock is registered with the SEC under Section 12(b) of the Securities Exchange Act of 1934.
Our business, financial condition, results of operations or prospects may be adversely affected, perhaps materially, as a result of any such new legislation or regulations. Federal Securities Laws and the Sarbanes-Oxley Act The Company Class A common stock is registered with the SEC under Section 12(b) of the Exchange Act.
The federal banking agencies have also adopted guidelines establishing safety and soundness standards for all insured depository institutions including U.S. Century Bank.
The federal banking agencies have also adopted guidelines establishing safety and soundness standards for all insured depository institutions including the Bank.
The 2018 Act, among other matters, expanded the definition of “qualified mortgages” which may be held by a financial institution and simplified the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10.0 billion by instructing (as described below) the federal banking regulators to establish a single “Community Bank Leverage Ratio” of between 8 and 10 percent to replace the leverage and risk-based regulatory capital ratios.
The 2018 Act, among other matters, expanded the definition of “qualified mortgages” which may be held by a financial institution and simplified the regulatory capital rules for financial institutions and their holding companies with total consolidated assets of less than $10.0 billion by instructing (as described below) the federal banking regulators to establish a single “Community Bank Leverage Ratio” discussed below.
Permissible Activities and Investments Banking laws generally restrict the ability of USCB Financial Holdings, Inc. to engage in activities other than those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto.
Permissible Activities and Investments Banking laws generally restrict the ability of the Company to engage in activities other than those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto.
Prior to the Effective Date, the Bank’s Class A common stock was registered under Section 12(b) of the Exchange Act, and the Bank was subject to the information requirements of the Exchange Act and, in accordance with Section 12(i) thereof, filed quarterly reports, proxy statements and other information with the FDIC.
Prior to the Effective Date, the Bank’s Class A common stock was registered under Section 12(b) of the Exchange Act, and the Bank was subject to the information requirements of the Exchange Act and, in accordance with Section 12(i) thereof, filed quarterly reports, proxy statements and other information with the Federal Deposit Insurance Corporation (“FDIC”).
Table of Contents 18 USCB Financial Holdings, Inc. 2024 10-K The Volcker Rule The Dodd-Frank Act prohibits (subject to certain exceptions) us and our affiliates from engaging in short term proprietary trading in securities and derivatives and from investing in and sponsoring certain investment companies defined in the rule as “covered funds” (including not only hedge funds, commodity pools and private equity funds, but also a range of asset securitization structures that do not meet exemptive criteria in the final rules).
The Volcker Rule The Dodd-Frank Act prohibits (subject to certain exceptions) us and our affiliates from engaging in short term proprietary trading in securities and derivatives and from investing in and sponsoring certain investment companies defined in the rule as “covered funds” (including not only hedge funds, commodity pools and private equity funds, but also a range of asset securitization structures that do not meet exemptive criteria in the final rules).
In addition to substantive penalties and corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take compliance with such laws and CRA into account when regulating and supervising other activities of the bank, including in acting on expansionary proposals such as when a bank submits an application to establish bank branches, merge with another bank, or acquire the assets and assume the liabilities of another bank.
In addition to substantive penalties and corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take Table of Contents 19 USCB Financial Holdings, Inc. 2025 10-K compliance with such laws and CRA into account when regulating and supervising other activities of the bank, including in acting on expansionary proposals such as when a bank submits an application to establish bank branches, merge with another bank, or acquire the assets and assume the liabilities of another bank.
In approving acquisitions or the addition of activities, the Federal Reserve considers, among other things, whether the acquisition or the additional activities can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition or gains in efficiency, that outweigh such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices.
In approving acquisitions or the addition of activities, the Federal Table of Contents 10 USCB Financial Holdings, Inc. 2025 10-K Reserve considers, among other things, whether the acquisition or the additional activities can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition or gains in efficiency, that outweigh such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices.
As a general matter, a party is deemed to conclusively control a depository institution or other company if the party owns or controls 25% or more of any class of voting stock.
As a general matter, a party is deemed to conclusively control a depository institution or other company if the party owns or controls 25% or more of any class of voting stock or owns one-third or more of the equity of the depository institution or its holding company.
Bank and Bank Holding Company Regulation As a Florida-chartered state bank, U.S. Century Bank is subject to ongoing and comprehensive supervision, regulation, examination, and enforcement by the FDIC and the Florida Office of Financial Regulation (“FOFR”).
Bank and Bank Holding Company Regulation As a Florida-chartered commercial bank, the Bank is subject to ongoing and comprehensive supervision, regulation, examination, and enforcement by the FDIC and the Florida Office of Financial Regulation (“FOFR”).
Changes in the discount rate on member bank borrowing, availability of borrowing at the “discount Table of Contents 19 USCB Financial Holdings, Inc. 2024 10-K window,” open market operations, changes in the Fed Funds target interest rate, the imposition of changes in reserve requirements against member banks’ deposits and assets of foreign banking centers and the imposition of and changes in reserve requirements against certain borrowings by banks and their affiliates are some of the instruments of monetary policy available to the Federal Reserve.
Changes in the discount rate on member bank borrowing, availability of borrowing at the “discount window,” open market operations, changes in the Fed Funds target interest rate, the imposition of changes in reserve requirements against member banks’ deposits and assets of foreign banking centers and the imposition of and changes in reserve requirements against certain borrowings by banks and their affiliates are some of the instruments of monetary policy available to the Federal Reserve.
These laws and regulations have a material effect on the operations of USCB Financial Holdings, Inc. and its direct and indirect subsidiaries, including U.S. Century Bank. Statutes, regulations and regulatory policies limit the activities in which we may engage and the conduct of our permitted activities and establish capital requirements with which we must comply.
These laws and regulations have a material effect on the operations of the Company and its direct and indirect subsidiaries, including the Bank. Statutes, regulations and regulatory policies limit the activities in which we may engage and the conduct of our permitted activities and establish capital requirements with which we must comply.
The Federal Reserve's jurisdiction also extends to any company that is directly or indirectly controlled by a bank holding company. USCB Financial Holdings, Inc., which controls U.S. Century Bank, is a bank holding company and, as such, is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Federal Reserve.
The Federal Reserve's jurisdiction also extends to any company that is directly or indirectly controlled by a bank holding company. The Company, which controls the Bank, is a bank holding company and, as such, is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Federal Reserve.
Federal banking agencies, including the FDIC, have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.
Federal banking agencies, including the FDIC, have adopted guidelines for establishing information security standards and cybersecurity programs for Table of Contents 18 USCB Financial Holdings, Inc. 2025 10-K implementing safeguards. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.
Furthermore, the Federal Reserve policy is that a bank holding company should stand ready to use available resources to provide adequate capital to its subsidiary banks during periods Table of Contents 9 USCB Financial Holdings, Inc. 2024 10-K of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks.
Furthermore, the Federal Reserve policy is that a bank holding company should stand ready to use available resources to provide adequate capital to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks.
Table of Contents 15 USCB Financial Holdings, Inc. 2024 10-K As a member of the FHLB of Atlanta, we are required to own capital stock in the FHLB in an amount at least equal to 0.07% (or 7 basis points), which is subject to annual adjustments, of the Bank’s total assets at the end of each calendar year (up to a maximum of $18.0 million), plus 4.75% of our outstanding advances (borrowings) from the FHLB of Atlanta under the activity-based stock ownership requirement.
As a member of the FHLB of Atlanta, we are required to own capital stock in the FHLB in an amount at least equal to 0.07% (or 7 basis points), which is subject to annual adjustments, of the Bank’s total assets at the end of each calendar year (up to a maximum of $18.0 million), plus 4.75% of our outstanding advances (borrowings) from the FHLB of Atlanta and 0.10% of the amount of outstanding letters of credit under the activity-based stock ownership requirements.
Additionally, FDIC-insured depository institutions are required to pay deposit insurance assessments to the FDIC. The amount of a particular institution's deposit insurance assessment is based on that institution's risk classification under an FDIC risk-based assessment system. An institution's risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators.
The amount of a particular institution's deposit insurance assessment is based on that institution's risk classification under an FDIC risk-based assessment system. An institution's risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators.
Table of Contents 13 USCB Financial Holdings, Inc. 2024 10-K In June 2010, the federal banking agencies jointly adopted the Guidance on Sound Incentive Compensation Policies, or GSICP. The GSICP was intended to ensure that banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
In June 2010, the federal banking agencies jointly adopted the Guidance on Sound Incentive Compensation Policies, or GSICP. The GSICP was intended to ensure that banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
Financial institutions must also take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report transactions that meet certain dollar amount thresholds as well as any suspicious transactions.
Financial institutions must also take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report transactions that meet certain dollar amount thresholds as Table of Contents 16 USCB Financial Holdings, Inc. 2025 10-K well as any suspicious transactions.
Under the rules, AOCI generally flows through to regulatory capital; however, community banks and their holding companies (if any) were allowed to make a one-time irrevocable opt-out election to continue to treat AOCI the same as under the old regulations for regulatory capital purposes.
Under the rules, AOCI generally flows through to regulatory capital; however, community banks and their holding companies (if any) were allowed to make a one-time irrevocable opt-out election to continue to treat AOCI Table of Contents 11 USCB Financial Holdings, Inc. 2025 10-K the same as under the old regulations for regulatory capital purposes.
OFAC publishes lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts; owned or controlled by, or acting on behalf of target countries; and narcotics traffickers. Such persons are referred to as “sanctioned” persons.
OFAC publishes lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts; owned Table of Contents 17 USCB Financial Holdings, Inc. 2025 10-K or controlled by, or acting on behalf of target countries; and narcotics traffickers. Such persons are referred to as “sanctioned” persons.
However, if USCB Financial Holdings, Inc. had been subject to the requirements, it would have been in compliance with such requirements.
However, if the Company had been subject to the requirements, it would have been in compliance with such requirements.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written agreement with, the Federal Reserve.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an Table of Contents 13 USCB Financial Holdings, Inc. 2025 10-K unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written agreement with, the Federal Reserve.
While the 2018 Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10.0 billion and for large banks with assets of more than $50.0 billion. Many of these changes resulted in meaningful regulatory relief for community banks such as U.S.
While the 2018 Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10.0 billion and for large banks with assets of more than $50.0 billion.
At December 31, 2024, the Bank was in compliance with the above restrictions. FDIC Deposit Insurance The FDIC is an independent federal agency that insures the deposits of federally insured depository institutions up to applicable limits.
At December 31, 2025, the Bank was in compliance with the above restrictions. FDIC Deposit Insurance The FDIC is an independent federal agency that insures the deposits of federally insured depository institutions up to applicable limits. The FDIC also has certain regulatory, examination and enforcement powers with respect to FDIC-insured institutions.
The increased assessment would improve the likelihood that the DIF reserve ratio would reach the required minimum by the statutory deadline, consistent with the FDIC’s amended Restoration Plan. The FDIC also concurrently maintained the Designated Reserve Ratio (“DDR”) for the DIF at 2% for 2023.
The increased assessment would improve the likelihood that the DIF reserve ratio would reach the required minimum by the statutory deadline, consistent with the FDIC’s amended Restoration Plan. The FDIC is maintain ing the Designated Reserve Ratio (“DRR”) for the DIF at 2% for 2026.
The SOA includes specific disclosure requirements and corporate governance rules, requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of certain issues by the SEC.
The SOA includes specific disclosure requirements and corporate governance rules, requires the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of certain issues Table of Contents 20 USCB Financial Holdings, Inc. 2025 10-K by the SEC.
We also leverage our relationships with our law firm clients to generate personal deposit accounts. • Correspondent Banking services: Our Global Banking vertical provides correspondent banking services for banks headquartered in certain Latin America and the Caribbean countries. We also cross-sell our correspondent banking relationships to generate international personal banking clients for our Bank.
By leveraging our deep relationships with law firm clients, we also generate opportunities to expand personal deposit account relationships across their organizations. • Correspondent Banking services: Our Global Banking vertical provides correspondent banking services for banks headquartered in certain Latin America and Caribbean countries. We also cross-sell our correspondent banking relationships to generate international personal banking clients for our Bank.
Human Capital Resources We respect the values and diversity exhibited throughout our organization and the community. Diversity is an integral part of our organization’s culture. We seek the active engagement and participation of people with diverse backgrounds.
As a consequence, we will cease to be an EGC as of December 31, 2026. Human Capital Resources We respect the values and diversity exhibited throughout our organization and the community. Diversity is an integral part of our organization’s culture. We seek the active engagement and participation of people with diverse backgrounds.
Launched in 2016, we offer our HOA customers a unique combination of market knowledge of a local bank, and a highly personalized “white glove” approach to customer service. • Jurist Advantage and Private Client Group services: Our Jurist Advantage and Private Client Group vertical provides customized banking solutions for law firms as well as their partners, associates, staff, and high net worth clients.
Launched in 2016, we offer our HOA customers a unique combination of market knowledge of a local bank, and a highly personalized “white glove” approach to customer service. • Private Client Group services: The Private Client Group provides tailored banking solutions for professionals—particularly those in law firms, including partners, associates, and staff—as well as physicians, dentists, veterinarians, and other high ‑ net ‑ worth individuals.
Table of Contents 12 USCB Financial Holdings, Inc. 2024 10-K As of December 31, 2024, our ratio of construction loans to total risk-based capital was 23%, and therefore, we were under the 100% threshold set forth in clause (iii) in the paragraph above.
As of As of December 31, 2025, our ratio of construction loans to total risk-based capital was 31%, and therefore, we were under the 100% threshold set forth in clause (iii) in the paragraph above.
Bank holding companies which are subject to the SBHC Policy are not Table of Contents 11 USCB Financial Holdings, Inc. 2024 10-K subject to compliance with the regulatory capital requirements described above until they exceed $3.0 billion in assets.
Bank holding companies which are subject to the SBHC Policy are not subject to compliance with the regulatory capital requirements described above until they exceed $3.0 billion in assets.
Table of Contents 10 USCB Financial Holdings, Inc. 2024 10-K In addition, as a general matter, the establishment or acquisition by USCB Financial Holdings, Inc. of a non-bank entity, or the initiation of a non-banking activity, requires prior regulatory approval.
In addition, as a general matter, the establishment or acquisition by the Company of a non-bank entity, or the initiation of a non-banking activity, requires prior regulatory approval.
These guidelines describe the criteria regulatory agencies will use as indicators to identify institutions potentially exposed to commercial real estate concentration risk.
Commercial Real Estate Concentration Guidelines The federal banking regulators have implemented guidelines to address increased concentrations in commercial real estate loans. These guidelines describe the criteria regulatory agencies will use as indicators to identify institutions potentially exposed to commercial real estate concentration risk.
As a public company, USCB Financial Holdings, Inc. is also subject to the Sarbanes-Oxley Act of 2002 (“SOA”), which is applicable to all companies, both U.S. and non-U.S., that file periodic reports under the Exchange Act.
The Company is subject to the proxy and tender offer rules, insider trading reporting requirements and restrictions, and certain other requirements under the Exchange Act. As a public company, the Company is also subject to the Sarbanes-Oxley Act of 2002 (“SOA”), which is applicable to all companies, both U.S. and non-U.S., that file periodic reports under the Exchange Act.
You should refer to the full text of the statutes, regulations, and corresponding guidance for more information. 2018 Regulatory Reform In May 2018 the Economic Growth, Regulatory Relief and Consumer Protection Act (the “2018 Act”), was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) enacted in 2010.
Table of Contents 8 USCB Financial Holdings, Inc. 2025 10-K 2018 Regulatory Reform In May 2018 the Economic Growth, Regulatory Relief and Consumer Protection Act (the “2018 Act”), was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) enacted in 2010.
In addition, loans or other extensions of credit by the financial institution to the affiliate are to be collateralized in accordance with the requirements set for in Section 23 of the Federal Reserve Act. Sections 22(g) and (h) of the Federal Reserve Act place restrictions on loans to executive officers, directors and principal stockholders.
In addition, loans or other extensions of credit by the financial institution to the affiliate are to be collateralized in accordance with the requirements set forth in Section 23 of the Federal Reserve Act.
Under this requirement, USCB Financial Holdings, Inc. in the future could be required to provide financial assistance to U.S. Century Bank should it experience financial distress. Such support may be required at times when, absent this statutory and Federal Reserve policy requirement, a bank holding company may not be inclined or able to provide it.
Such support may be required at times when, absent this statutory and Federal Reserve policy requirement, a bank holding company may not be inclined or able to provide it.
Competition Our markets are highly competitive, and we compete with a wide range of lenders and other financial institutions within our markets, including local, regional, national, and international commercial banks and credit unions.
The Miami Metro Area remains the most populous metro area in Florida with 6.7 million residents reflecting, a growth of 27.62% since 2020. Competition Our markets are highly competitive, and we compete with a wide range of lenders and other financial institutions within our markets, including local, regional, national, and international commercial banks and credit unions.
Following its most recent CRA performance evaluation in April 2023, the Bank received an overall rating of "Satisfactory." In October 2023, the federal banking agencies jointly issued a final rule to revise the regulations implementing the CRA.
Following its most recent CRA performance evaluation in April 2023, the Bank received an overall rating of "Satisfactory." In October 2023, the federal banking agencies jointly issued a final rule to modernize CRA, but in light of litigation, the agencies issued a joint proposal in July 2025 to rescind this rule and reinstate the CRA framework that existed prior to the 2023 final rule.
The material statutory and regulatory requirements that are applicable to us are summarized below. The description below is not intended to summarize all laws and regulations applicable to us. These summary descriptions are not intended to be a complete explanation of such laws and regulations and their effects on USCB Financial Holdings, Inc. and U.S.
The material statutory and regulatory requirements that are applicable to us are summarized below. The description below is not intended to summarize all laws and regulations applicable to us.
The CTA establishes Table of Contents 16 USCB Financial Holdings, Inc. 2024 10-K uniform beneficial ownership reporting requirements for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States.
The CTA establishes uniform beneficial ownership reporting requirements for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States. The CTA authorizes FinCEN to collect that information and share it with authorized government authorities and financial institutions, subject to effective safeguards and controls.
Our compliance team is experienced in issues related to correspondent banking, and we have frequent and regular open communication with our correspondent bank clients to ensure proper compliance controls are maintained at such institutions. • Medical Advantage: MD Advantage was launched in 2024; this vertical provides concierge-level banking services to physicians, dentists, and veterinarians.
Our compliance team is experienced in issues related to correspondent banking, and we have frequent and regular open communication with our correspondent bank clients to ensure proper compliance controls are maintained at such institutions. Credit Practices Our underwriting process is informed by a conservative credit culture that encourages prudent lending.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks are discussed more fully in this Item 1A and include, without limitation, the following: Risks Related to our Business and Operations • Our business operations and lending activities are concentrated in South Florida, and we are more sensitive to adverse changes in the local economy than our more geographically diversified competitors. • Our concentration of real estate loans in a limited market area exposes us to lending risks. • The small- to medium-sized businesses to which we lend may have fewer resources to weather adverse business developments, which may impair a borrower's ability to repay a loan. • Inflationary pressures and rising prices may affect our results of operations and financial condition. • The soundness of other financial institutions could adversely affect us. • Insufficient liquidity could impair our ability to fund operations and jeopardize our financial condition, results of operations, growth and prospects. • Changes in U.S. trade policies and other global political factors beyond our control, including the imposition of tariffs, retaliatory tariffs, or other sanctions, may adversely impact our business, financial condition and results of operations. • Our lending business is subject to credit risk, which could lead to unexpected losses. • The transition from the use of LIBOR may adversely impact the interest rates paid on certain financial instruments. • Natural disasters and severe weather events in Florida could have a material adverse impact on our business, financial condition and operations. • Our business is subject to interest rate risk and variations in interest rates may materially and adversely affect our financial performance. • A failure or the perceived risk of a failure to raise the statutory debt limit of the U.S. in the future could have a material adverse effect on our business, financial condition and results of operations. • Our allowance for credit losses may not be sufficient to absorb potential losses in our loan portfolio. • Our commercial loan portfolio may expose us to increased credit risk. • The imposition of further limits by the bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings. • Our SBA lending program depends on our status as a participant in the SBA's Preferred Lenders Program, and we face specific risks associated with originating SBA loans and selling the guaranteed portion thereof. • The SBA may not honor its guarantees if we do not originate loans in compliance with SBA guidelines.
Biggest changeThese risks are discussed more fully in this Item 1A and include, without limitation, the following: Risks Related to our Business and Operations • Our business operations and lending activities are concentrated in South Florida, and we are more sensitive to adverse changes in the local economy than our more geographically diversified competitors. • Our concentration of real estate loans in a limited market area exposes us to lending risks. • The small- to medium-sized businesses to which we lend may have fewer resources to weather adverse business developments, which may impair a borrower's ability to repay a loan. • Inflationary pressures and rising prices may affect our results of operations and financial condition. • The soundness of other financial institutions could adversely affect us. • Insufficient liquidity could impair our ability to fund operations and jeopardize our financial condition, results of operations, growth and prospects. • Significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition. • Our lending business is subject to credit risk, which could lead to unexpected losses. • Natural disasters and severe weather events in Florida could have a material adverse impact on our business, financial condition and operations. • Our business is subject to interest rate risk and variations in interest rates may materially and adversely affect our financial performance. • Our allowance for credit losses may not be sufficient to absorb potential losses in our loan portfolio. • Our commercial loan portfolio may expose us to increased credit risk. • The imposition of further limits by the bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings. • Our SBA lending program depends on our status as a participant in the SBA's Preferred Lenders Program, and we face specific risks associated with originating SBA loans and selling the guaranteed portion thereof. • The SBA may not honor its guarantees if we do not originate loans in compliance with SBA guidelines. • Correspondent banking is an important part of our business, which creates increased BSA/AML risk. • We may not recover all amounts that are contractually owed to us by our borrowers.
Additionally, significant future issuances of common stock or common stock equivalents, or changes in the direct or indirect ownership of our common stock or common stock equivalents, could cause an ownership change and could limit our ability to utilize our net operating loss carryforwards and other tax attributes pursuant to Section 382 and Section 383 of the Internal Revenue Code, as 1986, as amended.
Additionally, significant future issuances of common stock or common stock equivalents, or changes in the direct or indirect ownership of our common stock or common stock equivalents, could cause an ownership change and could limit our ability to utilize our net operating loss carryforwards and other tax attributes pursuant to Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended.
In addition, there are continuing concerns related to, among other things, the increasing level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, inflation, the potential resurgence of economic and political tensions with China, the continuing war in Ukraine, the conflict in Gaza and the level of oil and natural gas prices due to, among other things, Russian supply disruptions resulting from the ongoing Ukrainian conflict, each of which may have a destabilizing effect on financial markets and economic activity.
In addition, there are continuing concerns related to, among other things, the increasing level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, inflation, the potential resurgence of economic and political tensions with China, the continuing war in Ukraine and the level of oil and natural gas prices due to, among other things, Russian supply disruptions resulting from the ongoing Ukrainian conflict, each of which may have a destabilizing effect on financial markets and economic activity.
Table of Contents 24 USCB Financial Holdings, Inc. 2024 10-K • Because we are an emerging growth company and because we have decided to take advantage of certain exemptions from various reporting and other requirements applicable to emerging growth companies, our Class A common stock could be less attractive to investors. • Because we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company,” our financial statements may not be comparable to companies that comply with these accounting standards as of the public company effective dates. • We have existing investors that own a significant amount of our common stock whose individual interests may differ from yours. • Provisions in our governing documents and Florida law may have an anti-takeover effect and there are substantial regulatory limitations on changes of control of the Company.
Table of Contents 24 USCB Financial Holdings, Inc. 2025 10-K • Because we are an emerging growth company and because we have decided to take advantage of certain exemptions from various reporting and other requirements applicable to emerging growth companies, our Class A common stock could be less attractive to investors. • Because we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company,” our financial statements may not be comparable to companies that comply with these accounting standards as of the public company effective dates. • We have existing investors that own a significant amount of our common stock whose individual interests may differ from yours. • Provisions in our governing documents and Florida law may have an anti-takeover effect and there are substantial regulatory limitations on changes of control of the Company.
To prepare for eventual compliance with the auditor attestation requirement of Section 404 of the SOA once we no longer qualify as an emerging growth company or as a non-accelerated smaller reporting company, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
To prepare for compliance with the auditor attestation requirement of Section 404 of the SOA once we no longer qualify as an emerging growth company or as a non-accelerated smaller reporting company, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
The new rules raised the risk- based capital requirements and revised the methods for calculating risk-weighted assets, usually resulting in higher risk weights. The new rules now apply to us. The Basel III rules increased capital requirements and included two new capital measurements, a risk-based common equity Tier 1 ratio and a capital conservation buffer.
The new rules raised the risk- based capital requirements and revised the methods for calculating risk-weighted assets, usually resulting in higher risk weights. The rules apply to us. The Basel III rules increased capital requirements and included two new capital measurements, a risk-based common equity Tier 1 ratio and a capital conservation buffer.
In addition to the higher required capital ratios and the new deductions and adjustments, the final rules increased the risk weights for certain assets, meaning that we will have to hold more capital against these assets. We are also be required to hold capital against short-term commitments that are not unconditionally cancellable.
In addition to the higher required capital ratios and the new deductions and adjustments, the final rules increased the risk weights for certain assets, meaning that we will have to hold more capital against these assets. We are also required to hold capital against short-term commitments that are not unconditionally cancellable.
We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Our current and future uses of artificial intelligence (AI) and other emerging technologies may create additional risks.
We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Our current and future uses of artificial intelligence and other emerging technologies may create additional risks.
The SBA may not honor its guarantees if we do not originate loans in compliance with SBA guidelines . SBA lending programs typically guarantee 75.0% of the principal on an underlying loan.
The SBA may not honor its guarantees if we do not originate loans in compliance with SBA guidelines . SBA lending programs typically guarantee 75% of the principal on an underlying loan.
Because of the requirements to overcome this restriction, this provision of the amended Articles of Incorporation could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor. Table of Contents 47 USCB Financial Holdings, Inc. 2024 10-K Item 1B. Unresolved Staff Comments None.
Because of the requirements to overcome this restriction, this provision of the amended Articles of Incorporation could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor. Table of Contents 47 USCB Financial Holdings, Inc. 2025 10-K Item 1B. Unresolved Staff Comments None.
Also, for preservation and continued availability of our "deferred tax assets," our amended Articles of Incorporation prohibits any direct or indirect transfer of stock or options to acquire stock to any person who, as a result of the transfer, would own 4.95% or more of our stock, as long as we continue to have "deferred tax assets," subject to limited exceptions as provided in our amended Articles of Incorporation.
Also, for preservation and continued availability of our "deferred tax assets," our amended Articles of Incorporation prohibit any direct or indirect transfer of stock or options to acquire stock to any person who, as a result of the transfer, would own 4.95% or more of our stock, as long as we continue to have "deferred tax assets," subject to limited exceptions as provided in our amended Articles of Incorporation.
Table of Contents 26 USCB Financial Holdings, Inc. 2024 10-K Insufficient liquidity could impair our ability to fund operations and jeopardize our financial condition, results of operations, growth and prospects. Effective liquidity management is essential for the operation of our business.
Table of Contents 26 USCB Financial Holdings, Inc. 2025 10-K Insufficient liquidity could impair our ability to fund operations and jeopardize our financial condition, results of operations, growth and prospects. Effective liquidity management is essential for the operation of our business.
Table of Contents 25 USCB Financial Holdings, Inc. 2024 10-K Our concentration of real estate loans in a limited market area exposes us to lending risks.
Table of Contents 25 USCB Financial Holdings, Inc. 2025 10-K Our concentration of real estate loans in a limited market area exposes us to lending risks.
Further, any new laws, rules and regulations, such as were imposed under the Dodd-Frank Act or the Regulatory Relief Act, could make compliance more difficult or expensive or otherwise adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.
Further, any new laws, rules and regulations, such as were imposed under the Dodd-Frank Act or the 2018 Act, could make compliance more difficult or expensive or otherwise adversely affect our business, prospects, cash flow, liquidity, financial condition and results of operations.
Inflationary pressures and rising prices may affect our results of operations and financial condition. The inflationary outlook in the United States remains uncertain. As of December 31, 2024, the consumer price index was 2.9% year-over-year. While this is a significant reduction to the rate of inflation experienced in 2022 and 2023, it is still above the FRB’s targeted rate.
Inflationary pressures and rising prices may affect our results of operations and financial condition. The inflationary outlook in the United States remains uncertain. As of December 31, 2025, the consumer price index was 2.7% year-over-year. While this is a significant reduction to the rate of inflation experienced in 2023 and 2024, it is still above the FRB’s targeted rate.
Risks Related to Our Tax, Accounting and Regulatory Compliance • Our ability to recognize the benefits of our deferred tax assets is dependent on future cash flows and taxable income and may be materially impaired upon significant changes in ownership of our common stock. • The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate. • As a public company, we may not efficiently or effectively create an effective internal control environment, and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets, cause the price of our Class A common stock to decline and subject us to regulatory penalties. • We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us. • We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations and corresponding enforcement proceedings. • Significantly heightened regulatory and supervisory expectations and scrutiny in the United States have increased our compliance, regulatory, and other risks and costs and subject us to legal and regulatory examinations, investigations, and enforcement actions. • We are subject to capital adequacy requirements and may become subject to more stringent capital requirements, which could adversely affect our financial condition and operations. • We are periodically subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us. • We are subject to numerous laws and regulations of certain regulatory agencies designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. • Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations. • Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
Risks Related to Our Tax, Accounting and Regulatory Compliance • Our ability to recognize the benefits of our deferred tax assets is dependent on future cash flows and taxable income and may be materially impaired upon significant changes in ownership of our common stock. • The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate. • As a public company, we may not efficiently or effectively create an effective internal control environment, and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets, cause the price of our Class A common stock to decline and subject us to regulatory penalties. • We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us. • We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations and corresponding enforcement proceedings. • Significantly heightened regulatory and supervisory expectations and scrutiny in the United States have increased our compliance, regulatory, and other risks and costs and subject us to legal and regulatory examinations, investigations, and enforcement actions. • We are subject to capital adequacy requirements and may become subject to more stringent capital requirements, which could adversely affect our financial condition and operations. • We are periodically subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us. • We are subject to numerous laws and regulations of certain regulatory agencies designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. • Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations.
Our governing documents include provisions that: • empower our Board, without shareholder approval, to issue shares of preferred stock, the terms of which, including voting power, are set by our Board; • provide that directors may be removed from office only for cause and only upon a majority vote of the shares of our Company with voting power; • prohibit holders of our Class A common stock to take action by written consent in lieu of a shareholder meeting; • require holders of at least 10% of our Class A common stock to call a special meeting; • do not provide for cumulative voting in elections of our directors; • provide that our Board has the authority to amend our Amended and Restated Bylaws without shareholder approval; • require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing and satisfy disclosure requirements; and • enable our Board to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase until the next meeting of shareholders by a majority vote of the directors present at a meeting of directors.
Table of Contents 46 USCB Financial Holdings, Inc. 2025 10-K Our governing documents include provisions that: • empower our Board, without shareholder approval, to issue shares of preferred stock, the terms of which, including voting power, are set by our Board; • provide that directors may be removed from office only for cause and only upon a majority vote of the shares of our Company with voting power; • prohibit holders of our Class A common stock to take action by written consent in lieu of a shareholder meeting; • require holders of at least 10% of our Class A common stock to call a special meeting; • do not provide for cumulative voting in elections of our directors; • provide that our Board has the authority to amend our Amended and Restated Bylaws without shareholder approval; • require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing and satisfy disclosure requirements; and • enable our Board to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase until the next meeting of shareholders by a majority vote of the directors present at a meeting of directors.
While we currently meet these new requirements of the Basel III-based capital requirements, we may fail to do so in the future.
While we currently meet the requirements of the Basel III-based capital requirements, we may fail to do so in the future.
For as long as we remain an emerging growth company, we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not emerging growth companies, including: • we may present only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations • we are exempt from the requirements to obtain an attestation and report from our auditors on management’s assessment of our internal control over financial reporting under the SOA; • we are permitted to have less extensive disclosure about our executive compensation arrangements; and • we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements.
For as long as we remain an emerging growth company, we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not emerging growth companies, including: • we may present only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations Table of Contents 45 USCB Financial Holdings, Inc. 2025 10-K • we are exempt from the requirements to obtain an attestation and report from our auditors on management’s assessment of our internal control over financial reporting under the SOA; • we are permitted to have less extensive disclosure about our executive compensation arrangements; and • we are not required to give our shareholders non-binding advisory votes on executive compensation or golden parachute arrangements.
Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations.
Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations, including through AI capabilities.
Table of Contents 38 USCB Financial Holdings, Inc. 2024 10-K Despite efforts to ensure the integrity and security of our systems, it is possible that we may not be able to anticipate, detect or recognize threats to our systems or to implement effective preventive measures against all efforts to breach our security inside or outside our business, especially because the techniques used to attack our systems change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources, including individuals or groups who are associated with external service providers or who are or may be involved in organized crime or linked to terrorist organizations or hostile foreign governments.
Despite efforts to ensure the integrity and security of our systems, it is possible that we may not be able to anticipate, detect or recognize threats to our systems or to implement effective preventive measures against all efforts to breach our security inside or outside our business, especially because the techniques used to attack our systems change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources, including individuals or groups who are associated with external service providers or who are or may be involved in organized crime or linked to terrorist organizations or hostile foreign governments.
As a result, while the overall funds increased, the cost of it increased at a lesser pace when compared to the increase in cost of deposits from 2022 to 2023.
As a result, while the overall cost of funds increased, as compared to 2022 and 2023, it increased at a slower pace when compared to the increase in the cost of deposits from 2022 to 2023.
Our critical accounting policies, which are included in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider critical because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures.
Our critical accounting policies, which are included Table of Contents 40 USCB Financial Holdings, Inc. 2025 10-K in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider critical because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures.
A successful penetration or circumvention of the security of our systems, including those of our third-party vendors, could cause serious negative consequences, including significant disruption of our operations, misappropriation of confidential information, or damage to computers or systems, and may result in violations of applicable privacy and other laws, financial loss, loss of confidence in our security measures, customer dissatisfaction, increased insurance premiums, significant litigation exposure and harm to our reputation, all of which could have a material adverse effect on our business, financial condition, results of operations, and future prospects.
Table of Contents 38 USCB Financial Holdings, Inc. 2025 10-K A successful penetration or circumvention of the security of our systems, including those of our third-party vendors, could cause serious negative consequences, including significant disruption of our operations, misappropriation of confidential information, or damage to computers or systems, and may result in violations of applicable privacy and other laws, financial loss, loss of confidence in our security measures, customer dissatisfaction, increased insurance premiums, significant litigation exposure and harm to our reputation, all of which could have a material adverse effect on our business, financial condition, results of operations, and future prospects.
If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation may be negatively impacted.
If we become subject to such regulatory actions, our business, financial condition, result s of operations and reputation may be negatively impacted.
In addition, Patriot and Priam are each entitled to nominate a director to our Board and have certain subscription rights to purchase new equity securities that we issue in the future, in each case as long as certain equity ownership criteria are met. Patriot and Priam also have certain registration rights, including demand registration rights, and information rights.
In addition, Patriot and Priam are each entitled to nominate a director to our Board and have certain subscription rights to purchase new equity securities that we issue in the future, in each case as long as certain equity ownership criteria are met.
Table of Contents 22 USCB Financial Holdings, Inc. 2024 10-K • Correspondent banking is an important part of our business, which creates increased BSA/AML risk. • We may not recover all amounts that are contractually owed to us by our borrowers. • Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future. • We engage in lending secured by real estate and may foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property and other risks, including exposure to environmental liability, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all. • We are exposed to risk of environmental liability when we take title to property. • We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors. • We face significant operational risks because the nature of the financial services business involves a high volume of transactions. • We have several large depositor relationships, the loss of which could force us to fund our business through more expensive and less stable sources. • Our securities portfolio performance in difficult market conditions could have adverse effects on our results of operations. • We may not effectively execute on our expansion strategy, which may adversely affect our ability to maintain our historical growth and earnings trends. • New lines of business, products, product enhancements or services may subject us to additional risk. • Our business needs and future growth may require us to raise additional capital and that capital may not be available on terms acceptable to us or may be dilutive to existing shareholders. • We may grow through mergers or acquisitions, a strategy that may not be successful or, if successful, may produce risks in successfully integrating and managing the merged companies or acquisitions and may dilute our shareholders. • The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business. • Damage to our reputation could significantly harm our businesses. • We face strong competition from financial services companies and other companies that offer banking services, which could materially and adversely affect our business. • We must respond to rapid technological changes to remain competitive. • We continually encounter technological change, and we may have fewer resources than many of our competitors to invest in technological improvements. • Our current and future uses of Artificial Intelligence (AI) and other emerging technologies may create additional risks. • A failure, interruption, or breach in the security of our systems, or those of our contracted vendors, could disrupt our business, result in the disclosure of confidential information, damage our reputation, and create significant financial and legal exposure. • We rely on other companies to provide key components of our business infrastructure and our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.
Table of Contents 22 USCB Financial Holdings, Inc. 2025 10-K • Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future. • We engage in lending secured by real estate and may foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property and other risks, including exposure to environmental liability, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all. • We are exposed to risk of environmental liability when we take title to property. • We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors. • We face significant operational risks because the nature of the financial services business involves a high volume of transactions. • We have several large depositor relationships, the loss of which could force us to fund our business through more expensive and less stable sources. • Any change in the Bank's ability to gather brokered deposits may adversely impact the Bank. • Our securities portfolio performance in difficult market conditions could have adverse effects on our results of operations. • We may not effectively execute on our expansion strategy, which may adversely affect our ability to maintain our historical growth and earnings trends. • New lines of business, products, product enhancements or services may subject us to additional risk. • Our business needs and future growth may require us to raise additional capital and that capital may not be available on terms acceptable to us or may be dilutive to existing shareholders. • We may grow through mergers or acquisitions, a strategy that may not be successful or, if successful, may produce risks in successfully integrating and managing the merged companies or acquisitions and may dilute our shareholders. • The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business. • Damage to our reputation could significantly harm our businesses. • We face strong competition from financial services companies and other companies that offer banking services, which could materially and adversely affect our business. • We must respond to rapid technological changes to remain competitive. • We continually encounter technological change, and we may have fewer resources than many of our competitors to invest in technological improvements. • Our current and future uses of artificial intelligence and other emerging technologies may create additional risks. • A failure, interruption, or breach in the security of our systems, or those of our contracted vendors, could disrupt our business, result in the disclosure of confidential information, damage our reputation, and create significant financial and legal exposure. • We rely on other companies to provide key components of our business infrastructure and our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations. • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
If, as a result of an examination, one of these Table of Contents 43 USCB Financial Holdings, Inc. 2024 10-K banking agencies were to determine that the financial condition, capital resources, asset quality, asset concentration, earnings prospects, management, liquidity sensitivity to market risk, risk management and internal controls or other aspects of any of our operations has become unsatisfactory, or that we or our management are in violation of any law or regulation, the banking agency could take a number of different remedial or punitive actions as it deems appropriate.
If, as a result of an examination, one of these banking agencies were to determine that the financial condition, capital resources, asset quality, asset concentration, earnings prospects, management, liquidity sensitivity to market risk, risk management and internal controls or other aspects of any of our operations has become unsatisfactory, or that we or our management are in violation of any law or regulation, the banking agency could take a number of different remedial or punitive actions as it deems appropriate.
Similar to other companies, our risks and exposures related to cybersecurity attacks have increased as a result of the related increased reliance on remote working (largely as a result of the COVID-19 pandemic) and the increase in digital operations.
Similar to other companies, our risks and exposures related to cybersecurity attacks have increased as a result of the related increased reliance on remote working and the increase in digital operations.
Because the continued availability of our "deferred tax assets" depends, in part, on the value of our stock owned by shareholders owning 5% or more of our stock, our amended Articles of Incorporation, except as otherwise may be approved by the Board or except for transfers by our Significant Investors, prohibits any direct or indirect transfer of stock or options Table of Contents 45 USCB Financial Holdings, Inc. 2024 10-K to acquire stock to any person who, as a result of the transfer, would own 4.95% or more of our stock, as long as the Company continues to have "deferred tax assets." Such restrictions may limit the ability to transfer our stock.
Because the continued availability of our "deferred tax assets" depends, in part, on the value of our stock owned by shareholders owning 5% or more of our stock, our amended Articles of Incorporation, except as otherwise may be approved by the Board or except for transfers by our Significant Investors, prohibits any direct or indirect transfer of stock or options to acquire stock to any person who, as a result of the transfer, would own 4.95% or more of our stock, as long as the Company continues to have "deferred tax assets." Such restrictions may limit the ability to transfer our stock.
Regulatory guidance on concentrations in commercial real estate lending provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total commercial real estate loans, including loans secured by multi-family residential properties, owner-occupied and nonowner-occupied investor real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 Table of Contents 30 USCB Financial Holdings, Inc. 2024 10-K months.
Regulatory guidance on concentrations in commercial real estate lending provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total commercial real estate loans, including loans secured by multi-family residential properties, owner-occupied and nonowner-occupied investor real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
Finally, we cannot provide any assurances that we can maintain our current levels of noninterest-bearing deposits as customers may seek higher-yielding products due to the increased interest rates being paid on deposits currently, as compared to 2023 and 2022.
Finally, we cannot provide any assurances that we can maintain our current levels of noninterest-bearing deposits as customers continue seeking higher-yielding products due to the increased interest rates being paid on deposits currently, as compared to rates in early 2024 and 2023 and 2022.
We do not record interest income on nonaccrual loans or other real estate owned (“OREO”), thereby adversely affecting our net income and returns on assets and equity, increasing our loan administration costs and adversely affecting our efficiency ratio.
Non-performing assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or other real estate owned (“OREO”), thereby adversely affecting our net income and returns on assets and equity, increasing our loan administration costs and adversely affecting our efficiency ratio.
There are numerous laws and banking regulations and guidance that limit the Bank's ability to pay dividends to us and our ability to pay dividends on our common stock. The Bank may not pay dividends to the Company without the prior approval of the FDIC.
There are numerous laws and banking regulations and guidance that limit the Bank's ability to pay dividends to us and our ability to pay dividends on our common stock. Due to the fact that the Bank has negative retained earnings, the Bank may not pay dividends to the Company without the prior approval of the FDIC.
A failure to comply with regulators’ expectations and requirements, even if inadvertent, or to resolve any identified deficiencies in a timely and sufficiently satisfactory manner to regulators, could result in increased regulatory oversight; material restrictions, including, among others, imposition of limitations on capital distributions or other business activities or operations; enforcement proceedings; penalties; and fines.
A failure to comply with regulators’ expectations and requirements, even if inadvertent, or to resolve any identified deficiencies Table of Contents 42 USCB Financial Holdings, Inc. 2025 10-K in a timely and sufficiently satisfactory manner to regulators, could result in increased regulatory oversight; material restrictions, including, among others, imposition of limitations on capital distributions or other business activities or operations; enforcement proceedings; penalties; and fines.
The risks to our business from inflation depend on the durability of the inflationary pressures in our markets. Although the FRB has reduced the federal funds rate three times in 2024, no assurance can be given that it will continue to do so. At the end of January 2025, the FRB determined not to reduce the federal funds rate.
The risks to our business from inflation depend on the durability of the inflationary pressures in our markets. Although the FRB has reduced the federal funds rate three times in 2024, and further three times in 2025, no assurance can be given that it will continue to do so.
Commercial business and real estate loans generally have a higher risk of loss because loan balances are typically larger than residential real estate and consumer loans and repayment is usually dependent on cash flows from the borrower’s business or the property securing the loan. Our commercial business loans are primarily made to small business and middle market customers.
Commercial business and real estate loans generally have a higher risk of loss because loan balances are typically larger than residential real estate and consumer loans and repayment is usually dependent on cash flows from the borrower’s business or the property securing the loan.
Our failure to successfully evaluate and execute mergers, acquisitions or investments or Table of Contents 36 USCB Financial Holdings, Inc. 2024 10-K otherwise adequately address and manage the risks associated with such transactions could have a material adverse effect on our business, results of operations and financial condition, including short-term and long-term liquidity.
Our failure to successfully evaluate and execute mergers, acquisitions or investments or otherwise adequately address and manage the risks associated with such transactions could have a material adverse effect on our business, results of operations and financial condition, including short-term and long-term liquidity.
Future changes in tax law or changes in ownership structure could limit our ability to utilize our recorded net deferred tax assets. Table of Contents 40 USCB Financial Holdings, Inc. 2024 10-K The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.
Future changes in tax law or changes in ownership structure could limit our ability to utilize our recorded net deferred tax assets. The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.
Our customers' actual operating results may be worse than our underwriting contemplated when we originated the loans, and in these circumstances, we could incur substantial impairment or loss of the value on these loans.
We expect to experience charge-offs and delinquencies on our loans in the future. Our customers' actual operating results may be worse than our underwriting contemplated when we originated the loans, and in these circumstances, we could incur substantial impairment or loss of the value on these loans.
While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. We will cease to be an emerging growth company no later than December 31, 2026.
As part of our growth strategy, we may pursue mergers and acquisitions of banks and non-bank financial services companies within or outside our principal market areas that fit within the mission-driven values of our franchise and that we believe support our business and make financial and strategic sense.
As part of our growth strategy, we may pursue mergers and acquisitions of banks and non-bank financial services companies within or outside our principal market areas that fit within the mission-driven values of our franchise and that we Table of Contents 35 USCB Financial Holdings, Inc. 2025 10-K believe support our business and make financial and strategic sense.
Although we have entered into employment and other agreements with certain members of our executive and senior management team, including Mr. de la Aguilera and Mr. Anderson, no assurance can be given that these individuals will continue to be employed by us.
Although we have entered into employment or change-in-control agreements with certain members of our executive and senior management team, including Messrs. de la Aguilera, Anderson, Bustle and Turner, no assurance can be given that these individuals will continue to be employed by us.
(collectively, "Patriot"), and Priam Capital Fund II, LP ("Priam," and together with Patriot, the "Significant Investors"). As of February 28, 2025 Patriot and Priam own approximately 22.4% and 22.5%, respectively, of our outstanding shares of Class A common stock.
(collectively, "Patriot"), and Priam Capital Fund II, LP ("Priam," and together with Patriot, the "Significant Investors"). As of February 28, 2026 Patriot and Priam own approximately 10.4% and 21.8%, respectively, of our outstanding shares of Class A common stock.
For example, Patriot and Priam will have a greater ability than our other shareholders to influence the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, including mergers and other acquisition transactions, Table of Contents 46 USCB Financial Holdings, Inc. 2024 10-K amendments to our amended Articles of Incorporation and Amended and Restated Bylaws, and other extraordinary corporate matters.
For example, Patriot and Priam will have a greater ability than our other shareholders to influence the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, including mergers and other acquisition transactions, amendments to our amended Articles of Incorporation and Amended and Restated Bylaws, and other extraordinary corporate matters.
Withdrawals of deposits by any one of our largest depositors could force us to rely more heavily on more expensive and less stable funding sources. Consequently, the occurrence of such event could have a material adverse effect on our business, financial condition and results of operations. At December 31, 2024, our top 10 depositors held 16.7% of our total portfolio.
Withdrawals of deposits by any one of our largest depositors could force us to rely more heavily on more expensive and less stable funding sources. Consequently, the occurrence of such event could have a material adverse effect on our business, financial condition and results of operations.
At December 31, 2024, approximately $1,426 million, or 72.6%, of our total loan portfolio, was secured by real estate, in particular commercial real estate, most of which is located in our primary lending market area of the Miami metropolitan statistical area.
At December 31, 2025, approximately $1.55 billion, or 71.1%, of our total loan portfolio, was secured by real estate, in particular commercial real estate, most of which is located in our primary lending market area of the Miami metropolitan statistical area.
This risk of loss also includes potential legal actions that could arise as a result of operational deficiencies or as a result of non- compliance with applicable regulatory standards, adverse business decisions or their implementation, or customer attrition due to potential adverse publicity.
This risk of loss also includes potential legal actions that could arise as a result of operational deficiencies or as a result of non- compliance with applicable regulatory standards, adverse business decisions or their implementation, or customer attrition Table of Contents 33 USCB Financial Holdings, Inc. 2025 10-K due to potential adverse publicity.
The success of our strategy also depends on our ability to manage our growth effectively, which in turn depends on a number of factors, including our ability to adapt our credit, operational, technology, risk management, internal controls and governance infrastructure to accommodate expanded operations.
The success of our strategy also depends on our ability to manage our growth effectively, which in turn depends on a number of factors, including our ability to adapt our credit, operational, technology, risk management, internal controls and governance Table of Contents 34 USCB Financial Holdings, Inc. 2025 10-K infrastructure to accommodate expanded operations.
We are subject to numerous laws and regulations of certain regulatory agencies designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Table of Contents 43 USCB Financial Holdings, Inc. 2025 10-K We are subject to numerous laws and regulations of certain regulatory agencies designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Consequently, we may have a higher risk of non-compliance with the Bank Secrecy Act of 1970, as amended (“BSA”) and other anti-money laundering (“AML”) rules and regulations due to our correspondent banking relationships with foreign financial institutions.
Consequently, we may have a higher risk of non-compliance with the BSA and other anti-money laundering (“AML”) rules and regulations including the AML Act due to our correspondent banking relationships with foreign financial institutions.
Although Patriot and Priam are independent of each other, these institutional investors will continue to have a significant level of influence over us because of their level of Class A common stock ownership and their right to representation on our Board.
Patriot and Priam also have certain registration rights (which they have exercised), including demand registration rights, and information rights. Although Patriot and Priam are independent of each other, these institutional investors will continue to have a significant level of influence over us because of their level of Class A common stock ownership and their right to representation on our Board.
Such risks and exposures are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats and the expanding use of technology, as our web -based product offerings grow and we expand internal usage of web-based applications.
Such risks and exposures are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats and the expanding use of technology, as our web-based product offerings grow and we expand internal usage of web-based applications. Cybersecurity risk and other security matters are also a major focus of regulatory authorities.
These laws and regulations are not intended to protect our shareholders. Rather, these laws and regulations are intended to protect customers, depositors, the Deposit Insurance Fund, or DIF, and the overall financial health and stability of the United States banking system.
These laws and regulations are not intended to protect our shareholders. Rather, these laws and regulations are intended to protect Table of Contents 41 USCB Financial Holdings, Inc. 2025 10-K customers, depositors, the Deposit Insurance Fund, or DIF, and the overall financial health and stability of the United States banking system.
Our risk management practices, such as monitoring the concentration of our loans within specific industries in which we lend and Table of Contents 27 USCB Financial Holdings, Inc. 2024 10-K concentrations with individual borrowers or related borrowers, and our credit approval practices, may not adequately reduce credit risk.
Our risk management practices, such as monitoring the concentration of our loans within specific industries in which we lend and concentrations with individual borrowers or related borrowers, and our credit approval practices, may not adequately reduce credit risk.
We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies Table of Contents 39 USCB Financial Holdings, Inc. 2024 10-K regarding our current and/or prior business activities.
We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current and/or prior business activities.
Table of Contents 41 USCB Financial Holdings, Inc. 2024 10-K We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us.
We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us.
There can be no assurance that we will be able to continue originating these loans, that a secondary market for these loans will continue to exist or that we will continue to realize premiums upon the sale of the guaranteed portion of these loans.
There can be no assurance Table of Contents 30 USCB Financial Holdings, Inc. 2025 10-K that we will be able to continue originating these loans, that a secondary market for these loans will continue to exist or that we will continue to realize premiums upon the sale of the guaranteed portion of these loans.
We also need to continue to attract and retain other senior management and to recruit qualified individuals to succeed existing key personnel to ensure the continued growth and successful operation of our business.
Table of Contents 36 USCB Financial Holdings, Inc. 2025 10-K We also need to continue to attract and retain other senior management and to recruit qualified individuals to succeed existing key personnel to ensure the continued growth and successful operation of our business.
Table of Contents 33 USCB Financial Holdings, Inc. 2024 10-K We have implemented a system of internal controls designed to mitigate operational risks, including data processing system failures and errors and customer or employee fraud, as well as insurance coverage designed to protect us from material losses associated with these risks, including losses resulting from any associated business interruption.
Employee errors could also subject us to financial claims for negligence. We have implemented a system of internal controls designed to mitigate operational risks, including data processing system failures and errors and customer or employee fraud, as well as insurance coverage designed to protect us from material losses associated with these risks, including losses resulting from any associated business interruption.
At December 31, 2024, our total commercial investor real estate loans, including loans secured by apartment buildings, commercial real estate, and construction and land loans represented 366% of the Bank’s total risk-based capital and the growth in the commercial real estate portfolio exceeded 50% over the preceding 36 months.
At December 31, 2025, our total commercial investor real estate loans, including loans secured by apartment buildings, commercial real estate, and construction and land loans represented 370% of the Bank’s total risk-based capital. However, the growth in the commercial real estate portfolio did not exceed 50% over the preceding 36 months but it has exceeded the threshold in prior periods.
Due to competitive pressures in 2023, we increased the rates paid on our interest-bearing deposits such that our weighted average cost of deposits increased from 0.62% for 2022 to 3.04% for 2023. However, in 2024, in light of the FOMC’s actions to decrease the federal funds rate three times, we decreased the rates paid on our interest-bearing deposits.
Due to competitive pressures in 2023, we increased the rates paid on our interest-bearing deposits such that our weighted average cost of deposits increased from 0.62% for 2022 to 3.04% for 2023.
While an increase in interest rates may increase our weighted average loan yield, it may adversely affect the ability of certain borrowers with variable rate loans to pay the contractual interest and principal due to us.
In late January 2026, the FOMC determined to not change the federal funds rate at 3.50% to 3.75%. While an increase in interest rates may increase our weighted average loan yield, it may adversely affect the ability of certain borrowers with variable rate loans to pay the contractual interest and principal due to us.
Risks Related to Our Class A Common Stock • Our ability to pay dividends is subject to restrictions. • The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our shareholders. • There are significant restrictions in our Articles of Incorporation that restrict the ability to sell our capital stock to shareholders that would own 4.95% or more of our stock, excluding our Significant Investors.
Risks Related to Our Class A Common Stock • Our ability to pay dividends is subject to restrictions. • If we fail to pay interest on or otherwise default on our subordinated notes, we will be prohibited from paying dividends or distributions on our Class A common stock. • We may issue additional debt securities, which would be senior to our common stock and may cause the market price of our Class A common stock to decline. • The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our shareholders. • There are significant restrictions in our Articles of Incorporation that restrict the ability to sell our capital stock to shareholders that would own 4.95% or more of our stock, excluding our Significant Investors.
Accordingly, changes in levels of interest rates could materially and adversely affect our net interest margin, asset quality, loan origination volume, average loan portfolio balance, liquidity, and overall profitability.
Accordingly, changes in levels of interest rates could materially and adversely affect our net interest margin, asset quality, loan origination volume, average loan portfolio balance, liquidity, and overall profitability. Our allowance for credit losses may not be sufficient to absorb potential losses in our loan portfolio.
Table of Contents 42 USCB Financial Holdings, Inc. 2024 10-K Significantly heightened regulatory and supervisory expectations and scrutiny in the United States have increased our compliance, regulatory, and other risks and costs and subject us to legal and regulatory examinations, investigations, and enforcement actions.
Significantly heightened regulatory and supervisory expectations and scrutiny in the United States have increased our compliance, regulatory, and other risks and costs and subject us to legal and regulatory examinations, investigations, and enforcement actions.
Table of Contents 28 USCB Financial Holdings, Inc. 2024 10-K Our business is subject to interest rate risk, and variations in interest rates may materially and adversely affect our financial performance. Changes in the interest rate environment may reduce our profits.
Our business is subject to interest rate risk, and variations in interest rates may materially and adversely affect our financial performance. Changes in the interest rate environment may reduce our profits.
A capital injection may be required at times when the holding company may not have the resources to provide it and therefore may Table of Contents 35 USCB Financial Holdings, Inc. 2024 10-K be required to attempt to borrow the funds or raise capital.
A capital injection may be required at times when the holding company may not have the resources to provide it and therefore may be required to attempt to borrow the funds or raise capital.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans.
We are exposed to risk of environmental liability when we take title to property. A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business.
In such events, we could suffer loan losses, which could have a material adverse effect on our net earnings, allowance for loan and lease losses, financial condition, and results of operations.
In such events, we could suffer loan losses, which could have a material adverse effect on our net earnings, allowance for loan and lease losses, financial condition, and results of operations. Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.
Unrealized losses on investment securities result from changes in credit spreads and liquidity issues in the marketplace, along with changes in the credit profile of individual securities issuers.
Our securities portfolio performance in difficult market conditions could have adverse effects on our results of operations . Unrealized losses on investment securities result from changes in credit spreads and liquidity issues in the marketplace, along with changes in the credit profile of individual securities issuers.
If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of residential foreclosures or raise outright barriers, they could have an adverse effect on our business, financial condition, and results of operations. We are exposed to risk of environmental liability when we take title to property.
If new state or federal laws or regulations Table of Contents 32 USCB Financial Holdings, Inc. 2025 10-K are ultimately enacted that significantly raise the cost of residential foreclosures or raise outright barriers, they could have an adverse effect on our business, financial condition, and results of operations.
When we lend funds, commit to fund a loan or enter into a letter of credit or other credit-related contract with a counterparty, we incur credit risk. The credit quality of our portfolio can have a significant impact on our earnings. We expect to experience charge-offs and delinquencies on our loans in the future.
Table of Contents 31 USCB Financial Holdings, Inc. 2025 10-K When we lend funds, commit to fund a loan or enter into a letter of credit or other credit-related contract with a counterparty, we incur credit risk. The credit quality of our portfolio can have a significant impact on our earnings.
Mitigating these risks requires a robust governance framework, regularly testing and auditing of AI models, and strong human oversight. Investments in cybersecurity, data privacy protections, and employee training are critical to managing these risks.
Ethical and reputational risks, including unintended consequences or perceived unfairness in AI-driven decisions, may erode customer trust and expose us to regulatory scrutiny. Mitigating these risks requires a robust governance framework, regularly testing and auditing of AI models, and strong human oversight. Investments in cybersecurity, data privacy protections, and employee training are critical to managing these risks.
The loss of the services of any of these individuals could have a significant adverse effect on our business. In particular, we believe that retaining Luis de la Aguilera, our Chairman, President, and Chief Executive Officer, Robert Anderson, our Chief Financial Officer, and William Turner, our Chief Credit Officer, is important to our continuing success.
In particular, we believe that retaining Luis de la Aguilera, our Chairman, President and Chief Executive Officer, Robert Anderson, our Chief Financial Officer, Nicholas Bustle, our Chief Lending Officer, and William Turner, our Chief Credit Officer, is important to our continuing success.
A failure to effectively manage credit risk associated with our loan portfolio could lead to unexpected losses and have a material adverse effect on our business, financial condition and results of operations. The transition from the use of LIBOR may adversely impact the interest rates paid on certain financial instruments.
A failure to effectively manage credit risk associated with our loan portfolio could lead to unexpected losses and have a material adverse effect on our business, financial condition and results of operations. Natural disasters and severe weather events in Florida could have a material adverse impact on our business, financial condition and operations.
Table of Contents 31 USCB Financial Holdings, Inc. 2024 10-K Correspondent banking is an important part of our business, which creates increased BSA/AML risk.
Correspondent banking is an important part of our business, which creates increased BSA/AML risk.
Table of Contents 23 USCB Financial Holdings, Inc. 2024 10-K • Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities. • Certain of our directors may have conflicts of interest in determining whether to present business opportunities to us or another entity with which they are, or may become, affiliated.
Table of Contents 23 USCB Financial Holdings, Inc. 2025 10-K • Certain of our directors may have conflicts of interest in determining whether to present business opportunities to us or another entity with which they are, or may become, affiliated.
Similarly, we have agreed to notify the Federal Reserve before declaring and paying any dividends on our Class A common stock. The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our shareholders.
Further issuances of our Class A common stock could be dilutive to holders of our Class A common stock. The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our shareholders.
We continually encounter technological change, and we may have fewer resources than many of our competitors to invest in technological improvements. The financial services industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
The financial services industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services, including recent and rapid developments in artificial intelligence (“AI”) including agentic AI. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

19 edited+2 added−2 removed8 unchanged
Biggest changeThe Bank has developed general guidelines for the identification, risk assessment, monitoring and management of risks associated to the engagement of third-party providers or vendors.
Biggest changeProviders whose services include the transmission, storage, or processing of non-public personal information present heightened compliance risks, particularly with respect to the requirements of the GLB Act and other applicable Privacy Laws and Regulations. The Bank has established general guidelines to support the identification, risk assessment, monitoring, and management of risks related to the engagement of third-party providers or vendors.
These processes encompass data and business operations recovery, network capability rebuilding, and data protection for offline backups in the event of cyber-attacks impacting the Company or its critical service providers. ● Conducting ongoing information security risk assessments to address new and evolving threats to online deposit and loan accounts.
These processes encompass data and business operations recovery, network capability rebuilding, and data protection for offline backups in the event of cyber-attacks impacting the Company and/or its critical service providers. ● Conducting ongoing information security risk assessments to address new and evolving threats to online deposit and loan accounts.
The Information Security Officer (“ISO”) is an integral member of the Risk Management and Compliance Department (“RMCD”) of the Bank and who provides expert counsel on matters of cybersecurity and presents periodic reports to the Risk Committee of our Board of Directors.
The Information Security Officer (“ISO”) is an integral member of the Risk Management and Compliance Department (“RMCD”) of the Bank and provides expert counsel on matters of cybersecurity and presents periodic reports to the Risk Committee of our Board of Directors.
This includes maintaining up-to-date intrusion detection systems, antivirus protection, and properly configured firewall rules. Systems are monitored to identify, prevent, and contain attack attempts from all sources. Table of Contents 48 USCB Financial Holdings, Inc. 2024 10-K ● Maintaining robust business continuity planning processes to swiftly recover, resume, and maintain operations post- cyber-attack incidents involving destructive malware.
This includes maintaining up-to-date intrusion detection systems, antivirus protection, and properly configured firewall rules. Systems are monitored to identify, prevent, and contain cyber-attack attempts from all sources. Table of Contents 48 USCB Financial Holdings, Inc. 2025 10-K ● Maintaining robust business continuity planning processes to swiftly recover, resume, and maintain operations post- cyber-attack incidents involving destructive malware.
As of the end of the reporting period set forth in this Annual Report on Form 10-K, there is no knowledge or indication that customer sensitive information was compromised as a result of third-parties’ system vulnerabilities. Management continues to monitor developments and vendor communications. Table of Contents 49 USCB Financial Holdings, Inc. 2024 10-K
Table of Contents 49 USCB Financial Holdings, Inc. 2025 10-K As of the end of the reporting period set forth in this Annual Report on Form 10-K, there is no knowledge or indication that customer sensitive information was compromised as a result of third-parties’ system vulnerabilities. Management continues to monitor developments and vendor communications.
Alert systems notify of baseline control changes on critical systems, with the effectiveness and adequacy of controls periodically tested and the results reported to senior management and, if applicable, the Risk Committee, along with recommended risk mitigation strategies and progress to remediate findings. ● Performing security monitoring, prevention, and risk mitigation activities to ensure the effectiveness of protection and detection systems.
Alert systems notify of baseline control changes on critical systems, with the effectiveness and adequacy of controls periodically tested and the results reported to senior management and, if applicable, the Risk Committee, along with recommended risk mitigation strategies and the progress of actions taken to remediate findings. ● Performing security monitoring, prevention, and risk mitigation activities to ensure the effectiveness of protection and detection systems.
This includes measures such as logical network segmentation, hard backups, maintaining an inventory of authorized devices and software, and physical segmentation of critical systems.
This includes measures such as logical network segmentation, backups, maintaining an inventory of authorized devices and software, and physical segmentation of critical systems.
Management committees ensure program integration and effectiveness, with the RMCD responsible for cybersecurity controls and procedures. The Board receives regular reports on cybersecurity risk assessment and program updates, providing expectations and requirements to management and holding them accountable for oversight and coordination, assignment of responsibility, and the effectiveness of the information and cybersecurity security program.
Management committees ensure program integration and effectiveness, with the RMCD responsible for cybersecurity controls and procedures. The ARC receives regular reports on cybersecurity risk assessment and program updates, providing expectations and requirements to management and holding them accountable for oversight and coordination, assignment of responsibility, and the effectiveness of the information and cybersecurity security program.
The Company realizes that it faces a variety of risks from cyber-attacks involving destructive malware, including liquidity, capital, operational, and reputation risks, due to events such as fraud, data loss, and disruption of customer service.
The Company recognizes that it faces a variety of risks from cyber-attacks involving destructive malware, including liquidity, capital, operational, and reputation risks, due to events such as fraud, data loss, and disruption of customer service.
As such, it is the policy of the Company to ensure that its risk management processes, and business continuity planning address these risks by: ● Establishing a comprehensive governance program encompassing policies and procedures to administer and oversee the information/cybersecurity programs to ensure adherence to regulatory guidance and industry best practices. ● Securely configuring systems and services to mitigate the impact of cyberattacks.
As such, it is the policy of the Company to ensure that its risk management processes, and business continuity planning address these risks by: ● Establishing a comprehensive governance program encompassing policies and procedures to administer and oversee the information/cybersecurity programs to ensure adherence to regulatory guidance and industry best practices. ● Securely configuring systems and services to mitigate the impact of cyber-threats.
Annually, or as required, the RMCD will provide a comprehensive report to the Board or a designated committee regarding the status of the cybersecurity program. This report will encompass internal assessments, utilization of the Cybersecurity Assessment, and discussion of other significant program matters.
Annually, or as required, the RMCD will provide a comprehensive report to the ARC or a designated committee regarding the status of the cybersecurity program. This report will encompass internal assessments, utilization of the Cybersecurity Assessment, and discussion of other significant program matters.
Compliance with Regulatory Standards Annual testing or more frequently if deemed necessary of cybersecurity controls and procedures will be conducted to ensure compliance. In instances of identified deficiencies or vulnerabilities, remedial action plans will be implemented to rectify issues or establish mitigating controls. Any exceptions deemed significant will be promptly reported, with remediation efforts prioritized.
Compliance with Regulatory Standards As noted above, annual testing, or more frequently if deemed necessary, of cybersecurity controls and procedures will be conducted to ensure compliance. In instances of identified deficiencies or vulnerabilities, remedial action plans will be implemented to rectify issues or establish mitigating controls. Any exceptions deemed significant will be promptly reported, with remediation efforts prioritized.
This approach encompasses diverse methodologies including defense-in-depth and proactive security awareness training aimed at fortifying the institutions cybersecurity controls and fostering a resilient operational framework.
This approach encompasses diverse methodologies including defense-in-depth and proactive security awareness training aimed at fortifying the institutions’ cybersecurity controls and fostering a resilient operational framework.
Consistency in system configuration fosters a secure network environment by removing or disabling unused applications, functions, or components. ● Implementing and testing controls around critical systems on a regular basis to ensure appropriate access control and segregation of duties. Limits on sign-on attempts for critical systems are enforced, with accounts being locked upon threshold exceedance.
Consistency in system configuration fosters a secure network environment by removing or disabling unused applications, functions, or components. ● Implementing and testing controls around critical systems on a regular basis to ensure appropriate access control and segregation of duties. Limits on sign-on attempts for critical systems are enforced, with accounts being locked when the threshold are met.
Annually, or as required, the RMCD provides a comprehensive report to the Board or a designated committee regarding the status of the cybersecurity program .
Annually, or as required, the RMCD provides a comprehensive report to the Board regarding the status of the cybersecurity program .
Item 1C. Cybersecurity Risk Management and Strategy Overview Customers depend on the Company to properly protect nonpublic personal information gathered and stored in connection with the services we provide. The Company realizes that cyber incidents can have financial, reputational, legal, and operational impacts that can significantly adversely affect our customers, capital, and earnings.
Item 1C. Cybersecurity Risk Management and Strategy Overview Customers depend on the Company to safeguard nonpublic personal information gathered and stored in connection with the services we provide. The Company understands that cyber incidents can have financial, reputational, legal, and operational impacts that can adversely affect our customers, capital, and earnings.
Management committees and the Board of Directors review reports submitted by the RMCD detailing the Company’s inherent and residual cybersecurity risk, program sophistication level, and high-risk threats identified in the cybersecurity risk assessment. The Board oversees the development and maintenance of the information security program, holding management accountable.
Management committees and the Audit and Risk Committee of the Board (“ARC”) review reports submitted by the RMCD detailing the Company’s inherent and residual cybersecurity risk, program sophistication level, and high-risk threats identified in the cybersecurity risk assessment. The ARC oversees the development and maintenance of the information security program, holding management accountable.
The Company utilizes the National Institute of Standards and Technology (“NIST”) Framework and the FFIEC’s Cybersecurity Assessment Tool (“Cybersecurity Assessment”) to help management identify its risks and determine the Company’s cybersecurity posture. Through the implementation of rigorous procedures and controls, augmented by ongoing training initiatives for both management and staff, the institution cultivates a safe cybersecurity environment.
The Company utilizes the National Institute of Standards and Technology (“NIST”) Framework and the Cyber Risk Institute Framework (“CRI Framework”) to help management identify its risks and determine the Company’s cybersecurity posture. Through the implementation of rigorous procedures and controls, augmented by ongoing training initiatives for both management and staff, the institution cultivates a safe cybersecurity environment.
Engagement with Third Party Vendors The engagement of third-party providers involves potential risks that may impact strategic, reputational, operational, transaction, credit, financial, technology and compliance considerations.
Engagement with Third Party Vendors The engagement of critical third-party providers introduces a range of potential risks that can affect the Bank’s strategic direction, reputation, daily operations, transaction integrity, credit exposures, financial stability, technological environment, and compliance posture.
Removed
Third-party providers whose services involve transmittal, storage and processing of non-public personal information represent a greater level of compliance risks, specifically as it relates to compliance requirements of the Gramm Leach Bliley Act (GLBA) regulation and applicable Privacy Laws and Regulations.
Added
This framework ensures that risks are addressed proactively and in accordance with regulatory expectations. Risk assessment for critical providers may require the involvement of specialized personnel, including the compliance officer, technology officers, finance officers, internal auditors, and legal counsel.
Removed
Certain aspects of the risk assessment process may require the involvement of the compliance officer, technology officers, finance officers, internal auditors, and legal counsel to identify potential risks that may arise from the third-party engagement as well as identify performance criteria, internal controls, reporting needs and any contractual requirements that should be implemented for the ongoing assessment and control of risks that derive from the third-party engagement.
Added
Their participation is essential for identifying potential risks arising from third-party relationships, defining performance criteria, establishing internal controls, specifying reporting requirements, and ensuring contractual obligations are in place for ongoing risk assessment and mitigation. This collaborative approach helps maintain the integrity and security of the Bank’s operations while meeting regulatory and legal standards.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeSee Note 4 “Leases” and Note 5 “Premises and Equipment” to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Biggest changeSee Note 4 “Leases” and Note 5 “Premises and Equipment” to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K for additional information.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−13 removed2 unchanged
Biggest changeTable of Contents 50 USCB Financial Holdings, Inc. 2024 10-K There can be no assurance that any future legal proceedings to which we are a party will not be decided adversely to our interests and have a material adverse effect on our financial condition and operations.
Biggest changeThere can be no assurance that any future legal proceedings to which we are a party will not be decided adversely to our interests and have a material adverse effect on our financial condition and operations.
Removed
The Company previously disclosed that litigation (the “Litigation”) had been commenced on July 13, 2023 by three individuals who were shareholders of the Bank prior to the Bank’s reorganization into the holding company form of organization in 2021 (the “Plaintiffs”) against six persons, all of whom were directors of the Bank at the relevant time (the “Defendants”), in the Circuit Court, Eleventh Judicial Circuit for Miami-Dade County, Florida (the “Court”) (Benes et al. v. de la Aguilera et al.) alleging the Defendants (i) caused the Bank, as directors thereof, to engage in ultra vires conduct by devising and approving the exchange transaction effected in July 2021 pursuant to which the Bank’s then outstanding shares of Class C and Class D preferred stock was exchanged for shares of Class A voting common stock in the Bank (the “Exchange Transaction”), which action the Plaintiffs allege was not permitted by the Bank’s Articles of Incorporation, and (ii) breached their fiduciary duty as directors of the Bank by approving and engaging in the Exchange Transaction.
Removed
The Plaintiffs sought the Court to certify the action as a class action and to award damages in an amount to be proven at trial. The Plaintiffs sought damages exceeding $750,000 plus attorney’s fees and costs as well as such other relief as the Court determined to award.
Removed
The Defendants filed a motion to dismiss the Litigation with prejudice (the “Motion”).
Removed
On December 27, 2023, the Court, after reviewing the Motion, the Plaintiff’s response thereto and the Defendant’s reply as well as the oral arguments presented by the parties on December 14, 2023, granted the Motion, dismissing the Litigation with prejudice and rendering final judgment in favor of the Defendants (the “Order”).
Removed
The Court reserved jurisdiction to award costs or grant any post-judgment relief. On May 1, 2024, the Plaintiffs filed in the Third District Court of Appeal for the State of Florida (the “Appellate Court”) an appeal (the “Appeal”), appealing the issuance of the Order and seeking a reversal of the Order.
Removed
The Plaintiffs claimed the Court erred by concluding (i) the Exchange Transaction was not ultra vires, and (ii) that the Legacy Shareholders (which includes the Plaintiffs) lacked direct standing. The Plaintiffs filed their initial brief and the Defendants filed on July 1, 2024 their answer brief (“Answer Brief”) responding to the allegations contained in the Appeal.
Removed
Oral argument was heard before the Court on January 14, 2025. On February 18, 2025, the Appellate Court affirmed the lower court's ruling and dismissed the lawsuit, in favor of the Defendants (the “Dismissal”).
Removed
The Plaintiffs have the right to appeal the Dismissal, but they have not done so as of the date of the filing of this Annual Report on Form 10-K.
Removed
The Company believes that the positions in the Appeal are legally and factually without merit, and it intends to vigorously defend against any appeal of the Dismissal of the Appeal , pursue any potential counterclaims against the Plaintiffs as it deems appropriate, and seek coverage from its insurance carriers.
Removed
Furthermore, there is also no assurance that we will be able to secure coverage from our insurance carriers for any expenses incurred by us in connection with defending against the Appeal.
Removed
At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial condition or cash flows.
Removed
However, one or more unfavorable outcomes in any claim or litigation against us, including the aforementioned Appeal regarding the Exchange Transaction, could have a material adverse effect on the period in which such claims or litigation are resolved.
Removed
In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+2 added−5 removed7 unchanged
Biggest changeThe following table shows the quarterly high and low closing prices of our Class A common stock traded on the Nasdaq Stock Market for the last two fiscal years : Stock Price High Low Quarter Ended: March 31, 2023 $ 12.71 $ 9.89 June 30, 2023 $ 10.94 $ 8.86 September 30, 2023 $ 12.09 $ 10.31 December 31, 2023 $ 12.65 $ 10.11 March 31, 2024 $ 12.44 $ 10.85 June 30, 2024 $ 12.83 $ 10.25 September 30, 2024 $ 16.66 $ 11.99 December 31, 2024 $ 20.78 $ 14.16 As of December 31, 2024, our Class B common stock is not listed or traded on any stock exchange and no shares were issued and outstanding at such date.
Biggest changeAs of December 31, 2025, our Class B common stock is not listed or traded on any stock exchange and no shares were issued and outstanding at such date.
Effective December 30, 2021, the Company acquired all issued and outstanding shares of Class A common stock of the Bank in connection with the bank holding company reorganization. Each of the outstanding shares of the Bank’s common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Company’s common stock.
Effective December 30, 2021, the Company acquired all issued and outstanding shares of Class A common stock of the Bank in connection with the bank holding company reorganization. Each of the outstanding shares of the Bank’s common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Company’s Class A common stock.
Securities Authorized for Issuance Under Equity Compensation Plans See Note 9 ”Equity Based and Other Compensation Plans” to the Consolidated Financial Statements included in this Annual Report Form on 10-K for additional information required.
Securities Authorized for Issuance Under Equity Compensation Plans See Note 10 ”Equity Based and Other Compensation Plans” to the Consolidated Financial Statements included in this Annual Report Form on 10-K for additional information required.
As a Florida corporation, we are only permitted to pay dividends to shareholders if, after giving effect to the dividend, (i) the Company is able to pay its debts as they become due in the ordinary course of business and (ii) the Company’s assets exceeds the sum of Company’s (a) liabilities plus (b) the Table of Contents 52 USCB Financial Holdings, Inc. 2024 10-K amount that would be needed for the Company to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the dividend, if any.
As a Florida corporation, we are only permitted to pay dividends to shareholders if, after giving effect to the dividend, (i) the Company is able to pay its debts as they become due in the ordinary course of business and (ii) the Company’s assets exceeds the sum of Company’s (a) liabilities plus (b) the amount that would be needed for the Company to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the dividend, if any.
As of December 31, 2024, the Company had repurchased 712,020 shares of Class A common stock under the first program and no shares under the second repurchase program. The Company did not repurchase any of its equity securities for the quarter ended December 31, 2024.
As of December 31, 2025, the Company had repurchased 9,671 shares of Class A common stock under the first program and no shares under the second repurchase program. The Company did not repurchase any of its equity securities for the quarter ended December 31, 2025.
Holders As of January 31, 2025, the Company’s Class A common shares were held by approximately 526 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks.
Holders As of February 28, 2026, the Company’s Class A common shares were held by approximately 550 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks.
Purchases of Equity Securities by Issuer and Other Affiliates Table of Contents 53 USCB Financial Holdings, Inc. 2024 10-K On January 24, 2022, the Board of Directors approved the first share repurchase program of up to 750,000 shares of Class A common stock.
Purchases of Equity Securities by Issuer and Other Affiliates On January 24, 2022, the Board of Directors approved the first share repurchase program of up to 750,000 shares of Class A common stock. On April 22, 2024 the Board of Directors approved the second share repurchase program of up to 500,000 shares of Class A common stock.
(USCB) $ 100 $ 140 $ 122 $ 123 $ 166 NASDAQ Bank (BANK) $ 100 $ 115 $ 94 $ 88 $ 102 NASDAQ ABA Community Bank (QABA) $ 100 $ 114 $ 101 $ 96 $ 106 NASDAQ Composite (IXIC) $ 100 $ 107 $ 71 $ 102 $ 130 Recent Sales of Unregistered Securities The Company did not sell any of its equity securities during 2024 that were not registered under the Securities Act.
Table of Contents 51 USCB Financial Holdings, Inc. 2025 10-K Recent Sales of Unregistered Securities The Company did not sell any of its equity securities during 2025 that were not registered under the Securities Act.
Removed
Stock Price Performance The graph below compares the cumulative total return to stockholders of our Class A common stock between July 23, 2021 (the date the Bank’s Class A common stock commenced trading on the Nasdaq Stock Market) and December 31, 2024, with the cumulative total return of (a) the Nasdaq Bank Index (b) the NASDAQ ABA Community Bank Index, and (c) the Nasdaq Composite Index over the same period.
Added
As of December 31, 2025, 528,309 shares remained authorized for repurchase under the Company’s two stock repurchase programs. During the year ended December 31, 2025, the Company repurchased 2.0 million shares of Class A common stock from certain institutional shareholders through privately negotiated transactions, at a weighted average price per share of $17.19.
Removed
This graph assumes the investment of $100 in our Class A common stock at the closing sale price of $10.82 per share on July 23, 2021, and assumes the reinvestment of dividends. The comparisons shown in the graph below are based upon historical data.
Added
The aggregate purchase price for these transactions was approximately $34.4 million. The repurchases were supplemental and not part of the Company’s two previously announced stock repurchase programs described above.
Removed
We caution that the stock price performance shown in the graph below is not indicative of, nor is it intended to forecast, the potential future performance of our common stock. 07/23/2021 12/31/2021 12/31/2022 12/31/2023 12/31/2024 USCB Financial Holdings, Inc.
Removed
On April 22, 2024 the Board of Directors approved the second share repurchase program of up to 500,000 shares of Class A common stock.
Removed
As of December 31, 2024, 537,980 shares remained authorized for repurchase under the Company’s two stock repurchase programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

120 edited+27 added−21 removed77 unchanged
Biggest changeYears Ended December 31, 2024 2023 Average Balance (1) Interest Yield/Rate Average Balance (1) Interest Yield/Rate Assets Interest-earning assets: Loans (2) $ 1,862,013 $ 115,236 6.19 % $ 1,606,960 $ 87,884 5.47 % Investment securities (3) 427,567 11,480 2.68 % 423,749 10,012 2.36 % Other interest-earnings assets 88,758 4,517 5.09 % 65,986 3,121 4.73 % Total interest-earning assets 2,378,338 131,233 5.52 % 2,096,695 101,017 4.82 % Non-interest earning assets 108,215 109,541 Total assets $ $2,486,553 $ 2,206,236 Liabilities and stockholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 54,667 1,509 2.76 % $ 53,324 901 1.69 % Savings and money market deposits 1,109,853 40,098 3.61 % 963,708 29,658 3.08 % Time deposits 326,373 13,354 4.09 % 268,715 8,500 3.16 % Total interest-bearing deposits 1,490,893 54,961 3.69 % 1,285,747 39,059 3.04 % Borrowings and repurchase agreements 158,484 6,336 4.00 % 94,936 3,390 3.57 % Total interest-bearing liabilities 1,649,377 61,297 3.72 % 1,380,683 42,449 3.07 % Non-interest bearing demand deposits 596,073 607,506 Other non-interest-bearing liabilities 37,399 34,010 Total liabilities 2,282,849 2,022,199 Stockholders' equity 203,704 184,038 Total liabilities and stockholders' equity $ $2,486,553 $ 2,206,236 Net interest income $ 69,936 $ 58,568 Net interest spread (4) 1.80 % 1.74 % Net interest margin (5) 2.94 % 2.79 % (1) Average balances - Daily average balances are used to calculate yields/rates.
Biggest changeYears Ended December 31, 2025 2024 Average Balance (1) Interest Yield/Rate Average Balance (1) Interest Yield/Rate Assets Interest-earning assets: Loans (2) $ 2,069,039 $ 128,160 6.19 % $ 1,862,013 $ 115,236 6.19 % Investment securities (3) 460,089 13,715 2.98 % 427,567 11,480 2.68 % Other interest-earning assets 86,183 3,612 4.19 % 88,758 4,517 5.09 % Total interest-earning assets 2,615,311 145,487 5.56 % 2,378,338 131,233 5.52 % Non-interest earning assets 105,874 108,215 Total assets $ 2,721,185 $ 2,486,553 Liabilities and stockholders' equity Interest-bearing liabilities: Interest-bearing demand deposits $ 51,803 1,283 2.48 % $ 54,667 1,509 2.76 % Savings and money market deposits 1,255,719 38,027 3.03 % 1,109,853 40,098 3.61 % Time deposits 470,213 18,104 3.85 % 326,373 13,354 4.09 % Total interest-bearing deposits 1,777,735 57,414 3.23 % 1,490,893 54,961 3.69 % FHLB advances 86,382 3,238 3.75 % 158,484 6,336 4.00 % Subordinated notes 16,463 1,205 7.32 % - - - % Total interest-bearing liabilities 1,880,580 61,857 3.29 % 1,649,377 61,297 3.72 % Non-interest-bearing demand deposits 577,232 596,073 Other non-interest-bearing liabilities 41,955 37,399 Total liabilities 2,499,767 2,282,849 Stockholders' equity 221,418 203,704 Total liabilities and stockholders' equity $ 2,721,185 $ 2,486,553 Net interest income $ 83,630 $ 69,936 Net interest spread (4) 2.27 % 1.80 % Net interest margin (5) 3.20 % 2.94 % (1) Average balances - Daily average balances are used to calculate yields/rates.
Net interest spread is equal to the difference between the weighted average yields earned on interest -earning assets and the weighted average rates paid on interest-bearing liabilities. Net interest margin is equal to the net interest income divided by average interest-earning assets.
Net interest spread is equal to the difference between the weighted average yields earned on interest -earning assets and the weighted average rates paid on interest-bearing liabilities. Net interest margin is equal to net interest income divided by average interest-earning assets.
We expect funds to be available from several basic banking activity sources, including the core deposit base, the repayment and maturity of loans and investment security cash flows. Other potential funding sources include federal funds purchased, brokered certificates of deposit, listing certificates of deposit, Fed Funds lines and borrowings from the FHLB Atlanta.
We expect funds to be available from several basic banking activity sources, including the core deposit base, the repayment and maturity of loans and investment security cash flows. Other potential funding sources include federal funds purchased, brokered certificates of deposit, listing services certificates of deposit, Fed Funds lines and borrowings from the FHLB Atlanta.
The book value of the AFS securities is adjusted quarterly for unrealized gain or loss as a valuation allowance, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income (loss) in stockholders’ equity. CECL requires a loss reserve for securities classified as HTM.
The book value of the AFS securities is adjusted quarterly for unrealized gain or loss as a valuation allowance, and any gain or loss is reported on an after-tax basis as a component of other comprehensive loss in stockholders’ equity. CECL requires a loss reserve for securities classified as HTM.
The transfer of the debt securities from the AFS to HTM category was made at fair value at the date of transfer. The unrealized gain or loss at the date of transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the HTM securities. Such amounts are amortized over the remaining life of the security.
The transfer of the debt securities from the AFS to HTM category was made at fair value at the date of transfer. The unrealized gain or loss at the date of transfer is retained in accumulated other comprehensive loss and in the carrying value of the HTM securities. Such amounts are amortized over the remaining life of the security.
Restoring a loan to accrual status is possible when the borrower resumes payment of all principal and interest payments for a period of six months and the Company has a documented expectation of repayment of the remaining contractual principal and interest or the loan becomes secured and in the process of collection.
Restoring a loan to accrual status is possible when the borrower resumes payment of all principal and interest payments for a period of six consecutive months and the Company has a documented expectation of repayment of the remaining contractual principal and interest or the loan becomes secured and in the process of collection.
Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on a non-accrual status. This determination is based on current existing facts concerning collateral values and the paying capacity of the borrower.
Problem loans for which the collection or liquidation in full is reasonably uncertain are placed on non-accrual status. This determination is based on current existing facts concerning collateral values and the paying capacity of the borrower.
Our focus on quality and customer service has created a strong brand recognition within our depositors, which reflects in the composition of our deposits; most of our funding sources are core deposits.
Our focus on quality and customer service has created a strong brand recognition within our depositors, which reflects in the composition of our deposits; most of our funding sources are customer deposits.
These forward-looking statements include statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth and balance sheet restructuring.
These forward-looking statements include statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth and potential future additional balance sheet restructuring.
The investment portfolio is regularly reviewed by the Chief Financial Officer, Treasurer, and/or the ALCO of the Company to ensure an appropriate risk and return profile as well as for adherence to the Company’s investment policy. As of December 31, 2024, the investment portfolio consisted of available-for-sale (“AFS”) and held-to-maturity (“HTM”) debt securities.
The investment portfolio is regularly reviewed by the Chief Financial Officer, Treasurer, and/or the ALCO of the Company to ensure an appropriate risk and return profile as well as for adherence to the Company’s investment policy. As of December 31, 2025, the investment portfolio consisted of available-for-sale (“AFS”) and held-to-maturity (“HTM”) debt securities.
The following table shows the weighted average yields, categorized by contractual maturity, for investment securities as of December 31, 2024 (in thousands, except ratios): Within 1 year After 1 year through 5 years After 5 years through 10 years After 10 years Total Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Available-for-sale: U.S.
The following table shows the weighted average yields, categorized by contractual maturity, for investment securities as of December 31, 2025 (in thousands, except ratios): Within 1 year After 1 year through 5 years After 5 years through 10 years After 10 years Total Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Available-for-sale: U.S.
Changes in cash surrender value are recorded in non-interest income on the Consolidated Statements of Operations. In 2024, the Company maintained BOLI policies with five insurance carriers. The Company is the beneficiary of these policies. Deposits Customer deposits are the primary funding source for the Bank’s growth.
Changes in cash surrender value are recorded in non-interest income on the Consolidated Statements of Operations. In 2025, the Company maintained BOLI policies with five insurance carriers. The Company is the beneficiary of these policies. Deposits Customer deposits are the primary funding source for the Bank’s growth.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management’s discussion and analysis of financial condition and results of operations analyzes the consolidated financial condition and results of operations of the Company and the Bank, its wholly owned subsidiary, for the years ended December 31, 2024 and 2023.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management’s discussion and analysis of financial condition and results of operations analyzes the consolidated financial condition and results of operations of the Company and the Bank, its wholly owned subsidiary, for the years ended December 31, 2025 and 2024.
Table of Contents 55 USCB Financial Holdings, Inc. 2024 10-K CAUTIONARY NOTE REGARDING FORWARD -LOOKING STATEMENTS This Annual Report on Form 10-K contains statements that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended.
Table of Contents 53 USCB Financial Holdings, Inc. 2025 10-K CAUTIONARY NOTE REGARDING FORWARD -LOOKING STATEMENTS This Annual Report on Form 10-K contains statements that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended.
The Asset-Liability Committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect net interest income and net interest margin. Table of Contents 60 USCB Financial Holdings, Inc. 2024 10-K The following table contains information related to average balances, average yields on assets, and average costs of liabilities for the periods indicated (in thousands).
The Asset-Liability Committee (“ALCO”) has in place asset-liability management techniques to manage major factors that affect net interest income and net interest margin. Table of Contents 58 USCB Financial Holdings, Inc. 2025 10-K The following table contains information related to average balances, average yields on assets, and average costs of liabilities for the periods indicated (in thousands).
The words “may,” “will,” “anticipate,” “could,” “should,” “would,” “believe,” “contemplate,” “expect,” “aim,” “plan,” “estimate,” “seek,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements.
The words “may,” “will,” “anticipate,” “could,” “should,” “would,” “believe,” “contemplate,” “expect,” “aim,” “plan,” “estimate,” “seek,” “continue,” and “intend,” the negative of these terms, as well as other similar words and expressions of the future, are intended to identify forward-looking statements.
There was no impact to net income on the date of transfer. There were no securities transferred from AFS to HTM in 2024 or 2023.
There was no impact to net income on the date of transfer. There were no securities transferred from AFS to HTM in 2025 or 2024.
The growth experienced over the last couple of years is primarily due to implementation of our relationship-based banking model, our diversified business verticals, and the success of our relationship managers in competing for new Table of Contents 66 USCB Financial Holdings, Inc. 2024 10-K business in a highly competitive metropolitan area.
Table of Contents 65 USCB Financial Holdings, Inc. 2025 10-K The growth experienced over the last couple of years is primarily due to implementation of our relationship-based banking model, our diversified business verticals, and the success of our relationship managers in competing for new business in a highly competitive metropolitan area.
Critical elements of our liquidity risk management include: effective corporate governance consisting of oversight by the Board and ALCO and involvement by senior management; appropriate strategies, policies, procedures, and limits used to identify and mitigate liquidity risk; comprehensive liquidity risk measurement and monitoring systems (including assessments of the current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and business activities of the Company; management of intraday liquidity and collateral; an appropriately diverse mix of existing and potential future funding sources; adequate levels of highly liquid marketable securities free of legal, regulatory, or operational impediments, that can be used to meet liquidity needs in stressful situations; comprehensive contingency funding plans that sufficiently address potential adverse liquidity events and emergency cash flow requirements; and internal controls and internal audit processes sufficient to determine the adequacy of the institution’s liquidity risk management process.
Critical elements of our liquidity risk management include: effective corporate governance consisting of oversight by the Board and ALCO and involvement by senior management; appropriate strategies, policies, procedures, and limits used to identify and mitigate liquidity risk; comprehensive liquidity risk measurement and monitoring systems (including assessments of the current and prospective cash flows or sources and uses of funds) that are commensurate with the complexity and business activities of the Company; management of intraday liquidity and collateral; an appropriately diverse mix of existing and potential future funding sources; adequate levels of highly liquid marketable securities free of legal, regulatory, or operational impediments, that can be used to meet liquidity needs in stressful situations; comprehensive contingency funding plans that sufficiently address potential adverse liquidity events and emergency cash flow Table of Contents 70 USCB Financial Holdings, Inc. 2025 10-K requirements; and internal controls and internal audit processes sufficient to determine the adequacy of the institution’s liquidity risk management process.
Potential risks and uncertainties include, but are not limited to: • the strength of the United States economy in general and the strength of the local economies in which we conduct operations; • our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry; • the accuracy of our financial statement estimates and assumptions, including the estimates used for our credit loss reserve and deferred tax asset valuation allowance; • the efficiency and effectiveness of our internal control environment; • our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate; • adverse changes or conditions in the capital and financial markets, including actual or potential stresses in the banking industry; • deposit attrition and the level of our uninsured deposits; • legislative or regulatory changes and changes in accounting principles, policies, practices or guidelines, including the on-going effects of the implementation of CECL; • the lack of a significantly diversified loan portfolio and concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real estate, in particular, commercial real estate; • the effects of climate change; • the concentration of ownership of our common stock; • fluctuations in the price of our common stock; • our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic growth as well as growth through other means, such as future acquisitions; • inflation, interest rate, unemployment rate, market, and monetary fluctuations; • impacts of international hostilities and geopolitical events; • increased competition and its effect on the pricing of our products and services as well as our net interest rate 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 cybersecurity breaches; and • other risks described in this Annual Report on Form 10-K and other filings we make with the SEC.
Potential risks and uncertainties include, but are not limited to: • the strength of the United States economy in general and the strength of the local economies in which we conduct operations; • our ability to successfully manage interest rate risk, credit risk, liquidity risk, and other risks inherent to our industry; • the accuracy of our financial statement estimates and assumptions, including the estimates used for our credit loss reserve and deferred tax asset valuation allowance; • the efficiency and effectiveness of our internal control procedures and processes; • our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate; • adverse changes or conditions in the capital and financial markets, including actual or potential stresses in the banking industry; • deposit attrition and the level of our uninsured deposits; • legislative or regulatory changes and changes including the enactment of the One Big Beautiful Bill Act and changes in accounting principles, policies, practices or guidelines, including the on-going effects of the CECL standard ; • the lack of a significantly diversified loan portfolio and concentration in the South Florida market, including the risks of geographic, depositor, and industry concentrations, including our concentration in loans secured by real estate, in particular, commercial real estate; • the effects of climate change; • the concentration of ownership of our common stock; • fluctuations in the price of our common stock; • our ability to fund or access the capital markets at attractive rates and terms and manage our growth, both organic growth as well as growth through other means, such as future acquisitions; • inflation, interest rate, unemployment rate, market, and monetary fluctuations; • the effects of potential new or increased tariffs, retaliatory tariffs and trade restrictions; • impacts of international hostilities and geopolitical events; • increased competition and its effect on the pricing of our products and services as well as our net interest rate spread and net interest margin; • the loss of key employees; • the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, employee, or third-party fraud and security breaches; and • other risks described in this Annual Report on Form 10-K and other filings we make with the SEC.
This accessibility of additional funding allows us to efficiently and timely meet both expected and unexpected outgoing cash flows and collateral needs without adversely affecting either daily operations or the financial condition of the Company. Outstanding fixed-rate advances from the FHLB were at $163.0 million and $183.0 million, as of December 31, 2024, and December 31, 2023, respectively.
This accessibility of additional funding allows us to efficiently and timely meet both expected and unexpected outgoing cash flows and collateral needs without adversely affecting either daily operations or the financial condition of the Company. Outstanding fixed-rate advances from the FHLB were at $158.3 million and $163.0 million, as of December 31, 2025, and December 31, 2024, respectively.
Table of Contents 76 USCB Financial Holdings, Inc. 2024 10-K Reconciliation and Management Explanation of Non -GAAP Financial Measures Management has included the non-GAAP measures set forth below because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends.
Table of Contents 75 USCB Financial Holdings, Inc. 2025 10-K Reconciliation and Management Explanation of Non -GAAP Financial Measures Management has included the non-GAAP measures set forth below because it believes these measures may provide useful supplemental information for evaluating the Company’s underlying performance trends.
Additionally, it is important to note that most of our loans have interest rate floors. This embedded option protects the Company from a decrease in interest rates and positions us to gain in the scenario of higher interest rates. As of December 31, 2024, the commercial real estate portfolio was $1.1 billion or 57.8% of the total gross loans portfolio.
Additionally, it is important to note that most of our loans have interest rate floors. This embedded option protects the Company from a decrease in interest rates and positions us to gain in the scenario of higher interest rates. As of December 31, 2025, the commercial real estate portfolio was $1.2 billion or 57.0% of the total gross loans portfolio.
Changes in the cash surrender value of bank-owned life insurance policies for key employees, purchasing municipal bonds, and overall taxable income will be important elements in determining our effective tax rate. Income tax expense for the year ended December 31, 2024 was $7.8 million, compared to $5.3 million for the year ended December 31, 2023.
Changes in the cash surrender value of bank-owned life insurance policies for key employees, purchasing municipal bonds, and overall taxable income will be important elements in determining our effective tax rate. Income tax expense for the year ended December 31, 2025 was $9.8 million, compared to $7.8 million for the year ended December 31, 2024.
Table of Contents 64 USCB Financial Holdings, Inc. 2024 10-K The following table presents the amortized cost and fair value of investment securities for the dates indicated (in thousands): December 31, 2024 Available-for-sale: Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S.
Table of Contents 63 USCB Financial Holdings, Inc. 2025 10-K The following table presents the amortized cost and fair value of investment securities for the dates indicated (in thousands): December 31, 2025 Available-for-sale: Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S.
For the portion of the HTM exposed to non-government credit risk, the Company utilized the PD/LGD methodology to estimate a $6 thousand ACL as of December 31, 2024. The book value for debt securities classified as HTM represents amortized cost less ACL.
For the portion of the HTM exposed to non-government credit risk, the Company utilized the PD/LGD methodology to estimate a $2 thousand ACL as of December 31, 2025. The book value for debt securities classified as HTM represents amortized cost less ACL.
As of December 31, 2024, there were no outstanding balances under the Fed Funds line of credit. The Board of Governors of the Federal Reserve System, on March 12, 2023, announced the creation of a new Bank Term Funding Program (“BTFP”).
As of December 31, 2025, there were no outstanding balances under the Fed Funds lines of credit. The Board of Governors of the Federal Reserve System, on March 12, 2023, announced the creation of a new Bank Term Funding Program (“BTFP”).
Qualitative adjustments are applied to the estimated expected credit losses for the loan portfolio to account for potential constraints of the quantitative model. Management employs a scorecard to facilitate the evaluation of qualitative factor adjustments made to expected credit losses.
Historical credit losses provide the foundation for the estimation of expected credit losses. Qualitative adjustments are applied to the estimated expected credit losses for the loan portfolio to account for potential constraints of the quantitative model. Management employs a scorecard to facilitate the evaluation of qualitative factor adjustments made to expected credit losses.
Decisions on term and rate modifications are discussed as well. As of December 31, 2024, approximately 58.5% of the loans have adjustable/variable rates and 41.5% of the loans have fixed rates. The adjustable/variable loans re-price to different benchmarks and tenors in different periods of time. By contractual characteristics, there are no material concentrations on anniversary repricing.
Decisions on term and rate modifications are discussed as well. As of December 31, 2025, approximately 61.5% of the loans have adjustable/variable rates and 38.5% of the loans have fixed rates. The adjustable/variable loans re-price to different benchmarks and tenors in different periods of time. By contractual characteristics, there are no material concentrations on anniversary repricing.
The provision for credit loss for the year ended December 31, 2024, was $3.2 million compared to $2.4 million in provision expense for the same period in 2023. The ACL as a percentage of total loans was 1.22% at December 31, 2024 compared to 1.18% at December 31, 2023.
The provision for credit loss for the year ended December 31, 2025, was $2.3 million compared to $3.2 million in provision expense for the same period in 2024. The ACL as a percentage of total loans was 1.16% at December 31, 2025 compared to 1.22% at December 31, 2024.
We maintain an adequate ACL that can mitigate expected credit losses in the loan portfolio. The ACL is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs.
Provision for Credit Losses ACL represents expected credit losses in our portfolio as the measurement date. We maintain an adequate ACL that can mitigate expected credit losses in the loan portfolio. The ACL is increased by the provision for credit losses and is decreased by charge-offs, net of recoveries on prior loan charge-offs.
Government Agency $ 14,279 $ 14 $ (1,668) $ 12,625 Collateralized mortgage obligations 101,808 15 (22,918) 78,905 Mortgage-backed securities - residential 58,995 1 (12,063) 46,933 Mortgage-backed securities - commercial 86,604 40 (7,905) 78,739 Municipal securities 24,925 - (5,614) 19,311 Bank subordinated debt securities 24,314 438 (1,044) 23,708 $ 310,925 $ 508 $ (51,212) $ 260,221 Held-to-maturity: U.S.
Government Agency $ 14,279 $ 14 $ (1,668) $ 12,625 Collateralized mortgage obligations 101,808 15 (22,918) 78,905 Mortgage-backed securities - residential 58,995 1 (12,063) 46,933 Mortgage-backed securities - commercial 86,604 40 (7,905) 78,739 Municipal securities 24,925 - (5,614) 19,311 Bank subordinated debt securities 24,314 438 (1,044) 23,708 $ 310,925 $ 508 $ (51,212) $ 260,221 December 31, 2024 Held-to-maturity: Amortized Cost Unrecognized Gains Unrecognized Losses Fair Value U.S.
Because of the explicit and/or implicit guarantee on these bonds, the Company holds no reserves on these holdings. The remaining portion of the HTM portfolio is made up of $9.2 million in investment grade corporate bonds. The required reserve for these holdings is determined each quarter using the model described above.
Agency issued bonds and mortgage-backed securities. Because of the explicit and/or implicit guarantee on these bonds, the Company holds no reserves on these holdings. The remaining portion of the HTM portfolio is made up of $9.0 million in investment grade corporate bonds. The required reserve for these holdings is determined each quarter using the model described above.
The Company reported net income per diluted share for the year ended December 31, 2024 of $1.24 compared to net income per diluted share for the same period in 2023 of $0.84.
The Company reported net income per diluted share for the year ended December 31, 2025 of $1.33 compared to net income per diluted share for the same period in 2024 of $1.24.
Commitments generally have variable interest rates, fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to Table of Contents 73 USCB Financial Holdings, Inc. 2024 10-K expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash requirements.
Commitments generally have variable interest rates, fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn, the total commitment amounts disclosed above do not necessarily represent future cash requirements.
Liquidity risk is the risk that we will be unable to meet our short-term and long-term obligations as they become due because of an inability to liquidate assets or obtain adequate funding on acceptable terms in a timely matter.
Table of Contents 73 USCB Financial Holdings, Inc. 2025 10-K Liquidity risk is the risk that we will be unable to meet our short-term and long-term obligations as they become due because of an inability to liquidate assets or obtain adequate funding on acceptable terms in a timely matter.
The following table presents lending related commitments outstanding as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Commitments to grant loans and unfunded lines of credit $ 122,578 $ 85,117 Standby and commercial letters of credit 5,389 3,987 Total $ 127,967 $ 89,104 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition established in the contract, for a specific purpose.
The following table presents lending related commitments outstanding as of December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 Commitments to grant loans and unfunded lines of credit $ 161,606 $ 122,578 Standby and commercial letters of credit 2,700 5,389 Total $ 164,306 $ 127,967 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition established in the contract, for a specific purpose.
As of December 31, 2024, the Bank was well-capitalized for regulatory capital purposes, with a total risk-based capital ratio of 13.34%, a tier 1 risk-based capital ratio of 12.10%, a common equity tier 1 capital ratio of 12.10%, and a leverage ratio of 9.38%.
As of December 31, 2025, the Bank was well-capitalized for regulatory capital purposes, with a total risk-based capital ratio of 13.67%, a tier 1 risk-based capital ratio of 12.47%, a common equity tier 1 capital ratio of 12.47%, and a leverage ratio of 9.65%.
This sensitivity analysis provides a hypothetical result to assess the sensitivity of the ACL and does not represent a change in management’s judgement . The Company calculates a reserve for unfunded commitments, distinct from the allowance for credit losses reported in other liabilities.
The change resulted in a $10.3 million or 39.6% increase in the ACL. This sensitivity analysis provides a hypothetical result to assess the sensitivity of the ACL and does not represent a change in management’s judgement. The Company calculates a reserve for unfunded commitments, distinct from the allowance for credit losses reported in accrued interest and other liabilities.
The Company paid off $80 million in borrowings under the BTFP program during the third quarter of 2024. The original maturity of this borrowing by the Bank under the BTFP program was January 2025, and there are no remaining borrowings under this program.
Table of Contents 71 USCB Financial Holdings, Inc. 2025 10-K The Company paid off $80 million in borrowings under the BTFP program during the third quarter of 2024. The original maturity of this borrowing by the Bank under the BTFP program was January 2025, and there are no remaining borrowings under this program.
Net Interest Income Net interest income is the difference between interest earned on interest-earning assets and interest incurred on interest-bearing liabilities and is the primary driver of core earnings. Interest income is generated from interest and dividends on interest-earning assets, including loans, investment securities and other short-term investments.
Table of Contents 57 USCB Financial Holdings, Inc. 2025 10-K Net Interest Income Net interest income is the difference between interest earned on interest-earning assets and interest incurred on interest-bearing liabilities and is the primary driver of core earnings. Interest income is generated from interest and dividends on interest-earning assets, including loans, investment securities and other short-term investments.
The following table presents the components of non-interest income for the periods indicated (in thousands): Years Ended December 31, 2024 2023 Service fees $ 8,839 $ 5,055 Gain (loss) on sale of securities available for sale, net 14 (1,859) Gain on sale of loans held for sale, net 747 801 Other non-interest income 3,140 3,406 Total non-interest income $ 12,740 $ 7,403 Non-interest income for the year ended December 31, 2024 was $12.7 million compared to $7.4 million for the same period in 2023.
The following table presents the components of non-interest income for the periods indicated (in thousands): Years Ended December 31, 2025 2024 Service fees $ 9,603 $ 8,839 (Loss) gain on sale of securities available for sale, net (7,526) 14 Gain on sale of loans held for sale, net 1,001 747 Other non-interest income 3,514 3,140 Total non-interest income $ 6,592 $ 12,740 Non-interest income for the year ended December 31, 2025 was $6.6 million compared to $12.7 million for the same period in 2024.
Overview For the year ended December 31, 2024, the Company reported net income of $24.7 million compared with net income of $16.5 million for the year ended December 31, 2023.
Overview For the year ended December 31, 2025, the Company reported net income of $26.1 million compared with net income of $24.7 million for the year ended December 31, 2024.
Table of Contents 72 USCB Financial Holdings, Inc. 2024 10-K The following table presents the FHLB fixed rate advances as of December 31, 2024 (in thousands): December, 31, 2024 Interest Rate Type of Rate Maturity Date Amount 2.05% Fixed March 27, 2025 $ 10,000 1.07% Fixed July 18, 2025 6,000 3.76% Fixed January 24, 2028 11,000 3.77% Fixed April 25, 2028 50,000 3.68% Fixed September 13, 2027 21,000 3.79% Fixed March 23, 2026 20,000 4.65% Fixed February 13, 2025 45,000 $ 163,000 December, 31, 2023 Interest Rate Type of Rate Maturity Date Amount 1.04% Fixed July 30, 2024 5,000 1.07% Fixed July 18, 2025 6,000 2.05% Fixed March 27, 2025 $ 10,000 3.76% Fixed January 24, 2028 11,000 3.77% Fixed April 25, 2028 50,000 5.57% Fixed December 26, 2024 101,000 $ 183,000 We have also established Fed Funds lines of credit with our upstream correspondent banks to manage temporary fluctuations in our daily cash balances.
The following table presents the FHLB fixed-rate advances as of December 31, 2025 (in thousands): December, 31, 2025 Interest Rate Type of Rate Maturity Date Amount 3.77% Fixed March 16, 2026 $ 104,750 3.88% Variable May 22, 2026 42,500 3.76% Fixed January 24, 2028 11,000 $ 158,250 December, 31, 2024 Interest Rate Type of Rate Maturity Date Amount 2.05% Fixed March 27, 2025 $ 10,000 1.07% Fixed July 18, 2025 6,000 3.76% Fixed January 24, 2028 11,000 3.77% Fixed April 25, 2028 50,000 3.68% Fixed September 13, 2027 21,000 3.79% Fixed March 23, 2026 20,000 4.65% Fixed February 13, 2025 45,000 $ 163,000 We have also established Fed Funds lines of credit with our upstream correspondent banks to manage temporary fluctuations in our daily cash balances.
Operating performance measures should be viewed in addition to, and not as an alternative Table of Contents 56 USCB Financial Holdings, Inc. 2024 10-K to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.
Operating performance measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.
We are not aware of any accounting loss to be incurred by funding these commitments; however, we maintain an allowance for off-balance sheet credit risk which is recorded under other liabilities on the Consolidated Balance Sheets.
We use more conservative credit and collateral policies in making these credit commitments as we do for on-balance sheet items. We are not aware of any accounting loss to be incurred by funding these commitments; however, we maintain an allowance for off-balance sheet credit risk which is recorded under accrued interest and other liabilities on the Consolidated Balance Sheets.
At such date, $200.8 million of outstanding balances are characterized as owner occupied and $935.6 million are characterized as non-owner occupied. The retail sector was the largest segment comprising $305.0 million of the non-owner occupied commercial real estate portfolio.
At such date, $193.0 million of outstanding balances are characterized as owner occupied and $1.05 billion are characterized as non-owner occupied. The retail sector was the largest segment comprising $320.1 million of the non-owner occupied commercial real estate portfolio.
As of December 31, 2024, 67% of the non-owner occupied CRE portfolio were located within South Florida, and only 12 loan notes with an outstanding principal balance of $87.9 million are located outside Florida.
As of December 31, 2025, 71% of the non-owner occupied CRE portfolio were located within South Florida. 26 loan notes with an outstanding principal balance of $66.9 million are located outside Florida.
As part of our ALM strategy and policy, management has the ability to modify the balance sheet to either increase Table of Contents 74 USCB Financial Holdings, Inc. 2024 10-K or decrease asset duration and increase or decrease liability duration to modify the balance sheet sensitivity to interest rates.
As part of our ALM strategy and policy, management has the ability to modify the balance sheet to either increase or decrease asset duration and increase or decrease liability duration to modify the balance sheet sensitivity to interest rates.
Results of Operations General The following tables present selected balance sheet, income statement, and profitability ratios for the dates and for the periods indicated (in thousands, except ratios): As of December 31, 2024 2023 Consolidated Balance Sheets: Total assets $ 2,581,216 $ 2,339,093 Total loans (1) $ 1,972,848 $ 1,780,827 Total deposits $ 2,174,004 $ 1,937,139 Total stockholders' equity $ 215,388 $ 191,968 (1) Loan amounts include deferred fees/costs.
Results of Operations General The following tables present selected balance sheet, income statement, and profitability ratios for the dates and for the periods indicated (in thousands, except ratios): As of December 31, 2025 2024 Consolidated Balance Sheets: Total assets $ 2,791,540 $ 2,581,216 Total loans held for investment (1) $ 2,189,257 $ 1,972,848 Total deposits $ 2,345,080 $ 2,174,004 Total stockholders' equity $ 217,183 $ 215,388 (1) Loan amounts include deferred fees/costs.
Analysis of Financial Condition Total assets at December 31, 2024, were $2.6 billion, an increase of $242.1 million, or 10.4%, over total assets of $2.3 billion at December 31, 2023. Total loans increased $192.0 million, or 10.8%, to $2.0 billion at December 31, 2024 compared to $1.8 billion at December 31, 2023.
Analysis of Financial Condition Total assets at December 31, 2025, were $2.8 billion, an increase of $210.3 million, or 8.1%, over total assets of $2.6 billion at December 31, 2024. Total loans held for investment increased $216.4 million, or 11.0%, to $2.2 billion at December 31, 2025 compared to $2.0 billion at December 31, 2024.
Accordingly, our liquidity resources were at sufficient levels to fund loans and meet other cash needs as necessary. At December 31, 2024, the Company had $412.8 million in available liquidity on balance sheet, including $339.7 million in unpledged securities available to use as collateral and $73.1 million in excess cash.
Accordingly, our liquidity resources were at sufficient levels to fund loans and meet other cash needs as necessary. At December 31, 2025, the Company had $321.4 million in available liquidity on balance sheet, including $286.9 million in unpledged securities available to use as collateral and $34.5 million in excess cash.
(2) Average loan balances include non-accrual loans. Interest income on loans includes accretion of deferred loan fees, net of deferred loan costs. (3) At fair value except for securities held to maturity. This amount includes FHLB stock. (4) Net interest spread is the weighted average yield on total interest-earning assets minus the weighted average rate on total interest-bearing liabilities.
(2) Average loan balances include non-accrual loans. Interest income on loans includes accretion of deferred loan fees, net of deferred loan costs. (3) At fair value except for securities held to maturity. This amount includes FHLB stock.
The loss driver for each loan portfolio segment is derived from a readily available and reasonable economic forecast, including Federal Reserve Bank projections of the U.S. civilian unemployment rate and year-over-year real GDP growth.
The loss driver for each loan portfolio segment is derived from a readily available and reasonable economic forecast, including Federal Reserve Bank projections of the U.S. civilian unemployment rate and year-over-year real GDP growth. For the residential loan segment, House Price Index (“HPI”) projections published by Fannie Mae’s Economic and Strategic Research Group are utilized for the forecast.
In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,” “us,”, and “our” refer to the Company and the Bank, as the contest dictates. However, if the discussion relates to a period before the Effective Date, the terms refer only to the Bank.
In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,” “us,”, and “our” refer to the Company and the Bank, as the contest dictates.
Other factors contributing to the results of operations include our provision for credit losses, non-interest expense, and the provision for income taxes. Table of Contents 59 USCB Financial Holdings, Inc. 2024 10-K Net income for the year ended December 31, 2024 was $24.7 million , compared with net income of $16.5 million for the same period in 2023.
Other factors contributing to the results of operations include our provision for credit losses, non-interest expense, and the provision for income taxes. Net income for the year ended December 31, 2025 was $26.1 million , compared with net income of $24.7 million for the same period in 2024.
Results and analysis are presented quarterly to the ALCO, and strategies are reviewed and refined. Additionally, in the last year we have been reducing our asset sensitivity by extending asset duration. This has reduced our NII volatility for the first and second year in the analysis and has helped us to maintain the NII in accordance with ALCO expectations.
Additionally, during 2025, we have been taking actions to reduce our asset sensitivity by extending asset duration. This has reduced our NII volatility for the first and second year in the analysis and has helped us to maintain the NII in accordance with ALCO expectations.
The weighted average rate for outstanding FHLB advances was 3.8% and 4.4% at December 31, 2024, and December 31, 2023, respectively.
The weighted average rate for outstanding FHLB advances was 3.8% as of December 31, 2025 and 2024.
Senior management is responsible for ensuring in a timely manner that Board approved strategies, policies, and procedures for managing and mitigating risks are appropriately executed within the designated lines of authority and responsibility. ALCO oversees the establishment, approval, implementation, and review of interest rate risk, management, and mitigation strategies, ALM related policies, ALCO procedures and risk tolerances and appetite.
Senior management is responsible for ensuring in a timely manner that Board approved strategies, policies, and procedures for managing and mitigating risks are appropriately executed within the designated lines of authority and responsibility.
The following table presents the capital ratios for the Bank at December 31, 2024 and 2023 (in thousands, except ratios): Actual Minimum Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio December 31, 2024 Total risk-based capital: $ 266,387 13.34% $ 159,795 8.00% 199,744 10.00% Tier 1 risk-based capital: $ 241,740 12.10% $ 119,846 6.00% 159,795 8.00% Common equity tier 1 capital: $ 241,740 12.10% $ 89,885 4.50% 129,834 6.50% Leverage ratio: $ 241,740 9.38% $ 103,074 4.00% 128,843 5.00% December 31, 2023 Total risk-based capital: $ 233,109 12.65% $ 147,432 8.00% 184,290 10.00% Tier 1 risk-based capital: $ 211,645 11.48% $ 110,574 6.00% 147,432 8.00% Common equity tier 1 capital: $ 211,645 11.48% $ 83,931 4.50% 119,789 6.50% Leverage ratio: $ 211,645 9.17% $ 92,328 4.00% 115,410 5.00% Impact of Inflation Our Consolidated Financial Statements and related notes have been prepared in accordance with U.S.
The following table presents the capital ratios for the Bank at December 31, 2025 and 2024 (in thousands, except ratios): Actual Minimum Capital Requirements To be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio December 31, 2025 Total risk-based capital: $ 299,596 13.67% $ 175,387 8.00% 219,234 10.00% Tier 1 risk-based capital: $ 273,342 12.47% $ 131,541 6.00% 175,387 8.00% Common equity tier 1 capital: $ 273,342 12.47% $ 98,655 4.50% 142,502 6.50% Leverage ratio: $ 273,342 9.65% $ 113,296 4.00% 141,620 5.00% December 31, 2024 Total risk-based capital: $ 266,387 13.34% $ 159,795 8.00% 199,744 10.00% Tier 1 risk-based capital: $ 241,740 12.10% $ 119,846 6.00% 159,795 8.00% Common equity tier 1 capital: $ 241,740 12.10% $ 89,885 4.50% 129,834 6.50% Leverage ratio: $ 241,740 9.38% $ 103,074 4.00% 128,843 5.00% Impact of Inflation Our Consolidated Financial Statements and related notes have been prepared in accordance with U.S.
Total deposits increased by $236.9 million, or 12.2%, to $2.2 billion at December 31, 2024 compared to $1.9 billion at December 31, 2023. Table of Contents 63 USCB Financial Holdings, Inc. 2024 10-K Investment Securities The investment portfolio is used and managed to provide liquidity through cash flows, marketability and, if necessary, collateral for borrowings.
Total deposits increased by $171.1 million, or 7.9%, to $2.3 billion at December 31, 2025 compared to $2.2 billion at December 31, 2024. Investment Securities The investment portfolio is used and managed to provide liquidity through cash flows, marketability and, if necessary, collateral for borrowings.
Table of Contents 70 USCB Financial Holdings, Inc. 2024 10-K The following table presents ACL by type and its individual percentage to total loans for the periods indicated (in thousands): December 31, 2024 2023 Loan Category Allowance % of Loans in Each Category to Total Loans Allowance % of Loans in Each Category to Total Loans Residential Real Estate $ 5,121 21.3 % $ 2,695 11.5 % Commercial Real Estate 8,788 36.5 % 10,366 58.8 % Commercial and Industrial 4,633 19.2 % 3,974 12.4 % Correspondent Banks 654 2.7 % 911 6.5 % Consumer and Other 4,874 20.3 % 3,138 10.8 % Total $ 24,070 100.0 % $ 21,084 100.0 % Bank-Owned Life Insurance At December 31, 2024, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was $53.5 million.
The following table presents ACL by type and its individual percentage to total loans for the periods indicated (in thousands): December 31, 2025 2024 Loan Category Allowance % of Loans in Each Category to Total Loans Allowance % of Loans in Each Category to Total Loans Residential Real Estate $ 5,908 14.1 % $ 5,121 14.8 % Commercial Real Estate 9,476 57.0 % 8,788 57.8 % Commercial and Industrial 4,814 13.5 % 4,633 13.1 % Correspondent Banks 1,015 5.9 % 654 4.2 % Consumer and Other 4,287 9.5 % 4,874 10.1 % Total $ 25,500 100.0 % $ 24,070 100.0 % Table of Contents 69 USCB Financial Holdings, Inc. 2025 10-K Bank-Owned Life Insurance At December 31, 2025, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was $59.4 million.
The following table shows the loan portfolio composition as of the dates indicated (in thousands): December 31, 2024 December 31, 2023 Total Percent of Total Total Percent of Total Residential Real Estate $ 289,961 14.8 % $ 204,419 11.5 % Commercial Real Estate 1,136,417 57.8 % 1,047,593 58.8 % Commercial and Industrial 258,311 13.1 % 219,757 12.4 % Correspondent Banks 82,438 4.2 % 114,945 6.5 % Consumer and Other 198,091 10.1 % 191,930 10.8 % Total gross loans 1,965,218 100.0 % 1,778,644 100.0 % Plus: Deferred costs 7,630 2,183 Total loans net of deferred costs 1,972,848 1,780,827 Less: Allowance for credit losses 24,070 21,084 Total net loans $ 1,948,778 $ 1,759,743 Total loans held for investment net of deferred costs increased by $192.0 million or 10.8% at December 31, 2024 compared to December 31, 2023.
The following table shows the loan portfolio composition as of the dates indicated (in thousands): December 31, 2025 December 31, 2024 Total Percent of Total Total Percent of Total Residential Real Estate $ 307,692 14.1 % $ 289,961 14.8 % Commercial Real Estate 1,244,835 57.0 % 1,136,417 57.8 % Commercial and Industrial 295,548 13.5 % 258,311 13.1 % Correspondent Banks 127,968 5.9 % 82,438 4.2 % Consumer and Other 207,215 9.5 % 198,091 10.1 % Total gross loans 2,183,258 100.0 % 1,965,218 100.0 % Plus: Deferred costs/fees 5,999 7,630 Total loans held for investment, net of deferred costs/fees 2,189,257 1,972,848 Less: Allowance for credit losses 25,500 24,070 Total loans held for investment, net of allowance $ 2,163,757 $ 1,948,778 Total loans held for investment net of deferred costs/fees increased by $216.4 million or 11.0% at December 31, 2025 compared to December 31, 2024.
Commercial real estate continues to be the main category of our portfolio, reflective of the market in which we operate.
The most significant growth was in the commercial real estate and correspondent bank loan pools. Commercial real estate continues to be the main category of our portfolio, reflective of the market in which we operate.
To prepare financial statements in conformity with GAAP, management makes estimates, assumptions, and judgments based on available information. These estimates, assumptions, and judgments affect the amounts reported in the financial statements and accompanying notes.
GAAP, the most significant of which are described in Note 1 “Summary of Significant Accounting Policies” to our Consolidated Financial Statements. To prepare financial statements in conformity with GAAP, management makes estimates, assumptions, and judgments based on available information. These estimates, assumptions, and judgments affect the amounts reported in the financial statements and accompanying notes.
Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our operations and performance.
Further, management uses these measures in managing and evaluating the Company’s business and intends to refer to them in discussions about our Table of Contents 54 USCB Financial Holdings, Inc. 2025 10-K operations and performance.
It also applies to off-balance sheet credit exposures not accounted for as insurance (e.g., loan commitments, standby letters of credit, financial guarantees, and similar instruments), as well as net investments in leases recognized by lessors in accordance with Topic 842 on leases.
It also applies to off -balance sheet credit exposures not accounted for as insurance (e.g., loan commitments, standby letters of credit, financial guarantees, and similar instruments), as well as net investments in leases recognized by lessors in accordance with Topic 842 on leases.The Company estimates the allowance for credit losses by utilizing pertinent available data, sourced both internally and externally, relating to past events, current conditions, and reasonable and supportable forecasts.
The following table presents the daily average balance and average rate paid on deposits by category for the years ended December 31, 2024 and 2023 (in thousands, except ratios): Years Ended December 31, 2024 2023 Average Balance Average Rate Paid Average Balance Average Rate Paid Non-interest bearing demand deposits $ 596,073 0.00% $ 607,506 0.00% Interest-bearing demand deposits 54,667 2.76% 53,324 1.69% Savings and money market deposits 1,109,853 3.61% 963,708 3.08% Time deposits 326,373 4.09% 268,715 3.16% $ 2,086,966 2.63% $ 1,893,253 2.06% Total average deposits for the year ended December 31, 2024 was $2.1 billion, an increase of $193.7 million, or 10.2% over total average deposits of $1.9 billion for the same period in 2023.
The following table presents the daily average balance and average rate paid on deposits by category for the years ended December 31, 2025 and 2024 (in thousands, except ratios): Years Ended December 31, 2025 2024 Average Balance Average Rate Paid Average Balance Average Rate Paid Non-interest bearing demand deposits $ 577,232 0.00% $ 596,073 0.00% Interest-bearing demand deposits 51,803 2.48% 54,667 2.76% Savings and money market deposits 1,255,719 3.03% 1,109,853 3.61% Time deposits 470,213 3.85% 326,373 4.09% $ 2,354,967 2.44% $ 2,086,966 2.63% Total average deposits for the year ended December 31, 2025 was $2.4 billion, an increase of $268.0 million, or 12.8% over total average deposits of $2.1 billion for the same period in 2024.
The following table shows scheduled maturities of uninsured time deposits as of December 31, 2024 (in thousands): Three months or less $ 38,848 Over three through six months 31,977 Over six through twelve months 22,239 Over twelve months 942 $ 94,006 Borrowings As a member of the FHLB Atlanta, we are eligible to obtain advances with various terms and conditions.
The following table shows scheduled maturities of uninsured time deposits as of December 31, 2025 (in thousands): Total Three months or less $ 59,593 Over three through six months 16,190 Over six through twelve months 9,552 Over twelve months 26,146 $ 111,481 Borrowings FHLB Advances As a member of the FHLB Atlanta, we are eligible to obtain advances with various terms and conditions.
The quarterly dividend for all quarters in 2024 was $0.05 per share of Class A common stock. • Net interest income before provision for credit losses totaled $69.9 million, an increase of $11.4 million or 19.4%, compared to $58.6 million for the year ended December 31, 2023. • Net interest margin (“NIM”) was 2.94% for the year ended December 31, 2024 , an improvement from 2.79% for the year ended December 31, 2023. • Total assets grew to $2.6 billion at December 31, 2024, an increase of $242.1 million or 10.4%, compared to $2.3 billion at December 31, 2023. • Total loans held for investment grew to $2.0 billion at December 31, 2024, an increase of $192.0 million or 10.8%, compared to $1.8 billion at December 31, 2023. • Return on average assets for the year ended December 31, 2024 was 0.99% compared to 0.75% for 2023. • Return on average stockholders’ equity for the year ended December 31, 2024 was 12.11% compared to 8.99% for 2023. • Nonperforming assets totaled $2.7 million at December 31, 2024 compared to $468 thousand at December 31, 2023. • The Company maintained its strong capital position.
The following significant highlights are of note for the year ended December 31, 2025: • Net interest income before provision for credit losses totaled $83.6 million, an increase of $13.7 million or 19.6%, compared to $69.9 million for the year ended December 31, 2024. • Net interest margin (“NIM”) was 3.20% for the year ended December 31, 2025, an improvement from 2.94% for the year ended December 31, 2024. • Total assets grew to $2.8 billion at December 31, 2025, an increase of $210.3 million or 8.1%, compared to $2.6 billion at December 31, 2024. • Total loans held for investment grew to $2.2 billion at December 31, 2025, an increase of $216.4 million or 11.0%, compared to $2.0 billion at December 31, 2024. • Return on average assets for the year ended December 31, 2025 was 0.96% compared to 0.99% for 2024. • Return on average stockholders’ equity for the year ended December 31, 2025 was 11.79% compared to 12.11% for 2024. • Nonperforming assets totaled $3.1 million at December 31, 2025 compared to $2.7 million at December 31, 2024. • The Bank maintained its strong capital position.
Years Ended December 31, 2024 2023 Consolidated Statements of Operations: Net interest income before provision for credit losses $ 69,936 $ 58,568 Provision fro credit losses $ 3,157 $ 2,367 Total non-interest income $ 12,740 $ 7,403 Total non-interest expense $ 47,042 $ 41,808 Net income $ 24,674 $ 16,545 Net income available to common stockholders $ 24,674 $ 16,545 Profitability: Efficiency ratio 56.90% 63.37% Net interest margin 2.94% 2.79% The Company’s results of operations depend substantially on net interest income and non-interest income.
Years Ended December 31, 2025 2024 Consolidated Statements of Operations: Net interest income before provision for credit losses $ 83,630 $ 69,936 Provision for credit losses $ 2,297 $ 3,157 Total non-interest income $ 6,592 $ 12,740 Total non-interest expense $ 52,009 $ 47,042 Net income $ 26,100 $ 24,674 Net income available to common stockholders $ 26,100 $ 24,674 Profitability: Efficiency ratio 57.65% 56.90% Net interest margin 3.20% 2.94% The Company’s results of operations depend substantially on net interest income and non-interest income.
Time deposits with balances of $250 thousand or more totaled $94.0 million and $58.1 million at December 31, 2024 and 2023, respectively. The Bank maintains a well-diversified deposit base. At December 31, 2024, our top 10 depositors only held 16.7% of our total portfolio.
Time deposits with balances of $250 thousand or more totaled $111.5 million and $94.0 million at December 31, 2025 and 2024, respectively. At December 31, 2025, our top 10 depositors held 15.59% of our total deposit portfolio. At December 31, 2024, our top 10 depositors held 16.7% of our total deposit portfolio.
Government Agency $ 42,538 $ - $ (5,094) $ 37,444 Collateralized mortgage obligations 56,987 57 (7,785) 49,259 Mortgage-backed securities - residential 40,681 53 (4,613) 36,121 Mortgage-backed securities - commercial 15,272 - (1,385) 13,887 Corporate bonds 9,222 - (393) 8,829 $ 164,700 $ 110 $ (19,270) $ 145,540 Allowance for credit losses - securities held-to-maturity (6) Securities held-to maturity, net of allowance for credit losses $ 164,694 December 31, 2023 Available-for-sale: Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S.
Government Agency $ 42,538 $ - $ (5,094) $ 37,444 Collateralized mortgage obligations 56,987 57 (7,785) 49,259 Mortgage-backed securities - residential 40,681 53 (4,613) 36,121 Mortgage-backed securities - commercial 15,272 - (1,385) 13,887 Corporate bonds 9,222 - (393) 8,829 164,700 $ 110 $ (19,270) $ 145,540 Allowance for credit losses - securities held-to-maturity (6) Securities held-to maturity, net of allowance for credit losses $ 164,694 Table of Contents 64 USCB Financial Holdings, Inc. 2025 10-K AFS and HTM investment securities in aggregate increased $36.5 million or 8.6% to $461.4 million at December 31, 2025 from $424.9 million at December 31, 2024.
Non-Interest Expense The following table presents the components of non-interest expense for the periods indicated (in thousands): Years Ended December 31, 2024 2023 Salaries and employee benefits $ 28,793 $ 24,429 Occupancy 5,258 5,230 Regulatory assessment and fees 1,766 1,453 Consulting and legal fees 1,568 1,899 Network and information technology services 1,993 2,016 Other operating 7,664 6,781 Total non-interest expense $ 47,042 $ 41,808 Non-interest expense for the year ended December 31, 2024 increased $5.2 million or 12.5%, compared to the same period in 2023.
Non-Interest Expense The following table presents the components of non-interest expense for the periods indicated (in thousands): Years Ended December 31, 2025 2024 Salaries and employee benefits $ 32,167 $ 28,793 Occupancy 5,330 5,258 Regulatory assessment and fees 1,637 1,766 Consulting and legal fees 1,941 1,568 Network and information technology services 2,324 1,993 Other operating 8,610 7,664 Total non-interest expense $ 52,009 $ 47,042 Table of Contents 60 USCB Financial Holdings, Inc. 2025 10-K Non-interest expense for the year ended December 31, 2025 increased $5.0 million or 10.6%, compared to the year ended December 31, 2024.
Table of Contents 68 USCB Financial Holdings, Inc. 2024 10-K Loan credit exposures by internally assigned grades are as follows for the dates indicated (in thousands): December 31, 2024 Pass Special Mention Substandard Doubtful Total Residential Real Estate $ 289,401 $ - $ 560 $ - $ 289,961 Commercial Real Estate 1,133,965 - 2,452 - 1,136,417 Commercial and Industrial 256,031 - 2,280 - 258,311 Correspondent Banks 82,438 - - - 82,438 Consumer and Other 196,101 - 1,990 - 198,091 $ 1,957,936 $ - $ 7,282 $ - $ 1,965,218 December 31, 2023 Pass Special Mention Substandard Doubtful Total Residential Real Estate $ 204,127 $ - $ 292 $ - $ 204,419 Commercial Real Estate 1,040,032 - 7,561 - 1,047,593 Commercial and Industrial 218,129 - 1,628 - 219,757 Correspondent Banks 114,945 - - - 114,945 Consumer and Other 191,930 - - - 191,930 $ 1,769,163 $ - $ 9,481 $ - $ 1,778,644 Non-Performing Assets The following table presents non-performing assets as of December 31, 2024 and 2023 (in thousands, except ratios): 2024 2023 Total non-performing loans $ 2,707 $ 468 Other real estate owned - - Total non-performing assets 2,707 468 Asset quality ratios: - - Allowance for credit losses to total loans 1.22% 1.18% Allowance for credit losses to non-performing loans 889% 4505% Non-performing loans to total loans 0.14% 0.03% Non-performing assets include all loans categorized as non-accrual or restructured, impaired securities, OREO and other repossessed assets.
Table of Contents 67 USCB Financial Holdings, Inc. 2025 10-K Loan credit exposures by internally assigned grades are as follows for the dates indicated (in thousands): 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 December 31, 2024 Pass Special Mention Substandard Doubtful Total Residential Real Estate $ 289,401 $ - $ 560 $ - $ 289,961 Commercial Real Estate 1,133,965 - 2,452 - 1,136,417 Commercial and Industrial 256,031 - 2,280 - 258,311 Correspondent Banks 82,438 - - - 82,438 Consumer and Other 196,101 - 1,990 - 198,091 $ 1,957,936 $ - $ 7,282 $ - $ 1,965,218 Non-Performing Assets The following table presents non-performing assets as of December 31, 2025 and 2024 (in thousands, except ratios): 2025 2024 Total non-performing loans $ 3,138 $ 2,707 Other real estate owned - - Total non-performing assets 3,138 2,707 Asset quality ratios: Allowance for credit losses to total loans 1.16% 1.22% Allowance for credit losses to non-performing loans 813% 889% Non-performing loans to total loans 0.14% 0.14% Non-performing assets include all loans categorized as non-accrual or restructured, impaired securities, OREO and other repossessed assets.
See Note 3 “Loans” to the Consolidated Financial Statements set forth in Item 8 of Part 1 of this Annual Report as Form 10- K for more information on the allowance for credit losses.
Additionally, qualitative adjustments are made to the ACL when, based on management’s judgment, there are factors impacting the allowance estimate not considered by the quantitative calculations. See Note 3 “Loans” to the Consolidated Financial Statements set forth in Item 8 of Part 1 of this Annual Report as Form 10-K for more information on the allowance for credit losses.
The following table presents ACL and net charge-offs to average loans by type for the periods indicated (in thousands): Residential Real Estate Commercial Real Estate Commercial and Industrial Correspondent Banks Consumer and Other Total December, 31, 2024 Beginning balance $ 2,695 $ 10,366 $ 3,974 $ 911 $ 3,138 $ 21,084 Provision for credit losses (1) 2,403 (1,578) 640 (257) 1,752 2,960 Recoveries 23 - 19 - 3 45 Charge-offs - - - - (19) (19) Ending Balance $ 5,121 $ 8,788 $ 4,633 $ 654 $ 4,874 $ 24,070 Average loans $ 256,112 $ 1,068,574 $ 238,266 $ 103,345 $ 195,716 $ 1,862,013 Net charge-offs (recoveries) to average loans (0.01)% - (0.01)% - 0.01% (0.00)% December, 31, 2023 Beginning balance $ 1,352 $ 10,143 $ 4,163 $ 720 $ 1,109 $ 17,487 Cumulative effect of adoption of accounting principle (2) 1,238 1,105 (2,158) 23 858 1,066 Provision for credit losses (3) 95 (882) 1,897 168 1,225 2,503 Recoveries 10 - 72 - 3 85 Charge-offs - - - - (57) (57) Ending Balance $ 2,695 $ 10,366 $ 3,974 $ 911 $ 3,138 $ 21,084 Average loans $ 186,854 $ 986,234 $ 179,574 $ 93,364 $ 160,934 $ 1,606,960 Net charge-offs (recoveries) to average loans (0.01)% - (0.04)% - 0.03% (0.00)% (1) Provision for credit losses excludes $199 thousand release for unfunded commitments included in other liabilities and $2 thousand release for investment securities held to maturity.
The following table presents ACL and net charge-offs to average loans by type for the periods indicated (in thousands): Residential Real Estate Commercial Real Estate Commercial and Industrial Correspondent Banks Consumer and Other Total December, 31, 2025 Beginning balance $ 5,121 $ 8,788 $ 4,633 $ 654 $ 4,874 $ 24,070 Provision for credit losses (1) 763 688 164 361 143 2,119 Recoveries 24 - 17 - 2 43 Charge-offs - - - - (732) (732) Ending Balance $ 5,908 $ 9,476 $ 4,814 $ 1,015 $ 4,287 $ 25,500 Average loans $ 307,199 $ 1,186,105 $ 266,095 $ 99,580 $ 210,060 $ 2,069,039 Net charge-offs (recoveries) to average loans (0.01)% - (0.01)% - 0.35% 0.03% December, 31, 2024 Beginning balance $ 2,695 $ 10,366 $ 3,974 $ 911 $ 3,138 $ 21,084 Provision for credit losses (2) 2,403 (1,578) 640 (257) 1,752 2,960 Recoveries 23 - 19 - 3 45 Charge-offs - - - - (19) (19) Ending Balance $ 5,121 $ 8,788 $ 4,633 $ 654 $ 4,874 $ 24,070 Average loans $ 256,112 $ 1,068,574 $ 238,266 $ 103,345 $ 195,716 $ 1,862,013 Net charge-offs (recoveries) to average loans (0.01)% - (0.01)% - 0.01% (0.00)% (1) Provision for credit losses excludes $182 thousand provision for unfunded commitments included in accrued interest and other liabilities and $4 thousand release for investment securities held to maturity.
We also generate income from gain on sale of loans though our interest rate swap and SBA programs. In addition, we own life insurance policies on several employees and generate income reflecting the increase in the cash surrender value of these policies.
In addition, we own life insurance policies on several key employees and generate income reflecting the increase in the cash surrender value of these policies.
Credit ratings are monitored by the Company on at least a quarterly basis. As of December 31, 2024 and December 31, 2023, all HTM securities held by the Company were rated investment grade. At December 31, 2024, HTM securities included $155.5 million of U.S. Government and U.S. Agency issued bonds and mortgage-backed securities.
Credit ratings are monitored by the Company on at least a quarterly basis. As of December 31, 2025 and December 31, 2024, all HTM securities held by the Company were rated investment grade. Table of Contents 62 USCB Financial Holdings, Inc. 2025 10-K At December 31, 2025, HTM securities included $144.9 million of U.S. Government and U.S.
(5) Net interest margin is the ratio of net interest income to average total interest-earning assets. Net interest income before the provision for credit losses was $69.9 million for the year ended December 31, 2024, a increase of $11.4 million or 19.4%, from $58.6 million for the year ended December 31, 2023.
Net interest income before the provision for credit losses was $83.6 million for the year ended December 31, 2025, a increase of $13.7 million or 19.6%, from $69.9 million for the year ended December 31, 2024.

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