10-Q - USCB - Equibles

uscb-20250630p1i0

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number:

001-41196

USCB Financial Holdings, Inc.

(Exact name of registrant as specified in its charter)

Florida

87-4070846

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2301 N.W. 87th Avenue

Doral

33172

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code:

(

305

)

715-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $1.00 par value per share

USCB

The Nasdaq Stock Market LLC

Indicate by check

mark whether the

registrant (1) has

filed all reports

required to be

filed by Section

13 or 15(d)

of the Securities

Exchange

Act of 1934 during the preceding 12 months

(or for such shorter period that the registrant was

required to file such reports), and (2)

has

been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data

File required to be submitted pursuant

to Rule 405

of Regulation S-T

(§232.405 of this

chapter) during the

preceding 12 months

(or for such

shorter period that

the registrant

was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company

emerging

growth

company.

See

the

definitions

“large

accelerated

filer,”

“accelerated

filer,”

“non-accelerated

filer,”

“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☒

If an

emerging growth

company, indicate by

check mark

if the

registrant has elected

not to

use the

extended transition

period for

complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 31, 2025 the registrant had

20,078,385

shares of Class

common stock outstanding.

uscb-20250630p1i0

FORM 10-Q

June 30, 2025

TABLE OF CONTENTS

PART I

Item 1.

Financial Statements

Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024

Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024

(Unaudited)

Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and

2024 (Unaudited)

Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30,

2025 and 2024 (Unaudited)

Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)

Notes to the Consolidated Financial Statements (Unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibit Index

Signatures

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

PART

Item 1.

Financial Statements

USCB FINANCIAL HOLDINGS, INC

Consolidated Balance Sheets – Unaudited

(Dollars in thousands, except share data)

June 30, 2025

December 31, 2024

ASSETS:

Cash and due from banks

8,386

6,986

Interest-bearing deposits in banks

46,433

70,049

Total cash and cash equivalents

54,819

77,035

Investment securities held to maturity, net of allowance of $

and $

, respectively (fair value of

142,877

and $

145,540

, respectively)

158,740

164,694

Investment securities available for sale, at fair value

285,382

260,221

Federal Home Loan Bank stock, at cost

6,936

9,379

Loans held for investment, net of allowance of

24,933

and $

24,070

, respectively

2,088,385

1,948,778

Accrued interest receivable

11,285

10,945

Premises and equipment, net

4,359

4,563

Bank owned life insurance

58,427

53,472

Deferred tax assets, net

23,663

29,646

Lease right-of-use asset

7,046

8,451

Other assets

20,432

14,032

Total assets

2,719,474

2,581,216

LIABILITIES:

Deposits:

Non-interest bearing demand deposits

584,895

575,159

Savings and money market deposits

1,248,379

1,180,809

Interest-bearing demand deposits

40,597

50,648

Time deposits

461,790

367,388

Total deposits

2,335,661

2,174,004

Federal Home Loan Bank advances

108,000

163,000

Lease liability

7,046

8,451

Accrued interest and other liabilities

37,184

20,373

Total liabilities

2,487,891

2,365,828

Commitments and contingencies (See Notes 5

and 11)

(nil)

STOCKHOLDERS' EQUITY:

Preferred stock - Class C; $

1.00

par value; $

1,000

per share liquidation preference;

52,748

authorized;

and

issued and outstanding as of June 30, 2025

and December 31, 2024

Preferred stock - Class D; $

1.00

par value; $

5.00

per share liquidation preference;

12,309,480

authorized;

and

issued and outstanding as of June 30, 2025

and December 31, 2024

Preferred stock - Class E; $

1.00

par value; $

1,000

per share liquidation preference;

3,185,024

authorized;

and

issued and outstanding as of June 30, 2025

and December 31, 2024

Common stock - Class A Voting; $

1.00

par value;

45,000,000

shares authorized;

20,078,385

issued and

outstanding as of June 30, 2025,

19,924,632

issued and outstanding as of December 31,

2024

20,078

19,925

Common stock - Class B Non-voting; $

1.00

par value;

8,000,000

shares authorized;

and

issued and

outstanding as of June 30, 2025 and December

31, 2024

Additional paid-in capital on common stock

309,282

307,810

Accumulated deficit

(56,025)

(67,813)

Accumulated other comprehensive loss

(41,752)

(44,534)

Total stockholders' equity

231,583

215,388

Total liabilities and stockholders' equity

2,719,474

2,581,216

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Operations - Unaudited

(Dollars in thousands,

except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Interest income:

Loans, including fees

31,946

28,017

62,191

54,660

Investment securities

3,432

3,069

6,456

5,880

Interest-bearing deposits in financial institutions

776

1,531

1,485

2,964

Total interest income

36,154

32,617

70,132

63,504

Interest expense:

Interest-bearing demand deposits

285

391

623

760

Savings and money market deposits

9,410

10,071

18,745

20,465

Time deposits

4,343

3,222

8,261

6,516

Federal Home Loan Bank advances and other borrowings

1,082

1,622

2,354

3,294

Total interest expense

15,120

15,306

29,983

31,035

Net interest income before provision for

credit losses

21,034

17,311

40,149

32,469

Provision for credit losses

1,031

786

1,712

1,196

Net interest income after provision for

credit losses

20,003

16,525

38,437

31,273

Non-interest income:

Service fees

2,402

1,977

4,733

3,628

Gain on sale of securities available for sale, net

Gain on sale of loans held for sale, net

151

417

676

484

Other non-interest income

817

803

1,677

1,549

Total non-interest income

3,370

3,211

7,086

5,675

Non-interest expense:

Salaries and employee benefits

7,954

7,353

15,590

13,663

Occupancy

1,337

1,266

2,621

2,580

Regulatory assessments and fees

396

476

817

909

Consulting and legal fees

263

456

855

Network and information technology services

564

479

1,069

986

Other operating expense

2,120

1,723

4,133

3,741

Total non-interest expense

12,634

11,560

24,686

22,734

Income before income tax expense

10,739

8,176

20,837

14,214

Income tax expense

2,599

1,967

5,039

3,393

Net income

8,140

6,209

15,798

10,821

Per share information:

Net income per share, basic

0.41

0.32

0.79

0.55

Net income per share, diluted

0.40

0.31

0.78

0.55

Cash dividends declared

0.10

0.05

0.20

0.10

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Comprehensive Income

Unaudited

(Dollars in thousands)

Three Months Ended

June 30,

Six Months Ended

June 30,

2025

2024

2025

2024

Net income

8,140

6,209

15,798

10,821

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities

(895)

910

3,778

(1,224)

Reclassification adjustment for amortization of net

unrealized losses on

securities transferred from available-for-sale to held-to-maturity

134

133

Reclassification adjustment for gain included in net

income

(14)

Unrealized gain (loss) on cash flow hedge

(28)

(186)

549

Tax benefit (expense)

217

(251)

(944)

141

Total other comprehensive income (loss), net of tax

(639)

741

2,782

(415)

Total comprehensive income

7,501

6,950

18,580

10,406

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Changes in Stockholders’

Equity - Unaudited

(Dollars in thousands,

except per share data)

Common Stock

Additional Paid-in

Capital on Common

Stock

Accumulated

Deficit

Accumulated Other

Comprehensive

Loss

Par Value

Total

Stockholders'

Equity

Balance at March 31, 2025

20,048,385

20,048

308,313

(62,160)

(41,113)

225,088

Net income

8,140

Other comprehensive loss

(639)

Exercise of stock options

30,000

195

225

Dividend payment

(2,005)

Stock-based compensation

774

Balance at June 30, 2025

20,078,385

20,078

309,282

(56,025)

(41,752)

231,583

Balance at March 31, 2024

19,650,463

19,650

305,740

(84,952)

(45,427)

195,011

Net income

6,209

Other comprehensive income

741

Repurchase of Class A common stock

(25,000)

(25)

(275)

(300)

Restricted stock issued

5,169

(6)

Dividend payment

(1,017)

Stock-based compensation

376

Balance at June 30, 2024

19,630,632

19,631

305,835

(79,760)

(44,686)

201,020

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Common Stock

Additional Paid-in

Capital on Common

Stock

Accumulated

Deficit

Accumulated Other

Comprehensive

Loss

Par Value

Total

Stockholders'

Equity

Balance at December 31, 2024

19,924,632

19,925

307,810

(67,813)

(44,534)

215,388

Net income

15,798

Other comprehensive income

2,782

Repurchase of Class A common stock

(9,671)

(10)

(164)

(174)

Restricted stock issued

124,424

124

(124)

Restricted stock forfeiture

Exercise of stock options

39,000

278

317

Dividend payment

(4,010)

Stock-based compensation

1,482

Balance at June 30, 2025

20,078,385

20,078

309,282

(56,025)

(41,752)

231,583

Balance at December 31, 2023

19,575,435

19,575

305,212

(88,548)

(44,271)

191,968

Net income

10,821

Other comprehensive loss

(415)

Repurchase of Class A common stock

(32,100)

(32)

(348)

(380)

Restricted stock issued

57,922

(58)

Restricted stock forfeiture

(8,625)

(8)

Exercise of stock options

38,000

285

323

Dividend payment

(2,033)

Stock-based compensation

736

Balance at June 30, 2024

19,630,632

19,631

305,835

(79,760)

(44,686)

201,020

The accompanying notes are an integral

part of these unaudited consolidated financial

statements.

The accompanying notes are an integral

part of these consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Cash Flows - Unaudited

(Dollars in thousands)

Six Months Ended June 30,

2025

2024

Cash flows from operating activities:

Net income

15,798

10,821

Adjustments to reconcile net income

to net cash provided by operating activities:

Provision for credit losses

1,712

1,196

Depreciation and amortization

298

286

Accretion of premiums on securities, net

(728)

(228)

Amortization of deferred loan fees, net

280

100

Stock-based compensation

1,482

736

Gain on sale of available for sale securities,

net

(14)

Gain on sale of loans held for sale, net

(676)

(484)

Proceeds from the sale of loans held for sale

9,745

6,049

Origination of loans held for sale

(9,069)

(5,565)

Increase in cash surrender value of bank owned

life insurance

(955)

(826)

Decrease in deferred tax assets

5,040

3,393

Net change in operating assets and liabilities:

Accrued interest receivable

(340)

(850)

Other assets

(6,586)

(1,198)

Accrued interest and other liabilities

16,667

12,991

Net cash provided by operating activities

32,668

26,407

Cash flows from investing activities:

Proceeds from maturities and pay-downs of investment

securities held to maturity

6,044

5,455

Purchase of investment securities available

for sale

(31,676)

(52,449)

Proceeds from maturities and pay-downs of investment

securities available for sale

11,063

9,630

Proceeds from sales of investment securities

available for sale

34,753

Net increase in loans held for investment

(71,439)

(43,821)

Purchase of loans held for investment

(70,015)

(44,691)

Additions to premises and equipment

(94)

(178)

Purchase of bank owned life insurance

(4,000)

Proceeds from the redemption of Federal

Home Loan Bank stock

8,170

4,798

Purchase of Federal Home Loan Bank stock

(5,727)

(177)

Net cash used in investment activities

(157,674)

(86,680)

Cash flows from financing activities:

Proceeds from issuance of Class A common

stock, net

317

323

Cash dividends paid

(4,010)

(2,033)

Repurchase of Class A common stock

(174)

(380)

Net increase in deposits

161,657

119,562

Proceeds from FHLB advances

117,000

Proceeds from other borrowings

80,000

Repayments on Federal Home Loan Bank advances

(172,000)

(101,000)

Net cash provided by financing activities

102,790

96,472

Net increase (decrease) in cash and

cash equivalents

(22,216)

36,199

Cash and cash equivalents at beginning

of period

77,035

41,062

Cash and cash equivalents at end of period

54,819

77,261

Supplemental disclosure of cash flow

information:

Interest paid

29,167

28,538

The accompanying notes are an integral

part of these unaudited consolidated financial

statements.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES

Overview

USCB Financial Holdings,

Inc.,

a Florida corporation

incorporated in 2021,

is a bank

holding company with

one direct

wholly owned subsidiary,

U.S. Century Bank (the “Bank”), together referred to as “the Company”.

The Bank, established in

2002, is a Florida state-chartered,

non-member financial institution providing

financial services through its

banking centers

located in South Florida.

The Bank

owns a

subsidiary,

Florida Peninsula

Title LLC,

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 Department of Insurance Regulation,

Florida Peninsula Title LLC began operations

in 2021.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to

Form 10-Q and

do not include all

the information and

footnotes required by U.S.

generally accepted accounting

principles

(“U.S.

GAAP”)

for

complete

financial

statements.

All

adjustments

consisting

normally

recurring

accruals

that,

the

opinion

management,

are

necessary

for

fair

presentation

the

financial

position

and

results

operations

for

the

periods presented

have been

included. These

unaudited consolidated

financial statements

should be

read in

conjunction

with the Company’s audited

consolidated financial statements and

related notes appearing in

the Company’s Annual Report

on Form 10-K for the year ended December 31, 2024.

Principles of Consolidation

The

Company

consolidates

entities

which

has

controlling

financial

interest.

Intercompany

transactions

and

balances are eliminated in consolidation.

Use of Estimates

To prepare

financial statements in conformity with U.S. GAAP,

management makes estimates and assumptions based

on available

information. These

estimates and

assumptions affect

the amounts

reported in

the financial

statements. The

most

significant

estimate

impacting

the

Company’s

consolidated

financial

statements

the

allowance

for

credit

losses

(“ACL”).

Reclassifications

Certain

amounts

prior

period

consolidated

financial

statements

have

been

reclassified

conform

the

current

presentation. Reclassifications had no impact on prior period

net income or stockholders’ equity.

Recently Issued Accounting Standards

Adoption of New Accounting Standards

Improvements to Income Tax

Disclosures

December

2023,

the

FASB

issued

Accounting

Standards

Update

(ASU)

2023-09,

Income

Taxes

(Topic

740):

Improvements to Income Tax

Disclosures. This ASU pertains to

disclosures regarding effective

tax rates and cash income

taxes paid with the goal of providing stakeholders with more transparent

and relevant information. This ASU is effective for

public business

entities for

annual periods

beginning after

December 15,

The Company

adopted this

ASU 2023-09

effective January 1, 2025. The

adoption of this ASU did

not have a material

impact on the Company’s consolidated financial

statements.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

INVESTMENT SECURITIES

The following

tables present

a summary

of the amortized

cost, unrealized

or unrecognized

gains and

losses,

and fair

value of investment securities at the dates indicated (in

thousands):

June 30, 2025

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

16,308

(1,476)

14,850

Collateralized mortgage obligations

97,459

(20,748)

76,724

Mortgage-backed securities - residential

62,002

(11,024)

50,987

Mortgage-backed securities - commercial

104,782

(8,261)

96,524

Municipal securities

24,885

(5,054)

19,831

Bank subordinated debt securities

26,873

250

(657)

26,466

332,309

293

(47,220)

285,382

Held-to-maturity:

Amortized

Cost

Unrecognized

Gains

Unrecognized

Losses

Fair Value

U.S. Government Agency

41,716

(4,154)

37,584

Collateralized mortgage obligations

54,312

266

(6,641)

47,937

Mortgage-backed securities - residential

38,404

319

(4,168)

34,555

Mortgage-backed securities - commercial

15,182

(1,293)

13,889

Corporate bonds

9,133

(221)

8,912

158,747

607

(16,477)

142,877

Allowance for credit losses - securities held-to-maturity

(7)

Securities held-to maturity, net of allowance for credit losses

158,740

December 31, 2024

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

14,279

(1,668)

12,625

Collateralized mortgage obligations

101,808

(22,918)

78,905

Mortgage-backed securities - residential

58,995

(12,063)

46,933

Mortgage-backed securities - commercial

86,604

(7,905)

78,739

Municipal securities

24,925

(5,614)

19,311

Bank subordinated debt securities

24,314

438

(1,044)

23,708

310,925

508

(51,212)

260,221

Held-to-maturity:

Amortized

Cost

Unrecognized

Gains

Unrecognized

Losses

Fair Value

U.S. Government Agency

42,538

(5,094)

37,444

Collateralized mortgage obligations

56,987

(7,785)

49,259

Mortgage-backed securities - residential

40,681

(4,613)

36,121

Mortgage-backed securities - commercial

15,272

(1,385)

13,887

Corporate bonds

9,222

(393)

8,829

164,700

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

Transfers

debt

securities

into

the

HTM

category

and

length of

time that

those

individual securities

have been

in a

continuous

loss position,

are presented

as of

the following

dates (in thousands):

June 30, 2025

Less than 12 months

12 months or more

Total

Available-for-Sale:

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

U.S. Government Agency

3,163

(48)

8,083

(1,428)

11,246

(1,476)

Collateralized mortgage obligations

72,887

(20,748)

72,887

(20,748)

Mortgage-backed securities - residential

5,980

(29)

43,649

(10,995)

49,629

(11,024)

Mortgage-backed securities - commercial

60,802

(1,637)

32,732

(6,624)

93,534

(8,261)

Municipal securities

19,830

(5,054)

19,830

(5,054)

Bank subordinated debt securities

6,039

(18)

14,333

(639)

20,372

(657)

75,984

(1,732)

191,514

(45,488)

267,498

(47,220)

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

December 31, 2024

Less than 12 months

12 months or more

Total

Available-for-sale:

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

U.S. Government Agency

4,468

(76)

7,451

(1,592)

11,919

(1,668)

Collateralized mortgage obligations

3,101

(23)

72,952

(22,895)

76,053

(22,918)

Mortgage-backed securities - residential

972

(11)

44,600

(12,052)

45,572

(12,063)

Mortgage-backed securities - commercial

44,411

(1,265)

27,874

(6,640)

72,285

(7,905)

Municipal securities

19,311

(5,614)

19,311

(5,614)

Bank subordinated debt securities

14,352

(1,044)

14,352

(1,044)

52,952

(1,375)

186,540

(49,837)

239,492

(51,212)

The contractual cash

flows for these securities

are guaranteed by U.S.

government sponsored entities.

The municipal

bonds are of high

credit quality and the declines

in fair value are

not due to credit

quality. Based on the assessment of these

mitigating factors,

management believed that

the unrealized

losses on

these debt

security holdings

are a

function of

changes

in investment spreads and interest rate movements and

not changes in credit quality.

Gains

and

losses

the

sale

securities

are

recorded

the

trade

date

and

are

determined

the

specific

identification basis. There were

sales or calls of securities nor gains

or losses of securities during the three

months and

six months ended June 30, 2025.

The following table presents the proceeds,

realized gross gains and realized gross losses

on sales and calls of AFS debt securities for the three

and six months ended June 30, 2024 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Available-for-sale:

2025

2024

2025

2024

Proceeds from sale and call of securities

34,753

Gross gains

195

Gross losses

(181)

Net realized gain

The amortized

cost

and

fair

value of

investment

securities,

by contractual

maturity,

are shown

below

as of

the date

indicated (in thousands).

Actual maturities may

differ from contractual

maturities because borrowers

may have the right

call or prepay

obligations with or

without call or

prepayment penalties. Securities not

due at a

single maturity date are

shown

separately.

Available-for-sale

Held-to-maturity

June 30, 2025:

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

Due within one year

9,133

8,912

Due after one year through five years

7,925

7,978

Due after five years through ten years

39,593

35,066

Due after ten years

4,240

3,253

U.S. Government Agency

16,308

14,850

41,716

37,584

Collateralized mortgage obligations

97,459

76,724

54,312

47,937

Mortgage-backed securities - residential

62,002

50,987

38,404

34,555

Mortgage-backed securities - commercial

104,782

96,524

15,182

13,889

332,309

285,382

158,747

142,877

At June 30, 2025,

there were no

securities held in

the portfolio from

any one issuer

in an amount greater

than 10% of

total stockholders’

equity other

than the

U.S. Government

and U.S.

Government Agency

securities. All

the collateralized

mortgage

obligations

and

mortgage-backed

securities

June 30,

2025

and

December 31,

2024

were

issued

U.S.

Government entities.

The Bank is a Qualified Public Depository (“QPD”) with the State of Florida. As a QPD, the

Bank has the legal authority

maintain

public

deposits

from

cities,

municipalities,

and

the

State

Florida.

These

public

deposits

are

secured

securities pledged to the

State of Florida at a

ratio of

% of the quarter daily

average balance at June 30,

2025 and

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

at December

31, 2024.

The Bank

must also

maintain a

minimum amount

of pledged

securities

to be

in the

public funds

program.

As of June 30, 2025, the

Bank had a total of $

176.1

million in deposits under the

public funds program and pledged

the State of Florida for these public funds were

sixteen

bonds with an aggregate fair value of $

49.6

million.

As of

December 31, 2024, the

Bank had

a total

of $

110.5

million in

deposits under the

public funds program

and pledged

to the State of Florida for these public funds were

twenty-one

bonds with an aggregate fair value of $

66.1

million.

LOANS

The following table is a summary of the distribution of

loans held for investment by type (dollars in thousands):

June 30, 2025

December 31, 2024

Total

Percent of

Total

Percent of

Total

Residential Real Estate

307,020

14.6

289,961

14.8

Commercial Real Estate

1,206,621

57.3

1,136,417

57.8

Commercial and Industrial

263,966

12.5

258,311

13.1

Correspondent Banks

110,155

5.2

82,438

4.2

Consumer and Other

218,426

10.4

198,091

10.1

Total

gross loans

2,106,188

100.0

1,965,218

100.0

Plus: Deferred fees/costs

7,130

7,630

Total

loans net of deferred fees/costs

2,113,318

1,972,848

Less: Allowance for credit losses

24,933

24,070

Total

net loans

2,088,385

1,948,778

June 30,

2025

and

December 31,

2024,

the

Company

had

609.4

million

and

518.8

million,

respectively,

commercial real estate and residential mortgage loans pledged as collateral for

lines of credit with the FHLB of Atlanta and

the Federal Reserve Bank of Atlanta.

Allowance for Credit Losses

general,

the

Company

utilizes

the

Discounted

Cash

Flow

(“DCF”)

method

the

Weighted-Average

Remaining

Maturity (“WARM”) methodology to estimate the

quantitative portion of the ACL

for loan pools. The

DCF method uses a loss

driver analysis (“LDA”) and discounted cash

flow analyses. Management engaged

advisors and consultants

with expertise

in CECL model development

to assist in development of

a LDA based on

regression models and supportable forecast. Peer

group

data

obtained

from

FFIEC

Call

Report

filings

used

inform

regression

analyses

quantify

the

impact

reasonable and

supportable forecasts

in projective

models. Economic

forecasts applied

to regression

models to

estimate

probability of default for

loan receivables use

at least one of the

following economic indicators:

civilian unemployment rate

(national), real gross

domestic product growth (national

GDP) or the House

Price Index (“HPI”). For

each of the segments

in which the WARM methodology is used,

the long-term average loss rate is calculated and applied on a quarterly basis for

the remaining life of the pool. Adjustments for economic

expectations are made through qualitative factors.

Qualitative factors (“Q-Factors”) used in the ACL methodology

include:

•

Changes in lending policies, procedures, and strategies

•

Changes in international, national, regional, and local conditions

•

Changes in nature and volume of portfolio

•

Changes in the volume and severity of past due loans

and other similar conditions

•

Concentration risk

•

Changes in the value of underlying collateral

•

The effect of other external factors: e.g., competition,

legal, and regulatory requirements

•

Changes in lending management, among others

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Changes in the ACL for the three and six months ended June

30, 2025 and 2024 were as follows (in thousands):

Residential

Real Estate

Commercial

Real Estate

Commercial

and

Industrial

Correspondent

Banks

Consumer

and Other

Total

Three Months Ended June 30, 2025

Beginning balance

5,115

9,197

4,434

817

5,177

24,740

Provision for credit losses

(1)

356

294

115

895

Recoveries

Charge-offs

(710)

Ending Balance

5,477

9,491

4,508

874

4,583

24,933

Six Months Ended June 30, 2025

Beginning balance

5,121

8,788

4,633

654

4,874

24,070

Provision for credit losses

(2)

344

703

(131)

220

431

1,567

Recoveries

Charge-offs

(723)

Ending Balance

5,477

9,491

4,508

874

4,583

24,933

(1) Provision for credit losses excludes a $

134

thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $

thousand provision related to investment securities held to maturity.

(2) Provision for credit losses excludes a $

144

thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $

thousand provision related to investment securities held to maturity.

Residential

Real Estate

Commercial

Real Estate

Commercial

and

Industrial

Correspondent

Banks

Consumer

and Other

Total

Three Months Ended June 30, 2024

Beginning balance

2,930

10,302

4,272

794

3,156

21,454

Provision for credit losses

(1)

257

(30)

474

(25)

774

Recoveries

Charge-offs

(5)

Ending Balance

3,193

10,272

4,747

892

3,126

22,230

Six Months Ended June 30, 2024

Beginning balance

2,695

10,366

3,974

911

3,138

21,084

Provision for credit losses

(2)

492

(94)

762

(19)

(4)

1,137

Recoveries

Charge-offs

(10)

Ending Balance

3,193

10,272

4,747

892

3,126

22,230

(1) Provision for credit losses excludes a $

thousand provision due to unfunded commitments included in accrued interest and other

liabilities and a $

thousand release related to investment securities held to maturity.

(2) Provision for credit losses excludes a $

thousand provision due to unfunded commitments included in accrued interest and other

liabilities and $

thousand provision related to investment securities held to maturity.

At June 30, 2025, the ACL

for loans was $

24.9

million compared to $

24.1

million at December 31, 2024. The

increase

of $

863

thousand in the ACL was due to loan growth.

Charge offs related to loans for the

three months ended June 30, 2025 were

709

thousand originated in 2022 and $

originated in

Charge

offs for

the six

months ended

June 30,

2025 were

709

thousand originated

in 2022

and $

thousand originated in 2025.

Charge offs related

to loans for the

three months ended

June 30, 2024

totaled $

thousand and were

all originated in

Charge offs for the six months ended June 30,

2024 totaled $

thousand and were all originated in 2024.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The ACL

and the

outstanding balances

in the

specified loan

categories as

of June 30,

2025 and

December 31, 2024

are as follows (in thousands):

Residential

Real Estate

Commercial

Real Estate

Commercial

and Industrial

Correspondent

Banks

Consumer

and Other

Total

June 30, 2025:

Allowance for credit losses:

Individually evaluated

Collectively evaluated

5,442

9,491

4,462

874

4,583

24,852

Balances, end of period

5,477

9,491

4,508

874

4,583

24,933

Loans:

Individually evaluated

6,715

1,075

7,790

Collectively evaluated

300,305

1,206,621

262,891

110,155

218,426

2,098,398

Balances, end of period

307,020

1,206,621

263,966

110,155

218,426

2,106,188

December 31, 2024:

Allowance for credit losses:

Individually evaluated

651

718

Collectively evaluated

5,081

8,788

4,606

654

4,223

23,352

Balances, end of period

5,121

8,788

4,633

654

4,874

24,070

Loans:

Individually evaluated

6,788

690

1,990

9,468

Collectively evaluated

283,173

1,136,417

257,621

82,438

196,101

1,955,750

Balances, end of period

289,961

1,136,417

258,311

82,438

198,091

1,965,218

Credit Quality Indicators

The Company grades loans based on the estimated capability of the borrower to repay the contractual obligation of the

loan agreement based

on relevant information

which may include:

current financial information

on the borrower,

historical

payment

experience,

credit

documentation

and

other

current

economic

trends.

Internal

credit

risk

grades

are

evaluated

periodically.

The Company's internally assigned credit risk grades are as follows:

Pass

– Loans indicate different levels of satisfactory

financial condition and performance.

Special Mention

– Loans classified as special mention have a potential weakness

that deserves management’s

close attention. If left uncorrected, these potential weaknesses

may result in deterioration of the repayment

prospects for the loan or of the institution’s

credit position at some future date.

Substandard

– Loans classified as substandard are inadequately protected

by the current net worth and paying

capacity of the obligator or of the collateral pledged, if

any. Loans so classified

have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the

institution will sustain some loss if the deficiencies are

not corrected.

Doubtful

– Loans classified as doubtful have all the weaknesses inherent

in those classified at substandard, with

the added characteristic that the weaknesses make collection

or liquidation in full on the basis of currently existing

facts, conditions, and values, highly questionable and improbable.

Loss

– Loans classified as loss are considered uncollectible.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Loan credit exposures by internally assigned grades are

presented below for the periods indicated (in thousands):

As of June 30, 2025

Term Loans by Origination Year

Revolving

Loans

Total

2025

2024

2023

2022

2021

Prior

Residential real estate

Pass

49,259

96,857

35,326

26,533

21,750

63,430

10,381

303,536

Special Mention

2,925

Substandard

442

117

559

Total

49,259

97,299

35,326

26,533

21,750

66,472

10,381

307,020

Commercial real estate

Pass

133,847

181,987

118,108

308,006

139,583

312,652

4,687

1,198,870

Special Mention

4,632

695

5,327

Substandard

1,743

681

2,424

Total

133,847

181,987

122,740

308,006

141,326

314,028

4,687

1,206,621

Commercial and

industrial

Pass

20,713

65,009

75,054

33,547

28,671

13,652

23,696

260,342

Special Mention

891

965

Substandard

489

1,394

776

2,659

Total

20,713

65,083

75,054

33,547

30,051

15,046

24,472

263,966

Correspondent banks

Pass

102,784

7,371

110,155

Total

102,784

7,371

110,155

Consumer and other

loans

Pass

44,714

38,001

41,557

64,426

26,776

1,263

1,689

218,426

Total

44,714

38,001

41,557

64,426

26,776

1,263

1,689

218,426

Total

Loans

Pass

351,317

389,225

270,045

432,512

216,780

390,997

40,453

2,091,329

Special Mention

4,632

891

3,620

9,217

Substandard

442

2,232

2,192

776

5,642

Doubtful

Total

351,317

389,741

274,677

432,512

219,903

396,809

41,229

2,106,188

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

As of December 31, 2024

Term Loans by Origination Year

Revolving

Loans

Total

2024

2023

2022

2021

2020

Prior

Residential real estate

Pass

109,590

39,666

34,315

23,039

5,791

66,115

10,885

289,401

Substandard

560

Total

109,590

39,666

34,315

23,039

5,791

66,675

10,885

289,961

Commercial real estate

Pass

175,023

130,503

317,971

175,535

98,695

231,558

4,680

1,133,965

Substandard

1,765

687

2,452

Total

175,023

130,503

317,971

177,300

99,382

231,558

4,680

1,136,417

Commercial and

industrial

Pass

68,405

80,644

33,962

30,495

3,891

11,839

26,795

256,031

Substandard

519

1,093

668

2,280

Total

68,405

80,644

33,962

31,014

3,891

12,932

27,463

258,311

Correspondent banks

Pass

82,438

Total

82,438

Consumer and other

loans

Pass

40,921

51,392

65,603

35,181

491

815

1,698

196,101

Substandard

1,990

Total

40,921

51,392

67,593

35,181

491

815

1,698

198,091

Total

Loans

Pass

476,377

302,205

451,851

264,250

108,868

310,327

44,058

1,957,936

Special Mention

Substandard

1,990

2,284

687

1,653

668

7,282

Doubtful

Total

476,377

302,205

453,841

266,534

109,555

311,980

44,726

1,965,218

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Loan Aging

The Company

also considers the

performance of loans

in grading

and in

evaluating the

credit quality

of the

loan portfolio.

The Company

analyzes credit

quality and

loan grades

based on

payment performance

and the

aging status

of the

loan.

The

following

tables

include

aging

analysis

accruing

loans

and

total

non-accruing

loans

June 30,

2025

and

December 31, 2024 (in thousands):

Accruing

As of June 30, 2025

Current

Past Due 30-

89 Days

Past Due 90

Days or >

and Still

Accruing

Total

Accruing

Non-Accrual

Total Loans

Residential real estate:

Home equity lines of credit and other

1,139

1-4 family residential

241,492

3,424

244,916

442

245,358

Condo residential

60,284

121

60,405

118

60,523

302,915

3,545

306,460

560

307,020

Commercial real estate:

Land and construction

78,786

Multi-family residential

217,339

Condo commercial

56,986

Commercial property

853,424

853,510

1,206,535

1,206,621

Commercial and industrial:

Secured

239,496

381

239,877

806

240,683

Unsecured

23,283

262,779

381

263,160

806

263,966

Correspondent banks

110,155

Consumer and other

218,426

Total

2,100,810

4,012

2,104,822

1,366

2,106,188

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Accruing

As of December 31, 2024:

Current

Past Due

30-89 Days

Past Due 90

Days or >

and Still

Accruing

Total

Accruing

Non-Accrual

Total Loans

Residential real estate:

Home equity lines of credit and other

1,120

1-4 family residential

225,334

2,886

228,220

Condo residential

58,956

1,351

60,307

314

60,621

285,410

4,237

289,647

314

289,961

Commercial real estate:

Land and construction

40,090

Multi-family residential

214,912

Condo commercial

57,402

Commercial property

823,326

687

824,013

1,135,730

687

1,136,417

Commercial and industrial:

Secured

232,779

521

233,300

403

233,703

Unsecured

24,608

257,387

521

257,908

403

258,311

Correspondent banks

82,438

Consumer and other

196,101

1,990

198,091

Total

1,957,066

5,445

1,962,511

2,707

1,965,218

Non-accrual Status

The following

table

includes

the amortized

cost

basis

of loans

non-accrual

status

as of

June 30,

2025 and

as of

December 31, 2024 (in thousands):

June 30, 2025

Non-accrual

Loans With No

Related Allowance

Non-accrual

Loans With

Related Allowance

Total Non-

accruals

Residential real estate

560

Commercial and industrial

778

806

Total

1,338

1,366

December 31, 2024

Non-accrual

Loans With No

Related Allowance

Non-accrual

Loans With

Related Allowance

Total Non-

accruals

Residential real estate

314

Commercial and industrial

403

Consumer and other

1,990

Total

314

2,393

2,707

Accrued interest

receivable is

excluded from

the estimate

of credit

losses. There

was

interest income

recognized

attributable to non-accrual

loans outstanding during

the three months

ended June 30,

2025 and 2024.

Interest income

these loans

for the

three months

ended June

30, 2025

and 2024,

would have

been approximately

thousand and

thousand, respectively,

had these loans performed

in accordance with their

original terms. Interest

income on these loans

for

the

six

months

ended

June 30,

2025

and

2024,

would

have

been

approximately

thousand

and

thousand,

respectively, had

these loans performed in accordance with their original

terms.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Collateral-Dependent Loans

loan

collateral

dependent

when

the

borrower

experiencing

financial

difficulty

and

repayment

the

loan

expected to be provided substantially through the sale

or operation of the collateral.

The following

table includes

the amortized cost

basis of

collateral dependent

loans related

to borrowers

experiencing

financial difficulty by type of collateral as of June

30, 2025 and December 31, 2024 (in thousands):

June 30, 2025

Collateral Type

Residential Real Estate

Specific Reserve

Residential real estate

560

Total

560

December 31, 2024

Collateral Type

Boat

Specific Reserve

Consumer and other

1,990

651

Total

1,990

651

Management evaluates

on an individual

basis collateral

dependent loans

using the fair

value of the

collateral method

to determine

if a

credit loss

reserve is

necessary.

The ACL

is measured

based on

the difference

of the

fair

value of

the

collateral and

the recorded

investment

(amortized

cost basis

of the

loan). If

the final

collateral

valuation

is less

than the

recorded investment

of the

loan, a

reserve amount

is calculated.

If the

collateral valuation

is equal

to or

greater than

the

recorded investment of the loan, no reserve is determined.

Loan Modifications to Borrowers Experiencing Financial

Difficulties

The Company

had no

new modifications

to borrowers

experiencing financial

difficulties

for the

three

and six

months

ended

June 30,

2025

and

three

months

ended

June

30,

2024.

The

Company

had

one

new

modification

borrowers

experiencing financial difficulties

for the six

months ended June

30, 2024. The following

table presents newly

restructured

loans, by type of modification, which occurred during the

six months ended June 30, 2024 (in thousands):

Recorded Investment Prior to Modification

Recorded Investment After Modification

Number of

Loans

Combination

Modifications

Total

Modifications

Number of

Loans

Combination

Modifications

Total

Modifications

Commercial and industrial

468

Total

468

The loan modification for the

borrower experiencing financial

difficulty at June 30,

2024 included

a combination of rate

and

maturity

modifications.

The

rate

was

modified

from

variable

rate

fixed

rate

8.0

The

original

maturity

September 2029 was extended to January

2034.

There were

existing loan modifications that

subsequently defaulted during

either the three or the

six months ended

June 30, 2025 and June 30, 2024.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

INCOME TAXES

The Company’s provision for income taxes is presented

in the following table for the periods indicated (in thousands):

Six Months Ended June 30,

2025

2024

Current:

Federal

State

Total

current

Deferred:

Federal

3,948

2,653

State

1,091

740

Total

deferred

5,039

3,393

Total

tax expense

5,039

3,393

The actual income tax

expense for the six months

ended June 30, 2025 and 2024

differs from the statutory tax expense

for the periods (computed by applying the U.S.

federal corporate tax rate of

% for both 2025 and 2024

periods to income

before provision for income taxes) as follows (in thousands):

Six Months Ended June 30,

2025

2024

Federal taxes at statutory rate

4,376

2,985

State income taxes, net of federal tax benefit

905

618

Bank owned life insurance

(242)

(210)

Total

tax expense

5,039

3,393

The Company’s deferred tax assets and deferred

tax liabilities as of the dates indicated were (in thousands):

June 30, 2025

December 31, 2024

Deferred tax assets:

Net operating loss

3,942

9,276

Allowance for credit losses

6,319

6,100

Lease liability

1,786

2,142

Unrealized losses on available for sale securities

14,209

15,200

Depreciable property

Equity compensation

889

686

Accruals

367

520

Other, net

Deferred tax assets:

27,613

34,027

Deferred tax liabilities:

Deferred loan cost

(1,807)

(1,934)

Lease right of use asset

(1,786)

(2,142)

Deferred expenses

(323)

(224)

Cash flow hedge

(34)

(81)

Deferred tax liabilities

(3,950)

(4,381)

Net deferred tax assets

23,663

29,646

The Company

has approximately

11.7

million of

federal

and $

34.4

million of

state net

operating

loss carryforwards

expiring in various amounts between

2031 and 2036 and which

are limited to offset,

to the extent permitted, future

taxable

earnings of the Company.

In assessing the realizability of deferred tax assets, management considers

whether it is more likely than not that some

portion or

all of

the deferred

tax assets

will not

be realized.

The ultimate

realization

of deferred

tax assets

is dependent

upon the generation of

future taxable income

during the periods

in which those temporary

differences become deductible.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable

income, and tax planning

strategies in making this assessment.

The major tax

jurisdictions where the

Company files income

tax returns are

the U.S. federal

jurisdiction and

the State

of Florida. With few exceptions, the Company is no longer subject to U.S. federal and state income tax return examinations

by tax authorities for years before 2022.

For the six months

ended June 30, 2025 and

2024, the Company did

t have any unrecognized

tax benefits as a

result

of tax positions taken during a prior period or during

the current period. Additionally,

interest or penalties were recorded

as a result of tax uncertainties.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business in order to

meet the financial

needs of

its customers

and to reduce

its own

exposure to

fluctuations in

interest rates.

These financial

instruments include

unfunded commitments

under lines

of credit,

commitments to

extend credit,

standby and

commercial

letters of

credit. Those

instruments involve,

to varying

degrees, elements

of credit

and interest

rate risk

in excess

of the

amount recognized in the Company’s Consolidated Balance Sheets. The Company uses the

same credit policies in making

commitments and conditional obligations as it does for on-balance

sheet instruments.

The Company's

exposure to credit

loss in the

event of nonperformance

by the other

party to the

financial instruments

for unused lines of credit, and standby letters of credit

is represented by the contractual amount of these commitments.

summary

the

amounts

the

Company's

financial

instruments

with

off-balance

sheet

risk

are

shown

below

June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025

December 31, 2024

Commitments to grant loans and unfunded lines of credit

124,051

122,578

Standby and commercial letters of credit

2,616

5,389

Total

126,667

127,967

Commitments to

extend credit

are agreements

to lend

to a

customer as

long as

there is

no violation

of any

condition

established in the contract. Commitments generally have

fixed expiration dates or other termination clauses.

Unfunded lines of

credit and revolving

credit lines are

commitments for possible

future extensions

of credit to

existing

customers. These lines of

credit are uncollateralized and

usually do not contain

a specified maturity date

and ultimately may

not be drawn upon to the total extent to which the Company

committed.

Standby

and

commercial

letters

credit

are

conditional

commitments

issued

the

Company

guarantee

the

performance of a

customer to

a third

party. Those letters of

credit are

primarily issued to

support public and

private borrowing

arrangements. Essentially all letters of credit have fixed maturity dates and since

many of them expire without being drawn

upon, they do not generally present a significant liquidity

risk to the Company.

DERIVATIVES

The Company utilizes interest rate swap agreements

as part of its asset-liability management strategy to help

manage

its interest rate

risk exposure. The notional

amount of the interest

rate swaps does not

represent actual amounts exchanged

by the

parties.

The amounts

exchanged

are determined

by reference

to the

notional amount

and the

other

terms

of the

individual interest rate swap agreements.

Interest Rate Swaps Designated as a Cash Flow Hedge

As of

June 30, 2025,

the Company

had

two

interest rate

swap agreements

with a

notional aggregate

amount of

million that

were designated

as cash

flow hedges

certificates

of deposit.

The

interest rate

swap

agreements

have an

average

maturity

0.88

years,

weighted

average

fixed-rate

paid

3.59

and

with

weighted

average

3-month

compound SOFR being received.

As of December

31, 2024,

the Company had

two

interest rate swap

agreements with

a notional aggregate

amount of

million that were designated as cash flow hedges of certificates of deposit. The interest rate swap agreements have an

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

average

maturity

1.38

years,

weighted

average

fixed-rate

paid

3.59

and

with

weighted

average

3-month

compound SOFR being received.

The changes

in fair

value of

these interest

rate swaps

are recorded

in other

assets or

accrued interest

and other

liabilities

with

corresponding

recognition

other

comprehensive

income

(loss)

and

subsequently

reclassified

earnings

when

gains or losses are realized.

Interest Rate Swaps Designated as Fair Value

Hedge

The Company

had

interest

rate swap

agreements

designated

as fair

value

hedges

at June

30, 2025.

During

the

quarter ended

September 30,

2024, the

Company unwound

four

fair value

interest rate

swaps with

a notional

aggregate

amount of

200

million. The

decision to

unwind these

swaps was

driven by

changes in

interest rate

forecasts and

asset-

liability management

strategies. The

early termination

fee to

unwind the

fair value

swaps totaled

3.7

million. The

termination

fee allocated to

each loan category

is being amortized

over the remining

life of the

hedge loans on

a monthly straight-line

basis

with

full

recognition

the

unamortized

cost

upon

the

early

payoff

the

hedge

loan.

The

amortization

the

termination

fee

is reflected

in the

loan interest

income

line in

the

Consolidated

Statement

of Operations

The remaining

unamortized termination fee as of June 30, 2025 was $

3.2

million. The original maturities of these fair value interest swaps

were between 2025

and 2026. The

fair value interest

rate swap agreements

had an average

maturity of

1.51

years at the

date of their termination.

At June

30,

2024,

the

Company

had

four

interest

rate

swap

agreements

with

a notional

aggregate

amount

200

million that were designated as fair value hedges on loans. The interest

rate swap agreements have an average maturity of

1.73

years,

the

weighted

average

fixed-rate

paid

4.74

with

the

weighted

average

3-month

compound

SOFR

being

received.

Interest Rate Swaps

The Company enters into interest rate swaps with its loan customers. The Company had

and

interest rate swaps

with

loan

customers

with

aggregate

notional

amount

237.8

million

and

206.3

million

June 30,

2025

and

December 31,

2024,

respectively.

June

30,

2025,

these

interest

rate

swaps

mature

between

2025

and

2051.

The

Company entered

into corresponding

and offsetting

derivatives with

third parties.

The fair

value of

the liability

created by

these derivatives requires the Company to

provide the counterparty with funds to be

held as collateral which the Company

reports as other assets under the Consolidated Balance

Sheets. While these derivatives represent economic

hedges, they

do not qualify as hedges for accounting purposes.

The following table reflects the Company’s

interest rate swaps at the dates indicated (in thousands):

Fair Value

Notional

Amount

Collateral

Amount

Balance Sheet Location

Asset

Liability

June 30, 2025:

Derivatives designated as cash flow hedges:

Interest rate swaps

50,000

Other assets

135

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

237,804

4,981

Other assets/Other liabilities

9,260

December 31, 2024:

Derivatives designated as cash flow hedges:

Interest rate swaps

50,000

Other assets

321

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

206,258

4,943

Other assets/Other liabilities

6,869

FAIR VALUE

MEASUREMENTS

Determination of Fair Value

The Company

uses

fair value

measurements

to record

fair-value

adjustments

to certain

assets

and liabilities

and to

determine fair value

disclosures. In accordance

with the fair

value measurements

accounting guidance, the

fair value of

financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

between market

participants

at the

measurement

date.

Fair value

is best

determined based

upon quoted

market prices.

However, in

many instances, there

are no quoted

market prices for the

Company's various financial

instruments. In cases

where quoted

market prices

are not

available, fair

values are

based on

estimates using

present value

or other

valuation

techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates

of future cash flows. Accordingly, the fair value estimates may not be realized in

an immediate settlement of the instrument.

The fair

value guidance provides

a consistent definition

of fair

value, which focuses

on exit

price in

an orderly transaction

(that is,

not a

forced

liquidation

or distressed

sale) between

market participants

at the

measurement

date

under current

market conditions.

If there

has been

a significant

decrease

in the

volume

and level

of activity

for the

asset

or liability,

change in

valuation technique or

the use

of multiple

valuation techniques may

be appropriate.

In such

instances, determining

the

price

which

willing

market

participants

would

transact

the

measurement

date

under

current

market

conditions

depends on the facts

and circumstances and

requires the use of

significant judgment. The fair

value is a reasonable

point

within the range that is most representative of fair value under

current market conditions.

Fair Value Hierarchy

In accordance with

this guidance, the

Company groups its

financial assets

and financial liabilities

generally measured

at fair

value in

three

levels, based

on the

markets

in which

the assets

and liabilities

are traded,

and the

reliability

of the

assumptions used to determine fair value.

Level 1

Valuation

is based

on quoted

prices in

active markets

for identical

assets or

liabilities that

the reporting

entity has

the ability

to access

at the measurement

date. Level

1 assets

and liabilities

generally include

debt and

equity securities that

are traded in

an active exchange

market. Valuations are obtained from

readily available pricing

sources for market transactions involving identical assets

or liabilities.

Level 2

Valuation

is based on inputs other

than quoted prices included

within Level 1 that are

observable for the

asset

liability,

either

directly

indirectly.

The

valuation

may

based

quoted

prices

for

similar

assets

liabilities; quoted

prices in

markets that are

not active;

or other inputs

that are observable

or can be

corroborated

by observable market data for substantially the full term of the

asset or liability.

Level 3

Valuation

is based on

unobservable inputs that

are supported

by little or

no market activity

and that are

significant

the

fair

value

the

assets

liabilities.

Level

assets

and

liabilities

include

financial

instruments

whose value

is determined

using pricing

models, discounted

cash

flow

methodologies,

or similar

techniques,

well as instruments for which determination of fair value

requires significant management judgment or estimation.

financial

instrument's

categorization

within

the

valuation

hierarchy

based

upon

the

lowest

level

input

that

significant to the fair value measurement.

Items Measured at Fair Value

on a Recurring Basis

AFS investment securities:

When instruments are traded in

secondary markets and quoted market

prices do not exist

for such securities,

management generally relies

on prices obtained

from independent vendors

or third-party broker-dealers.

Management reviews pricing methodologies provided by the vendors and third-party broker-dealers in order to determine if

observable market information is being utilized. Securities measured with pricing provided by independent vendors or

third-

party broker-dealers

are classified within

Level 2 of

the hierarchy

and often

involve using quoted

market prices

for similar

securities, pricing models or discounted cash flow analyses

utilizing inputs observable in the market where available.

Derivatives:

The

fair

value

derivatives

are

measured

with

pricing

provided

third-party

participants

and

are

classified within Level 2 of the hierarchy.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The

following

table

represents

the

Company's

assets

and

liabilities

measured

fair

value

recurring

basis

June 30, 2025 and December 31, 2024 for each of the

fair value hierarchy levels (in thousands):

June 30, 2025

December 31, 2024

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Investment securities available for sale:

U.S. Government Agency

14,850

12,625

Collateralized mortgage obligations

76,724

78,905

Mortgage-backed securities - residential

50,987

46,933

Mortgage-backed securities - commercial

96,524

78,739

Municipal securities

19,831

19,311

Bank subordinated debt securities

26,466

23,708

Total

285,382

260,221

Derivative assets

9,395

7,190

Total assets at fair value

294,777

267,411

Derivative liabilities

9,260

6,869

Total liabilities at fair value

9,260

6,869

Items Not Measured at Fair Value

The following table

presents the carrying

amounts and estimated

fair values of

financial instruments

not carried at fair

value as of June 30, 2025 and December 31, 2024 (in

thousands):

Fair Value Hierarchy

Carrying

Amount

Level 1

Level 2

Level 3

Fair Value

Amount

June 30, 2025:

Financial Assets:

Cash and due from banks

8,386

Interest-bearing deposits in banks

46,433

Investment securities held to maturity, net

158,740

142,877

Loans held for investment, net

2,088,385

2,113,423

Accrued interest receivable

11,285

1,450

9,835

11,285

Financial Liabilities:

Non-interest bearing demand deposits

584,895

Savings and money market deposits

1,248,379

Interest-bearing demand deposits

40,597

Time deposits

461,790

460,962

FHLB advances and other borrowings

108,000

107,975

Accrued interest payable

2,940

December 31, 2024:

Financial Assets:

Cash and due from banks

6,986

Interest-bearing deposits in banks

70,049

Investment securities held to maturity

164,694

145,540

Loans held for investment, net

1,948,778

1,950,646

Accrued interest receivable

10,945

1,372

9,573

10,945

Financial Liabilities:

Non-interest bearing demand deposits

575,159

Savings and money market deposits

1,180,809

Interest-bearing demand deposits

50,648

Time deposits

367,388

366,479

FHLB advances

163,000

161,375

Accrued interest payable

2,125

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

STOCKHOLDERS’ EQUITY

Common Stock

There were

restricted stock awards issued

in the three months ended

June 30, 2025. During

the six months ended

June 30,

2025, the

Company issued

124,424

shares of

Class A

common stock

to employees

as restricted

stock awards

pursuant to the Company’s 2015 equity incentive

plan.

During the

second quarter 2024,

the Company issued

5,169

shares of

Class A

common stock to

employees as restricted

stock awards pursuant to the Company’s 2015 equity incentive

plan. For the six month ended June 30, 2024 the Company

issued

52,922

shares of Class A common stock

to employees as restricted stock

awards pursuant to the Company’s

2015

equity incentive plan.

During the first quarter 2025, the Company repurchased

9,671

shares of Class A

common stock at a weighted average

cost per share of $

17.91

. The aggregate purchase price for

these transactions was approximately $

174

thousand, including

transaction costs.

These repurchases

were made

pursuant to

the Company’s

publicly announced

repurchase

programs.

There

were

repurchased

during

the

second

quarter

2025.

June 30,

2025,

528,309

remained

authorized for repurchase under the Company’s two stock

repurchase programs.

Shares of the Company’s Class A common stock issued and outstanding as of June 30, 2025 and December

31, 2024

were

20,078,385

and

19,924,632

, respectively.

Dividends

Declaration of dividends

by the Board

is required before

dividend payments

are made. The

Company is

limited in the

amount of

cash dividends

that it

may pay.

Payment of

dividends is

generally limited

to the

Company’s

net income

of the

current

year

combined

with

the

Company’s

retained

income

for

the

preceding

two

years,

defined

state

banking

regulations. However,

for any

dividend declaration,

the Company

must consider

additional factors

such as

the amount

current period net income, liquidity,

asset quality,

capital adequacy and economic conditions

at the Bank since the Bank is

the primary source

of funds to fund

dividends by the Company.

It is likely that

these factors would

further limit the

amount

of dividends which

the Company could

declare. In addition,

bank regulators have

the authority to

prohibit banks and

bank

holding companies from paying dividends if they deem

such payment to be an unsafe or unsound practice.

As of June 30, 2025, the Company was not subject

to any formal supervisory restrictions on its

ability to pay dividends

but will notify the Federal Reserve

Bank of Atlanta in advance of any

proposed dividend to the Company's

shareholders in

light of the Bank's negative retained earnings. In addition, 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.

On January

21,

2025,

the

Board of

Directors

declared

a quarterly

cash

dividend.

The

quarterly

dividend

for the

first

quarter of 2025 was $

0.10

per share of Class A common

stock, paid on March 5, 2025,

to stockholders of record as

of the

close of business

on February 14,

The aggregate

distribution in connection

with the first quarter

2025 dividend was

2.0

million. The

quarterly dividend

for the

second quarter

2025 was

0.10

per share

of Class

A common

stock, paid

June 5, 2025, to stockholders

of record as of close of

business on May 15, 2025.

The aggregate distribution in connection

with the second quarter dividend was $

2.0

million.

On January 29,

2024, the Company

announced that its

Board of Directors

approved a quarterly

cash dividend program.

The quarterly dividend for

the first quarter of

2024 was $

0.05

per share of Class

A common stock, paid

on March 5, 2024,

to stockholders

of record as

of the close

of business

on February 15,

The aggregate

distribution in connection

with

the first

quarter dividend

was $

1.0

million. The

quarterly dividend

for the

second quarter

was $

0.05

per share

of Class

common stock, paid on June

5, 2024, to stockholders of

record as of the

close of business on May 15,

The aggregate

distribution in connection with the second quarter dividend was

1.0

million.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following table details the dividends declared and paid by

the Company for the periods presented:

Six Months Ended June 30, 2025

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

January 21, 2025

February 14, 2025

March 5, 2025

0.10

2.0

million

April 21, 2025

May 15, 2025

June 5, 2025

0.10

2.0

million

Six Months Ended June 30, 2024

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

January 22, 2024

February 15, 2024

March 5, 2024

0.05

1.0

million

April 22, 2024

May 15, 2024

June 5, 2024

0.05

1.0

million

The

Company

and

the

Bank

exceeded

all

regulatory

capital

requirements

and

remained

above

“well-capitalized”

guidelines as

of June 30,

2025 and December

31, 2024.

At June 30, 2025,

the total risk

-based capital ratios

for the Bank

was

13.67

The

Company

not

subject

regulatory

capital

ratios

imposed

Basel

III

bank

holding

companies

because the Company is deemed to be a small bank holding

company.

See Note 13, Subsequent Events, for information regarding

dividends declared in July 2025.

EARNINGS PER SHARE

Earnings

per

(“EPS”)

for

common

stock

calculated

using

the

two-class

method

required

for

participating

securities.

Basic

EPS

calculated

dividing

net

income

available

common

shareholders

the

weighted-average

number of common shares outstanding for

the period, without consideration for common

stock equivalents. Diluted EPS is

computed by dividing

net income available

to common

shareholders by the

weighted-average number

of common shares

outstanding for

the period

and the

weighted-average number of

dilutive common stock

equivalents outstanding

for the

period

determined using the treasury-stock

method. For purposes of this

calculation, common stock equivalents

include common

stock options and are only included in the calculation of diluted

EPS when their effect is dilutive.

The following table

reflects the calculation of

net income available to

common shareholders for the

three and six months

ended June 30, 2025 and 2024 (in thousands):

Three Months Ended June 30,

Six Months Ended

June 30,

2025

2024

2025

2024

Net Income

8,140

6,209

15,798

10,821

Net income available to common shareholders

8,140

6,209

15,798

10,821

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following table reflects

the calculation of basic

and diluted earnings per

common share class

for the three

and six

months ended June 30, 2025 and 2024 (in thousands,

except share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Class A

Basic EPS

Numerator:

Net income available to common shares

8,140

6,209

15,798

10,821

Denominator:

Weighted average shares outstanding

20,059,264

19,650,681

20,040,205

19,642,006

Earnings per share, basic

0.41

0.32

0.79

0.55

Diluted EPS

Numerator:

Net income available to common shares

8,140

6,209

15,798

10,821

Denominator:

Weighted average shares outstanding for basic EPS

20,059,264

19,650,681

20,040,205

19,642,006

Add: Dilutive effects of assumed exercises of stock

options

236,530

66,486

259,380

65,555

Weighted avg. shares including dilutive potential common

20,295,794

19,717,167

20,299,585

19,707,561

Earnings per share, diluted

0.40

0.31

0.78

0.55

Anti-dilutive stock options excluded from diluted

EPS

502,500

Net income has not been allocated to unvested

restricted stock awards that are participating

securities because the amounts that

would be allocated are not material to net income

per share of common stock. Unvested restricted

stock awards that are

participating securities represent less than one percent

of all of the outstanding shares of common

stock for each of the periods

presented.

10.

SEGMENT REPORTING

Operating segments are components of an enterprise about which

separate financial information is available that is

evaluated regularly by the chief operating decision maker

(“CODM”) in assessing performance and in deciding how to

allocate resources. The Company’s CODM is the

President, Chief Executive Officer,

and Chairman of the Board.

The Company through the Bank, its sole direct subsidiary,

operates

banking centers in South Florida providing a

wide range of personal and business banking products and services,

and through a subsidiary of the Bank, offers clients

title insurance policies for real estate transactions closed

at the Bank. The Company’s business activities

are similar in

their nature, operations and economic characteristics, largely serving

commercial and specialty banking clients with

products and services that are offered through similar

processes and platforms. Accounting policies for the products

and

services referenced here are the same as those described

in Note 1, “Summary of Significant Accounting Policies”

in this

From 10-Q. The Company’s segment revenue is

driven primarily by interest income on loans as well as fee

income from

the origination of loans and from fees charged on loans

and deposit accounts. Lending activities include loans

individuals, which primarily consist of home equity lines

of credit, residential real estate loans, yacht loans, and

consumer

loans, and loans to commercial clients, which include

commercial and industrial loans, commercial real estate

loans,

investor residential real estate loans, correspondent bank

loans, and letters of credit.

The CODM regularly reviews consolidated income and

expenses, as presented on the Consolidated Statements

Operations, in addition to consolidated assets presented on the

Consolidated Balance Sheets. The significant segment

expenses that the CODM reviews regularly are interest

expense, provision for credit losses, salaries and wages,

employee benefits, and occupancy expense. The CODM

evaluates the performance of the segment and allocates

resources based on net income that is also reported on

the Consolidated Statements of Operations as consolidated

net

income to maximize shareholder value. Additionally,

consolidated internal financial information is used by the

CODM to

monitor credit quality and credit loss expense. Furthermore,

net income, as the measure of profit or loss, is used

monitor budget versus actual results and to perform competitive

analyses that benchmark the Company to competitors.

As a result, the Company has determined that it has only

one

reportable segment.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

11.

LOSS CONTINGENCIES

Loss contingencies,

including claims

and legal actions

may arise in

the ordinary

course of

business. In

the opinion

management, none

of these

actions, either

individually or

in the aggregate,

is expected to

have a

material adverse

effect

on the Company’s Consolidated Financial Statements.

12.

RELATED PARTY

TRANSACTIONS

In the ordinary course of business, principal officers,

directors, and affiliates may engage in transactions

with the

Company.

Loan Purchases

During the six months ended June 30, 2025 the Bank purchased

70.0

million from entities that deemed to be related

parties. The Bank paid those entities net fees of $

447

thousand.

During the year 2024, the Bank purchased $

90.8

million of loans from entities that are deemed to be related

parties.

The Bank paid those entities fees of $

2.7

million.

Loan Originations

During the three months ended June 30, 2025, the Bank

acted as the lead arranger in a $

40.0

million syndicated loan

extended to an entity deemed to be a related party.

As of June 30, 2025, the Bank held an outstanding balance

of $

15.0

million related to this transaction. In connection with the syndication,

the Bank received a

-basis point commitment fee

and will earn a

-basis point annual servicing fee. The other two financial

institutions participating in the syndication were

also deemed to be related parties. Although originating

loans to related parties is not part of the Company’s

standard

policy, this transaction

was reviewed by the appropriate departments in accordance

with Company procedures. Detailed

analyses were presented to the Board of Directors and

the Audit and Risk Committee, and all necessary approvals

were

obtained. Additional analysis was conducted to determine that

the transaction was executed in the ordinary course

business and on arm’s-length terms, consistent with the

requirements of Regulation O.

There were

loan originations or syndications extended to entities deemed

to be related parties during the three

months ended March 31, 2025 and for the year ended December

31, 2024.

13.

SUBSEQUENT EVENTS

Dividends

On July

21, 2025, the

Company announced that

its Board

of Directors

declared its quarterly

cash dividend. The

quarterly

dividend for the third quarter of

2025 was $

0.10

per share of Class A

common stock and will be paid

on September 5, 2025,

to stockholders of record as of the close of business on August

15, 2025.

Derivatives

In July

2025, the

Company entered into

a two-year costless

collar hedge

with a

notional amount of

million to

manage

exposure to interest

rate volatility on a

three-month brokered CD. The

derivative is based on

the USD SOFR

overnight index

and establishes a

cap rate of

4.50

% and a

floor rate of

1.875

%, effectively creating a

defined range of

interest rate outcomes

without requiring

an upfront

premium. The

hedge was

designated as

a cash

flow hedge

under ASC 815,

Derivatives and

Hedging,

and

will

accounted

for

accordingly.

Changes

the

fair

value

the

derivative

will

recorded

other

comprehensive income

to the

extent the

hedge remains

effective. Management

believes this

instrument

strengthens the

Company’s interest rate risk management strategy by

mitigating the impact of rate movements on future cash flows.

In Augus

2025, the

Company

entered

into a

two-year

costless collar

hedge with

a notional

amount

of $

million to

manage

exposure

interest

rate

volatility

three-month

brokered

CD.

The

derivative

based

the

USD

SOFR

overnight

index

and

establishes

cap

rate

4.50

and

floor

rate

1.965

effectively

creating

defined

range

interest rate outcomes without requiring

an upfront premium. The hedge was

designated as a cash flow

hedge under ASC

815,

Derivatives

and

Hedging,

and

will

accounted

for

accordingly.

Changes

the

fair

value

the

derivative

will

recorded in other

comprehensive income

to the extent

the hedge remains

effective. Management believes

this instrument

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

strengthens the

Company’s interest

rate risk

management strategy

by mitigating

the impact

of rate

movements on

future

cash flows.

Debt Rating

Kroll Bond Rating Agency assigned both the Company and the Bank investment grade

debt ratings in July 2025.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

The

following

discussion

and

analysis

designed

provide

better

understanding

the

consolidated

financial

condition and results of

operations of the

Company and the Bank,

its wholly owned subsidiary,

as of and for

the three and

the

six

months

ended

June 30,

2025.

This

discussion

and

analysis

best

read

conjunction

with

the

unaudited

consolidated financial statements and related

notes included in this Quarterly

Report on Form 10-Q (“Form

10-Q”) and the

audited consolidated financial

statements and related

notes included in the

Annual

Report on Form

10-K (“2024 Form

10-

K”) filed with the Securities and Exchange Commission

(“SEC”) for the year ended December 31, 2024.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause

actual results to differ materially

from management's expectations. Factors that could cause

such differences are discussed

in the sections

entitled "Forward-Looking

Statements" and Item

1A “Risk Factors"

below

in Part II

hereof and in

the 2024

Form 10-K filed with the SEC which is available at the

SEC’s website www.sec.gov.

Throughout

this

document,

references

“we,”

“us,”

“our,”

and

“the

Company”

generally

refer

USCB

Financial

Holdings, Inc.

Forward-Looking Statements

This Form 10

-Q 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

words “may,” “will,” “anticipate,” “could,”

“should,” “would,” “believe,”

“contemplate,” “expect,” “aim,”

“plan,”

“estimate,” “continue,”

and “intend,”

as well

as other

similar words

and expressions

of the

future, are

intended to

identify

forward-looking

statements.

These

forward-looking

statements

include

statements

our

projected

growth,

anticipated future

financial performance,

and management’s

long-term performance

goals, as

well as

statements relating

to the anticipated

effects on results

of operations and

financial condition from

expected developments or

events, or business

and growth strategies, including anticipated internal growth.

These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ

materially from those anticipated in such statements.

Potential risks and uncertainties include, but are not

limited to:

•

the strength of the United States economy

in general and the strength of the local

economies in which we conduct

operations;

•

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 allowance

for credit losses 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 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 Current Expected Credit

Losses (“CECL”) standard;

•

the lack of a

significantly diversified loan

portfolio and our

concentration in the

South Florida market,

including the

risks

of geographic,

depositor,

and

industry concentrations,

including our

concentration

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

and trade restrictions;

•

the impacts of international hostilities and geopolitical events;

•

increased competition and its

effect on the pricing

of our products and services

as well as our 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 Form 10-Q, the 2024 Form

10-K and other filings we make with the SEC.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

All

forward-looking

statements

are

necessarily

only

estimates

future

results,

and

there

can

assurance

that

actual results will

not differ

materially from expectations.

Therefore, you are

cautioned not to

place undue reliance

on any

forward-looking statements.

Further,

forward-looking statements

included in

this Form

10-Q are

made only

as of the

date

hereof, and we undertake

no obligation to update

or revise any forward-looking

statement to reflect events

or circumstances

after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so

under the federal

securities laws. You should also review the

risk factors described in

the 2024 Form 10-K

and in the

reports

the Company filed or will file with the SEC.

Overview

The Company

reported net

income of

$8.1 million

or $0.40

per diluted

share of

common stock

for the

three

months

ended June 30, 2025

compared to $6.2 million

or $0.31 per diluted

share of common stock for

the three months ended

June

30, 2024.

On January 21, 2025, the Company’s Board of Directors

declared the first quarter cash dividend of $0.10

per share on

the Company’s Class A common stock. The

dividend was paid

on March 5,

2025 to shareholders

of record at the

close of

business on February 15, 2025. The aggregate amount distributed in

connection with the quarterly cash dividend paid was

$2.0 million. The

second quarter cash

dividend of $0.10

per share on

the Company’s

Class A common stock was

paid on

June 5,

2025 to

shareholders

of record

at the

of business

on May

15, 2025.

The aggregate

amount distributed

connection with this dividend

was $2.0 million. Additionally, the

Company’s Board of

Directors declared a cash

dividend of

$0.10 per share of the

Company’s Class A

common stock on July 21,

The dividend will

be paid on September 5,

2025

to shareholders of record at the close of business on August 15, 2025.

In evaluating our financial

performance, the Company

considers the level of

and trends in net

interest income, the

net

interest

margin,

the

cost

deposits

and

borrowings,

levels

and

composition

non-interest

income

and

non-interest

expense, performance ratios,

asset quality ratios, regulatory capital ratios, and any

significant event or transaction.

Unless otherwise

stated, all

period comparisons

in the

bullet points

below are

calculated

at or

for the

quarter ended

June 30, 2025 compared to at or for the quarter ended June 30, 2024 and as of December 31, 2024 and annualized where

appropriate:

•

Net interest income for

the three months ended June

30, 2025 increased $3.7 million

or 21.5% to $21.0 million from

$17.3 million for the quarter ended June 30, 2024.

•

Net interest margin (“NIM”) was 3.28%

for the three months ended June 30, 2025 compared to 2.94% for the three

months ended June 30, 2024.

•

Total assets were $2.72 billion at

June 30, 2025, representing an increase of $261.2 million

or 10.6% from June 30,

2024 and an increase of $138.3 million or 10.8% annualized

from December 31, 2024.

•

Total

loans

held

for

investment

(net

deferred

cost/fees)

were

$2.11

billion

June

30,

2025,

representing

increase of $244.1 million

or 13.1% from June

30,

2024 and an increase

of $140.5 million or

14.4% annualized from

December 31, 2024.

•

Total deposits were $2.34

billion at June 30,

2025, representing an

increase of $279.0 million

or 13.6% from

June

30, 2024 and an increase of $161.7 million or 15.0% annualized

from December 31, 2024.

•

Annualized return on

average assets for

the quarter

ended June 30,

2025 was 1.22%

compared to

1.01%

for the

quarter ended June 30, 2024.

•

Annualized return on

average stockholders’ equity for

the quarter ended

June 30, 2025

was 14.29% compared

12.63% for quarter ended June 30, 2024.

•

The ACL to total loans was 1.18% at June 30, 2025 compared to 1.22% at December 31, 2024.

•

Non-performing loans to total loans was 0.06% at June

30, 2025 and 0.14% at December 31, 2024.

•

June 30,

2025,

the

total

risk-based

capital

ratios

for

the

Company

and

the

Bank

were

13.73%

and

13.67%,

respectively.

•

Tangible

book

value

per

common

non-GAAP

measure)

was

$11.53

June

30,

2025,

representing

increase of $0.72 or 13.5%

annualized from $10.81

at December 31, 2024. At June 30,

2025, tangible book value

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

per common share

was negatively affected

by $2.08 due

to an accumulated

comprehensive loss

of $41.8 million.

December

31,

2024,

tangible

book

value

per

common

was

negatively

affected

$2.24

due

accumulated comprehensive loss

of $44.5

million. See

“Reconciliation and Management

Explanation for

Non-GAAP

Financial Measures” included in this Form 10-Q for a reconciliation

of this non-GAAP financial measure.

•

The Company filed

a $100.0 million

universal shelf

offering. The shelf

offering registration

allows the Company

offer various securities over

a period of

time, as needed, without

the requirement to file

a new registration statement

for each offering.

Critical Accounting Policies and Estimates

The consolidated

financial statements

are prepared

based on

the application

of U.S.

Generally Accepted

Accounting

Practices (“GAAP”),

the most significant

of which are

described in Note

1 “Summary

of Significant Accounting

Policies” in

the Company’s 2024 Form

10-K and “Summary of Significant

Accounting Policies” in Part I

in this Form 10-Q . To

prepare

financial statements

in conformity

with US

GAAP,

management makes

estimates, assumptions,

and judgments

based on

available information. These estimates,

assumptions, and judgments affect

the amounts reported in

the financial statements

and accompanying notes. These estimates, assumptions,

and judgments are based on information available as of the date

of the financial statements and,

as this information changes, actual results

could differ from the estimates, assumptions and

judgments reflected

in the

financial statements.

In particular,

management

has identified

accounting

policies that,

due to

the

estimates,

assumptions

and

judgments

inherent

those

policies,

are

critical

understanding

our

financial

statements. Management has

presented the application

of these policies to

the Audit and

Risk Committee of

our Board of

Directors.

Non-GAAP Financial Measures

This

Form

10-Q

includes

financial

information

determined

methods

other

than

accordance

with

GAAP.

This

financial

information

includes

certain

operating

performance

measures.

Management

has

included

these

non-GAAP

measures because it believes these measures

may provide useful supplemental information

for evaluating the Company’s

underlying performance

trends. Further,

management

uses these

measures in

managing and

evaluating

the Company’s

business

and

intends

refer

them

discussions

about

our

operations

and

performance.

Operating

performance

measures should be

viewed in addition to,

and not as

an alternative to

or substitute for, measures determined in

accordance

with GAAP,

and are

not necessarily

comparable to

non-GAAP measures

that may

be presented

by other

companies. To

the extent applicable,

reconciliations of

these non-GAAP

measures to the

most directly comparable

GAAP measures

can

be found

in the

section “Reconciliation

and Management

Explanation of

Non-GAAP Financial

Measures” included

in this

Form 10-Q.

Segment Reporting

Management monitors the revenue streams for all its various

products and services. The identifiable segments are not

material

and

operations

are

managed

and

financial

performance

evaluated

overall

Company-wide

basis.

Accordingly, all

the financial service

operations are

considered by management

to be

aggregated in one

reportable operating

segment.

Results of Operations

General

The following tables present selected

balance sheet, income statement, and

profitability ratios for the dates

and periods

indicated (in thousands, except ratios):

June 30, 2025

December 31, 2024

Consolidated Balance Sheets:

Total

assets

2,719,474

2,581,216

Total

loans

(1)

2,113,318

1,972,848

Total

deposits

2,335,661

2,174,004

Total

stockholders' equity

231,583

215,388

(1)

Loan amounts include deferred fees/costs.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Three Months Ended June 30,

Six Months Ended

June 30,

2025

2024

2025

2024

Consolidated Statements of Operations:

Net interest income before provision for credit losses

21,034

17,311

40,149

32,469

Total

non-interest income

3,370

3,211

7,086

5,675

Total

non-interest expense

12,634

11,560

24,686

22,734

Net income

8,140

6,209

15,798

10,821

Profitability:

Efficiency ratio

51.77%

56.33%

52.26%

59.60%

Net interest margin

3.28%

2.94%

3.18%

2.78%

The Company’s

results

operations

depend

substantially

the

levels

our

net

interest

income

and

non-interest

income. Other factors contributing

to the results of

operations include our provision for

credit losses, the level

of non-interest

expense, and the provision for income taxes.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Net income

increased $1.9

million to

$8.1 million

for the

three months

ended June 30,

2025 from

$6.2 million

for the

same

period

$1.9

million

31.1%

increase

net

income

was

primarily

driven

improvement

net

interest margin, resulting from a larger loan portfolio earning

higher yields, along with a reduction in interest expense.

Six months ended June 30, 2025 compared to the six

months ended June 30, 2024

Net income increased

to $15.8 million

for the six

months ended June

30, 2025

from $10.8 million

for the same

period

in 2024. The

$5.0 million or

46.0%

increase in net

income was

driven by an

improvement in

net interest margin,

resulting

from a larger loan portfolio earning higher yields, along with a reduction

in interest expense. Additionally,

increased

activity

in fee generating transactions

(gain on sale of

SBA 7a loans, prepayment

penalties, title insurance

income) contributed to

the increase between periods.

Net Interest Income

Net interest income

is the difference

between interest

earned on interest-earning

assets and interest

paid on interest-

bearing liabilities

and is

the primary

driver of

core earnings.

Interest income

is generated

from interest

and dividends

interest-earning

assets,

including

loans,

investment

securities

and

other

short-term

investments.

Interest

expense

incurred

from

interest

paid

interest-bearing

liabilities,

including

interest-bearing

deposits,

FHLB

advances

and

other

borrowings.

To evaluate net

interest income, we

measure and monitor

(i) yields on

loans and other

interest-earning assets, (ii)

the

costs of deposits

and other funding

sources, (iii) net

interest spread, and

(iv) net interest margin.

Net interest spread is

equal

to the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest

margin is

equal to

the annualized

net interest

income

divided by

average interest

-earning assets.

Because

non-interest-

bearing sources

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

stockholders’ equity, also fund interest-earning assets,

net interest margin includes the indirect benefit of these

non-interest-bearing funding sources.

Changes

market

interest

rates

and

interest

rates

earn

interest-earning

assets

pay

interest-bearing

liabilities, as well

as the volume

and types of

interest-earning assets and interest-bearing

and non-interest-bearing liabilities,

are usually the

largest drivers

of periodic changes

in net interest

spread, net interest

margin and net

interest income.

Our

asset liability committee

(“ALCO”) has

in place asset-liability

management techniques

to manage major

factors that

affect

net interest income and net interest margin.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following

table contains

information related

to average

balances, average

yields earned

on assets,

and average

costs of liabilities for the periods indicated (dollars in

thousands):

Three Months Ended June 30,

2025

2024

Average

(1)

Balance

Interest

Yield/Rate

(2)

Average

(1)

Balance

Interest

Yield/Rate

(2)

Assets

Interest-earning assets:

Loans

(3)

2,057,445

31,946

6.23%

1,828,487

28,017

6.16%

Investment securities

(4)

449,624

3,432

3.06%

440,559

3,069

2.80%

Other interest-earnings assets

63,974

776

4.87%

100,371

1,531

6.13%

Total interest-earning assets

2,571,043

36,154

5.64%

2,369,417

32,617

5.54%

Non-interest-earning assets

106,155

109,805

Total assets

2,677,198

2,479,222

Liabilities and stockholders' equity

Interest-bearing liabilities:

Interest-bearing demand deposits

46,694

285

2.45%

56,369

391

2.79%

Saving and money market deposits

1,211,513

9,410

3.12%

1,101,272

10,071

3.68%

Time deposits

452,361

4,343

3.85%

315,872

3,222

4.10%

Total interest-bearing deposits

1,710,568

14,038

3.29%

1,473,513

13,684

3.74%

FHLB advances and other borrowings

116,527

1,082

3.72%

162,000

1,622

4.03%

Total interest-bearing liabilities

1,827,095

15,120

3.32%

1,635,513

15,306

3.76%

Non-interest-bearing demand deposits

580,121

610,370

Other non-interest-bearing liabilities

41,490

35,584

Total liabilities

2,448,706

2,281,467

Stockholders' equity

228,492

197,755

Total liabilities and stockholders' equity

2,677,198

2,479,222

Net interest income

21,034

17,311

Net interest spread

(5)

2.32%

1.78%

Net interest margin

(6)

3.28%

2.94%

(1)

Average balances - Daily average balances are used

to calculate yields/rates.

(2)

Annualized.

(3)

Average loan balances include

deferred fees/costs and non-accrual loans.

Interest income on loans includes accretion

of deferred loan fees, net of

deferred loan costs.

(4)

At fair value except for securities held to maturity. This amount includes

FHLB stock.

(5)

Net interest spread is the weighted average

yield on total interest-earning assets minus the weighted

average rate on total interest-bearing liabilities.

(6)

Net interest margin is the ratio of net interest

income to average total interest-earning assets.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Six Months Ended June 30,

2025

2024

Average

Balance

(1)

Interest

Yield/Rate

(2)

Average

Balance

(1)

Interest

Yield/Rate

(2)

Assets

Interest-earning assets:

Loans

(3)

2,022,345

62,191

6.18

1,805,008

54,660

6.09

Investment securities

(4)

443,314

6,456

2.93

430,274

5,880

2.75

Other interest-earnings assets

69,547

1,485

4.29

112,808

2,964

5.28

Total interest-earning assets

2,535,206

70,132

5.56

2,348,090

63,504

5.44

Non-interest earning assets

106,885

109,572

Total assets

2,642,091

2,457,662

Liabilities and stockholders' equity

Interest-bearing liabilities:

Interest-bearing demand deposits

50,133

623

2.50

54,857

760

2.79

Saving and money market deposits

1,205,305

18,745

3.13

1,099,423

20,465

3.74

Time deposits

426,081

8,261

3.90

319,392

6,516

4.10

Total interest-bearing deposits

1,681,519

27,629

3.30

1,473,672

27,741

3.79

FHLB advances and other borrowings

127,674

2,354

3.71

163,093

3,294

4.06

Total interest-bearing liabilities

1,809,193

29,983

3.33

1,636,765

31,035

3.81

Non-interest bearing demand deposits

571,627

592,565

Other non-interest-bearing liabilities

37,247

32,908

Total liabilities

2,418,067

2,262,238

Stockholders' equity

224,024

195,424

Total liabilities and stockholders' equity

2,642,091

2,457,662

Net interest income

40,149

32,469

Net interest spread

(5)

2.23

1.63

Net interest margin

(6)

3.18

2.78

(1)

Average balances - Daily average balances are used

to calculate yields/rates.

(2)

Annualized.

(3)

Average loan balances include non-accrual loans. Interest income

on loans includes accretion of deferred

loan fees, net of deferred loan costs.

(4)

At fair value except for securities held to maturity. This amount includes

FHLB stock.

(5)

Net interest spread is the weighted average

yield on total interest-earning assets minus the weighted

average rate on total interest-bearing

liabilities.

(6)

Net interest margin is the ratio of net interest

income to average total interest-earning assets.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Net interest income before the provision

for credit losses was $21.0 million

for the three months ended June

30, 2025.

The increase of $3.7

million or 21.5% was

primarily driven by

higher income from

an expanded loan portfolio,

an increase

in the weighted average loan yield, and a reduction in rates

paid on interest-bearing liabilities between periods.

Net interest

margin (“NIM”)

was 3.28%

for the

three months

ended June 30,

2025 and

2.94% for

the same

period in

NIM expansion of

34 basis

points reflects both

higher loan

yields and growth

in the loan

portfolio average balance,

along with a decrease in interest rates paid on interest-bearing

liabilities.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Net interest income before the provision for credit losses was $40.1 million for the six months ended June 30, 2025, an

increase of $7.7 million or

23.7%, from $32.5 million for the

same period in 2024. This

growth was primarily driven by higher

income from an

expanded loan

portfolio, an increase

in the weighted

average loan yield,

and a reduction

in rates paid

interest-bearing liabilities between periods.

The NIM

was 3.18%

for the

six months

ended June 30, 2025

and 2.78%

for the

same period

in 2024.

The NIM

expansion

of 40 basis points reflects both higher loan yields and growth in the loan average balance, along with a decrease in interest

rates paid on interest-bearing liabilities.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Provision for Credit Losses

The provision

for credit

losses represents

a charge

to earnings

necessary to

maintain an

allowance for

credit losses

that, in

management's evaluation,

is adequate

to provide

coverage for

all expected

credit losses.

The provision

for credit

losses is impacted

by variations in

the size and

composition of our

loan and debt

securities portfolio, recent

historical and

projected future economic conditions, our internal assessment of the credit quality of the loan and debt

securities portfolios

and net charge-offs.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

The provision for credit loss was

$1.0 million for the three months

ended June 30, 2025 compared to $786 thousand for

the same period in 2024.

Growth in the loan portfolio

was the primary driver

of the increase in the

provision expense. This

impact was partially offset by the release of

reserves related to individually evaluated loans, following a charge-off recorded

during the second quarter of 2025.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

The provision for credit

loss was $1.7

million for the six

months ended June 30,

2025 compared to

$1.2 million for the

same

period

2024.

Growth

in the

loan

portfolio

was

the

primary

driver

the

increase

the

provision

expense.

This

impact was partially offset by the release of

reserves related to individually evaluated loans, following a charge-off recorded

during the second quarter of 2025.

Non-Interest Income

Our services and products generate service charges and fees, mainly from our depository

accounts. We also generate

income from gain

on sale of

loans though SBA 7a

loan program and

the monetization fees

earned through our

loan swap

program. In addition, we own

and are beneficiaries of

the life insurance policies

on some of our employees,

which policies

generate income from the increase in the cash surrender values.

The following table presents the components of non-interest

income for the dates indicated (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Service fees

2,402

1,977

4,733

3,628

Gain on sale of securities available for sale, net

Gain on sale of loans held for sale, net

151

417

676

484

Other non-interest income

817

803

1,677

1,549

Total

non-interest income

3,370

3,211

7,086

5,675

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Non-interest

income for

the

three months

ended June

30, 2025

increased

$159 thousand

or 5.0%,

compared

to the

same

period

This

increase

was

primarily

driven

growth

prepayment

penalties

and

title

insurance

income

reported under service fees category.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Non-interest income

for the six

months ended

June 30, 2025

increased $1.4

million or 24.9%,

compared to

the same

period in 2024.

This increase

was primarily

driven by growth

in prepayment

penalties and title

insurance income

reported

under service fees category combined with an increase in

the gain on sale of loans.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Non-Interest Expense

The following table presents the components of non-interest

expense for the dates indicated (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Salaries and employee benefits

7,954

7,353

15,590

13,663

Occupancy

1,337

1,266

2,621

2,580

Regulatory assessment and fees

396

476

817

909

Consulting and legal fees

263

456

855

Network and information technology services

564

479

1,069

986

Other operating

2,120

1,723

4,133

3,741

Total

non-interest expense

12,634

11,560

24,686

22,734

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Non-interest expense for the

three months ended the

June 30, 2025 increased

$1.1 million, or 9.3%,

compared to the

same period

in 2024.

The increase was

primarily driven by

a $601

thousand rise

in salaries

and employee

benefits, reflecting

merit increases

and higher

stock-based compensation

expense. Additionally, other

operating expense

increased by

$397

thousand, largely due to a reimbursement

of force-placed insurance expense

received in the second quarter

of 2024. This

reimbursement reduced expenses in that period, making the

second quarter of 2025 appear higher by comparison.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Non-interest expense

for the six

months ended June

30, 2025 increased

$2.0 million or

8.6%, compared

to the same

period in 2024.

The increase

was primarily

driven by an

increase of

$1.9 million

in salaries and

employee benefits

due to

increase of $882

thousand in merit

increases and new

full-time employee salaries,

$318 thousand in

payroll taxes and

group

insurance expense, and $727 thousand in stock-based

compensation expense.

Provision for Income Tax

Fluctuations in the effective tax rate reflect the effect of the differences in the inclusion or deductibility of certain income

and expenses for

income tax purposes.

Therefore, future

decisions on the

investments we choose

will affect our

effective

tax rate.

The cash

surrender value

of bank-owned

life insurance

policies covering

key employees,

purchasing municipal

bonds, and overall levels of taxable income will be important

elements in determining our effective tax rate.

Three months ended June 30, 2025 compared to the three

months ended June 30, 2024.

Income tax

expense for

the three

months ended

June 30,

2025 was

$2.6 million

as compared

to $2.0

million for

the

same period in 2024 and reflected the substantially increased level of net income

experienced during the 2025 period. The

effective tax rate for the three months ended June 30,

2025 was 24.2% compared to 24.1% for the same period

in 2024.

Six months ended June 30, 2025 compared to the six months ended

June 30, 2024

Income tax expense for the six months ended June 30, 2025 was $5.0 million as compared to $3.4 million for

the same

period

2024

and

reflected

the

substantially

increased

level

net

income

experienced

during

the

2025

period.

The

effective tax rate for the six months ended June 30,

2025 was 24.2% compared to 23.9% for the same period

in 2024.

For

further

discussion

income

taxes,

see

Note

“Income

Taxes”

the

unaudited

Consolidated

Financial

Statements in Item 1 of Part I of this Form 10-Q.

Analysis of Financial Condition

Total

assets at June 30, 2025 were

$2.72 billion, an increase

of $138.3 million, or 10.8%

annualized, over total assets

$2.58

billion

December 31,

2024.

Total

loans,

net

deferred

fees/costs,

increased

$140.5

million,

14.4%

annualized, to $2.11

billion at June 30, 2025 compared to

$1.97 billion at December 31, 2024. Total

deposits increased by

$161.7 million,

or 15.0% annualized, to $2.34 billion at June 30, 2025 compared

to $2.17 billion December 31, 2024.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Investment Securities

The investment portfolio

is used and

managed to provide

liquidity through cash

flows, marketability

and, if necessary,

collateral for

borrowings. The

investment portfolio

is also

used as

a tool

to manage

interest rate

risk and

the Company’s

capital

market

risk

exposure.

The

philosophy

the

portfolio

maximize

the

Company’s

profitability

taking

into

consideration the

Company’s risk

appetite and

tolerance, manage

it’s asset

composition and

diversification, and

maintain

adequate risk-based capital ratios.

The investment portfolio

is managed in accordance

with the Board approved

Asset and Liability

Management (“ALM”)

policy,

which

includes

investment

guidelines.

Such

policy

reviewed

least

annually

frequently

deemed

necessary,

depending on

market conditions

and/or unexpected

events. The investment

portfolio composition

is subject to

change depending on the funding and liquidity needs of the Company, and the interest risk management objective directed

the

Asset-Liability

Committee

(“ALCO”).

The

portfolio

investments

also

can

used

modify

the

duration

the

balance

sheet.

The

allocation

cash

into

securities

takes

into

consideration

anticipated

future

cash

flows

(uses

and

sources) and all available sources of credit.

Our investment portfolio consists primarily of

securities issued by the U.S.

Government and U.S. Government Agencies

and

mortgage-backed

securities,

collateralized

mortgage

obligations,

corporate

bonds,

municipal

securities,

other

debt

securities

all

with

varying

contractual

maturities

and

coupons.

Due

the

optionality

embedded

these

securities,

the

contractual maturities do not necessarily represent the

expected life of the portfolio. Some of these securities

will be called

or paid down

prior to maturity

depending on capital market

conditions and expectations. The

investment portfolio is

regularly

reviewed by the Chief Financial Officer,

Treasurer,

and the ALCO of the Company to ensure an appropriate risk and return

profile as well as for adherence to the Company’s

investment policy.

When evaluating AFS

debt securities under

ASC Topic

326, the Company

evaluates

whether the decline

in fair value

is attributable

to credit losses

or other

factors like interest

rate risk,

using both quantitative

and qualitative

analyses, including

company performance analysis, review of credit ratings, vintage bonds, remaining payment terms, prepayment speeds and

analysis

macro-economic

conditions.

result

this

evaluation,

the

Company

concluded

that

allowance

was

required on AFS securities as of June 30, 2025.

quarter

end,

HTM

securities

included

$149.6

million

U.S.

Government

and

U.S.

Government

Agencies

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 $9.1

million in investment

grade corporate

bonds. For

the portion

of the

HTM exposed

to non-government credit

risk, the

Company utilized

the PD/LGD

methodology to

estimate a

$7 thousand

ACL as

of June 30,

book value

for debt

securities

classified as

HTM

represents amortized cost less ACL.

Aggregate

AFS

and

HTM

investment

securities

increased

$19.2 million,

9.1%

annualized,

$444.1 million

June 30, 2025 from $424.9 million

at December 31, 2024. Investment securities

increased due to

reinvestment of payments

received and investment of

excess in cash

balances into high credit

quality investment securities to

increase the Company’s

profitability and modify the Company’s balance sheet

duration according to the ALM policy.

As of June 30, 2025,

investment securities with a market value of $49.6 million were pledged to secure public deposits.

The investment portfolio does not have any tax-exempt

securities.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following table

presents the amortized

cost and fair

value of investment

securities for

the dates indicated

(dollars

in thousands):

June 30, 2025

December 31, 2024

Available-for-sale:

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

U.S. Government Agency

16,308

14,850

14,279

12,625

Collateralized mortgage obligations

97,459

76,724

101,808

78,905

Mortgage-backed securities - residential

62,002

50,987

58,995

46,933

Mortgage-backed securities - commercial

104,782

96,524

86,604

78,739

Municipal securities

24,885

19,831

24,925

19,311

Bank subordinated debt securities

26,873

26,466

24,314

23,708

332,309

285,382

310,925

260,221

Held-to-maturity:

U.S. Government Agency

41,716

37,584

42,538

37,444

Collateralized mortgage obligations

54,312

47,937

56,987

49,259

Mortgage-backed securities - residential

38,404

34,555

40,681

36,121

Mortgage-backed securities - commercial

15,182

13,889

15,272

13,887

Corporate bonds

9,133

8,912

9,222

8,829

158,747

142,877

164,700

145,540

Allowance for credit losses - securities held-to-maturity

(7)

(6)

Securities held-to maturity, net of allowance for credit losses

158,740

164,694

The following

table shows

the weighted

average yields,

categorized by

contractual maturity,

for investment

securities

as of June 30, 2025 (in thousands,

except yields):

Within 1 year

After 1 year

through 5 years

After 5 years

through 10 years

After 10 years

Total

Amortized

Cost

Yield

Amortized

Cost

Yield

Amortized

Cost

Yield

Amortized

Cost

Yield

Amortized

Cost

Yield

Available-for-sale:

U.S. Government Agency

5,374

4.20%

10,933

4.18%

16,308

4.19%

Collateralized mortgage obligations

97,459

1.61%

97,459

1.61%

MBS - residential

62,002

2.11%

62,002

2.11%

MBS - commercial

1,594

4.41%

4,092

4.71%

99,097

3.97%

104,782

4.01%

Municipal securities

20,645

1.73%

4,240

1.86%

24,885

1.75%

Bank subordinated debt securities

7,925

9.13%

18,948

4.96%

26,873

6.19%

9,519

8.34%

49,058

3.50%

273,732

2.68%

332,309

2.97%

Held-to-maturity:

U.S. Government Agency

2,997

4,967

1.25%

19,866

1.44%

13,886

1.85%

41,716

1.50%

Collateralized mortgage obligations

54,312

1.65%

54,312

1.65%

MBS - residential

3,818

1.71%

5,865

1.75%

28,721

2.32%

38,404

2.17%

MBS - commercial

3,050

1.62%

12,132

2.57%

15,182

2.38%

Corporate bonds

9,133

2.81%

9,133

2.81%

12,130

2.27%

11,835

1.49%

25,731

1.51%

109,051

1.95%

158,747

1.87%

Loans

Loans are the

largest category of

interest-earning assets

on the unaudited

Consolidated Balance

Sheets, and usually

provide higher yields than the

remainder of the interest

-earning assets. Higher yields

typically carry greater

inherent credit

and liquidity risks in comparison to lower yield assets. The Company manages and mitigates such risks in accordance with

the credit and ALM policies, risk tolerance and balance

sheet composition.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following table shows the loan portfolio composition

as of the dates indicated (in thousands):

June 30, 2025

December 31, 2024

Total

Percent of

Total

Percent of

Total

Residential Real Estate

307,020

14.6

289,961

14.8

Commercial Real Estate

1,206,621

57.3

1,136,417

57.8

Commercial and Industrial

263,966

12.5

258,311

13.1

Correspondent Banks

110,155

5.2

82,438

4.2

Consumer and Other

218,426

10.4

198,091

10.1

Total

gross loans

2,106,188

100.0

1,965,218

100.0

Plus: Deferred fees/costs

7,130

7,630

Total

loans net of deferred fees/costs

2,113,318

1,972,848

Less: Allowance for credit losses

24,933

24,070

Total

net loans

2,088,385

1,948,778

Total

loans, net

of deferred

fees/costs, increased

by $140.5 million,

or 14.4%

annualized to

$2.11

billion, at

June 30,

2025 compared to

December 31, 2024. The

commercial real estate

loan segment had

the most significant

growth compared

to December 31, 2024.

Our

loan

portfolio

continues

grow,

with

commercial

real

estate

lending

the

primary

focus

which

represented

approximately

57.3%

of the

total gross

loan portfolio

as of

June 30,

loan growth

strategy

since

inception

has

been reflective of the market in which we operate and

of our strategic plan as approved by the Board.

Most of the

commercial real estate

exposure represents

loans to commercial

businesses secured

by owner-occupied

real estate.

The growth

experienced in

recent years

is primarily

due to

implementation of

our relationship-based

banking

model and

the success

of our

relationship managers

in competing

for new

business

in a

highly competitive

metropolitan

area. Many

of our

larger loan

clients have

long-term relationships

with members

of our

senior management

team or

our

relationship managers that date back to former institutions.

From a

liquidity perspective,

our loan

portfolio provides

us with

additional

liquidity due

to repayments

or unexpected

prepayments. The following table

shows maturities and sensitivity

to interest rate changes

of the loan portfolio

at June 30,

2025 (in thousands):

Due in 1 year or

less

Due in 1 to 5

years

Due after 5 to 15

years

Due after 15

years

Total

Residential Real Estate

17,952

44,877

64,545

179,646

307,020

Commercial Real Estate

88,561

441,689

670,767

5,604

1,206,621

Commercial and Industrial

10,922

86,096

122,542

44,406

263,966

Correspondent Banks

110,155

Consumer and Other

2,218

1,534

20,038

194,636

218,426

Total

gross loans

229,808

574,196

877,892

424,292

2,106,188

Interest rate sensitivity:

Fixed interest rates

187,629

189,334

151,576

333,915

862,454

Floating or adjustable rates

42,179

384,862

726,316

90,377

1,243,734

Total

gross loans

229,808

574,196

877,892

424,292

2,106,188

The information

presented

in the

table above

is based

upon the

contractual

maturities of

the individual

loans, which

may be

subject to

renewal at

their contractual

maturity.

Renewals will

depend on

approval by

our credit

department and

balance sheet

composition at the

time of

the analysis,

as well

as any

modification of terms

at the

loan’s maturity. Additionally,

maturity

concentrations,

loan

duration,

prepayment

speeds

and

other

interest

rate

sensitivity

measures

are

discussed,

reviewed, and analyzed by the ALCO. Decisions on term

/rate modifications are discussed as well.

As of

June 30,

2025,

approximately

59.1%

of the

loan

portfolio

has

adjustable/variable

rates

and

40.9%

the loan

portfolio

has

fixed

rates.

The

adjustable/variable

rate

loans

re-price

different

benchmarks

and

tenors

and

different

periods of time.

By contractual characteristics,

there are no

material concentrations

on anniversary repricing.

Additionally,

it is important to

note that most of

our loans have interest

rate floors. This embedded

option protects the

Company from a

decrease in interest rates below the floor and positions

us to gain in the scenario of higher interest rates.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Asset Quality

Our asset quality grading

analysis estimates the capability of

the borrower to repay

the contractual obligation of

the loan

agreement as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly

graded loans. Internal credit

risk grades are reviewed

at least once a

year, and

more frequently as

needed. Internal credit

risk ratings

may change

based on

management’s

assessment of

the results

from the

annual review,

portfolio monitoring,

and other developments observed with borrowers.

The internal credit risk grades used by the Company to

assess the credit worthiness of a loan are shown below:

Pass

– Loans indicate different levels of satisfactory

financial condition and performance.

Special Mention

– Loans classified as special mention have a potential weakness

that deserves management’s

close attention. If left uncorrected, these potential weaknesses

may result in deterioration of the repayment

prospects for the loan or of the institution’s

credit position at some future date.

Substandard

– Loans classified as substandard are inadequately protected

by the current net worth and paying

capacity of the obligator or of the collateral pledged, if

any. Loans so classified

have a well-defined weakness or

weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the

institution will sustain some loss if the deficiencies are

not corrected.

Doubtful

– Loans classified as doubtful have all the weaknesses inherent

in those classified at substandard, with

the added characteristic that the weaknesses make collection

or liquidation in full on the basis of currently existing

facts, conditions, and values, highly questionable and improbable.

Loss

– Loans classified as loss are considered uncollectible.

Loan credit exposures by internally assigned grades are

as follows for the dates indicated (in thousands):

June 30, 2025

Pass

Special Mention

Substandard

Doubtful

Total

Residential Real Estate

303,536

2,925

559

307,020

Commercial Real Estate

1,198,870

5,327

2,424

1,206,621

Commercial and Industrial

260,342

965

2,659

263,966

Correspondent Banks

110,155

Consumer and Other

218,426

2,091,329

9,217

5,642

2,106,188

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

Consumer and Other

196,101

1,990

198,091

1,957,936

7,282

1,965,218

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Non-Performing Assets

The following table presents non-performing assets as

of the dates shown (in thousands,

except ratios):

June 30, 2025

December 31, 2024

Non-accrual loans

1,366

2,707

Loans past due over 90 days and still accruing

Total

non-performing loans

1,366

2,707

Other real estate owned

Total

non-performing assets

1,366

2,707

Asset quality ratios:

Allowance for credit losses to total loans

1.18%

1.22%

Allowance for credit losses to non-performing loans

1,825%

889%

Non-performing loans to total loans

0.06%

0.14%

Non-performing

assets

include

all

loans

categorized

non-accrual,

other

real

estate

owned

(“OREO”)

and

other

repossessed assets. Problem loans for

which the collection or

liquidation in full is

reasonably uncertain are placed on

a non-

accrual status. This determination is based on current existing facts concerning collateral values and the paying

capacity of

the

borrower.

When

the

collection

the

full

contractual

balance

unlikely,

the

loan

placed

non-accrual

avoid

overstating the Company’s income for a loan

with increased credit risk.

If the

principal or

interest on

a commercial

loan becomes

due and

unpaid for

90 days

or more,

the loan

is placed

non-accrual status as of

the date it becomes

90 days past due

and remains in non-accrual

status until it meets

the criteria

for restoration to accrual status.

Residential loans, on

the other hand, are placed

on non-accrual status when

the principal

or interest

becomes due

and unpaid

for 120

days or

more and remains

in non-accrual

status until

it meets

the criteria

for

restoration

accrual

status.

Restoring

loan

accrual

status

possible

when

the

borrower

resumes

payment

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.

The

Company

may

grant

loan

concession

borrower

experiencing

financial

difficulties.

This

determination

performed

during

the

annual

review

process

whenever

problems

surface

regarding

the

borrower’s

ability

repay

accordance with

the original

terms of

the loan

or line

of credit.

The concessions

are given

to the

debtor in

various forms,

including interest rate

reductions, principal forgiveness, extension

of maturity date,

waiver, or deferral of

payments and other

concessions intended to minimize potential losses.

For further discussion of

non-performing loans and

borrowers experiencing financial

difficulties, see

Note 3 “Loans” to

the unaudited Consolidated Financial Statements in Item

1 of Part 1 this Form 10-Q.

Allowance for Credit Losses

The

ACL

loans

represents

amount

that,

management's

evaluation,

adequate

provide

coverage

for

all

expected future credit losses on outstanding loans. Additionally,

qualitative adjustments are made to the ACL when, based

management’s

judgment,

there

are

factors

impacting

the

allowance

estimate

not

considered

the

quantitative

calculations. See Note 3 “Loans” in Item 1 of Part 1 of

this Form 10-Q for more information on the ACL.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following

table presents

ACL on

loans 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

Three Months Ended June 30, 2025

Beginning balance

5,115

9,197

4,434

817

5,177

24,740

Provision for credit losses

(1)

356

294

115

895

Recoveries

Charge-offs

(710)

Ending Balance

5,477

9,491

4,508

874

4,583

24,933

Average loans

299,857

1,167,698

265,465

101,776

222,649

2,057,445

Net charge-offs (recoveries) to average

loans

(2)

(0.01)%

(0.00)%

1.28%

0.14%

Six Months Ended June 30, 2025

Beginning balance

5,121

8,788

4,633

654

4,874

24,070

Provision for credit losses

(3)

344

703

(131)

220

431

1,567

Recoveries

Charge-offs

(723)

Ending Balance

5,477

9,491

4,508

874

4,583

24,933

Average loans

300,560

1,155,436

261,377

94,516

210,456

2,022,345

Net charge-offs (recoveries) to average

loans

(2)

(0.01)%

(0.00)%

0.69%

0.07%

(1) Provision for credit losses excludes a $134 thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $2 thousand provision related to investment securities held to maturity.

(2) Annualized.

(3) Provision for credit losses excludes a $144 thousand provision due to unfunded commitments included in accrued interest and

other liabilities and a $1 thousand provision related to investment securities held to maturity.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Residential

Real Estate

Commercial

Real Estate

Commercial

and

Industrial

Correspondent

Banks

Consumer

and Other

Total

Three Months Ended June 30, 2024

Beginning balance

2,930

10,302

4,272

794

3,156

21,454

Provision for credit losses

(1)

257

(30)

474

(25)

774

Recoveries

Charge-offs

(5)

Ending Balance

3,193

10,272

4,747

892

3,126

22,230

Average loans

231,807

1,064,636

232,019

102,597

197,428

1,828,487

Net charge-offs (recoveries) to average

loans

(2)

(0.01)%

(0.00)%

0.01%

0.00%

Six Months Ended June 30, 2024

Beginning balance

2,695

10,366

3,974

911

3,138

21,084

Provision for credit losses

(3)

492

(94)

762

(19)

(4)

1,137

Recoveries

Charge-offs

(10)

Ending Balance

3,193

10,272

4,747

892

3,126

22,230

Average loans

228,830

1,050,965

229,040

101,280

194,893

1,805,008

Net charge-offs (recoveries) to average

loans

(2)

(0.01)%

0.01%

0.00%

(1) Provision for credit losses excludes a $15 thousand provision due to unfunded commitments included in accrued interest and other

liabilities and a $3 thousand release related to investment securities held to maturity.

(2) Annualized.

(3) Provision for credit losses excludes $58 thousand provision due to unfunded commitments included in accrued interest and other

liabilities and $1 thousand provision due to investment securities held to maturity.

The

Federal

Open

Market

Committee

(“FOMC”)

economic

forecasts

June

30,

2025,

showed

moderate

deterioration

unemployment

and

forecast

for

real

GDP.

Fannie

Mae

House

Price

Index

(“HPI”)

forecast

reflected

deterioration in

national housing

prices as

well. The

Company continued

to adjust

the HPI

index effect

on the

1-4 Family

loan portfolio

with

qualitative

factor

because

Florida

housing prices

are

performing

better

than

national

levels.

The Q-

factor scorecard was updated based on the latest portfo

lio stress test and the resulting maximum loss calculation.

Our ACL

included residential

loans. To

assess the

potential impact

of changes

in qualitative

factors related

to these

loans,

management

performed

a sensitivity

analysis.

The Company

evaluated

the

impact

of the

HPI

used

in calculating

expected losses on

the residential loan

segment. As of

June 30, 2025,

for every 100

basis points increase

in the HPI,

the

forecast

reduces

reserves

approximately

$353

thousand

and

about

basis

points

the

reserve

coverage

ratio,

everything else being

constant. This sensitivity

analysis provides a

hypothetical result to

assess the sensitivity

of the ACL

and does not represent a change in management’s

judgement.

As of June 30, 2025, we stress tested two qualitative factors in our commercial real estate loan pool, as it is the largest

segment in

our portfolio.

We evaluated

the impact

of a

change in

the qualitative

factors from

no risk

to maximum

loss to

measure the

sensitivity of

the qualitative

factors. The

change from

no risk

to high

risk resulted

in a

$9.4 million

or 36.4%

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.

Bank-Owned Life Insurance

As of June 30,

2025, the combined

cash surrender value

of all bank-owned

life insurance (“BOLI”)

policies was $58.4

million. Changes in cash surrender value are recorded to non-interest income in the unaudited Consolidated Statements of

Operations. The Company has BOLI policies with five insurance carriers. The Company is the beneficiary of these policies.

Deposits

Customer deposits are the

primary funding source for

the Bank’s growth.

Through our network of

banking centers, we

offer a competitive array of deposit

accounts and treasury management services designed

to meet our customers’ business

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

needs. Our primary

deposit customers

are small-to-medium

sized businesses (“SMBs”),

and the personal

business of the

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

relationships of the employees of these businesses.

The following table

presents the daily

average balance and

average rate paid

on deposits by

category for

the periods

presented (in thousands, except ratios):

Three Months Ended June 30,

2025

2024

Average Balance

Average Rate

Paid

Average Balance

Average Rate

Paid

Non-interest bearing demand deposits

580,121

0.00%

610,370

0.00%

Interest-bearing demand deposits

46,694

2.45%

56,369

2.79%

Saving and money market deposits

1,211,513

3.12%

1,101,272

3.68%

Time deposits

452,361

3.85%

315,872

4.10%

Total

2,290,689

2.46%

2,083,883

2.64%

The Company

has a

granular deposit

portfolio with

outstanding balances

comprised of

57% in

commercial

deposits,

28% in personal deposits, 8% in public funds (which are

partially collateralized) and 8% in brokered deposits. The brokered

deposits balance at June 30, 2025 was $188.0 million

and was $133.0 million at December 31, 2024.

June

30,

2025,

the

Company

has

approximately

thousand

deposit

accounts

with

the

majority

personal

accounts,

approximately

thousand

61.4%.

The

estimated

average

account

size

our

deposit

portfolio

was

approximately $113

thousand as of June 30, 2025.

The uninsured deposits are estimated based on

the FDIC deposit insurance limit of $250 thousand

per account holder

for all deposit accounts at

the Company.

The total estimated percentage

of uninsured deposits was

52% at June 30, 2025

and

55%

December 31,

2024.

The

Company

offers

Insured

Cash

Sweep

(“ICS”)

and

Certificate

Deposit Account

Registry Service

(“CDARS”)

deposit products

to fully

insure our

clients. The

deposit balance

in ICS/CDARS

was $143.4

million at June 30, 2025 and was $125.5 million at December

31, 2024.

The following table shows scheduled maturities of uninsured

time deposits as of June 30, 2025 (in thousands):

June 30, 2025

Three months or less

53,680

Over three through six months

25,041

Over six though twelve months

11,888

Over twelve months

40,376

130,985

Other Liabilities

The Company collects from commercial and residential loan

customers funds which are held in escrow for future

payment of real estate taxes and insurance. These escrow

funds are disbursed by the Company directly to the

insurance

companies and taxing authority of the borrower.

Escrow funds are recorded as accrued interest and other

liabilities.

As of June 30, 2025, escrow balances totaled $20.9 million

compared to $6.1 million at December 31, 2024

Borrowings

member

the

FHLB

Atlanta,

are

eligible

obtain

advances

with

various

terms

and

conditions.

This

accessibility to additional

funding allows us

to efficiently and

timely meet both

expected and unexpected

outgoing cash flows

and collateral needs without adversely affecting

either daily operations or the financial condition of the

Company.

As of June 30, 2025, we had $108.0 million of fixed-rate advances outstanding from

the FHLB with a weighted average

rate of 3.60%. Maturity dates for the advances range

between 2025 to 2028 as detailed in the table below.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

The following table presents the FHLB advances as of

June 30, 2025 (in thousands):

Interest Rate

Type of Rate

Maturity Date

Amount

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

108,000

During the third

quarter 2024, the

Company paid off

the $80.0 million

fixed-rate loan outstanding

from the Bank

Term

Funding Program with an original maturity date of January

10, 2025.

The

Company

has

also

established

Federal

Funds

lines

credit

with

our

upstream

correspondent

banks

and

the

Federal

Reserve

Bank

Atlanta

Discount

Window

manage

temporary

fluctuations

our

daily

cash

balances.

June 30, 2025, there were no outstanding balances with any

of these liquidity sources.

Off-Balance Sheet Arrangements

We engage

in various financial

transactions in

our operations

that, under GAAP,

may not be

included on

the balance

sheet. To

meet the financing needs of our customers,

we may include commitments to extend credit and standby

letters of

credit. To

a varying

degree, such

commitments involve

elements of

credit, market,

and interest

rate risk

in excess

of the

amount recognized

in the

balance sheet.

We use

more conservative

credit and

collateral policies

in making

these credit

commitments than

we do

for on-balance

sheet items.

We maintain

an allowance

for off-balance

sheet credit

risk which

recorded under

accrued interest

and other

liabilities on

the unaudited

Consolidated

Balance Sheets.

The ACL

related to

unfunded commitments at June 30, 2025 was

$716 thousand and at December 31, 2024

was $571 thousand. The increase

was primarily driven by an increase

in unfunded commitments and to

a lesser degree by the deterioration

of the estimated

loss rate.

Since commitments associated with letters of

credit and commitments to extend

credit may expire unused, the

amounts

shown

not

necessarily

reflect

actual

future

cash

funding

requirements.

The

following

table

presents

lending

commitments outstanding as of the dates indicated (in thousands

June 30, 2025

December 31, 2024

Commitments to grant loans and unfunded lines of credit

124,051

122,578

Standby and commercial letters of credit

2,616

5,389

Total

126,667

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

the

contract,

for

specific

purpose.

Commitments

generally

have

variable

interest

rates,

fixed

expiration

dates or

other

termination

clauses

and

may require

payment

a fee.

Since many

of the

commitments

are

expected to

expire without being

fully drawn, the

total commitment

amounts disclosed

above do not

necessarily represent

future cash

requirements.

Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change

in credit risk in our portfolio. Lines

of credit generally have variable interest

rates. The maximum potential amount

of future

payments we could

be required to

make is represented

by the contractual

amount of the

commitment, less

the amount of

any advances made.

Letters of credit are

conditional commitments issued

by us to guarantee

the performance of a

client to a third

party.

the event of nonperformance by

the client in accordance with the

terms of the agreement with the

third party,

we would be

required to fund

the commitment.

If the commitment

is funded, we

would be entitled

to seek recovery

from the client

from

the underlying collateral,

which can include

commercial real estate,

physical plant and

property, inventory, receivables, cash

or marketable securities.

Asset and Liability Management Committee

Members

senior

management

and

our

Board

make

the

asset

and

liability

management

committee,

ALCO.

Senior management

is responsible

for ensuring

that Board

approved strategies

and policies

for managing

and mitigating

risks are appropriately executed within the designated lines

of authority and responsibility in a timely manner.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

ALCO

oversees

the

establishment,

approval,

implementation,

and

review

interest

rate

risk,

management,

and

mitigation strategies, ALM related policies, ALCO procedures

and risk tolerances and appetite.

While some degree of Interest Rate Risk (“IRR”) is inherent to the banking business, we believe our ALCO implements

sound risk management practices to identify,

quantify,

monitor, and limit IRR exposures.

When assessing

the scope

of IRR

exposure

and

impact on

the consolidated

balance sheet,

cash

flows and

income

statement,

management

considers

both

earnings

and

economic

impacts.

Asset

price

variations,

deposit

volatility

and

reduced earnings or outright losses could adversely affect

the Company’s liquidity,

performance, and capital adequacy.

Income simulations

are used

to assess

the impact

of changing

rates on

earnings under

different rates

scenarios and

time horizons.

These simulations

utilize both

instantaneous and

parallel changes

in the

level of

interest rates,

as well

non-parallel changes such as

changing slopes (flat and steepening)

and twists of the yield curve.

Static simulation models

are based

on current

exposures

and assume

a constant

balance sheet

with

new growth.

Dynamic

simulation

is also

utilized to have a

more comprehensive assessment

on IRR. This simulation

relies on detailed

assumptions outlined in

our

budget and strategic plan, and in assumptions regarding changes in

existing lines of business, new business, management

strategies and client expected behavior.

have

complete

picture

IRR,

the

Company

also

evaluates

the

economic

value

equity

(“EVE”).

This

assessment

allows

measure

the

degree

which

the

economic

values

will

change

under

different

interest

rate

scenarios (parallel and non-parallel). The economic value approach focuses on a longer-term time horizon and captures all

future cash flows expected

from existing assets and

liabilities. The economic value

model utilizes a static

approach in that

the analysis

does not

incorporate new

business; rather,

the analysis

shows a

snapshot in

time of

the risk

inherent in

the

balance sheet.

Market and Interest Rate Risk Management

According to our ALCO model, as of June 30,

2025, we had a slightly liability sensitive balance sheet

for year one, and

a neutral

balance sheet

for year

two, using

the static

model. Asset

sensitivity indicates

that our

assets generally

reprice

faster than

our liabilities,

which results

in a

favorable

impact to

net interest

income when

market interest

rates

increase.

Liability sensitivity

indicates that

our liabilities generally

reprice faster

than our

assets, which

results in a

favorable impact

to net interest income when market interest rates

decrease. Many assumptions are used to calculate the

impact of interest

rate variations on our net interest income, such as asset prepayment speeds, non-maturity deposit price sensitivity (betas),

pricing correlations,

deposit truncations and decay rates, and key interest rate

drivers.

Because of the inherent use

of these estimates and

assumptions in the model,

our actual results may,

and most likely

will, differ from static measures results.

In addition, static measures like EVE

do not include actions that management

may

undertake to manage the risks in response to anticipated changes in interest rates or customer deposit behavior. As part of

our ALM strategy and policy, management

has the ability to modify the balance sheet to either increase asset duration and

decrease liability

duration to reduce

asset sensitivity,

or to decrease

asset duration and

increase liability duration

in order

to increase asset sensitivity.

According to our

model, as of

June 30,

2025, our balance

sheet is liability

sensitive for year

one and more

neutral

year two

under static

interest rate

scenarios (an

increase or

decrease of

400 basis

points). Additionally,

utilizing an

EVE

approach, we analyze

the risk to capital

from the effects

of various interest

rate scenarios through

a long-term discounted

cash flow model.

This measures

the difference

between the

economic value

of our assets

and the economic

value of our

liabilities, which is

a proxy for

our liquidation value.

According to our

balance sheet composition, and

as expected, our

model

stipulates

that

increase

interest

rates

will

have

negative

impact

the

EVE

and

lower

rates,

positive

impact.

Results and analysis are presented quarterly to the ALCO,

and strategies are reviewed and defined.

Liquidity

Liquidity is defined

as a Company’s

capacity to meet

its cash and

collateral obligations at

a reasonable cost.

Maintaining

an adequate level of liquidity depends on the Company’s ability to

efficiently meet both expected and unexpected cash flow

and collateral needs without adversely affecting

either daily operations or the financial condition of the

Company.

Liquidity risk

is the

risk that

we will

be unable

to meet

our short-term

and long-term

obligations as

they become

due

because of an inability

to liquidate assets or

obtain relatively adequate funding. The

Company’s obligations, and the funding

sources

used

meet

them,

depend

significantly

our

business

mix,

balance

sheet

structure

and

composition,

credit

quality of our assets and the cash flow profiles of our on-

and off-balance sheet obligations.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

In managing

inflows and

outflows,

management

regularly

monitors situations

that can

give rise

to increased

liquidity

risk. These

include funding

mismatches, market

constraints on

the ability

to convert

assets (particularly

investments) into

cash or in accessing sources of funds (i.e., market liquidity),

pledging assets and contingent liquidity events.

Changes in macroeconomic conditions, as well as exposure to credit, market, operational, legal,

cybersecurity risk and

reputational

risks,

could

have

unexpected

impact

the

Company’s

liquidity

risk

profile

and

are

factored

into

the

assessment of liquidity and the ALM framework.

Management has established

a comprehensive and

holistic management process for

identifying, measuring, monitoring

and

mitigating

liquidity

risk.

Due

its

critical

importance

the

viability

the

Company,

liquidity

risk

management

integrated into our risk management processes, Contingency

Funding Plan and ALM policy.

Critical elements of our liquidity

risk management include: effective corporate governance consisting of

oversight by the

Board and

ALCO, and

active involvement

of senior

management; appropriate

strategies, policies,

procedures,

and limits

used

identify

and

mitigate

liquidity

risk;

comprehensive

liquidity

risk

measurement

and

monitoring

systems

(including

assessments

the

current

and

prospective

cash

flows

sources

and

uses

funds)

that

are

commensurate

with

the

complexity and business activities of the Company; active management of intraday liquidity and collateral; an appropriately

diverse mix

of existing

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

determine

the

adequacy

the

institution’s

liquidity risk management process.

expect

funds

available

from

several

basic

banking

activity

sources,

including

the

core

deposit

base,

the

repayment and maturity

of loans and

the investment

portfolio cash flows.

Other potential

funding sources

include Federal

Funds purchased,

brokered

certificates

of deposit,

listing

services

certificates

deposit, unsecured

fed funds

lines with

other banking institutions

and draws from the

Federal Reserve Bank

of Atlanta discount

window, and

borrowings from the

FHLB Atlanta.

Accordingly,

we believe

our liquidity

resources are

adequate to

fund loans

and meet

other cash

needs as

necessary.

Capital Adequacy

June 30,

2025,

the

Bank

was

well

capitalized

under

the

FDIC’s

prompt

corrective

action

framework.

also

follow the capital conservation

buffer framework,

and as of June

30, 2025, we

exceeded the capital

conversation buffer

all capital

ratios,

according

our actual

ratios.

The

following

table

presents

the

capital

ratios

for

the

Bank

at the

dates

indicated (in thousands, except ratios).

Actual

Minimum Capital

Requirements

To be Well Capitalized

Under Prompt Corrective

Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

June 30, 2025

Total

risk-based capital

287,836

13.67

168,507

8.00

210,634

10.00

Tier 1 risk-based capital

262,180

12.45

126,380

6.00

168,507

8.00

Common equity tier 1 capital

262,180

12.45

94,785

4.50

136,912

6.50

Leverage ratio

262,180

9.65

108,629

4.00

135,786

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

The Company is

not subject to

regulatory capital ratios

imposed by Basel

III on bank

holding companies because

the

Company is deemed to be a small bank holding company.

Impact of Inflation

Our

Consolidated

Financial

Statements

and

notes

have

been

prepared

accordance

with

U.S.

GAAP,

which require the measurement of financial

position and operating results in terms

of historical dollars, without considering

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

the changes in the relative purchasing power of money over time

due to inflation. The impact of inflation is mostly reflected

in the increased cost of operations, inflation can negatively impact overhead expenses and other variable expenses. Unlike

most industrial

companies,

nearly all

our

assets

and liabilities

are monetary

in nature.

As a

result,

interest

rates

have a

greater impact on our performance than the effects of inflation. Periods of high inflation are often accompanied by relatively

higher interest rates, and periods of low inflation are accompanied

by relatively lower interest rates.

Recently Issued Accounting Pronouncements

Recently issued accounting

pronouncements are discussed

in Note 1 “Summary

of Significant Accounting Policies”

the unaudited Consolidated Financial Statements in Part

1 of this Form 10-Q.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Reconciliation and Management Explanation of Non

-GAAP Financial Measures

Management

has

included

these

non-GAAP

measures

because

believes

these

measures

may

provide

useful

supplemental information

for evaluating

the Company’s

underlying performance

trends. Further,

management uses

these

measures

managing

and

evaluating

the

Company’s

business

and

intends

refer

them

discussions

about

our

operations and performance.

Operating performance

measures should be

viewed in addition

to, and not

as an alternative

to or

substitute

for,

measures

determined

accordance

with

GAAP,

and

are

not

necessarily

comparable

to non-GAAP

measures that may be presented by other

companies. The following table reconciles the non-GAAP financial measurement

of operating net income available to

common shareholders for the periods presented (in

thousands,

except per share data):

USCB FINANCIAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(Dollars in thousands)

As of or For the Three Months Ended

6/30/2025

3/31/2025

12/31/2024

9/30/2024

6/30/2024

Pre-tax pre-provision ("PTPP") income:

(1)

Net income

8,140

7,658

6,904

6,949

6,209

Plus: Provision for income taxes

2,599

2,440

2,197

2,213

1,967

Plus: Provision for credit losses

1,031

681

1,030

931

786

PTPP income

11,770

10,779

10,131

10,093

8,962

PTPP return on average assets:

(1)

PTPP income

11,770

10,779

10,131

10,093

8,962

Average assets

2,677,198

2,606,593

2,544,592

2,485,434

2,479,222

PTPP return on average assets

(2)

1.76%

1.68%

1.58%

1.62%

1.45%

Operating net income:

(1)

Net income

8,140

7,658

6,904

6,949

6,209

Less: Net gains (losses) on sale of securities

Less: Tax effect on sale of securities

(4)

Operating net income

8,140

7,658

6,904

6,949

6,199

Operating PTPP income:

(1)

PTPP income

11,770

10,779

10,131

10,093

8,962

Less: Net gains (losses) on sale of securities

Operating PTPP income

11,770

10,779

10,131

10,093

8,948

Operating PTPP return on average assets:

(1)

Operating PTPP income

11,770

10,779

10,131

10,093

8,948

Average assets

2,677,198

2,606,593

2,544,592

2,485,434

2,479,222

Operating PTPP return on average assets

(2)

1.76%

1.68%

1.58%

1.62%

1.45%

Operating return on average assets:

(1)

Operating net income

8,140

7,658

6,904

6,949

6,199

Average assets

2,677,198

2,606,593

2,544,592

2,485,434

2,479,222

Operating return on average assets

(2)

1.22%

1.19%

1.08%

1.11%

1.01%

Operating return on average equity:

(1)

Operating net income

8,140

7,658

6,904

6,949

6,199

Average equity

228,492

219,505

215,715

206,641

197,755

Operating return on average equity

(2)

14.29%

14.15%

12.73%

13.38%

12.61%

Operating Revenue:

(1)

Net interest income

21,034

19,115

19,358

18,109

17,311

Plus: Non-interest income

3,370

3,716

3,627

3,438

3,211

Less: Net gains (losses) on sale of

securities

Operating revenue

24,404

22,831

22,985

21,547

20,508

Operating Efficiency Ratio:

(1)

Total non-interest expense

12,634

12,052

12,854

11,454

11,560

Operating revenue

24,404

22,831

22,985

21,547

20,508

Operating efficiency ratio

51.77%

52.79%

55.92%

53.16%

56.37%

(1)

The Company believes these non-GAAP measurements

are key indicators of the ongoing earnings

power of the Company.

(2)

Annualized.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

(Dollars in thousands, except per share data)

As of or For the Three Months Ended

6/30/2025

3/31/2025

12/31/2024

9/30/2024

6/30/2024

Tangible book value per common share (at period-end):

(1)

Total stockholders' equity

231,583

225,088

215,388

213,916

201,020

Less: Intangible assets

Tangible stockholders' equity

231,583

225,088

215,388

213,916

201,020

Total shares issued and outstanding (at period-end):

Total common shares issued and outstanding

20,078,385

20,048,385

19,924,632

19,620,632

19,630,632

Tangible book value per common share

(2)

11.53

11.23

10.81

10.90

10.24

Operating diluted net income per common share:

(1)

Operating net income

8,140

7,658

6,904

6,949

6,199

Total weighted average diluted shares of common stock

20,295,794

20,319,535

20,183,731

19,825,211

19,717,167

Operating diluted net income per common share:

0.40

0.38

0.34

0.35

0.31

Tangible Common Equity/Tangible Assets

(1)

Tangible stockholders' equity

231,583

225,088

215,388

213,916

201,020

Tangible total assets

(3)

2,719,474

2,677,382

2,581,216

2,503,954

2,458,270

Tangible Common Equity/Tangible

Assets

8.52%

8.41%

8.34%

8.54%

8.18%

(1)

The Company believes these non-GAAP measurements

are key indicators of the ongoing earnings

power of the Company.

(2)

Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise

of outstanding stock options.

(3) Since the Company has no intangible

assets, tangible total assets is the same amount

as total assets calculated under GAA

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company,

we are not required to provide the information required

by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the

supervision and with

the participation of

our management, including

our President and

Chief Executive Officer

and our

Chief Financial

Officer,

we evaluated

the effectiveness

of the

design and

operation of

the Company’s

disclosure

controls

and

procedures

(as

defined

Rules

13a-15(e)

and

15d-15(e)

under

the

Securities

Exchange

Act

1934

(“Exchange Act”))

as of

June 30, 2025.

Based on

that evaluation,

management believes

that, as

of the

end of

the period

covered

this

Form

10-Q,

the

Company's

disclosure

controls

and

procedures

were

effective

collect,

process,

and

disclose the information required

to be disclosed in

the reports filed or

submitted under the Exchange

Act within the

required

time periods.

Changes in Internal Control Over Financial Reporting

There has been

no change in

our internal control

over financial reporting

(as defined in

Rules 13a-15(f) and

15d-15(f)

under the Exchange Act) during the period covered by this Form 10-Q that has

materially affected, or is reasonably likely to

materially affect, our internal control over financial

reporting.

Limitations on Effectiveness of Controls and Procedures

designing

and

evaluating

the

disclosure

controls

and

procedures,

management

recognizes

that

any

controls

and

procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving

the desired control objectives.

In addition, the design

of disclosure controls and

procedures must reflect the

fact that there

are resource constraints and that management is required to apply

judgment in evaluating the benefits of possible controls

and procedures relative to their costs.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

PART II

Item 1.

Legal Proceedings

We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation

arising

the

ordinary

course

business.

These

claims

and

litigation

may

include,

among

other

things,

allegations

violation of banking and other applicable regulations, competition

law, labor laws and consumer

protection laws, as well as

claims or

litigation

relating

to intellectual

property,

securities, breach

of contract

and tort.

intend to

defend ourselves

vigorously against any pending or future claims and litigation.

There can be no

assurance that any

future legal proceedings

to which we are

a party will not

be decided adversely

our interests and have a material adverse effect

on our financial condition and operations.

Item 1A. Risk Factors

For detailed information about certain risk factors that could materially affect our business, financial

condition, or future

results, see “Part I, Item 1A – Risk Factors” of the

2024 Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

no repurchases of

equity securities during

any month in

the three months

ended June 30,

As of

June 30,

2025 the

maximum number

of shares

that may

yet be

purchased

under the

Company’s

Board approved

stock

repurchase programs was 528,309 shares.

Item 3.

Defaults Upon Senior Securities

(a)

Not applicable

(b)

Not applicable

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a)

Not applicable

(b)

Not applicable

(c)

During the

three months

ended June

30, 2025,

none of

the Company’s

directors or

Section 16

reporting persons

adopted

terminated

any

Rule

10b5-1

trading

arrangement

non-Rule

10b5-1

trading

arrangement

(as

such

terms are defined in Item 408 of the SEC’s Regulation

S-K).

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

Item 6. Exhibits

Exhibit No.

Description of Exhibit

2.1

Agreement and Plan of Share Exchange, dated December 27, 2021, by and between U.S. Century Bank and USCB

Financial Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No.

001-41196) filed with the Securities and Exchange Commission on December 30, 2021).

3.1

Articles of Incorporation, as amended, of USCB Financial Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the

Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (File No. 001-41196) filed with the

Securities and Exchange Commission on August 11, 2023).

3.2

Amended and Restated Bylaws of USCB Financial Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s

Current Report on Form 8-K (File No. 001-41196) filed with the Securities and Exchange Commission on July 26, 2023).

4.1

Side Letter Agreement, dated December 30, 2021, between USCB Financial Holdings, Inc., U.S. Century Bank, Priam

Capital Fund II, LP, Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P. (incorporated by

reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41196) filed with the Securities and

Exchange Commission on December 30, 2021).

4.2

Registration Rights Agreement, dated March 17, 2015, between U.S. Century Bank, Priam Capital Fund II, LP, Patriot

Financial Partners II, L.P., Patriot Financial Partners Parallel II, L.P., and certain other shareholders of U.S. Century Bank

(incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-41196) filed with the

Securities and Exchange Commission on December 30, 2021).

4.3

Assignment and Assumption of Agreement, dated December 30, 2021, between U.S. Century Bank and USCB Financial

Holdings, Inc. (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K (File No. 001-41196)

filed with the Securities and Exchange Commission on December 30, 2021).

4.4

Description of USCB Financial Holdings, Inc.’s securities (incorporated by reference to Exhibit 4.4 to the Registrant's Annual

Report on Form 10-K (File No. 001-41196) filed with the Securities and Exchange Commission on March 22, 2024).

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

***

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

***

101

The following financial statements

from the Company’s Quarterly

Report on Form

10-Q for the

quarter ended June 30,

2025

formatted

Inline

XBRL:

(i)

Consolidated

Balance

Sheets

(unaudited),

(ii)

Consolidated

Statements

Operations

(unaudited), (iii) Consolidated

Statements

of Comprehensive

Income (unaudited), (iv)

Consolidated Statements

of Changes

in Stockholders’

Equity (unaudited),

(v) Consolidated

Statements of

Cash Flows

(unaudited), (vi)

Notes to

Consolidated

Financial Statements (unaudited).

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Management Contract or Compensatory plan or arrangement.

Filed herewith.

***

Furnished hereby.

Table of Contents

USCB Financial Holdings, Inc.

Q2 2025 Form 10-Q

SIGNATURES

Pursuant to the

requirements of

the Securities Exchange

Act of 1934,

the registrant has

duly caused this

report to be

signed on its behalf by the undersigned thereunto duly authorized.

USCB FINANCIAL HOLDINGS, INC.

(Registrant)

Signature

Title

Date

/s/ Luis de la Aguilera

Chairman, President and Chief Executive

Officer

August 8, 2025

Luis de la Aguilera

(Principal Executive Officer)

/s/ Robert Anderson

Executive Vice President and Chief Financial

Officer

August 8, 2025

Robert Anderson

(Principal Financial Officer and Principal

Accounting Officer)

exhibit311

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act

of 2002

I, Luis de la Aguilera, certify that:

I have reviewed this Quarterly Report on Form

10-Q of USCB Financial Holdings, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary

make

the

statements

made,

light

the

circumstances

under

which

such

statements

were

made,

not

misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects

the financial

condition, results

of operations

and cash

flows of

the registrant

as of,

and for,

the periods

presented in this report;

The

registrant’s

other

certifying

officer

and

are

responsible

for

establishing

and

maintaining

disclosure

controls

and

procedures (as

defined in

Exchange Act

Rules 13a-15(e)

and 15d-15(e))

and internal

control over

financial reporting

(as

defined in Exchange

Act Rules 13a-15(f) and 15d-15(f)) for the registrant and

have:

designed

such

disclosure

controls

and

procedures,

caused

such

disclosure

controls

and

procedures

designed

under

our

supervision,

ensure

that

material

information

relating

the

registrant,

including

its

consolidated subsidiaries, is

made known

to us by

others within those

entities, particularly during

the period in

which

this report is being prepared;

designed such internal control over financial reporting, or caused such

internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and

the

preparation

financial

statements

for

external

purposes

accordance

with

generally

accepted

accounting

principles;

evaluated the effectiveness

of the registrant’s

disclosure controls and

procedures and presented

in this report our

conclusions about the effectiveness of the

disclosure controls and procedures, as of the

end of the period covered

by this report based on such evaluation; and

disclosed in this

report any

change in the

registrant’s internal

control over

financial reporting

that occurred

during

the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that

has

materially

affected,

reasonably

likely

materially

affect,

the

registrant’s

internal

control

over

financial

reporting; and

The registrant’s

other certifying

officer

and I

have disclosed,

based on

our most

recent evaluation

of internal

control over

financial

reporting,

the

registrant’s

auditors

and

the

audit

committee

the

registrant’s

board

directors

(or

persons

performing the equivalent functions):

All

significant

deficiencies

and

material

weaknesses

the

design

operation

internal

control

over

financial

reporting which are

reasonably likely

to adversely affect

the registrant’s ability

to record, process,

summarize and

report financial information; and

Any fraud, whether or not material,

that involves management or other employees who

have a significant role in

the

registrant’s internal control over financial reporting.

/s/ Luis de la Aguilera

Luis de la Aguilera

Chairman, President and Chief Executive Officer

Date: August 8, 2025

exhibit312

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act

of 2002

I, Robert Anderson, certify that:

I have reviewed this Quarterly Report on Form 10-Q of

USCB Financial Holdings, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary

make

the

statements

made,

light

the

circumstances

under

which

such

statements

were

made,

not

misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects

the financial

condition, results

of operations

and cash

flows of

the registrant

as of,

and for,

the periods

presented in this report;

The

registrant’s

other

certifying

officer

and

are

responsible

for

establishing

and

maintaining

disclosure

controls

and

procedures (as

defined in

Exchange Act

Rules 13a-15(e)

and 15d-15(e))

and internal

control over

financial reporting

(as

defined in Exchange Act Rules 13a-15(f) and 15d-15(f))

for the registrant and have:

designed

such

disclosure

controls

and

procedures,

caused

such

disclosure

controls

and

procedures

designed

under

our

supervision,

ensure

that

material

information

relating

the

registrant,

including

its

consolidated subsidiaries, is

made known

to us by

others within those

entities, particularly during

the period in

which

this report is being prepared;

designed such internal control over financial reporting, or caused such

internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and

the

preparation

financial

statements

for

external

purposes

accordance

with

generally

accepted

accounting

principles;

evaluated the effectiveness

of the registrant’s

disclosure controls and

procedures and presented

in this report our

conclusions about the effectiveness of the

disclosure controls and procedures, as of the

end of the period covered

by this report based on such evaluation; and

disclosed in this

report any

change in the

registrant’s internal

control over

financial reporting

that occurred

during

the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that

has

materially

affected,

reasonably

likely

materially

affect,

the

registrant’s

internal

control

over

financial

reporting; and

The registrant’s

other certifying

officer

and I

have disclosed,

based on

our most

recent evaluation

of internal

control over

financial

reporting,

the

registrant’s

auditors

and

the

audit

committee

the

registrant’s

board

directors

(or

persons

performing the equivalent functions):

All

significant

deficiencies

and

material

weaknesses

the

design

operation

internal

control

over

financial

reporting which are

reasonably likely

to adversely affect

the registrant’s ability

to record, process,

summarize and

report financial information; and

Any fraud, whether or not material, that involves

management or other employees who have a significant role

in the

registrant’s internal control over financial reporting.

/s/ Robert Anderson

Robert Anderson

Chief Financial Officer

Date: August 8, 2025

exhibit321

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to

18 U.S.C. Section 1350

as Adopted Pursuant to Section 906 of the Sarbanes

-Oxley Act of 2002

In connection with the Quarterly

Report of USCB Financial Holdings, Inc. (the

“Company”) on Form 10-Q for the

quarter

ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Luis de la

Aguilera, as

President and

Chief Executive

Officer of

the Company,

certify,

to the

best of

my knowledge,

pursuant to

U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes

-Oxley Act of 2002, that:

The

Report

fully

complies

with

the

requirements

Section 13(a) or

15(d),

applicable,

the

Securities

Exchange Act of 1934; and

The

information

contained

the

Report

fairly

presents,

all

material

respects,

the

financial

condition

and

results of operations of the Company.

/s/ Luis de la Aguilera

Luis de la Aguilera

Chairman, President and Chief Executive Officer

Date: August 8, 2025

exhibit322

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to

18 U.S.C. Section 1350

as Adopted Pursuant to Section 906 of the Sarbanes

-Oxley Act of 2002

In connection with the Quarterly

Report of USCB Financial Holdings, Inc. (the

“Company”) on Form 10-Q for the

quarter

ended June 30,

2025, as

filed with

the Securities

and Exchange

Commission on

the date

hereof (the

“Report”), I, Robert

Anderson,

as Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as

adopted pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002, that:

The

Report

fully

complies

with

the

requirements

Section 13(a) or

15(d),

applicable,

the

Securities

Exchange Act of 1934; and

The

information

contained

the

Report

fairly

presents,

all

material

respects,

the

financial

condition

and

results of operations of the Company.

/s/ Robert Anderson

Robert Anderson

Chief Financial Officer

Date: August 8, 2025