10-Q - USCB - Equibles

uscb-20250331p1i0

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

March 31, 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 April 30, 2025 the registrant had

20,048,385

shares of Class

common stock outstanding.

uscb-20250331p1i0

FORM 10-Q

March 31, 2025

TABLE OF CONTENTS

PART I

Item 1.

Financial Statements

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

Consolidated Statements of Operations for three months ended March 31, 2025 and 2024 (Unaudited)

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024

(Unaudited)

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2025 and

2024 (Unaudited)

Consolidated Statements of Cash Flows for the three months ended March 31, 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.

Q1 2025 Form 10-Q

PART

Item 1.

Financial Statements

USCB FINANCIAL HOLDINGS, INC

Consolidated Balance Sheets – Unaudited

(Dollars in thousands, except share data)

March 31, 2025

December 31, 2024

ASSETS:

Cash and due from banks

6,726

6,986

Interest-bearing deposits in banks

91,258

70,049

Total cash and cash equivalents

97,984

77,035

Investment securities held to maturity, net of allowance of $

and $

, respectively (fair value of

145,665

and $

145,540

, respectively)

161,790

164,694

Investment securities available for sale, at fair value

275,139

260,221

Federal Home Loan Bank stock, at cost

6,936

9,379

Loans held for investment, net of allowance of $

24,740

and $

24,070

, respectively

2,011,472

1,948,778

Accrued interest receivable

11,024

10,945

Premises and equipment, net

4,461

4,563

Bank owned life insurance

57,943

53,472

Deferred tax assets, net

26,045

29,646

Lease right-of-use asset

7,708

8,451

Other assets

16,880

14,032

Total assets

2,677,382

2,581,216

LIABILITIES:

Deposits:

Non-interest bearing demand deposits

605,489

575,159

Savings and money market deposits

1,207,303

1,180,809

Interest-bearing demand deposits

49,951

50,648

Time deposits

446,826

367,388

Total deposits

2,309,569

2,174,004

Federal Home Loan Bank advances

108,000

163,000

Lease liability

7,708

8,451

Accrued interest and other liabilities

27,017

20,373

Total liabilities

2,452,294

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 March 31, 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 March 31, 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 March 31, 2025

and December 31, 2024

Common stock - Class A Voting; $

1.00

par value;

45,000,000

shares authorized;

20,048,385

issued and

outstanding as of March 31, 2025,

19,924,632

issued and outstanding as of December

31, 2024

20,048

19,925

Common stock - Class B Non-voting; $

1.00

par value;

8,000,000

shares authorized;

and

issued and

outstanding as of March 31, 2025 and December

31, 2024

Additional paid-in capital on common stock

308,313

307,810

Accumulated deficit

(62,160)

(67,813)

Accumulated other comprehensive loss

(41,113)

(44,534)

Total stockholders' equity

225,088

215,388

Total liabilities and stockholders' equity

2,677,382

2,581,216

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Operations - Unaudited

(Dollars in thousands,

except per share data)

Three Months Ended March 31,

2025

2024

Interest income:

Loans, including fees

30,245

26,643

Investment securities

3,024

2,811

Interest-bearing deposits in financial institutions

709

1,433

Total interest income

33,978

30,887

Interest expense:

Interest-bearing demand deposits

338

369

Savings and money market deposits

9,335

10,394

Time deposits

3,918

3,294

Federal Home Loan Bank advances and other borrowings

1,272

1,672

Total interest expense

14,863

15,729

Net interest income before provision for

credit losses

19,115

15,158

Provision for credit losses

681

410

Net interest income after provision for

credit losses

18,434

14,748

Non-interest income:

Service fees

2,331

1,651

Gain on sale of loans held for sale, net

525

Other non-interest income

860

746

Total non-interest income

3,716

2,464

Non-interest expense:

Salaries and employee benefits

7,636

6,310

Occupancy

1,284

1,314

Regulatory assessments and fees

421

433

Consulting and legal fees

193

592

Network and information technology services

505

507

Other operating expense

2,013

2,018

Total non-interest expense

12,052

11,174

Income before income tax expense

10,098

6,038

Income tax expense

2,440

1,426

Net income

7,658

4,612

Per share information:

Net income per share, basic

0.38

0.23

Net income per share, diluted

0.38

0.23

Cash dividends declared

0.10

0.05

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Comprehensive Income

Unaudited

(Dollars in thousands)

Three Months Ended March 31,

2025

2024

Net income

7,658

4,612

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities

4,673

(2,134)

Amortization of net unrealized gain on securities transferred

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

Unrealized gain (loss) on cash flow hedge

(158)

519

Tax effect

(1,161)

392

Total other comprehensive income (loss), net of tax

3,421

(1,156)

Total comprehensive income

11,079

3,456

The accompanying notes are an integral part of

these unaudited consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q1 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 December 31, 2024

19,924,632

19,925

307,810

(67,813)

(44,534)

215,388

Net income

7,658

Other comprehensive income

3,421

Repurchase of Class A common stock

(9,671)

(10)

(164)

(174)

Restricted stock issued

124,424

124

(124)

Exercise of stock options

9,000

Dividend payment

(2,005)

Stock-based compensation

708

Balance at March 31, 2025

20,048,385

20,048

308,313

(62,160)

(41,113)

225,088

Balance at December 31, 2023

19,575,435

19,575

305,212

(88,548)

(44,271)

191,968

Net income

4,612

Other comprehensive loss

(1,156)

Repurchase of Class A common stock

(7,100)

(7)

(72)

(79)

Restricted stock issued

52,753

(53)

Restricted stock forfeiture

(8,625)

(9)

Exercise of stock options

38,000

284

322

Dividend payment

(1,016)

Stock-based compensation

360

Balance at March 31, 2024

19,650,463

19,650

305,740

(84,952)

(45,427)

195,011

The accompanying notes are an integral

part of these consolidated financial statements.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

USCB FINANCIAL HOLDINGS, INC.

Consolidated Statements of Cash Flows - Unaudited

(Dollars in thousands)

Three Months Ended March 31,

2025

2024

Cash flows from operating activities:

Net income

7,658

4,612

Adjustments to reconcile net income

to net cash provided by operating activities:

Provision for credit losses

681

410

Depreciation and amortization

148

140

Accretion of premiums on securities, net

(212)

(135)

Amortization (accretion) of deferred loan

fees, net

126

(3)

Stock-based compensation

708

360

Gain on sale of loans held for sale, net

(525)

(67)

Proceeds from the sale of loans held for sale

7,719

787

Origination of loans held for sale

(7,194)

(720)

Increase in cash surrender value of bank owned

life insurance

(471)

(411)

Decrease in deferred tax assets

2,440

1,424

Net change in operating assets and liabilities:

Accrued interest receivable

(79)

(891)

Other assets

(3,005)

(464)

Accrued interest and other liabilities

6,634

3,051

Net cash provided by operating activities

14,628

8,093

Cash flows from investing activities:

Proceeds from maturities and pay-downs of investment

securities held to maturity

2,955

1,987

Purchase of investment securities available

for sale

(14,123)

(36,927)

Proceeds from maturities and pay-downs of investment

securities available for sale

4,106

4,278

Net increase in loans held for investment

(43,503)

(15,110)

Purchase of loans held for investment

(19,989)

(25,249)

Additions to premises and equipment

(46)

(91)

Purchase of bank owned life insurance

(4,000)

Proceeds from the redemption of Federal

Home Loan Bank stock

2,612

4,798

Purchase of Federal Home Loan Bank stock

(169)

(177)

Net cash used in investment activities

(72,157)

(66,491)

Cash flows from financing activities:

Proceeds from issuance of Class A common

stock, net

322

Cash dividends paid

(2,005)

(1,016)

Repurchase of Class A common stock

(174)

(79)

Net increase in deposits

135,565

165,655

Proceeds from other borrowings

80,000

Repayments on Federal Home Loan Bank advances

(55,000)

(101,000)

Net cash provided by financing activities

78,478

143,882

Net decrease in cash and cash equivalents

20,949

85,484

Cash and cash equivalents at beginning

of period

77,035

41,062

Cash and cash equivalents at end of period

97,984

126,546

Supplemental disclosure of cash flow

information:

Interest paid

14,454

14,624

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.

Q1 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

estimates impacting

the Company’s

consolidated financial

statements are

the allowance

for credit

losses

(“ACL”) and income taxes.

Reclassifications

Certain amounts in the consolidated financial statements have been reclassified to conform

to the current presentation.

Reclassifications had no impact on the net income or stockholders’

equity of the Company.

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.

INVESTMENT SECURITIES

The measurement of expected credit losses under the current expected credit loss (“CECL”) methodology is applicable

financial

assets

measured

amortized

cost,

including

loan

receivables

and

held-to-maturity

debt

securities.

The

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

accounting for available-for-sale

debt securities (“AFS”)

credit losses is

presented as an

allowance rather than

as a write-

down. Management does not intend to sell or believes

that it is more likely they will not be required to sell

AFS securities.

CECL requires a loss reserve for

securities classified as held-to-maturity

(“HTM”). The reserve should reflect

historical

credit performance

as well

as the

impact of

projected economic

forecasts.

For U.S.

Government bonds

and U.S.

Agency

issued bonds

classified as

HTM, the

explicit guarantee

of the U.S.

Government is

sufficient to

conclude that

a credit

loss

reserve is not required.

The reserve requirement is for three primary assets groups: municipal bonds, corporate bonds, and

non-agency

securitizations.

The Company

calculates

quarterly

the loss

reserve

utilizing Moody’s

ImpairmentStudio.

The

CECL measurement for

investment securities

incorporates historical

data, containing

defaults and recoveries

information,

and

Moody’s

baseline

economic

forecast.

The

solution

uses

the

probability

default/loss

given

default

(“PD/LGD”)

approach. PD represents the likelihood

a borrower will default. Within the

Moody’s model, this is determined using historical

default data, adjusted for the current economic environment.

LGD projects the expected loss if a borrower were to

default.

The Company

monitors the credit

quality of HTM

securities through the

use of

credit ratings. Credit

ratings are monitored

by the Company on at least

a quarterly basis. As of March 31, 2025

and December 31, 2024, all HTM securities held by

the

Company were rated investment grade.

quarter

end,

HTM

securities

included

152.6

million

U.S.

Government

and

U.S.

Agency

issued

bonds

and

mortgage-backed

securities.

Because

the

explicit

and/or

implicit

guarantee

these

bonds,

the

Company

holds

reserves

on these

holdings.

The remaining

portion

the HTM

portfolio

is made

up of

9.2

million

investment

grade

corporate bonds. The required reserve for these holdings is

determined each quarter using the model described above.

For

the portion of the HTM exposed to non-government

credit risk, the Company utilized the PD/LGD

methodology to estimate

a $

thousand ACL as of March

31, 2025. The book value

for debt securities classified

as HTM represents amortized

cost

less the ACL related to these 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):

March 31, 2025

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

13,986

(1,398)

12,605

Collateralized mortgage obligations

99,775

(21,235)

78,556

Mortgage-backed securities - residential

63,115

(10,913)

52,219

Mortgage-backed securities - commercial

95,033

109

(7,331)

87,811

Municipal securities

24,905

(5,013)

19,892

Bank subordinated debt securities

24,356

445

(745)

24,056

321,170

604

(46,635)

275,139

Held-to-maturity:

U.S. Government Agency

42,095

(4,297)

37,822

Collateralized mortgage obligations

55,781

206

(6,865)

49,122

Mortgage-backed securities - residential

39,514

370

(4,091)

35,793

Mortgage-backed securities - commercial

15,227

(1,190)

14,037

Corporate bonds

9,178

(287)

8,891

161,795

600

(16,730)

145,665

Allowance for credit losses - securities held-to-maturity

(5)

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

161,790

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

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:

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):

March 31, 2025

Less than 12 months

12 months or more

Total

Available-for-Sale:

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

U.S. Government Agency

2,761

(2)

8,418

(1,396)

11,179

(1,398)

Collateralized mortgage obligations

1,712

(11)

72,814

(21,225)

74,526

(21,236)

Mortgage-backed securities - residential

44,824

(10,913)

44,824

(10,913)

Mortgage-backed securities - commercial

36,457

(887)

30,623

(6,443)

67,080

(7,330)

Municipal securities

19,892

(5,013)

19,892

(5,013)

Bank subordinated debt securities

466

(3)

14,229

(742)

14,695

(745)

41,396

(903)

190,800

(45,732)

232,196

(46,635)

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)

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 during

the three

months ended

March 31,

2025 and

March

31, 2024; therefore, there were

gains or losses during these periods.

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 to

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

March 31, 2025:

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

Due within one year

1,015

984

Due after one year through five years

2,935

3,098

8,163

7,907

Due after five years through ten years

42,083

37,552

Due after ten years

4,243

3,298

U.S. Government Agency

13,986

12,605

42,095

37,822

Collateralized mortgage obligations

99,775

78,556

55,781

49,122

Mortgage-backed securities - residential

63,115

52,219

39,514

35,793

Mortgage-backed securities - commercial

95,033

87,811

15,227

14,037

321,170

275,139

161,795

145,665

At March 31, 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

Government

Agency

securities.

All

the

collateralized

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

mortgage

obligations

and

mortgage-backed

securities

March 31,

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

the outstanding

uninsured deposits

at March 31,

2025 and

% at December 31, 2024. The

Bank must also maintain a

minimum amount of pledged securities

to be in the public

funds

program.

As of March 31,

2025, the Bank

had a total

of $

122.9

million in deposits

under the public

funds program

and pledged

to the State of Florida for these public funds were

sixteen

bonds with an aggregate fair value of $

51.1

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):

March 31, 2025

December 31, 2024

Total

Percent of

Total

Percent of

Total

Residential Real Estate

301,164

14.8

289,961

14.8

Commercial Real Estate

1,150,129

56.7

1,136,417

57.8

Commercial and Industrial

256,326

12.6

258,311

13.1

Correspondent Banks

103,026

5.1

82,438

4.2

Consumer and Other

218,711

10.8

198,091

10.1

Total

gross loans

2,029,356

100.0

1,965,218

100.0

Plus: Deferred fees/costs

6,856

7,630

Total

loans net of deferred fees/costs

2,036,212

1,972,848

Less: Allowance for credit losses

24,740

24,070

Total

net loans

2,011,472

1,948,778

March 31,

2025

and

December 31,

2024,

the

Company

had

517.2

million

and

518.8

million,

respectively,

commercial real estate

and residential mortgage loans

pledged as collateral

for lines of

credit with the

FHLB and the

Federal

Reserve Bank of Atlanta.

Allowance for Credit Losses

general,

the

Company

utilizes

the

Discounted

Cash

Flow

(“DCF”)

method

the

Remaining

Life

(“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 to

inform

regression

analyses

quantify

the

impact

of reasonable

and

supportable

forecasts

projective

models.

Economic

forecasts

applied

regression

models

estimate

probability

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

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

•

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

legal, and regulatory requirements

•

Changes in lending management, among others

Changes in the ACL for the three months ended March

31, 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 March 31, 2025

Beginning balance

5,121

8,788

4,633

654

4,874

24,070

Provision for credit losses

(1)

(12)

409

(204)

163

316

672

Recoveries

Charge-offs

(13)

Ending Balance

5,115

9,197

4,434

817

5,177

24,740

(1) Provision for credit losses excludes a $

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

liabilities and a $

thousand release related to investment securities held to maturity.

Residential

Real Estate

Commercial

Real Estate

Commercial

and

Industrial

Correspondent

Banks

Consumer

and Other

Total

Three Months Ended March 31, 2024

Beginning balance

2,695

10,366

3,974

911

3,138

21,084

Provision for credit losses

(1)

235

(64)

288

(117)

363

Recoveries

Charge-offs

(5)

Ending Balance

2,930

10,302

4,272

794

3,156

21,454

(1) Provision for credit losses excludes a $

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

liabilities and a $

thousand charge related to investment securities held to maturity.

At March 31, 2025, the ACL for loans

was $

24.7

million compared to $

24.1

million at December 31, 2024. The increase

of $

670

thousand in the ACL was due to loan growth.

The Company had

charge-offs totaling

thousand for the

quarter ended March

31, 2025 related

to loans that

were

all originated in 2025.

The Company had charge-offs totaling $

thousand for the quarter ended March 31, 2024 related to loans that were all

originated in 2024.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

The ACL and the outstanding

balances in the specified

loan categories as of March

31, 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

March 31, 2025:

Allowance for credit losses:

Individually evaluated

576

646

Collectively evaluated

5,078

9,197

4,401

817

4,601

24,094

Balances, end of period

5,115

9,197

4,434

817

5,177

24,740

Loans:

Individually evaluated

7,729

1,130

1,990

10,849

Collectively evaluated

293,435

1,150,129

255,196

103,026

216,721

2,018,507

Balances, end of period

301,164

1,150,129

256,326

103,026

218,711

2,029,356

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.

Q1 2025 Form 10-Q

Loan credit exposures by internally assigned grades are

presented below for the periods indicated (in thousands):

As of March 31, 2025

Term Loans by Origination Year

Revolving

Loans

Total

2025

2024

2023

2022

2021

Prior

Residential real estate

Pass

22,560

105,659

37,624

34,174

22,658

68,534

8,762

299,971

Substandard

108

543

542

1,193

Total

22,560

105,767

38,167

34,174

22,658

69,076

8,762

301,164

Commercial real estate

Pass

50,845

179,335

121,993

314,165

147,130

324,348

5,225

1,143,041

Special Mention

4,643

Substandard

1,762

683

2,445

Total

50,845

179,335

126,636

314,165

148,892

325,031

5,225

1,150,129

Commercial and

industrial

Pass

3,572

65,801

78,610

33,310

30,021

14,573

27,309

253,196

Special Mention

Substandard

502

1,508

1,044

3,054

Total

3,572

65,877

78,610

33,310

30,523

16,081

28,353

256,326

Correspondent banks

Pass

70,325

32,701

103,026

Total

70,325

32,701

103,026

Consumer and other

loans

Pass

30,715

39,005

45,627

65,030

33,184

1,298

1,862

216,721

Substandard

1,990

Total

30,715

39,005

45,627

65,030

35,174

1,298

1,862

218,711

Total

Loans

Pass

178,017

422,501

283,854

446,679

232,993

408,753

43,158

2,015,955

Special Mention

4,643

4,719

Substandard

108

543

4,254

2,733

1,044

8,682

Doubtful

Total

178,017

422,685

289,040

446,679

237,247

411,486

44,202

2,029,356

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 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.

Q1 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

an aging

analysis

of accruing

loans and

total non-accruing

loans as

of March 31,

2025 and

December 31, 2024 (in thousands):

Accruing

As of March 31, 2025

Current

Past Due 30-

89 Days

Past Due 90

Days or >

and Still

Accruing

Total

Accruing

Non-Accrual

Total Loans

Residential real estate:

Home equity line of credit and other

1,319

1-4 family residential

237,187

609

237,796

998

238,794

Condo residential

59,190

1,547

60,737

314

61,051

297,696

2,156

299,852

1,312

301,164

Commercial real estate:

Land and construction

51,601

Multi-family residential

210,331

Condo commercial

58,353

Commercial property

825,039

4,805

829,844

1,145,324

4,805

1,150,129

Commercial and industrial:

Secured

230,799

103

230,902

854

231,756

Unsecured

24,570

255,369

103

255,472

854

256,326

Correspondent banks

103,026

Consumer and other

216,721

1,990

218,711

Total

2,018,136

7,064

2,025,200

4,156

2,029,356

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 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 line 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

Leasehold improvements

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 on non-accrual

status and loans

past due over

90 days

and still accruing as of March 31, 2025 and as of December

31, 2024 (in thousands):

March 31, 2025

Non-accrual

Loans With

No Related

Allowance

Non-accrual

Loans With

Allowance

Total Non-

accruals

Loans Past

Due Over 90

Days and Still

Accruing

Residential real estate

1,312

Commercial and industrial

854

Consumer and other

1,990

Total

1,312

2,844

4,156

December 31, 2024

Non-accrual

Loans With

No Related

Allowance

Non-accrual

Loans With

Allowance

Total Non-

accruals

Loans Past

Due Over 90

Days and Still

Accruing

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 March 31, 2025 and 2024. Interest income on

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

these loans for

the three months

ended March 31,

2025 and 2024,

would have been

approximately $

thousand and $

thousand, respectively,

had these loans performed in accordance with their

original terms.

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 March

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

March 31, 2025

Collateral Type

Residential Real

Estate

Boat

Total

Specific Reserve

Residential real estate

1,312

Consumer and other

1,990

576

Total

1,312

1,990

3,302

576

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

new

modifications

borrowers

experiencing

financial

difficulties

for

the

three

months

ended

March 31, 2025 and one new modification

for the three months ended March 31,

The following table presents newly

restructured loans, by type of modification, which occurred

during the three months ended March 31, 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 March 31, 2024

included

a combination of rate

and maturity modifications.

There were

existing loan modifications that

subsequently defaulted during the

three months ended March 31,

2025

and March 31, 2024.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 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):

Three Months Ended March 31,

2025

2024

Current:

Federal

State

Total

current

Deferred:

Federal

1,914

1,114

State

526

312

Total

deferred

2,440

1,426

Total

tax expense

2,440

1,426

The actual

income

tax

expense

for

the

three

months

ended March

31,

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):

Three Months Ended March 31,

2025

2024

Federal taxes at statutory rate

2,120

1,268

State income taxes, net of federal tax benefit

439

262

Bank owned life insurance

(119)

(104)

Other, net

Total

tax expense

2,440

1,426

The Company’s deferred tax assets and deferred

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

March 31, 2025

December 31, 2024

Deferred tax assets:

Net operating loss

6,993

9,276

Allowance for credit losses

6,270

6,100

Lease liability

1,954

2,142

Unrealized losses on available for sale securities

13,999

15,200

Depreciable property

Equity compensation

694

686

Accruals

158

520

Other, net

Deferred tax assets:

30,170

34,027

Deferred tax liabilities:

Deferred loan cost

(1,738)

(1,934)

Lease right of use asset

(1,954)

(2,142)

Deferred expenses

(392)

(224)

Cash flow hedge

(41)

(81)

Deferred tax liabilities

(4,125)

(4,381)

Net deferred tax assets

26,045

29,646

The Company

has approximately

23.7

million of

federal

and $

46.4

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

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

upon the generation of

future taxable income

during the periods

in which those temporary

differences become deductible.

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 three months ended

March 31, 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

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

March 31, 2025

December 31, 2024

Commitments to grant loans and unfunded lines of credit

132,466

122,578

Standby and commercial letters of credit

3,346

5,389

Total

135,812

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 March 31,

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

1.13

years,

weighted

average

fixed-rate

paid

3.59

and

with

weighted

average

3-month

compound SOFR being received.

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

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

average

maturity

1.38

years,

weighted

average

fixed-rate

paid

3.59

and

with

weighted

average

3-month

compound SOFR being received.

The

changes

fair

value

these

interest

rate

swaps

are

recorded

other

assets

other

liabilities

with

corresponding recognition

in other comprehensive

income (loss)

and subsequently reclassified

to earnings when

gains or

losses are realized.

Interest Rate Swaps Designated as Fair Value

Hedge

As of March 31, 2024, the Company had

four

interest rate swap agreements with a notional aggregate amount of $

200

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

rate swap agreements have an average maturity of

1.98

years,

the

weighted

average

fixed-rate

paid

4.74

with

the

weighted

average

3-month

compound

SOFR

being

received.

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 of the unamortized

cost upon the early payoff of the hedge

loan. The amortization of

the termination

fee is

reflected in

the loan

interest income

line in

the Consolidated

Statement of

Operations.

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. The Company had no interest rate swap agreements

designated as fair value hedges at March 31, 2025.

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

211.0

million

and

206.3

million

March 31,

2025

and

December 31,

2024,

respectively.

March

31,

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

March 31, 2025:

Derivatives designated as cash flow hedges:

Interest rate swaps

50,000

Other assets

163

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

211,016

4,981

Other assets/Other liabilities

7,837

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

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

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

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.

Q1 2025 Form 10-Q

The

following

table

represents

the

Company's

assets

and

liabilities

measured

fair

value

recurring

basis

March 31, 2025 and December 31, 2024 for each of the

fair value hierarchy levels (in thousands):

March 31, 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

12,605

12,625

Collateralized mortgage obligations

78,556

78,905

Mortgage-backed securities - residential

52,219

46,933

Mortgage-backed securities - commercial

87,811

78,739

Municipal securities

19,892

19,311

Bank subordinated debt securities

24,056

23,708

Total

275,139

260,221

Derivative assets

8,000

7,190

Total assets at fair value

283,139

267,411

Derivative liabilities

7,837

6,869

Total liabilities at fair value

7,837

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 March 31, 2025 and December 31, 2024 (in

thousands):

Fair Value Hierarchy

Carrying

Amount

Level 1

Level 2

Level 3

Fair Value

Amount

March 31, 2025:

Financial Assets:

Cash and due from banks

6,726

Interest-bearing deposits in banks

91,258

Investment securities held to maturity, net

161,790

145,665

Loans held for investment, net

2,011,472

2,022,078

Accrued interest receivable

11,024

1,537

9,487

11,024

Financial Liabilities:

Demand deposits

605,489

Money market and savings accounts

1,207,303

Interest-bearing checking accounts

49,951

Time deposits

446,826

446,080

FHLB advances and other borrowings

108,000

107,488

Accrued interest payable

2,534

482

2,052

2,534

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:

Demand deposits

575,159

Money market and savings accounts

1,180,809

Interest-bearing checking accounts

50,648

Time deposits

367,388

366,479

FHLB advances

163,000

161,375

Accrued interest payable

2,125

622

1,503

2,125

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

STOCKHOLDERS’ EQUITY

Common Stock

In July

2021, the

Bank completed

the initial

public offering

of its

Class

A common

stock, in

which it

issued

and sold

4,600,000

shares of Class A

common stock at a

price of $

10.00

per share. The Bank

received total net proceeds

of $

40.0

million after deducting underwriting discounts and expenses.

In December 2021,

the Company acquired

all the issued

and outstanding shares

of the Class

A common stock

of the

Bank, which at the time were

the only issued and outstanding shares

of the Bank’s capital stock,

in a share exchange (the

“Reorganization”)

effected

under

the

Florida

Business

Corporation

Act.

Each

outstanding

the

Bank’s

Class

common stock,

par value

1.00

per share,

formerly held

by its

shareholders

was

converted into

and exchanged

for

one

newly

issued

the

Company’s

Class

common

stock,

par

value

1.00

per

share,

and

the

Bank

became

the

Company’s wholly owned subsidiary.

In the

Reorganization,

each

shareholder

of the

Bank

received securities

the same

class,

having

substantially

the

same designations,

rights,

powers, preferences,

qualifications,

limitations

and restrictions,

as those

that the

shareholder

held in the Bank,

and the Company’s

then current shareholders

owned the same

percentages of the

Company’s common

stock as they previously owned of the Bank’s common

stock.

During the first quarter

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 first

quarter 2024,

the Company

issued

52,753

shares of Class A

common stock to employees

as restricted stock awards

pursuant to the Company’s

2015 equity

incentive plan.

During the three months ended

March 31, 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

the

Company’s

publicly

announced

repurchase programs.

As of

March 31,

2025,

528,309

shares 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 March 31, 2025 and

December 31, 2024

were

20,048,385

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 March 31, 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.

On January

22,

2024, the

Board of

Directors

declared

a quarterly

cash

dividend.

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

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

close of business

on February 15,

The aggregate

distribution in connection

with the first quarter

2024 dividend was

1.0

million.

The following table details the dividends

declared and paid by the Company during

the three months ended March 31,

2025 and 2024:

As of March 31, 2025

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

January 21, 2025

February 14, 2025

March 5, 2025

0.10

2.0

million

As of March 31, 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

The

Company

and

the

Bank

exceeded

all

regulatory

capital

requirements

and

remained

above

“well-capitalized”

guidelines as of March 31, 2025 and December 31, 2024.

At March 31, 2025, the total risk-based capital

ratios for the Bank

was

13.65

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 11, Subsequent

Events, for information regarding dividends declared in April 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 months ended

March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

2025

2024

Net Income

7,658

4,612

Net income available to common shareholders

7,658

4,612

Table of Contents

USCB FINANCIAL HOLDINGS, INC.

Notes to the Consolidated Financial Statements - Unaudited

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

The following table reflects

the calculation of basic and

diluted earnings per common

share class for the

three months

ended March 31, 2025 and 2024 (in thousands, except

per share amounts):

Three Months Ended March 31,

2025

2024

Class A

Basic EPS

Numerator:

Net income available to common shares

7,658

4,612

Denominator:

Weighted average shares outstanding

20,020,933

19,633,330

Earnings per share, basic

0.38

0.23

Diluted EPS

Numerator:

Net income available to common shares

7,658

4,612

Denominator:

Weighted average shares outstanding for basic EPS

20,020,933

19,633,330

Add: Dilutive effects of assumed exercises of stock options

298,602

64,928

Weighted avg. shares including dilutive potential common shares

20,319,535

19,698,258

Earnings per share, diluted

0.38

0.23

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 banking

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.

Q1 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.

SUBSEQUENT EVENTS

Dividends

April

21,

2025,

the

Company

announced

that

its

Board

Directors

declared

its

quarterly

cash

dividend.

The

quarterly dividend for

the second quarter

of 2025 was

0.10

per share of Class

A common stock

and will be paid

on June

5, 2025, to stockholders of record as of the close of business

on May 15, 2025.

Table of Contents

USCB Financial Holdings, Inc.

Q1 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 months

ended March 31,

This

discussion and analysis

is best read

in 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

notes

included

the

Annual

Report

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 credit loss

reserve and deferred tax asset valuation allowance;

•

the efficiency and effectiveness of our

internal control procedures and processes;

•

our ability

to comply

with the

extensive laws

and regulations

to which

we are

subject, including

the laws

for each

jurisdiction where we operate;

•

adverse changes or conditions in 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 the 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;

•

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.

Q1 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

$7.7 million

or $0.38

per diluted

share of

common stock

for the

three

months

ended March

31, 2025

compared to

$4.6 million

or $0.23

per diluted

share of

common stock

for the

three months

ended

March 31, 2024.

On January 21, 2025,

the Company’s Board of

Directors declared a quarterly

cash dividend of $0.10

per share on the

Company’s

Class A

common

stock.

The

dividend

was

paid

March

2025

shareholders

record

the

business on February 14, 2025. The aggregate amount distributed in

connection with the quarterly cash dividend paid was

$2.0 million.

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

March 31, 2025

compared

to at

or for

the quarter

ended March

31, 2024

and as

of December

31, 2024

and annualized

where appropriate:

•

Net interest

income for

the three

months ended

March 31,

2025 increased

$4.0 million

or 26.1%

to $19.1 million

from $15.2 million for the quarter ended March 31,

2024.

•

Net interest margin (“NIM”)

was 3.10% for

the three months ended

March 31,

2025 compared to 2.62%

for the three

months ended March 31,

2024.

•

Total assets were

$2.68 billion at

March 31, 2025,

representing an increase

of $188.2 million

or 7.6% from

March

31, 2024 and an increase of $96.2 million or 15.1% annualized

from December 31, 2024.

•

Total loans

(net of

deferred

cost/fees)

were

$2.04 billion

at March

31,

2025, representing

an increase

of $215.0

million or

11.8% from

March 31,

2024 and

an increase

of $63.4

million or

13.0% annualized

from December

31,

2024.

•

Total deposits were $2.31 billion at March 31, 2025, representing an increase of $206.8 million or 9.8% from March

31, 2024 and an increase of $135.6 million or 25.3%

annualized from December 31, 2024.

•

Annualized return on average assets for the quarter

ended March 31, 2025 was 1.19% compared to 0.76%

for the

quarter ended March 31, 2024.

•

Annualized return on average stockholders’ equity for the quarter ended March 31, 2025 was 14.15% compared to

9.61% for quarter ended March 31, 2024.

•

The ACL to total loans was 1.22% at both March 31, 2025 and December 31, 2024.

•

Non-performing loans to total loans was 0.20% at March

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

•

At March 31,

2025, the

total risk

-based capital

ratios

for the

Company

and

the

Bank were

13.72%

and 13.

65%,

respectively.

•

Tangible book

value per

common share

(a non-GAAP

measure) was

$11.23 at

March 31,

2025, representing

increase of $0.42 or 15.6% annualized from $10.81 at December 31, 2024.

At March 31, 2025, tangible book value

per common share

was negatively affected

by $2.05 due

to an accumulated

comprehensive loss

of $41.1 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 reconciliati

on of this non-GAAP financial measure.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Critical Accounting Policies and Estimates

The

consolidated

financial

statements

are

prepared

based

the

application

U.S.

GAAP,

the

most

significant

which

are

described

Note

“Summary

Significant

Accounting

Policies”

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

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,

this

information

changes,

actual

results

could

differ

from

the

estimates,

assumptions

and

judgments

reflected

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 by

methods other than in

accordance with generally accepted

accounting principles (“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

found

the

section

“Reconciliation

and

Management

Explanation

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 indicated

(in thousands, except ratios):

March 31, 2025

December 31, 2024

Consolidated Balance Sheets:

Total

assets

2,677,382

2,581,216

Total

loans

(1)

2,036,212

1,972,848

Total

deposits

2,309,569

2,174,004

Total

stockholders' equity

225,088

215,388

(1)

Loan amounts include deferred fees/costs.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Three Months Ended March 31,

2025

2024

Consolidated Statements of Operations:

Net interest income before provision for credit losses

19,115

15,158

Total

non-interest income

3,716

2,464

Total

non-interest expense

12,052

11,174

Net income

7,658

4,612

Profitability:

Efficiency ratio

52.79%

63.41%

Net interest margin

3.10%

2.62%

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 March 31, 2025 compared to the three

months ended March 31, 2024

Net income increased to $7.7

million for the three months ended March

31, 2025

from $4.6 million for the same period

in 2024.

The $3.0 million

or 66% increase

in net income

was attributable to

higher interest income

from a larger

loan portfolio

and increased

activity in fee

generating transactions

(gain on sale

of SBA 7a

loans, prepayment

penalties, title

insurance

income) 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.

Q1 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 March 31,

2025

2024

Average

(1)

Balance

Interest

Yield/Rate

(2)

Average

(1)

Balance

Interest

Yield/Rate

(2)

Assets

Interest-earning assets:

Loans

(3)

1,986,856

30,245

6.17%

1,781,528

26,643

6.01%

Investment securities

(4)

436,935

3,024

2.81%

419,989

2,811

2.69%

Other interest-earnings assets

75,182

709

3.82%

125,244

1,433

4.60%

Total interest-earning assets

2,498,973

33,978

5.51%

2,326,761

30,887

5.34%

Non-interest-earning assets

107,620

109,342

Total assets

2,606,593

2,436,103

Liabilities and stockholders' equity

Interest-bearing liabilities:

Interest-bearing checking

53,611

338

2.56%

53,344

369

2.78%

Saving and money market deposits

1,199,027

9,335

3.16%

1,097,575

10,394

3.81%

Time deposits

399,509

3,918

3.98%

322,912

3,294

4.10%

Total interest-bearing deposits

1,652,147

13,591

3.34%

1,473,831

14,057

3.84%

FHLB advances and other borrowings

138,944

1,272

3.71%

164,187

1,672

4.10%

Total interest-bearing liabilities

1,791,091

14,863

3.37%

1,638,018

15,729

3.86%

Non-interest-bearing demand deposits

563,040

574,760

Other non-interest-bearing liabilities

32,957

30,233

Total liabilities

2,387,088

2,243,011

Stockholders' equity

219,505

193,092

Total liabilities and stockholders' equity

2,606,593

2,436,103

Net interest income

19,115

15,158

Net interest spread

(5)

2.14%

1.48%

Net interest margin

(6)

3.10%

2.62%

(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.

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Net interest income before the provision for

credit losses was $19.1 million for the

three months ended March 31, 2025,

an increase of $4.0 million

or 26.1%, from $15.2 million

for the same period in

This increase was

primarily attributable

to higher income from a larger loan portfolio combined with

an increase in the weighted average loan yield.

Net interest margin

(“NIM”) was

3.10% for the

three months ended

March 31, 2025

and 2.62% for

the same period

NIM expansion

of 48 basis

points was due

to increases

in both loan

yields and the

average balance of

interest-earning

assets, and also a decrease on rates paid on interest-bearing

liabilities between periods.

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 March 31, 2025 compared to the three months ended

March 31, 2024

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

The provision

for credit

loss was

$681 thousand

for the

three months

ended March 31, 2025

compared to

$410 thousand

for the

same period

in 2024.

Growth in

the loan

portfolio was

the primary

driver of

the increase

in the

provision expense,

and to a lesser degree the

slight deterioration in the economic

forecast under the CECL methodology

to calculate the ACL

during the three months ended March 31, 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 our

swap and

SBA loan programs. In

addition, we own

and are beneficiaries

the

life

insurance

policies

some

our

employees,

which

policies

generate

income

from

the

increase

the

cash

surrender values.

The following table presents the components of non-interest

income for the dates indicated (in thousands):

Three Months Ended March 31,

2025

2024

Service fees

2,331

1,651

Gain on sale of loans held for sale, net

525

Other non-interest income

860

746

Total

non-interest income

3,716

2,464

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Non-interest

income

for

the

three

months

ended

March 31,

2025

increased

$1.3

million

50.8%,

compared

the

same

period

This

increase

was

primarily

driven

growth

prepayment

penalties

and

title

insurance

income

reported under service

fees category combined with

an increase in the

gain on sale of

loans. Gain on sale

of loans during

the first quarter of 2025 was greater than the first quarter

of 2024 due to higher loan amounts in new SBA 7a loans.

Non-Interest Expense

The following table presents the components of non-interest

expense for the dates indicated (in thousands):

Three Months Ended March 31,

2025

2024

Salaries and employee benefits

7,636

6,310

Occupancy

1,284

1,314

Regulatory assessment and fees

421

433

Consulting and legal fees

193

592

Network and information technology services

505

507

Other operating

2,013

2,018

Total

non-interest expense

12,052

11,174

Three months ended March 31, 2025 compared to the three months ended

March 31, 2024

Non-interest expense for the three

months ended March 31, 2025

increased $878 thousand or 7.9%,

compared to the

same period

in 2024.

The increase

was primarily

driven by

an increase

of $1.3

million in

salaries and

employee benefits

due to merit increases, management

bonuses, stock-based compensation expense,

and an increase in payroll

taxes for the

first quarter 2025.

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 March 31, 2025 compared to the three months ended

March 31, 2024

Income tax expense

for the three

months ended

March 31, 2025

was $2.4 million

as compared to

$1.4 million

for the

same period in 2024. The effective tax rate for the three months ended

March 31, 2025 was 24.2% compared to 23.6% for

the same period in 2024.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

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 March 31, 2025 were $2.68

billion, an increase of $96.2

million, or 15.1% annualized, over

total assets

of $2.58 billion at

December 31, 2024. Total loans, net of deferred fees/costs, increased

$63.4 million, or 13.0% annualized,

to $2.04

billion at

March 31, 2025

compared

to $1.97

billion

at December

31, 2024.

Total

deposits

increased

by $135.6

million, or 25.3% annualized, to $2.31 billion at March

31, 2025 compared to $2.17 billion December 31, 2024.

Investment Securities

The investment portfolio

is used and

managed to provide

liquidity through cash

flows, marketability

and, if necessary,

collateral for

borrowings. 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

obligation,

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 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 of macro-economic conditions. Each investment is expected to recover its unrealized loss position over its holding

period as it approaches

to maturity and the Company has the intent and ability to hold these securities maturity.

As a result

of this evaluation, the Company concluded that no allowance

was required on AFS securities as of March

31, 2025.

quarter

end,

HTM

securities

included

$152.6

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 $9.2

million in investment

grade

corporate

bonds.

The

required

reserve

for

these

holdings

determined

each

quarter

using

the

model

described

above. For the portion of the HTM

exposed to non-government credit risk,

the Company utilized the PD/LGD

methodology

to estimate

a $5

thousand

allowance for

credit

losses

(“ACL”)

as of

March 31,

book value

for debt

securities

classified as HTM represents amortized cost less ACL.

AFS and HTM investment securities increased $12.0 million,

or 11.5%

annualized, to $436.9 million at March 31, 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 investments

to increase the

Company’s profitability and

modify

the Company

’s

balance

sheet

duration

according to

the

ALM policy.

As of

March 31, 2025,

investment

securities

with

market

value

$51.1 million

were

pledged

secure

public

deposits.

The

investment

portfolio

does

not

have

any

tax-

exempt securities.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

The following table

presents the amortized

cost and fair

value of investment

securities for

the dates indicated

(dollars

in thousands):

March 31, 2025

December 31, 2024

Available-for-sale:

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

U.S. Government Agency

13,986

12,605

14,279

12,625

Collateralized mortgage obligations

99,775

78,556

101,808

78,905

Mortgage-backed securities - residential

63,115

52,219

58,995

46,933

Mortgage-backed securities - commercial

95,033

87,811

86,604

78,739

Municipal securities

24,905

19,892

24,925

19,311

Bank subordinated debt securities

24,356

24,056

24,314

23,708

321,170

275,139

310,925

260,221

Held-to-maturity:

U.S. Government Agency

42,095

37,822

42,538

37,444

Collateralized mortgage obligations

55,781

49,122

56,987

49,259

Mortgage-backed securities - residential

39,514

35,793

40,681

36,121

Mortgage-backed securities - commercial

15,227

14,037

15,272

13,887

Corporate bonds

9,178

8,891

9,222

8,829

161,795

145,665

164,700

145,540

Allowance for credit losses - securities held-to-maturity

(5)

(6)

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

161,790

164,694

The following

table shows

the weighted

average yields,

categorized by

contractual maturity,

for investment

securities

as of March 31, 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

2,383

3.14%

11,603

2.62%

13,986

2.70%

Collateralized mortgage obligations

99,775

1.62%

99,775

1.62%

MBS - residential

63,115

2.12%

63,115

2.12%

MBS - commercial

1,595

4.41%

4,094

4.71%

89,344

3.26%

95,033

3.62%

Municipal securities

20,662

1.73%

4,243

1.86%

24,905

1.75%

Bank subordinated debt securities

2,935

9.10%

21,421

5.10%

24,356

5.58%

4,530

7.45%

48,560

3.49%

268,080

2.44%

321,170

2.67%

Held-to-maturity:

U.S. Government Agency

7,958

1.02%

19,854

1.38%

14,283

1.99%

42,095

1.52%

Collateralized mortgage obligations

55,781

1.66%

55,781

1.66%

MBS - residential

3,844

1.70%

5,874

1.74%

29,796

2.31%

39,514

2.17%

MBS - commercial

3,053

1.62%

12,174

2.57%

15,227

2.38%

Corporate bonds

1,015

2.59%

8,163

2.84%

9,178

2.81%

1,015

2.59%

23,018

1.86%

25,728

1.46%

112,034

1.98%

161,795

1.88%

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.

Q1 2025 Form 10-Q

The following table shows the loan portfolio composition

as of the dates indicated (in thousands):

March 31, 2025

December 31, 2024

Total

Percent of

Total

Percent of

Total

Residential Real Estate

301,164

14.8

289,961

14.8

Commercial Real Estate

1,150,129

56.7

1,136,417

57.8

Commercial and Industrial

256,326

12.6

258,311

13.1

Correspondent Banks

103,026

5.1

82,438

4.2

Consumer and Other

218,711

10.8

198,091

10.1

Total

gross loans

2,029,356

100.0

1,965,218

100.0

Plus: Deferred fees/costs

6,856

7,630

Total

loans net of deferred fees/costs

2,036,212

1,972,848

Less: Allowance for credit losses

24,740

24,070

Total

net loans

2,011,472

1,948,778

Total

loans, net

of deferred

fees/costs, increased

by $63.4 million,

or 13.0%

annualized to

$2.04 billion,

at March 31,

2025 compared to December 31, 2024. The correspondent

banks loan segment had the most significant growth

Our

loan

portfolio

continues

grow,

with

commercial

real

estate

lending

the

primary

focus

which

represented

approximately 56.7%

of the

total gross

loan portfolio

as of

March 31, 2025.

Our 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 March 31,

2025 (in thousands):

Due in 1 year or

less

Due in 1 to 5

years

Due after 5 to 15

years

Due after 15

years

Total

Residential Real Estate

15,598

56,635

66,212

162,719

301,164

Commercial Real Estate

71,483

413,144

660,122

5,380

1,150,129

Commercial and Industrial

8,921

93,182

109,616

44,607

256,326

Correspondent Banks

103,026

Consumer and Other

2,125

1,694

21,710

193,182

218,711

Total

gross loans

201,153

564,655

857,660

405,888

2,029,356

Interest rate sensitivity:

Fixed interest rates

174,592

208,718

158,136

319,980

861,426

Floating or adjustable rates

26,561

355,937

699,524

85,908

1,167,930

Total

gross loans

201,153

564,655

857,660

405,888

2,029,356

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

March 31, 2025,

approximately 57.6%

of the

loans have

adjustable/variable rates

and 42.4%

of the

loans have

fixed rates. The adjustable/variable

rate loans re-price

to different benchmarks

and tenors and

in 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.

Q1 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):

March 31, 2025

Pass

Special Mention

Substandard

Doubtful

Total

Residential Real Estate

299,971

1,193

301,164

Commercial Real Estate

1,143,041

4,643

2,445

1,150,129

Commercial and Industrial

253,196

3,054

256,326

Correspondent Banks

103,026

Consumer and Other

216,721

1,990

218,711

2,015,955

4,719

8,682

2,029,356

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.

Q1 2025 Form 10-Q

Non-Performing Assets

The following table presents non-performing assets as

of the dates shown (in thousands,

except ratios):

March 31, 2025

December 31, 2024

Non-accrual loans

4,156

2,707

Loans past due over 90 days and still accruing

Total

non-performing loans

4,156

2,707

Other real estate owned

Total

non-performing assets

4,156

2,707

Asset quality ratios:

Allowance for credit losses to total loans

1.22%

Allowance for credit losses to non-performing loans

595%

889%

Non-performing loans to total loans

0.20%

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.

Q1 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 March 31, 2025

Beginning balance

5,121

8,788

4,633

654

4,874

24,070

Provision for credit losses

(1)

(12)

409

(204)

163

316

672

Recoveries

Charge-offs

(13)

Ending Balance

5,115

9,197

4,434

817

5,177

24,740

Average loans

301,230

1,142,985

257,241

87,214

198,186

1,986,856

Net charge-offs (recoveries) to average

loans

(3)

(0.01)%

0.03%

0.00%

Three Months Ended March 31, 2024

Beginning balance

2,695

10,366

3,974

911

3,138

21,084

Provision for credit losses

(2)

235

(64)

288

(117)

363

Recoveries

Charge-offs

(5)

Ending Balance

2,930

10,302

4,272

794

3,156

21,454

Average loans

217,117

1,048,870

221,804

102,150

191,587

1,781,528

Net charge-offs (recoveries) to average

loans

(3)

0.02%

0.01%

0.00%

(1) Provision for credit losses excludes a $10 thousand expense due to unfunded commitments included in accrued interest and other

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

(2) Provision for credit losses excludes a $43 thousand expense due to unfunded commitments included in accrued interest and other

liabilities and a $4 thousand charge related to investment securities held to maturity.

(3) Annualized.

The

Federal

Open

Market

Committee

(“FOMC”)

economic

forecasts

March

31,

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 portfolio 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 March 31,

2025, for every 100 basis points increase in the HPI, the

forecast

reduces

reserves

approximately

$334

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 March 31,

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 $10.2

million or 41.0%

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 March 31, 2025, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was

$57.9

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.

Table of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

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

needs.

Our

primary

deposit

customers

are

small-to-medium

sized

businesses

(“SMBs”),

and

the

personal

business

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 March 31,

2025

2024

Average Balance

Average Rate

Paid

Average Balance

Average Rate

Paid

Non-interest-bearing checking

563,040

0.00%

574,760

0.00%

Interest-bearing checking

53,611

2.56%

53,344

2.78%

Money market and savings deposits

1,199,027

3.16%

1,097,575

3.81%

Time deposits

399,509

3.98%

322,912

4.10%

Total

2,215,187

2.49%

2,048,591

2.76%

The Company

has a

granular deposit

portfolio with

outstanding balances

comprised of

55% in

commercial

deposits,

32%

personal

deposits,

public

funds

(which

are

partially

collateralized)

and

brokered

deposits.

The

brokered

deposits balance at March 31, 2025 was $178.0 million

and $133.0 million at December 31, 2024.

As of

March

31,

2025, the

Company

has approximately

21 thousand

deposit accounts

with

the

majority

personal

accounts,

approximately

thousand

63.8%.

The

estimated

average

account

size

our

deposit

portfolio

was

approximately $112

thousand as of March 31, 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 54% at March 31, 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 $158.5

million at March 31, 2025 and $125.5 million at December

31, 2024.

The following table shows scheduled maturities of uninsured

time deposits as of March 31, 2025 (in thousands):

March 31, 2025

Three months or less

58,048

Over three through six months

15,450

Over six though twelve months

13,316

Over twelve months

40,537

127,351

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 other liabilities.

As of March 31, 2025, escrow balances totaled $13.5

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 March 31,

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.

Q1 2025 Form 10-Q

The following table presents the FHLB advances as of

March 31, 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.

March 31, 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 are

not aware

of any accounting

loss to

be incurred

by funding

these commitments; however,

we maintain an allowance

for off-balance sheet

credit risk which is

recorded under accrued

interest and other liabilities

on the unaudited Consolidated

Balance Sheets. The

ACL related to unfunded

commitments at

March 31, 2025 was $581 thousand and at March 31, 2024 was

$415 thousand.

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

March 31, 2025

December 31, 2024

Commitments to grant loans and unfunded lines of credit

132,466

122,578

Standby and commercial letters of credit

3,346

5,389

Total

135,812

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.

Q1 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 March

31, 2025, we had a neutral to slightly asset

sensitive balance sheet both for

year one,

and an

asset sensitivity

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 March 31, 2025, our balance sheet is neutral to slightly asset sensitive

for year one more

asset sensitivity and year two

under interest static rate scenarios (an

increase or decrease of 400 basis

points). This means

that the impact of rates variations will be minimal to our NIM. 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 an

increase in

interest rates will have a

negative impact on the EVE

and lower rates, a 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.

Q1 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. Accordingly, we believe our liquidity resources are adequate

to fund loans and meet

other cash needs as necessary.

Capital Adequacy

As of

March 31, 2025,

the Bank

was well

capitalized

under the

FDIC’s

prompt corrective

action framework.

We also

follow the capital conservation buffer framework, and as of March 31, 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

March 31, 2025

Total

risk-based capital

277,832

13.65

162,795

8.00

203,494

10.00

Tier 1 risk-based capital

252,506

12.41

122,096

6.00

162,795

8.00

Common equity tier 1 capital

252,506

12.41

91,572

4.50

132,271

6.50

Leverage ratio

252,506

9.55

105,814

4.00

132,267

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.

Q1 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. Unlike

most industrial companies,

nearly

all

our

assets

and

liabilities

are

monetary

nature.

result,

interest

rates

have

greater

impact

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.

Q1 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

3/31/2025

12/31/2024

9/30/2024

6/30/2024

3/31/2024

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

(1)

Net income

7,658

6,904

6,949

6,209

4,612

Plus: Provision for income taxes

2,440

2,197

2,213

1,967

1,426

Plus: Provision for credit losses

681

1,030

931

786

410

PTPP income

10,779

10,131

10,093

8,962

6,448

PTPP return on average assets:

(1)

PTPP income

10,779

10,131

10,093

8,962

6,448

Average assets

2,606,593

2,544,592

2,485,434

2,479,222

2,436,103

PTPP return on average assets

(2)

1.68%

1.58%

1.62%

1.45%

1.06%

Operating net income:

(1)

Net income

7,658

6,904

6,949

6,209

4,612

Less: Net gains (losses) on sale of securities

Less: Tax effect on sale of securities

(4)

Operating net income

7,658

6,904

6,949

6,199

4,612

Operating PTPP income:

(1)

PTPP income

10,779

10,131

10,093

8,962

6,448

Less: Net gains (losses) on sale of securities

Operating PTPP income

10,779

10,131

10,093

8,948

6,448

Operating PTPP return on average assets:

(1)

Operating PTPP income

10,779

10,131

10,093

8,948

6,448

Average assets

2,606,593

2,544,592

2,485,434

2,479,222

2,436,103

Operating PTPP return on average assets

(2)

1.68%

1.58%

1.62%

1.45%

1.06%

Operating return on average assets:

(1)

Operating net income

7,658

6,904

6,949

6,199

4,612

Average assets

2,606,593

2,544,592

2,485,434

2,479,222

2,436,103

Operating return on average assets

(2)

1.19%

1.08%

1.11%

1.01%

0.76%

Operating return on average equity:

(1)

Operating net income

7,658

6,904

6,949

6,199

4,612

Average equity

219,505

215,715

206,641

197,755

193,092

Operating return on average equity

(2)

14.15%

12.73%

13.38%

12.61%

9.61%

Operating Revenue:

(1)

Net interest income

19,115

19,358

18,109

17,311

15,158

Plus: Non-interest income

3,716

3,627

3,438

3,211

2,464

Less: Net gains (losses) on sale of

securities

Operating revenue

22,831

22,985

21,547

20,508

17,622

Operating Efficiency Ratio:

(1)

Total non-interest expense

12,052

12,854

11,454

11,560

11,174

Operating revenue

22,831

22,985

21,547

20,508

17,622

Operating efficiency ratio

52.79%

55.92%

53.16%

56.37%

63.41%

(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.

Q1 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

3/31/2025

12/31/2024

9/30/2024

6/30/2024

3/31/2024

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

(1)

Total stockholders' equity

225,088

215,388

213,916

201,020

195,011

Less: Intangible assets

Tangible stockholders' equity

225,088

215,388

213,916

201,020

195,011

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

Total common shares issued and outstanding

20,048,385

19,924,632

19,620,632

19,630,632

19,650,463

Tangible book value per common share

(2)

11.23

10.81

10.90

10.24

9.92

Operating diluted net income per common share:

(1)

Operating net income

7,658

6,904

6,949

6,199

4,612

Total weighted average diluted shares of common stock

20,319,535

20,183,731

19,825,211

19,717,167

19,698,258

Operating diluted net income per common share:

0.38

0.34

0.35

0.31

0.23

Tangible Common Equity/Tangible Assets

(1)

Tangible stockholders' equity

225,088

215,388

213,916

201,020

195,011

Tangible total assets

(3)

2,677,382

2,581,216

2,503,954

2,458,270

2,489,142

Tangible Common Equity/Tangible

Assets

8.41%

8.34%

8.54%

8.18%

7.83%

(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.

Q1 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 March 31, 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.

Q1 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.

for the quarter ended March 31,

2025 were as follows:

Total

Number of

Purchased

Average

Price Paid

Per Share

Total Number of Shares Purchased

as Part of Publicly Announced Plans

or Programs (1)

Maximum Number

of Shares that May

Yet Be Purchased

Under Plans or

Programs (1)

Period

January 1 - 31, 2025

2,031

18.27

2,031

535,949

February 1 -28, 2025

535,949

March 1 - 31, 2025

7,640

17.81

7,640

528,309

(1) As of March 31, 2025 there were 528,309

number of shares available for repurchase. As of

March 31, 2025 there are two outstanding share

repurchase programs:

On January 24, 2022, the Company announced

its initial stock repurchase program to repurchase

up to 750,000 shares of Class A common

stock.

On April 22, 2024, the Company announced the

adoption of a second repurchase program to repurchase

up to 500,000 share of Class A common

stock to commence upon completion of its first

repurchase program.

Item 3.

Defaults Upon Senior Securities

(a)

Not applicable

(b)

Not applicable

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a)

Not applicable

(b)

Not applicable

(c)

During the three months ended

March 31, 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.

Q1 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).

10.1

Change in Control Agreement between U.S. Century Bank and Maricarmen Logrono.*,**

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

March 31,

2025 formatted

in Inline

XBRL: (i)

Consolidated Balance

Sheets (unaudited),

(ii) Consolidated

Statements of

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.

Q1 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

May 9, 2025

Luis de la Aguilera

(Principal Executive Officer)

/s/ Robert Anderson

Executive Vice President and Chief Financial

Officer

May 9, 2025

Robert Anderson

(Principal Financial Officer and Principal

Accounting Officer)

exhibit101

Table

of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Exhibit 10.1

CHANGE

CONTROL AGREEMENT

THIS

CHANGE

CONTROL

AGREEMENT

(the "Agreement")

made

of the

th]

day

Marc

2025

by and between U.S.

Century Bank, with Corporate Offices

located at

2301 NW

Ave.,

Doral, FL 33172

(hereinafter called the

"Bank")

and Ms. Maricarmen Logrono ("Executive").

WHEREAS,

as consideration for

Executive's continued

employment with

the Bank as

Executive Vice

President/Chief Risk Officer,

the parties hereto,

intending to be

legally bound, agree

as follows:

Payment Upon

Change in

Control.

In the event

of a

Change in

Control (as defined

herein) during

the term

of this

Agreement,

the Bank

agrees

to pay

Executive

a cash payment

equal to one

times

the

Base

Annual

Salary of

Executive received

during the

one (1)

year period

prior to

the Change

in Control, to

be paid within

thirty (30) days

of the consummation

of the Change

in Control.

The

Bank's provision of this benefit

to Executive is made

without regard to whether,

or for

how long, Executive remains

employed with the surviving

company subsequent to the

Change

in Control.

Change in

Control.

"Change in

Control” shall mean the

occurrence of

an event described

in (i),

(ii), (iii), or (iv) below:

(i)

Any person or

group (within

the meaning

of Sections

13(d) and

14(d) of

the Securities

Exchange Act

of 1934,

as amended

(the "Exchange

Act"),

other than

USCB Financial

Holdings, Inc. (the

"Company"),

an affiliate

of the Company

or a

trustee or

other fiduciary

holding

securities

under

employee

benefit

plan

the

Company

the

Bank

corporation

owned

directly

indirectly

the

stockholders

the

Company

substantially the same proportions as their ownership of stock of the Company,

becomes

the

beneficial

owner

(within

the

meaning

Rule

13(d)(3)

under

the

Exchange

Act,

directly or indirectly (which shall include

securities issuable upon

conversion, exchange

or otherwise) or

securities representing 50% or

more of

the combined voting power of

the

Company’s or the

Bank’s

then-outstanding

securities

entitled

generally

to vote

for

the

election of directors.

(ii)

Consummation of an agreement to merge or consolidate with

another entity (other than a

majority-controlled

subsidiary

the

Company)

unless

the

Company's

stockholders

immediately

before

the

merger

or consolidation

own

than

50%

of the

combined

voting power of the resulting entity's voting securities (giving effect to the conversion or

exchange of

securities issued

in the

merger or

consolidation to

the other

entity that

are

convertible or exchangeable

for voting

securities) entitled

generally to

vote for

the election

of directors.

(iii)

Consummation

agreement

(including,

without

limitation,

agreement

liquidation) to sell or otherwise dispose of

all or substantially all of the business or assets

of the Company or the Bank; or

(iv)

Individuals who, as of the date hereof, constitute the Board of Directors of

the Company

(the

"Incumbent

Board")

cease

for

any

reason

during

any

month

period to

constitute at least a

majority of the Board,

provided that any person

becoming a director

subsequent

the

date

hereof

whose

election

nomination

for

election

the

stockholders

of the Company

is approved by a vote of at least a majority of directors then

constituting the

Incumbent

Board shall

be, for

purposes of

this Agreement,

considered

as though such person were a member of the Incumbent Board.

Notwithstanding

the foregoing,

no event shall

constitute

a Change in Control

unless such

event

shall also constitute

a change in

control as

defined in Section

409A of the

Internal

Revenue

Code

of 1986, as amended.

Table

of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

Severability.

Should any provision of this

Agreement be declared or determined by any court

of competent

jurisdiction to

unenforceable

invalid

for any

reason,

the validity

of the

remaining

parts, term or provisions

of this Agreement

shall

not

be affected

thereby and

the

invalid or

unenforceable

part,

term

provision

shall

deemed

not

part

this

Agreement.

Applicable Law/Forum.

This Agreement has been entered into and

shall be governed by and

construed under the internal

laws of the State of

Florida, without regard to conflicts

of laws or

principles. All suits, proceedings and other actions relating to, arising out of

or in connection

with this

Agreement

will be

submitted solely

the in

personam jurisdiction

the

United States

District Court for the Southern

District of Florida ("Federal Court") or to the Circuit Court in

Broward

County

MiamiDade County.

Executive

hereby

waives

any

claims

against

objections to such in

personam jurisdiction and venue.

Notice.

All

notices

and

other

communications

hereunder

shall

be in

writing

and

shall

deemed

to have been

given only if and when

personally delivered

or three (3) business days

after mailing, postage

prepaid, registered

or certified mail,

or when delivered

(and receipted

for) by an express delivery service, addressed in each case as follows. As to

notices provided

to the Bank, notices shall

be sent to the Human

Resources

Department

the address

of the

Bank listed

in the

introductory paragraph of this Agreement.

notices

Executive,

notices

shall be

sent to

the

address provided

below in the

signature block hereto.

Executive and

Bank may

change the address

for the giving of notices.

Complete Agreement. This Agreement represents the complete

agreement between Executive

and the

Bank regarding

the subject matter

of this

Agreement.

This Agreement is

in no

way

dependent upon

the performance of

any other

contract or

agreement that

may have

been or

may

be entered into

between Executive and Bank and remains in

effect during the

pendency of this

Agreement.

As such, the

breach or

alleged breach

of any

other contract

or agreement

is no

defense to enforcement of this

Agreement.

All prior agreements, if

any, between the Bank and

Executive with respect

to the matters

agreed to herein

are hereby superseded

and shall have

force or effect.

Amendments

Writing.

amendment,

modification,

waiver,

other

change

this

Agreement shall

in any

event

be effective

unless the same

shall

be in

writing, specifically

identifying this Agreement

and the provision intended

to be

changed and signed by

Bank and

Executive,

and

each

such

change shall be effective only in the

specific instance and for the

specific

purpose

for which

is given.

provision

this

Agreement

shall

varied,

contradicted or

explained by

any oral

agreement, course

of dealing

performance

any

other

matter not set

forth in an

agreement in writing and signed by Executive and the

Bank.

Term of the

Agreement.

Subject to

the terms

hereof, the

term of

this Agreement

shall commence

on the date

hereof and terminate

on December 31,

2027 (the

"Initial

Term

").

Prior to December

31, 2025

(the “Extension Anniversary Date”)

and each annual

anniversary thereafter of the

Extension

Anniversary

Date,

the

Board

Directors

the

Bank

the

Compensation

Committee

thereof

shall

consider

and

review

(with

appropriate

corporate

documentation

thereof, and after taking into account all

relevant factors, including Executive’s performance

hereunder) a one-year extension of

the term of this

Agreement. If the Board

of Directors or

the

Compensation

Committee

thereof

approve

such

extension,

then

the

term

this

Agreement shall be so extended

as of the Extension

Anniversary Date or any

relevant annual

anniversary

such

date

unless

the

Executive

gives

written

notice

the

Bank

the

Executive’s election not to extend the

term, with such written

notice to be given

not less than

thirty (30) days prior

to the Extension Anniversary Date

or any relevant annual

anniversary

of such

date. If

the Board

of Directors

elects not

to extend

the term,

it shall

give written

notice

such

decision

the

Executive

not

less

than

thirty

(30)

days

prior

the

Extension

Anniversary Date or

any annual

anniversary of such

date.

If any

party gives

timely notice

that

the

term

will

not

extended

the

Extension

Anniversary

Date

any

annual

Table

of Contents

USCB Financial Holdings, Inc.

Q1 2025 Form 10-Q

anniversary of such date, then this Agreement

and the rights and obligations provided herein

shall terminate at the conclusion of its remaining term.

References herein to the term of this

Agreement

shall

refer

both

the

Initial

Term

and

successive

terms

the

term

this

Agreement is extended in accordance with the terms

hereof.

Regulatory Actions

The following provisions

shall be applicable

to the parties

hereto or any

successor thereto, and shall be controlling in the event of a conflict with any other provision

of this Agreement, including without limitation

Section 1 hereof:

(i)

If Executive is

suspended from office

and/or temporarily prohibited from

participating

in the

conduct of

the Bank’s

affairs pursuant

to notice

served under

Section 8(e)(3) or

Section 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”)(12 U.S.C. §§1818(e)(3)

and 1818(g)(1)), the Bank’s

obligations under this Agreement shall be

suspended as of

the date of

service, unless

stayed by

appropriate proceedings.

If the charges

in the notice

are dismissed, the Bank will:

(i) pay Executive all or part

of the compensation withheld

while its obligations under this Agreement were

suspended, and (ii) reinstate (in whole

or in part) any of its obligations which were suspended.

(ii)

If Executive is removed

from office and/or permanently

prohibited from participating

the conduct

of the

Bank’s

affairs by

an order

issued under

Section 8(e)(4)

or Section

8(g)(1) of

the

FDIA

(12 U.S.C.

§§1818(e)(4) and

(g)(1)), all

obligations of

the

Bank

under

this Agreement

shall terminate

the

effective

date

the

order,

but

vested

rights of Executive and the Bank as of the date

of termination shall not be affected.

(iii)

the

Bank

default,

defined

Section

3(x)(1)

the

FDIA

(12

U.S.C.

§1813(x)(1)),

all

obligations

under

this

Agreement

shall

terminate

the

date

default, but vested

rights of Executive

and the Bank

as of the

date of termination

shall

not be affected.

(iv)

Notwithstanding any

other provision

of this

Agreement to

the contrary,

any payments

made

Executive

pursuant

this

Agreement,

otherwise,

are

subject

and

conditioned upon

their compliance

with Section

18(k) of the

FDIA (12

U.S.C. §1828(k))

and 12 C.F.R.

Part 359.

10.

Nature

Obligations.

Nothing

contained

herein

shall

deemed

create

other

than

terminable at will

employment relationship between

the Bank and

Executive, and the

Bank may

terminate

Executive’s

employment

any

time,

subject

providing

any

payments

specified

herein in accordance with the terms

hereof.

11.

Acknowledgment. Executive acknowledges that Executive has read this

Agreement in full and

completely understands all of its terms and obligations

and enters into this Agreement freely

and voluntarily, and

after having

the

opportunity to

consult with

representatives

Executive's

own choosing and that Executive's

agreement is freely given.

IN WITNESS WHEREOF, the parties

hereto have duly

executed this Agreement

as of the date

first

above mentioned.

U.S. Century Bank

Executive

By: /s/Luis de la Aguilera

/s/Maricarmen Logrono

Title:

President and Chief Executive Officer

Print Name:

Maricarmen Logrono

Address:

[•]

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: May 9, 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: May 9, 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 March 31, 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 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/ Luis de la Aguilera

Luis de la Aguilera

Chairman, President and Chief Executive Officer

Date: May 9, 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 March 31, 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: May 9, 2025