# EDGAR Filing Document

**Accession Number:** 0001901637
**File Stem:** 0001562762-23-000140
**Filing Date:** 2023-3
**Character Count:** 41016
**Document Hash:** 0ee5575d787118550dd3285f57e23c1f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001562762-23-000140.hdr.sgml**: 20230328

**ACCESSION NUMBER**: 0001562762-23-000140

**CONFORMED SUBMISSION TYPE**: 10-K/A

**PUBLIC DOCUMENT COUNT**: 114

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230328

**DATE AS OF CHANGE**: 20230327

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** USCB FINANCIAL HOLDINGS, INC.
- **CENTRAL INDEX KEY:** 0001901637
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 874070846
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41196
- **FILM NUMBER:** 23765817

**BUSINESS ADDRESS:**
- **STREET 1:** 2301 NW 87TH AVENUE
- **CITY:** DORAL
- **STATE:** FL
- **ZIP:** 33172
- **BUSINESS PHONE:** (305) 715-5200

**MAIL ADDRESS:**
- **STREET 1:** 2301 NW 87TH AVENUE
- **CITY:** DORAL
- **STATE:** FL
- **ZIP:** 33172

Table of Contents

**USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

to reflect the effect of stock splits as occurred. See Note 14 'Earnings Per Share' for additional information on earnings per common share. See Note 13 'Stockholders' Equity' for further discussion on stock splits.

#### **Interest Income**

Interest income is recognized as earned, based upon the principal amount outstanding, on an accrual basis.

#### **Operating Segments**

While the Company monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company wide basis. Operating results of the individual products are not used to make resource allocations or performance decisions by Company management.

#### **Stock-Based Compensation**

Stock based compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the accompanying Consolidated Financial Statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock-based compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

The stock-based compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options.

#### **Loss Contingencies**

Loss contingencies, including claims and legal actions arising in the normal course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. In the opinion of 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. See Note 18 'Loss Contingencies' for further details.

#### **Dividend Restrictions**

Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the Company or by the Company to the shareholders.

#### **Fair Value Measurements**

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 12 'Fair Value Measurements'. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

#### **Derivative Instruments**

Derivative financial instruments are carried at fair value and reflect the estimated amount that would have been received to terminate these contracts at the reporting date based upon pricing or valuation models applied to current market information.

The Company enters into interest rate swaps to provide commercial loan clients the ability to swap from a variable interest rate to a fixed rate. The Company enter into a floating-rate loan with a customer with a separately issued swap agreement allowing the customer to convert floating payments of the loan into a fixed interest rate. To mitigate risk, the Company will enter into a matching agreement with a third party to offset the exposure on the customer agreement. These swaps are not considered to be qualified hedging transactions and the unmatched unrealized gain or loss is recorded in other non-interest income.

21 USCB Financial Holdings, Inc. 2022 10-K/A

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**USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

## Revenue from Contracts with Customers

Revenue from contracts with customers is recognized in an amount that reflects the consideration the Company expects to receive for the services the Company provides to its customers. The main revenue earned by the Company from loans and investment securities are excluded from the accounting standard update 'Revenue from Contracts with Customers'. Deposit and service charge fees, consisting of primarily monthly maintenance fees, wire fees, ATM interchange fees and other transaction-based fees, are the most significant types of revenue within the accounting standard update. Revenue is recognized when the service provided by the Company is complete. The aggregate amount of revenue within the scope of this standard that is received from sources other than deposit service charges and fees is not material.

## Cash Flow Statement

The Company reports the net activity rather than gross activity in the Consolidated Statements of Cash Flows. The net cash flows are reported for loans held for investment, accrued interest receivable, deferred tax asset, other assets, customer deposits, accrued interest payable, other liabilities, and proceeds from issuance of Class A common shares.

## 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 - Not Yet Adopted

### Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments. This accounting standard update ('ASU' or 'Update') on accounting for current expected credit losses on financial instruments ('CECL') will replace the current probable incurred loss impairment methodology under U.S. GAAP with a methodology that reflects the expected credit losses. The Update is intended to provide financial statement users with more decision-useful information about expected credit losses. This Update is applicable to the Company on a modified retrospective basis for interim and annual periods in fiscal years beginning after December 15, 2022. The Company adopted this ASU on January 1, 2023. To date, the Company executed a detailed implementation plan through the adoption date, implemented a software solution to assist with the CECL estimation process, and has completed parallel run models, and finished a data gap analysis.

The company expects its allowance for credit losses to increase in 2023 approximately $1.0 million to $2.0 million upon adoption of ASU 2016-13 compared to its allowance for loan losses at December 31, 2022. Reserve on unfunded commitments will also increase approximately $200 thousand to $600 thousand and it will be recognized as a liability on the Consolidated Balance Sheet. The Company reviewed its held-to-maturity debt securities and the allowance was deemed immaterial. The Company will initially apply the impact of the new guidance through a cumulative-effect adjustment to retained earnings as of January 1, 2023. Future adjustments to credit loss expectations will be recorded through the income statement as charges or credits to earnings.

The disclosed estimates are subject to further refinement upon finalization of the Company's review of the calculations, assumptions, methodologies and judgments. Internal controls over financial reporting relating to these new processes have been designed and implemented and are being evaluated. The Company is in the final stages of completing the formal governance and approval process. The ongoing impact to the Company's results of operations in future periods will be influenced by the loan portfolio composition and by macroeconomic conditions and forecasts at each reporting date. Adoption of the standard on the first quarter of 2023 is expected to result in higher volatility in the quarterly provision for credit losses when compared to the Company's historical results under the incurred loss model.

### Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures. This accounting standard eliminates the accounting guidance for troubled debt restructurings by creditors in ASC 310-40, and it enhances disclosure requirements for some loan refinancings and restructurings involving borrowers experiencing financial difficulty. Specifically, rather than applying the troubled debt restructuring recognition and measurement guidance, creditors will evaluate all loan modifications to determine if they result in a new loan or a continuation of the existing loan. Losses associated with troubled debt restructurings should be

22 USCB Financial Holdings, Inc. 2022 10-K/A

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

incorporated in a creditor's estimate of its allowance for credit losses. Additionally, public business entities are required to disclose current-period gross write-offs by year of origination for loan financing receivables and net investment in leases.

# **Reference Rate Reform**

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB clarified the scope of this guidance with ASU 2021-01 which provides optional guidance for a limited period of time to ease the burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This ASU is effective March 12, 2020 through December 31, 2024. The Company is evaluating the impact of this ASU and has not yet determined whether LIBOR transition and this ASU will have material effects on our business operations and consolidated financial statements.

# **2. INVESTMENT SECURITIES**

The following tables present a summary of the amortized cost, unrealized or unrecognized gains and losses, and fair value of investment securities at the dates indicated (in thousands):

| Available-for-sale: | December 31, 2022 |  |  |  |
| --- | --- | --- | --- | --- |
|  | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value |
| U.S. Government Agency | $10,177 | $ - | $(1,522) | $8,655 |
| Collateralized mortgage obligations | 118,951 | - | (23,410) | 95,541 |
| Mortgage-backed securities - Residential | 73,838 | - | (12,959) | 60,879 |
| Mortgage-backed securities - Commercial | 32,244 | 15 | (4,305) | 27,954 |
| Municipal securities | 25,084 | - | (6,601) | 18,483 |
| Bank subordinated debt securities | 15,964 | 5 | (1,050) | 14,919 |
| Corporate bonds | 4,037 | - | (328) | 3,709 |
|  | $280,295 | $20 | $(50,175) | $230,140 |
| Held-to-maturity: |  |  |  |  |
| U.S. Government Agency | $44,914 | $25 | $(5,877) | $39,062 |
| U.S. Treasury | 9,841 | - | (13) | 9,828 |
| Collateralized mortgage obligations | 68,727 | 28 | (7,830) | 60,925 |
| Mortgage-backed securities - Residential | 42,685 | 372 | (4,574) | 38,483 |
| Mortgage-backed securities - Commercial | 11,442 | - | (665) | 10,777 |
| Corporate bonds | 11,090 | - | (1,077) | 10,013 |
|  | $188,699 | $425 | $(20,036) | $169,088 |

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

|  | December 31, 2021 |  |  |  |
| --- | --- | --- | --- | --- |
|  | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value |
| Available-for-sale: |  |  |  |  |
| U.S. Government Agency | $10,564 | $6 | $(50) | $10,520 |
| Collateralized mortgage obligations | 160,506 | 22 | (3,699) | 156,829 |
| Mortgage-backed securities - Residential | 120,643 | 228 | (2,029) | 118,842 |
| Mortgage-backed securities - Commercial | 49,905 | 820 | (608) | 50,117 |
| Municipal securities | 25,164 | 6 | (894) | 24,276 |
| Bank subordinated debt securities | 27,003 | 1,418 | (13) | 28,408 |
| Corporate bonds | 12,068 | 482 | - | 12,550 |
|  | $405,853 | $2,982 | $(7,293) | $401,542 |
| Held-to-maturity: |  |  |  |  |
| U.S. Government Agency | $34,505 | $14 | $(615) | $33,904 |
| Collateralized mortgage obligations | 44,820 | - | (1,021) | 43,799 |
| Mortgage-backed securities - Residential | 26,920 | - | (568) | 26,352 |
| Mortgage-backed securities - Commercial | 3,103 | - | (90) | 3,013 |
| Corporate bonds | 13,310 | - | (221) | 13,089 |
|  | $122,658 | $14 | $(2,515) | $120,157 |

For the year ended December 31, 2022, there were 26 investment securities that were transferred from available-for-sale ('AFS') to held-to-maturity ('HTM') with an amortized cost basis and fair value amount of $74.4 million and $63.8 million, respectively. On the date of transfer, these securities had a total net unrealized loss of $10.6 million which was included in accumulated other comprehensive income (loss).

Transfers of debt securities into the HTM category from the AFS category are made at fair value at the date of transfer. The unrealized gain or loss at the date of transfer is retained in accumulated other comprehensive income ('AOCI') and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the remaining life of the security. For the year ended December 31, 2022, total amortization out of AOCI for the net unrealized losses on securities transferred from AFS to HTM was $120 thousand and $108 thousand for year ended December 31, 2021.

The following table presents the proceeds, realized gross gains and realized gross losses on sales and calls of AFS debt securities for the years ended December 31, 2022 and 2021 (in thousands):

| Available-for-sale: | 2022 | 2021 |
| --- | --- | --- |
| Proceeds from sales and call of securities | $60,649 | $51,974 |
| Gross Gains | $217 | $545 |
| Gross Losses | (2,746) | (331) |
| Net realized gains (losses) | $(2,529) | $214 |

The amortized cost and fair value of investment securities, by contractual maturity, are shown below for 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.

24 USCB Financial Holdings, Inc. 2022 10-K/A

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

|  | Available-for-sale |  | Held-to-maturity |  |
| --- | --- | --- | --- | --- |
|  | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| December 31, 2022: |  |  |  |  |
| Due within one year | $ - | $ - | $1,515 | $1,475 |
| Due after one year through five years | 4,037 | 3,709 | 9,575 | 8,539 |
| Due after five years through ten years | 16,964 | 15,722 | - | - |
| Due after ten years | 24,084 | 17,680 | - | - |
| U.S. Government Agency | 10,177 | 8,655 | 44,914 | 39,061 |
| U.S. Treasury | - | - | 9,841 | 9,828 |
| Collateralized mortgage obligations | 118,951 | 95,541 | 68,727 | 60,925 |
| Mortgage-backed securities - Residential | 73,838 | 60,879 | 42,685 | 38,483 |
| Mortgage-backed securities - Commercial | 32,244 | 27,954 | 11,442 | 10,777 |
|  | $280,295 | $230,140 | $188,699 | $169,088 |

At December 31, 2022 and 2021, there were no securities to any one issuer, in an amount greater than 10% of total stockholders' equity other than the United States Government and Government Agencies. All the collateralized mortgage obligations and mortgage-backed securities are issued by United States sponsored entities at December 31, 2022 and 2021.

Information pertaining to investment securities with gross unrealized losses, aggregated by investment 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):

|  | December 31, 2022 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | 12 months or more |  | Total |  |
|  | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses |
| U.S. Government Agency | $11,407 | (1,093) | 36,310 | (7,616) | $47,717 | $(8,709) |
| U.S. Treasury | 9,828 | (13) | - | - | 9,828 | $(13) |
| Collateralized mortgage obligations | 16,500 | (963) | 139,965 | (34,962) | 156,465 | $(35,925) |
| Mortgage-backed securities - Residential | 5,059 | (564) | 91,742 | (19,348) | 96,801 | $(19,912) |
| Mortgage-backed securities - Commercial | 10,052 | (1,173) | 26,823 | (5,300) | 36,875 | $(6,473) |
| Municipal securities | - | - | 18,483 | (6,601) | 18,483 | $(6,601) |
| Bank subordinated debt securities | 11,295 | (670) | 2,619 | (381) | 13,914 | $(1,051) |
| Corporate bonds | 13,723 | (926) | - | - | 13,723 | $(926) |
|  | $77,864 | $(5,402) | $315,942 | $(74,208) | $393,806 | $(79,610) |

|  | December 31, 2021 |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Less than 12 months |  | 12 months or more |  | Total |  |
|  | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses |
| U.S. Government Agency | $25,951 | $(254) | $15,477 | $(516) | $41,428 | $(770) |
| Collateralized mortgage obligations | 155,668 | (3,223) | 38,459 | (1,497) | 194,127 | $(4,720) |
| Mortgage-backed securities - Residential | 88,772 | (1,178) | 37,373 | (1,274) | 126,145 | $(2,452) |
| Mortgage-backed securities - Commercial | 25,289 | (318) | 7,507 | (309) | 32,796 | $(627) |
| Municipal securities | 11,292 | (395) | 11,978 | (499) | 23,270 | $(894) |
| Bank subordinated debt securities | 4,487 | (13) | - | - | 4,487 | $(13) |
|  | $311,459 | $(5,381) | $110,794 | $(4,095) | $422,253 | $(9,476) |

The unrealized losses associated with $134.7 million of investment securities transferred from the AFS portfolio to the HTM portfolio represent unrealized losses since the date of purchase, independent of the impact associated with changes in the cost basis upon transfer between portfolios.

25 USCB Financial Holdings, Inc. 2022 10-K/A

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

The Company performs a review of the investments that have an unrealized loss to determine whether there have been any changes in the economic circumstance of the security issuer to indicate that the unrealized loss is impaired on an other-than-temporary (“OTTI”) basis. Management considers several factors in their analysis including (i) severity and duration of the impairment, (ii) credit rating of the security including any downgrade, (iii) intent to sell the security, or if it is more likely than not that it will be required to sell the security before recovery, (iv) whether there have been any payment defaults and (v) underlying guarantor of the securities.

At December 31, 2022, the Company had $53.7 million of unrealized losses on mortgage backed securities and collateralized mortgage obligations of government sponsored entities having a fair value of $94.6 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government sponsored entities. The municipal bonds are of high credit quality and the declines in fair value are not due to credit quality. Based on the assessment of these mitigating factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At December 31, 2022, the Company does not intend to sell debt securities that are in an unrealized loss position and it is not more than likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other than temporarily impaired at December 31, 2022.

As of December 31, 2022, the Company maintains a master repurchase agreement with a public banking institution for up to $20.0 million fully guaranteed with investment securities upon withdrawal. Any amounts borrowed would be at a variable interest rate based on prevailing rates at the time funding is requested. At December 31, 2022, the Company did not have any securities pledged under this agreement.

In 2018, the Company became a Qualified Public Depositor (“QPD”) with the State of Florida. As a QPD, the Company has the authority to legally maintain public deposits from cities, municipalities, and the State of Florida. These public deposits are secured by securities pledged to the State of Florida at a ratio of 25% of the average outstanding uninsured deposits. The Company must also maintain a minimum amount of pledged securities to be in the program.

At December 31, 2022, the Company had eighteen securities with a fair value of $49.0 million pledged to the State of Florida under the public funds program. The Company held a total of $204.2 million in public funds at December 31, 2022.

At December 31, 2021, the Company had eleven securities with a fair value of $20.4 million pledged to the State of Florida under the public funds program. The Company held a total of $37.3 million in public funds at December 31, 2021.

### 3. LOANS

The following table is a summary of the distribution of loans held for investment by type (in thousands):

|  | December 31, 2022 |  | December 31, 2021 |  |
| --- | --- | --- | --- | --- |
|  | Total | Percent of Total | Total | Percent of Total |
| Residential Real Estate | $185,636 | 12.3% | $201,359 | 16.9% |
| Commercial Real Estate | 970,410 | 64.4% | 704,988 | 59.2% |
| Commercial and Industrial | 126,984 | 8.4% | 146,592 | 12.3% |
| Foreign Banks | 93,769 | 6.2% | 59,491 | 5.0% |
| Consumer and Other | 130,429 | 8.7% | 79,229 | 6.6% |
| Total gross loans | 1,507,228 | 100.0% | 1,191,659 | 100.0% |
| Less: Unearned income | (110) |  | 1,578 |  |
| Total loans net of unearned income | 1,507,338 |  | 1,190,081 |  |
| Less: Allowance for credit losses | 17,487 |  | 15,057 |  |
| Total net loans | $1,489,851 |  | $1,175,024 |  |

At December 31, 2022 and 2021, the Company had $338.1 million and $185.1 million, respectively, of commercial real estate and residential mortgage loans pledged as collateral on lines of credit with the FHLB and the Federal Reserve Bank

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

of Atlanta. At December 31, 2022 and 2021 the Company had no loans and one loan for $1.2 million, respectively, in the process of foreclosure.

The Company was a participant of the Small Business Administration's ('SBA') Paycheck Protection Program ('PPP') loans. These loans were designed to provide a direct incentive for small businesses to keep their workers on payroll and had to be used towards payroll cost, mortgage interest, rent, utilities and other costs related to COVID-19. These loans are forgivable under specific criteria as determined by the SBA. The Company had PPP loans of $1.3 million at December 31, 2022 and $42.4 million at December 31, 2021, which are categorized as commercial and industrial loans. These PPP loans had deferred loan fees of $13 thousand at December 31, 2022 and $1.5 million at December 31, 2021.

The Company recognized $1.6 million and $4.5 million in PPP loan fees and interest income for the years ended December 31, 2022 and 2021, respectively, which is reported under loans, including fees within the Consolidated Statements of Operations.

The Company segments the portfolio by pools grouping loans that share similar risk characteristics and employing collateral type and lien position to group loans according to risk. The Company determines historical loss rates for each loan pool based on its own loss experience. In estimating credit losses, the Company also considers qualitative and environmental factors that may cause estimated credit losses for the loan portfolio to differ from historical losses.

Changes in the allowance for credit losses for the years ended December 31, 2022 and 2021 are as follows (in thousands):

|  | Residential Real Estate | Commercial Real Estate | Commercial and Industrial | Foreign Banks | Consumer and Other | Total |
| --- | --- | --- | --- | --- | --- | --- |
| December 31, 2022: |  |  |  |  |  |  |
| Beginning balance | $2,498 | $8,758 | $2,775 | $457 | $569 | $15,057 |
| Provision for credit losses | (1,179) | 1,385 | 1,474 | 263 | 552 | 2,495 |
| Recoveries | 33 | - | 18 | - | 4 | 55 |
| Charge-offs | - | - | (104) | - | (16) | (120) |
| Ending Balance | $1,352 | $10,143 | $4,163 | $720 | $1,109 | $17,487 |
| December 31, 2021: |  |  |  |  |  |  |
| Beginning balance | $3,408 | $9,453 | $1,689 | $348 | $188 | $15,086 |
| Provision for credit losses | (919) | (695) | 955 | 109 | 390 | (160) |
| Recoveries | 238 | - | 149 | - | 5 | 392 |
| Charge-offs | (229) | - | (18) | - | (14) | (261) |
| Ending Balance | $2,498 | $8,758 | $2,775 | $457 | $569 | $15,057 |

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# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

Allowance for credit losses and the outstanding balances in loans as of December 31, 2022 and 2021 are as follows (in thousands):

|  | Residential Real Estate | Commercial Real Estate | Commercial and Industrial | Foreign Banks | Consumer and Other | Total |
| --- | --- | --- | --- | --- | --- | --- |
| December 31, 2022: |  |  |  |  |  |  |
| Allowance for credit losses: |  |  |  |  |  |  |
| Individually evaluated for impairment | $155 | $ - | $41 | $ - | $98 | $294 |
| Collectively evaluated for impairment | 1,197 | 10,143 | 4,122 | 720 | 1,011 | 17,193 |
| Balances, end of period | $1,352 | $10,143 | $4,163 | $720 | $1,109 | $17,487 |
| Loans: |  |  |  |  |  |  |
| Individually evaluated for impairment | $7,206 | $393 | $82 | $ - | $196 | $7,877 |
| Collectively evaluated for impairment | 178,430 | 970,017 | 126,902 | 93,769 | 130,233 | 1,499,351 |
| Balances, end of period | $185,636 | $970,410 | $126,984 | $93,769 | $130,429 | $1,507,228 |
| December 31, 2021: |  |  |  |  |  |  |
| Allowance for credit losses: |  |  |  |  |  |  |
| Individually evaluated for impairment | $178 | $ - | $71 | $ - | $111 | $360 |
| Collectively evaluated for impairment | 2,320 | 8,758 | 2,704 | 457 | 458 | 14,697 |
| Balances, end of period | $2,498 | $8,758 | $2,775 | $457 | $569 | $15,057 |
| Loans: |  |  |  |  |  |  |
| Individually evaluated for impairment | $9,006 | $696 | $141 | $ - | $224 | $10,067 |
| Collectively evaluated for impairment | 192,353 | 704,292 | 146,451 | 59,491 | 79,005 | 1,181,592 |
| Balances, end of period | $201,359 | $704,988 | $146,592 | $59,491 | $79,229 | $1,191,659 |

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**USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

# **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.

Loan credit exposures by internally assigned grades are presented below for the periods indicated (in thousands):

|  | As of December 31, 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Pass | Special Mention | Substandard | Doubtful | Total Loans |
| Residential real estate: |  |  |  |  |  |
| Home equity line of credit ('HELOC') and other | $623 | $ - | $ - | $ - | $623 |
| 1-4 family residential | 132,178 | - | - | - | 132,178 |
| Condo residential | 52,835 | - | - | - | 52,835 |
|  | 185,636 | - | - | - | 185,636 |
| Commercial real estate: |  |  |  |  |  |
| Land and construction | 38,687 | - | - | - | 38,687 |
| Multi family residential | 176,820 | - | - | - | 176,820 |
| Condo commercial | 49,601 | - | 393 | - | 49,994 |
| Commercial property | 702,357 | - | 2,552 | - | 704,909 |
| Leasehold improvements | - | - | - | - | - |
|  | 967,465 | - | 2,945 | - | 970,410 |
| Commercial and industrial: (1) |  |  |  |  |  |
| Secured | 120,873 | - | 807 | - | 121,680 |
| Unsecured | 5,304 | - | - | - | 5,304 |
|  | 126,177 | - | 807 | - | 126,984 |
| Foreign banks | 93,769 | - | - | - | 93,769 |
| Consumer and other loans | 130,233 | - | 196 | - | 130,429 |
| Total | $1,503,280 | $ - | $3,948 | $ - | $1,507,228 |

(1) All outstanding PPP loans were internally graded pass.

29 USCB Financial Holdings, Inc. 2022 10-K/A

Table of Contents

# **USCB FINANCIAL HOLDINGS, INC.**  
Notes to the Consolidated Financial Statements

|  | As of December 31, 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  | Pass | Special Mention | Substandard | Doubtful | Total Loans |
| Residential real estate: |  |  |  |  |  |
| Home equity line of credit ('HELOC') and other | $701 | $ - | $ - | $ - | $701 |
| 1-4 family residential | 130,840 | - | 4,581 | - | 135,421 |
| Condo residential | 65,237 | - | - | - | 65,237 |
|  | 196,778 | - | 4,581 | - | 201,359 |
| Commercial real estate: |  |  |  |  |  |
| Land and construction | 24,581 | - | - | - | 24,581 |
| Multi family residential | 127,489 | - | - | - | 127,489 |
| Condo commercial | 41,983 | - | 417 | - | 42,400 |
| Commercial property | 509,189 | 1,222 | - | - | 510,411 |
| Leasehold improvements | 107 | - | - | - | 107 |
|  | 703,349 | 1,222 | 417 | - | 704,988 |
| Commercial and industrial: (1) |  |  |  |  |  |
| Secured | 97,605 | - | 536 | - | 98,141 |
| Unsecured | 48,434 | - | 17 | - | 48,451 |
|  | 146,039 | - | 553 | - | 146,592 |
| Foreign banks | 59,491 | - | - | - | 59,491 |
| Consumer and other loans | 79,005 | - | 224 | - | 79,229 |
| Total | $1,184,662 | $1,222 | $5,775 | $ - | $1,191,658 |

(1) All outstanding PPP loans were internally graded pass.

30 USCB Financial Holdings, Inc. 2022 10-K/A

## Exhibit 31.1

**Table of Contents**

#### USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements

#### 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:

1. I have reviewed this Annual Report on Form 10-K/A of USCB Financial Holdings, Inc.;

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

necessary to make the statements made, in light of the circumstances under which such statements were made, not

misleading with respect to the period covered by this report;

3. 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;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to 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;

b) 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

c) 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, or is reasonably likely to materially affect, the registrant's internal control over financial

reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons

performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of 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

b)

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

President and Chief Executive Officer

Date: 3/27/2023

## Exhibit 31.2

**Table of Contents**

#### USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements

#### Exhibit 31.2

#### Certification of Chief Financial Officer

#### Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert Anderson, certify that:

1. I have reviewed this Annual Report on Form 10-K/A of USCB Financial Holdings, Inc.;

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

necessary to make the statements made, in light of the circumstances under which such statements were made, not

misleading with respect to the period covered by this report;

3. 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;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to 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;

b) 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

c) 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, or is reasonably likely to materially affect, the registrant's internal control over financial

reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons

performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of 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

b) 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: 3/27/2023

## Exhibit 32.1

**Table of Contents**

#### USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements

#### 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 Annual Report of USCB Financial Holdings, Inc. (the "Company") on Form 10-K/A for the year

ended December 31, 2022, 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:

1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities

Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

/s/ Luis de la Aguilera

Luis de la Aguilera

President and Chief Executive Officer

Date: 3/27/2023

## Exhibit 32.2

**Table of Contents**

#### USCB FINANCIAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements

#### 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 Annual Report of USCB Financial Holdings, Inc. (the "Company") on Form 10-K/A for the year

ended December 31, 2022, 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:

1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities

Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and

results of operations of the Company.

/s/ Robert Anderson

Robert Anderson

Chief Financial Officer

Date: 3/27/2023