USCB FINANCIAL HOLDINGS, INC. (USCB) FY 2022 MD&A

Item 7.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

Management’s

discussion

and

analysis

of

financial

condition

and

results

of

operations

analyzes

the

consolidated

financial condition and results of operations of the Company and the

Bank, its wholly owned subsidiary, for the years ended

December 31, 2022

and 2021.

This discussion

and analysis

are best

read in

conjunction with

the Consolidated

Financial

Statements and related footnotes

of our Company presented

in Item 8 “Financial

Statements and Supplementary

Data” of

this Annual Report on Form

10-K. In addition to

historical information, 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" of this Annual Report.

In this Annual Report on Form 10-K, unless the context indicated otherwise, references to “we,”

“us,”, and “our” refer to

the Company and the Bank, as

the contest dictates. However, if

the discussion relates to a period

before the Effective Date,

the terms refer only to the Bank.

Forward-Looking Statements

This

Annual

Report

on

Form

10-K

contains

statements

that

are

not

historical

in

nature

are

intended

to

be,

and

are

hereby identified as, forward-looking

statements for purposes of

the safe harbor provided by

Section 21E of the Securities

Exchange

Act

of

1934,

as

amended.

The

words

“may,”

“will,”

“anticipate,”

“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

related

to

our

projected

growth,

anticipated

future

financial

performance,

and

management’s

long-term

performance

goals,

as

well

as

statements relating to

the anticipated effects

on results of

operations and financial

condition from

expected developments

or events, or business and growth strategies, including

anticipated internal growth.

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;

•

the COVID-19

pandemic

and its

impact

on us,

our employees,

customers

and third-party

service

providers,

and the

ultimate extent of the impact of the pandemic and related

government stimulus programs;

•

our ability to successfully manage interest rate risk, credit

risk, liquidity risk, and other risks inherent to our

industry;

•

the

accuracy

of

our financial

statement

estimates

and

assumptions,

including

the

estimates

used

for

our credit

loss

reserve and deferred tax asset valuation allowance;

•

the efficiency and effectiveness of

our internal control environment;

•

our

ability

to

comply

with

the

extensive

laws

and

regulations

to

which

we

are

subject,

including

the

laws

for

each

jurisdiction where we operate;

•

legislative or

regulatory changes

and changes

in accounting

principles, policies,

practices or

guidelines, including

the

effects of the implementation of the Current Expected

Credit Losses (“CECL”) standard on January 1, 2023;

•

the effects of our lack of a diversified loan portfolio and concentration in the South Florida market, including the risks of

geographic, depositor, and

industry concentrations, including our concentration in loans

secured by real estate;

•

effects of climate change;

•

the concentration of ownership of our common stock;

•

fluctuations in the price of our Class A 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 potential monetary fluctuations;

•

impacts of international hostilities and geopolitical events;

•

increased competition and its effect

on the pricing of our products and services as well as our margin;

•

the

effectiveness

of

our

risk

management

strategies,

including

operational

risks,

including,

but

not

limited

to,

client,

employee, or third-party fraud and security breaches; and

•

other risks described in this Annual Report and other

filings we make with the SEC.

All

forward-looking

statements

are

necessarily

only

estimates

of

future

results,

and

there

can

be

no

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

Annual Report

on Form

10-K 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 herein and in

Table of Contents

45

USCB Financial Holdings, Inc.

2022 10-K

the reports the Company filed or will file with the SEC and, for periods

prior to the completion of the bank holding company

reorganization in December 2021, the Bank filed with the FDIC

Non-GAAP Financial Measures

This Annual Report on Form 10-K 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