USCB FINANCIAL HOLDINGS, INC. (USCB) FY 2025 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,

2025

and

2024.

This

discussion

and

analysis

is best

read

in

conjunction

with

the

Consolidated

Financial

Statements and related

footnotes of the 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.

Table of Contents

53

USCB Financial Holdings, Inc.

2025 10-K

CAUTIONARY NOTE REGARDING FORWARD

-LOOKING STATEMENTS

This

Annual

Report

on

Form

10-K

contains

statements

that

are

not

historical

in

nature

are

intended

to

be,

and

are

hereby identified as, forward-looking

statements for purposes of

the safe harbor provided by

Section 21E of the Securities

Exchange Act

of 1934,

as amended.

The words

“may,” “will,” “anticipate,” “could,”

“should,” “would,” “believe,”

“contemplate,”

“expect,”

“aim,”

“plan,”

“estimate,”

“seek,”

“continue,”

and

“intend,”

the

negative

of

these

terms,

as

well

as

other

similar

words and expressions of the

future, are intended to identify forward-looking statements.

These forward-looking statements

include statements related to

our projected growth, anticipated

future financial performance, and

management’s long-term

performance goals, as well as statements

relating to the anticipated effects

on results of operations and financial condition

from

expected

developments

or

events,

or

business

and

growth

strategies,

including

anticipated

internal

growth

and

potential future additional balance sheet restructuring.

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

the

capital

and

financial

markets,

including

actual

or

potential

stresses

in

the

banking industry;

•

deposit attrition and the level of our uninsured deposits;

•

legislative or

regulatory changes and

changes including the

enactment of the

One Big Beautiful

Bill Act

and changes

in accounting principles, policies, practices or guidelines,

including the on-going effects of the CECL standard

;

•

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

of geographic, depositor,

and industry concentrations,

including our concentration

in loans secured by

real estate,

in particular, commercial real estate;

•

the effects of climate change;

•

the concentration of ownership of our common stock;

•

fluctuations in the price of our common stock;

•

our ability to fund or access the capital markets at attractive

rates and terms and manage our growth, both organic

growth as well as growth through other means, such as

future acquisitions;

•

inflation, interest rate, unemployment rate, market, and monetary

fluctuations;

•

the effects of potential new or increased tariffs,

retaliatory tariffs and trade restrictions;

•

impacts of international hostilities and geopolitical events;

•

increased

competition

and

its

effect

on

the

pricing

of

our

products

and

services

as

well

as

our

net

interest

rate

spread and net interest margin;

•

the loss of key employees;

•

the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client,

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

•

other risks described in this Annual Report on Form 10-K

and other filings we make with the SEC.

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 in this Annual

Report on Form 10-K and in the reports the

Company filed or will file with the SEC.

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