USCB FINANCIAL HOLDINGS, INC. (USCB) FY 2021 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, 2021

and

2020. 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.

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.

Throughout this document, references to “we,” “us,” “our,” and “the

Company” refer to USCB Financial Holdings, Inc.

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 impacts 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 forthcoming implementation

of the Current Expected Credit Losses (“CECL”) standard;

•

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;

•

the concentration of ownership of our Class A 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 monetary

fluctuations;

•

increased competition and its effect on pricing

of our products and services as well as our margins;

•

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

this

Form

10-K

and

other

filings

we

make

with

the

Securities

and

Exchange

Commission

(“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 presentation

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 reports the Company

filed or will

file with the

SEC and,

for periods

prior to

the completion

of the bank

holding company

reorganization, the

Bank filed

with

the FDIC.

Table of Contents

44

USCB Financial Holdings, Inc.

2021 10-K

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