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

Verbatim Item 7 Management's Discussion and Analysis from USCB FINANCIAL HOLDINGS, INC.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1901637/000156276223000130/uscb-10K-20211231.htm
Accession: 0001562762-23-000130
Filing date: 2023-03-24
Report date: 2022-12-31
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/USCB/
All MD&A years: /company/USCB/mda/
Previous year: /company/USCB/mda/fy2021/ (FY 2021)
Next year: /company/USCB/mda/fy2023/ (FY 2023)

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