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Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Summary of Significant Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
1.
 
SUMMARY OF SIGNIFICANT ACCOUNTING
 
POLICIES
 
Overview
USCB Financial Holdings, Inc., a
 
Florida corporation incorporated
 
in 2021, is a bank holding
 
company with one wholly
owned subsidiary,
 
U.S. Century Bank (the
 
“Bank”), together referred to
 
as “the Company”. The Bank,
 
established in 2002,
is a Florida
 
state-chartered, non-member financial institution providing financial
 
services through its banking
 
centers located
in South Florida.
During the year ended December 31,
 
2021, the Bank completed an initial
 
public offering (“IPO”) and
 
its Class A voting
common shares began
 
trading on the
 
Nasdaq Stock
 
Market in July
 
2021. In December
 
2021, the Bank
 
exchanged all the
outstanding
 
shares
 
of
 
Class
 
B
 
non-voting
 
common
 
stock
 
for
 
shares
 
of
 
Class
 
A
 
voting
 
common
 
stock
 
on
 
a
 
one
 
to
 
five
exchange. Shortly thereafter,
 
the Company acquired all issued and
 
outstanding shares of Class A voting
 
common stock of
the Bank
 
in connection with
 
the reorganization
 
of the
 
Bank into
 
the holding company
 
form of
 
structure.
 
For further information
on the IPO and the exchange and redemption of shares
 
,
 
see Note 8 “Stockholders’ Equity”.
The Company’s
 
Consolidated Financial
 
Statements consist
 
of USCB
 
Financial Holdings,
 
Inc. and
 
U.S. Century
 
Bank
as of
 
September 30, 2022 and
 
December 31, 2021 and for
 
the three and
 
nine months ended
 
September 30, 2022 compared
to only U.S. Century Bank as of September 30, 2021
 
and for the three and nine months ended September
 
30, 2021.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to
Form 10-Q and
 
do not include all
 
the information and
 
footnotes required by U.S.
 
generally accepted accounting
 
principles
(“U.S.
 
GAAP”)
 
for
 
complete
 
financial
 
statements.
 
All
 
adjustments
 
consisting
 
of
 
normally
 
recurring
 
accruals
 
that,
 
in
 
the
opinion
 
of
 
management,
 
are
 
necessary
 
for
 
a
 
fair
 
presentation
 
of
 
the
 
financial
 
position
 
and
 
results
 
of
 
operations
 
for
 
the
periods presented
 
have been
 
included. These
 
unaudited consolidated
 
financial statements
 
should be
 
read in
 
conjunction
with
 
the
 
Company’s
 
consolidated
 
financial
 
statements
 
and
 
related
 
notes
 
appearing
 
in the
 
Company’s
 
Annual
 
Report
 
on
Form 10-K for the year ended December 31, 2021.
Principles of Consolidation
The
 
Company
 
consolidates
 
entities
 
in
 
which
 
it
 
has
 
a
 
controlling
 
financial
 
interest.
 
Intercompany
 
transactions
 
and
balances are eliminated in consolidation.
 
Use of Estimates
To prepare
 
financial statements in conformity with U.S. GAAP,
 
management makes estimates and assumptions based
on available
 
information. These
 
estimates and
 
assumptions
 
affect
 
the amounts
 
reported in
 
the financial
 
statements. The
most significant
 
estimates impacting
 
the Company’s
 
consolidated financial
 
statements are
 
the allowance
 
for credit
 
losses
and income taxes.
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
Issued and 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. Early adoption is permitted for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal
 
years.
 
The
 
Company
 
expects
 
to
 
adopt
 
this
 
ASU
 
on
 
January 1,
 
2023.
 
The
 
impact
 
of
 
adoption
 
on
 
the
 
Company’s
financial statements
 
will depend on
 
the composition
 
of the loan
 
and investment
 
securities portfolio
 
as of January
 
1, 2023,
general economic conditions,
 
and other factors that
 
are not known at
 
this time. Although
 
management is in the
 
process of
evaluating the impact of
 
adoption of this ASU on
 
its consolidated financial statements,
 
management does believe that
 
this
ASU will lead to significant changes
 
in accounting policies and disclosures
 
related to, and the methods used
 
in estimating,
the
 
ACL.
 
The
 
Company
 
has
 
developed
 
a
 
detailed
 
implementation
 
plan
 
through
 
the
 
date
 
of
 
adoption
 
that
 
includes
 
the
implementation of a software solution to assist
 
with the CECL implementation process and is developing
 
measurements in
parallel
 
with
 
the
 
current
 
methodology.
 
To
 
date,
 
the
 
Company
 
has
 
initiated
 
policy
 
discussion
 
with
 
key
 
stakeholders,
completed a data
 
gap analysis
 
and retained the
 
services of a
 
third-party consulting
 
firm to perform
 
an independent model
validation prior to adoption.
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 from March 12,
 
2020 through December 31,
2022. The
 
Company is
 
evaluating the
 
impact of
 
this ASU
 
and has
 
not yet
 
determined whether
 
LIBOR transition
 
and this
ASU will have a material effect on our business operations
 
and consolidated financial statements.
Trouble Debt Restructuring
In
 
March
 
2022,
 
the
 
FASB
 
issued
 
ASU
 
2022-02,
 
Financial
 
Instruments—Credit
 
Losses
 
(Topic
 
326):
 
Troubled
 
Debt
Restructurings and Vintage Disclosures.
 
This ASU eliminates the recognition and measurement guidance on troubled debt
restructurings for
 
creditors and
 
aligns it
 
with existing
 
guidance to
 
determine whether
 
a loan
 
modification results
 
in a
 
new
loan
 
or
 
a
 
continuation
 
of
 
an
 
existing
 
loan.
 
The
 
new
 
guidance
 
also
 
requires
 
enhanced
 
disclosures
 
about
 
certain
 
loan
modifications by
 
creditors
 
when a
 
borrower is
 
experiencing financial
 
difficulty.
 
This ASU
 
is effective
 
in periods
 
beginning
after
 
December
 
15,
 
2022,
 
using
 
either
 
a
 
prospective
 
or
 
modified
 
retrospective
 
transition
 
approach.
 
Early
 
adoption
 
is
permitted for entities that have already adopted CECL.
 
The Company is in the process of reviewing this
 
ASU, as part of its
CECL implementation efforts,
 
to determine
 
whether it would
 
have a material
 
impact on
 
the Company’s consolidated financial
statements when adopted.