USCB FINANCIAL HOLDINGS, INC.

USCB Financial Holdings, Inc.,

a Florida corporation (the “Company”), was formed on December 17, 2021, to serve as

the

holding

company

for

U.S.

Century

Bank,

a

Florida

state-chartered

bank,

and

is

a

bank

holding

company

(a

“BHC”)

registered with

of the

Federal

Reserve System

(the “Federal

Reserve”)

Company Act

of 1956,

as amended

(the “BHC

Act”). The

headquartered

in Miami,

Florida, and,

through the

Bank,

its

sole

direct

operates

banking

centers

in

South

Florida

a

wide

range

of

and

banking products

and services.

As of

Company

had total

assets

of $2.8

U.S. Century Bank (the “Bank”)

commenced operations in October

2002 and is a Florida

state-chartered, non-Federal

Reserve

System

member

bank.

Over

the

course

of

2021,

the

Bank

simplified

its

capitalization

by

exchanging

and/or repurchasing

all of its

issued and outstanding

preferred shares,

including Class C,

Class D, and

Class E preferred

stock.

In

2021,

the

Bank

reached

with

holders

of

its

Class

B

common

stock

to

exchange

all

outstanding Class B common stock for Class A common stock

in a 1-for-5 stock exchange.

On July 27,

2021, the Bank

completed an initial

public offering of 4,600,000

shares of its Class

A common stock. Shares

of the Bank’s Class

A common stock were

sold at a price

to the public

of $10.00 per share

and began trading on

the Nasdaq

Stock Market under ticker symbol “USCB”.

On December

30, 2021

(the

“Effective

Date”),

acquired

all of

the

issued

and

stock

of the

Bank in a

share exchange

(the “Reorganization”)

effected under

the Florida

Business Corporation

Act and

an Agreement and

Plan of

Share Exchange dated

December 27, 2021

between the Bank

and the

Company

(the “Share Exchange Agreement”). The Reorganization and

the Share Exchange Agreement were approved

by the Bank’s

stockholders at a special meeting of the Bank’s stockholders held on December 20,

2021. Pursuant to the Share Exchange

Agreement, on the Effective

Date each issued and outstanding

share of the Bank’s

Class A common stock was

into and exchanged

for one share

of the Company’s Class

A common stock.

As a result,

the Bank became

the wholly owned

of

the

the

Company

became

the

holding

company

for

the

Bank

and

the

of the

Bank

became stockholders of the Company.

Prior to the Effective Date, the Bank’s Class A common stock was registered under Section 12(b) of the Exchange Act,

and the

Bank was subject

to the information

requirements of the

Exchange Act and,

in accordance with

Section 12(i)

thereof,

filed quarterly reports, proxy statements and other information with the Federal Deposit Insurance Corporation (“FDIC”). As

of the

Reorganization, pursuant

to Rule

12g-3(a) under

the Exchange

Company became

the successor

registrant

to the

Bank, the

Class

stock

was

deemed

to

be

under

Section

12(b) of

the

Exchange Act, and the Company became subject to the information requirements of the Exchange Act and is now required

to file

reports, proxy

statements and

other information with

the SEC.

The trading

symbol for

the Company’s Class

A Common

Stock is “USCB”, which is the same as the Bank’s former

trading symbol.

Prior to

the Reorganization,

had no

material assets

and had

not conducted

any business

or operations

except for activities related to its incorporation and the

Reorganization.

Our strategy

in becoming

a publicly

traded company

and forming

a BHC

was to

continue pursuing

organic growth

as

well as strategic

acquisitions if the opportunity

arose, which efforts

will be further

facilitated by access

to the public capital

markets and the added flexibility provided by a holding

company structure.

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 context dictates. However, if the discussion

relates to a period before

the Effective Date,

the terms refer only to the Bank.

Products and Services

Lending Services

Our mission

is to

provide high

value, relationship

-based banking

products, services

and solutions

to a

diverse

set of

clients in the

markets we serve. We focus

on serving small-to-medium sized businesses (“SMBs”)

and catering to the

needs

of

local

owners,

entrepreneurs

and

professionals

in

South

We

have

further

leveraged

our

success

in

providing comprehensive banking solutions

to SMBs to also secure the personal

retail deposit relationships of the owners,

operators, and employees of our commercial lending clients, which has

been a cornerstone of our deposit growth strategy.

In addition

to our

traditional commercial

banking services,

we are

among a

select number

of banks

of our

size within

our market

area that

can offer

certain specialty

banking products,

services and

solutions designed

for small

businesses,

homeowner associations,

law firms, medical

practices and other

professional services

firms, and global

banking services.

Our major specialty banking offerings include

the following:

•

Small

Administration

(“SBA”)

lending:

Our

SBA

platform

originates

loans

under

Sections

7(a)

and 504

of the

SBA program.

The 7(a)

loan program,

SBA's most

common loan

program, includes

help for small businesses with

special requirements while the

504 loan program provides

long-term, fixed-rate

financing of

up to $5.0

million for

major fixed assets

that promote

business growth

and job creation.

Since its

formation in

2018, the

platform serves

as an

opportunity to

generate commercial

and industrial

loans, or

C&I

loans, and to diversify our revenue stream through originating and

selling SBA 7(a) loans. As of December 31,

2025, the Bank continued to be

a Preferred Lending Partner with the

SBA which allows us to offer

the full range

of SBA loan products and to exercise lending authority at the local bank level, allowing us to

make timely credit

decisions for prospective clients.

•

Yacht lending:

Our yacht lending vertical

provides yacht financing for

larger vessels; transactions range

from

$750 thousand to

$7.5 million. We

target high net-worth

clients in one

of the most

active yacht markets

in the

country.

•

Homeowner Association (“HOA”)

services:

We provide banking services

to HOAs and property

managers,

including deposit collection,

lockbox services, payment

services, and lending

products. Launched in

2016, we

offer our HOA customers a unique combination of market knowledge of

a local bank, and a highly personalized

“white glove” approach to customer service.

•

Private

Client

Group

services:

The

Private

Client

Group

tailored

banking

solutions

for

professionals—particularly those in law firms,

including partners, associates, and

staff—as well as physicians,

dentists, veterinarians, and other high

‑

net

‑

worth individuals. By leveraging our deep relationships with

law firm

clients,

we

also

generate

to

expand

deposit

account

across

their

organizations.

•

Correspondent Banking services:

Our Global Banking

vertical provides correspondent

banking services for

banks headquartered in certain

Latin America and Caribbean

countries. We also

cross-sell our correspondent

banking relationships to

generate international personal

banking clients for

our Bank. Our compliance

team is

experienced in

issues related

to correspondent banking,

and we

have frequent

and regular

open communication

with our correspondent bank clients to ensure proper compliance

controls are maintained at such institutions.

Credit Practices

Our underwriting process is informed by a conservative credit culture

that encourages prudent lending. We believe our

strong asset quality

is due

to our understanding

of and experience

with businesses within

in particular South

our

long-standing

with

clients

and

our

disciplined

processes.

Our

thorough

collaboratively

engage

our

seasoned

bankers,

credit

underwriters

and

managers

in

the

analysis of each loan request.

We manage our credit risk by analyzing metrics related

to our different lines of business, which allows us to

maintain a

conservative

and

well-diversified

loan portfolio

reflective

of our

of various

sectors.

Based

upon our

aggregate exposure to any given borrower relationship, we undertake a scaled review

of loan originations that may involve

our senior credit officers, our Chief Credit Officer,

our Credit Committee or, ultimately,

our Board of Directors (“Board”).

Deposit Products

We offer

traditional deposit

products, including

commercial and

consumer checking

accounts, money

market deposit

accounts, savings accounts, and

certificates of deposit

with a

variety of terms

and rates, as

well as a

robust suite of

treasury,

commercial payments, and cash management services. Additionally,

we offer insured cash sweep (“ICS”) and certificate of

deposit account

registry service

(“CDARS”) deposit

products that

are FDIC-insured

for our

clients. Furthermore,

we offer

deposit products

for municipalities

and

other public

entities. Our

deposit products

are mainly

offered

across

our primary

geographic footprint.

Title Services

Florida

Peninsula

Title

LLC

is

a

of

the

Bank

that

offers

our

clients

title

for

real

estate

closed

at

the

Bank.

Licensed

in the

State

of Florida

and

by the

Florida

of Insurance

Regulation, Florida Peninsula

Title LLC began operations

in 2021. Our

title service business not

only provides diversification

for non-interest income but also provides our clients with access

to tile insurance services.

Seasonality

We do not believe our business to be seasonal

in nature.

Markets

Our

primary

banking

market

is

South

South

Florida

has

rapidly

emerged

as

a

top

destination

for

driven

by

a

combination

of

factors

that

foster

growth

and

stability.

The

region

offers

a

low-tax

environment, a robust business infrastructure, and access to a

diverse talent pool. With a thriving

real estate market, strong

trade

connections,

and

an

of

tech

and

finance

sectors,

South

Florida

a

dynamic ecosystem for financial services. Additionally,

the region's strategic location as a gateway to Latin America further

enhances

its appeal

for corporations

looking

to strengthen

global

connectivity

and investment

opportunities.

We

believe

Florida offers

long-term attractive

banking opportunities.

Our largest

concentration is

in the

Miami metropolitan

area; however, we are

also focused on

growth in

other urban Florida

markets in which

we have a

presence, such as

Broward

and Palm Beach counties.

According to the

United States

Census Bureau’s

estimates, Florida

had

population of

23.8 million at

the end of

2025,

of 2%

when compared

to the

end of

2024, making

it the

3rd most

populated state

in the

country.

The Miami

Metro Area remains the most populous metro area in Florida with 6.7

million residents reflecting, a growth of 27.62% since

Competition

Our markets are highly competitive, and we compete with a wide range of lenders and other financial institutions within

our markets,

including local,

regional,

national,

and international

banks

and credit

unions.

We

also compete

with mortgage companies, brokerage

firms, trust service providers, consumer

finance companies, mutual funds,

firms,

payment

processors,

technology

or

Fintechs,

and

other

financial intermediaries on various

of our products and

services. Some of our competitors

are not subject to the

and

the

level

of

supervision

to

us.

Many

of

our

competitors

are

much

larger

institutions that have greater financial

resources than we do

and compete aggressively for market

share. These competitors

attempt to gain market share through their financial product

mix, pricing strategies and larger banking center networks.

Interest rates

on both

deposits and

prices of

fee-based services

are significant

competitive factors

among

generally.

Other

important

factors

include

quality

of

service,

availability and quality of digital offerings, community

reputation, and continuity of personnel and services.

Emerging Growth Company

We are an “emerging growth

company,”

or “EGC”, as defined in the Jumpstart

Our Business Startups Act of 2012 (the

“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are

applicable to other public companies

that are not EGCs, including,

but not limited to, not being

required to comply with

the

auditor

of

Section

of

the

Sarbanes-Oxley

Act,

reduced

executive compensation in

our periodic reports and

proxy statements, and

exemptions from the requirements

of holding a

non-binding

advisory

vote

on executive

and shareholder

of any

golden

parachute

not

previously approved.

Section

of

the

JOBS

Act

also

that

an

EGC can

take

of

the

extended

transition

period provided

in Section

7(a)(2)(B) of

the Securities

Act of

1933, as

amended (the

“Securities Act”),

for complying

with

new or revised accounting standards. In other

words, an EGC can delay the adoption

of certain accounting standards until

those standards would otherwise apply to private

companies. We intend to take advantage

of the benefits of this extended

transition period, for as long as it is available.

We will

remain an

EGC until

the earliest

to occur

of (i)

the end

of the

fiscal year

following the

fifth anniversary

of the

completion of the Bank’s initial public offering in 2021,

(ii) the last day of the first fiscal year in

which the Company's annual

gross revenues exceed $1.235 billion, (iii) the date that the

Company becomes a “large accelerated filer” as defined in Rule

12b-2 under the Exchange Act which would

occur if the market value of the

Company's common stock that is held

by non-

affiliates exceeds $700 million as of the last business day

of the Company’s most recently completed second

fiscal quarter

(June 30th for the

Company), or (iv) the date on

which the Company has issued more

than $1 billion in non-convertible debt

during the preceding three-year period. As a consequence,

we will cease to be an EGC as of December 31, 2026.

Human Capital Resources

We respect

the values and

diversity exhibited

throughout our organization

and the community.

Diversity is

an integral

part of

our organization’s

culture. We

seek the

active engagement

and participation

of people

with diverse

backgrounds.

We continue

taking steps

to create

programs to

we are

organized in

a way where

the unique

contributions of

each individual in our

Company is recognized

and supported. Each

team member is

to be treated fairly

with equal access

to opportunities and resources

for success. Additionally, we run homebuyer educational

and financial literacy workshops in

an effort to reach the financing needs of the sectors

of our communities in which these workshops

are most needed.

Our human capital

objectives include attracting,

developing and retaining

the best available

talent from a

diverse pool

of

candidates

for

the

To

do

so,

we

strive

to

pay

and

benefits,

updating

our

and

reviewing

our

and

programs.

the

Company

identifies

and

paths

for

the

of

our

staff,

and

we

seek

to,

whenever

possible,

fill

positions

by

promotion within. The Company recognizes that the skills and knowledge of its employees

are critical to the success of the

organization, and promotes training and continuing education

as an ongoing function for employees.

We recognize

the importance

of our

employee's

health and

well-being,

and offer

benefits such

as a

401(k)

retirement savings plan and make both matching and profit-sharing contributions to that plan. Benefit programs available to

include,

in

to

the

401(k)

retirement

savings

plan,

health

and

life

insurance,

paid

holidays and other benefits.

We value and promote diversity in

every aspect of our business

and at every level within

the Company. We recruit, hire,

and

promote

based

on

their

ability

and

and

in

with

Affirmative

Action

and

Equal Employment Opportunity

laws and regulations.

Our policy is that

we do not

discriminate on the

basis of race, color,

religion,

sex,

gender,

sexual

orientation,

ancestry,

pregnancy,

medical

age,

marital

status,

national

origin,

citizenship status, disability veteran status, gender identity,

genetic information, or any other status protected

by law.

At December 31, 2025,

we had 205

full-time equivalent employees.

None of our

employees are parties

to a collective

bargaining agreement. We believe that our employees are our greatest asset and vital to our success. As such, we seek to

hire and retain the best

candidate for each position, without regard to

age, gender, ethnicity, or other protected class status,

but

with

an

appreciation

for

a

diversity

of

perspectives

and

experiences.

We

have

a

including an array of benefit plans and programs that

we believe is attractive to our current and prospective

employees.

Regulation and Supervision

Bank holding

companies, banks, and

their affiliates are

extensively regulated under

state law

and regulation.

These laws and regulations have

a material effect on the operations

of the Company and its

direct and indirect subsidiaries,

including the Bank.

Statutes, regulations and

regulatory policies limit

the activities in

which we may

engage and the

conduct of our

activities and establish capital requirements with which we must comply. The regulatory framework is intended primarily for

the

of

depositors,

borrowers,

customers

and

clients,

the

FDIC

funds

and

the

banking

system

as

a

whole, and not for the protection of our shareholders or creditors. In many cases, the applicable regulatory authorities have

broad

power

over

bank

holding

banks

and

their

subsidiaries,

the

power

to

impose

substantial fines and other penalties for violations of laws

and regulations.

the

system

imposes

and

collection

obligations.

Banking

and

regulations are subject

to change,

and additional statutes,

regulations, and corresponding

guidance may

be adopted. We

are unable to predict these future changes or the effects, if any, that these changes could have on the business, prospects,

revenues, and results of operations of the Bank and Company.

The material

statutory and

regulatory requirements

applicable to

us are

summarized below.

The description

below is not intended to summarize all laws

and regulations applicable to us. These summary descriptions are not

to be a complete explanation of

such laws and regulations and their effects on the

Company and the Bank and are

in their entirety by reference to the actual

laws and regulations. You

should refer to the full text of the statutes,

and corresponding guidance for more information.

2018 Regulatory Reform

In May 2018

the Economic

Growth, Regulatory

Relief and

Consumer Protection

Act (the “2018

Act”), was

enacted to

modify or remove

certain financial reform

rules and regulations, including

some of those

implemented under the

Dodd-Frank

Wall Street Reform

and Consumer Protection

Act (“Dodd-Frank Act”) enacted

in 2010. While the 2018

Act maintains most

of the

structure established

by the

Dodd-Frank Act,

it amends

certain aspects

of the

regulatory framework

for

small depository institutions with assets of less than $10.0 billion and for large banks with assets of more than $50.0

Many of these changes resulted in meaningful regulatory

relief for community banks such as the Bank.

The 2018 Act, among other matters, expanded

the definition of “qualified mortgages”

which may be held by a financial

and

simplified

the

capital

rules

for

and

their

holding

with

total

consolidated assets of less than

$10.0 billion by instructing

(as described below) the federal

banking regulators to establish

a

single

“Community

Bank

Leverage

Ratio”

discussed

below.

The

Act

also

expanded

the

of

holding

companies that may rely on the “Small Bank Holding Company and

Savings and Loan Holding Company Policy Statement”

(the “SBHC Policy”) by raising

the maximum amount of

assets a qualifying holding

company may have from

$1.0 billion to

$3.0 billion.

This expansion

also excluded

such holding

minimum capital

of the

Dodd-

Frank Act. In addition,

the 2018 Act included

regulatory relief for community banks regarding

regulatory examination cycles,

call reports, the

Volcker

Rule (proprietary trading

prohibitions), mortgage

disclosures and risk

weights for certain

high-risk

commercial real estate loans.

Bank and Bank Holding Company Regulation

As a

Florida-chartered

commercial bank,

is subject

to ongoing

and comprehensive

supervision, regulation,

examination, and enforcement by the FDIC and the Florida Office

of Financial Regulation (“FOFR”). The FOFR supervises

and regulates

all areas

of our

operations including,

without limitation,

the making

of loans,

the issuance

of securities,

the

conduct

of

our

affairs,

the

satisfaction

of

capital

the

payment

of

dividends,

and

the

establishment or closing

of banking centers.

In addition, our

deposit accounts

are insured

by the Deposit

Insurance Fund

(the “DIF”)

administered by

the FDIC to

the maximum

extent permitted

by law,

and the FDIC

has certain

supervisory and

enforcement powers over us.

Any entity that directly or

indirectly controls a bank

must be approved by the

Federal Reserve under the

Company

Act

of

(the

“BHC

Act”)

to

become

a

bank

holding

Bank

holding

are

subject

to

regulation, inspection, examination, supervision and enforcement

by the Federal Reserve under the BHC Act. The Federal

Reserve's jurisdiction also extends to any company that is directly

or indirectly controlled by a bank holding company.

The

which

the

Bank,

is

a

bank

holding

company

and,

as

such,

is

subject

to

ongoing

and

comprehensive supervision, regulation, examination and

enforcement by the Federal Reserve.

Notice and Approval Requirements Related to Control

Banking

laws

impose

notice,

approval,

and

ongoing

on

any

person

or

entity

that

seeks

to

acquire direct or

indirect “control” of

an FDIC-insured depository

institution. These laws

include the

BHC Act and

the Change

in Bank Control Act. Among other things,

these laws require regulatory filings by

individuals or entities that seek to

acquire

direct or indirect

"control" of

an FDIC-insured

depository institution.

The determination

of whether

an investor

"controls" a

depository institution is based

on all of

the facts and

circumstances surrounding the investment. As

a general matter, a party

is deemed to conclusively control a depository institution or

other company if the party owns or

controls 25% or more of any

class of voting stock or owns

one-third or more of the equity of the

depository institution or its holding company.

Subject to

rebuttal, a party may be presumed to control a

depository institution or other company if the investor owns

or controls 10%

or more of any class of

voting stock (and the entity’s securities are registered under the Exchange Act

or, if not, the investor

would

be

the

largest

shareholder).

Except

under

limited

bank

holding

are

from

acquiring, without prior approval,

control of any other

bank or bank holding

company or substantially

all the assets thereof

or more

than 5%

of the

voting shares

of a

bank or

company which

is not

already a

subsidiary of

such bank

holding company.

Source of Strength

All companies, including bank holding companies, that directly or indirectly control an insured depository institution, are

required to serve as a source

of strength for the institution. Furthermore,

the Federal Reserve policy

is that a bank holding

company should stand ready

to use available resources

to provide adequate capital

to its subsidiary banks

during periods

stress or

adversity and

should maintain

flexibility and

capital-raising capacity

resources for assisting its subsidiary banks. Under

this requirement, the Company in the future could be

required to provide

financial assistance to

the Bank should it

experience financial distress. Such

support may be

required at times when,

absent

this statutory and Federal Reserve policy requirement, a bank holding

company may not be inclined or able to provide

it. A

bank holding company’s failure to meet its obligations to serve as

a source of strength to its subsidiary banks will generally

be considered by

the Federal Reserve to

be an unsafe and

unsound banking practice or

a violation of

the Federal Reserve’s

regulations, or both.

Safety and Soundness Regulation

As an insured depository

institution, we are subject to

prudential regulation and supervision

and must undergo regular

on-site examinations by our state and federal banking agencies. The cost of examinations of insured depository institutions

and any affiliates are assessed

by the appropriate agency against

each institution or affiliate that

is subject to examination

as it deems

necessary or

appropriate. We

file quarterly

consolidated reports

of condition

and income, or

call reports,

with

the FDIC and the FOFR.

The federal banking

agencies have also

adopted guidelines establishing safety

and soundness standards for

all insured

depository institutions including

the Bank. The safety

and soundness guidelines relate

to, among other things,

controls,

audit

loan

and

documentation,

laundering policies and procedures, transactions with insiders, risk management, compensation, asset growth, and interest

rate exposure. These

standards assist

the federal banking

agencies with early

identification and resolution

of problems at

insured depository institutions.

If we were

to fail to

meet or otherwise

comply with any

of these standards,

the FDIC could

require us to submit a

plan for achieving and maintaining

compliance. If a financial

institution fails to submit

an acceptable

compliance plan, or fails

in any material respect

to implement a compliance

plan that has been

accepted by the FDIC,

the

FDIC is

issue an

order directing

the institution

to cure

the deficiency.

Until the

deficiency cited

in the

order is

cured, the FDIC

may restrict the

financial institution’s

rate of growth,

require the financial

institution to increase

its capital,

restrict the rates the institution pays on

deposits or require the institution to take

any action the regulator deems appropriate

under the circumstances. Noncompliance with the standards established by the safety and soundness guidelines may also

constitute grounds

for other

enforcement action,

including cease

and desist

orders and civil

money penalty

assessments.

In

the

FDIC

could

our

deposit

if

it

determines

that

our

was

unsafe

or

unsound or that we engaged in unsafe or unsound practices that violated applicable rules, regulations, orders or conditions

enacted or imposed on us by our regulators.

During

the

past

decade,

the

bank

have

increasingly

emphasized

the

importance

of

sound

risk

management processes

and strong

when evaluating

the activities

of the

financial institutions they

supervise.

Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become

even more

important as

new technologies, product

innovation and

the size

and speed

transactions have

changed

the nature of

banking markets. The

agencies have identified

a spectrum of

risks facing a

banking institution including,

but

not limited

to, credit,

market, liquidity, interest rate,

cybersecurity, operational, legal and

reputational risk. In

particular, recent

regulatory pronouncements

have focused

on operational

risk, which

arises from

the potential

that inadequate

operational problems,

breaches

in

controls, fraud

or unforeseen

catastrophes

will result

in unexpected

losses. New

products and

services, use

of outside

vendors and

cybersecurity are

critical sources

of operational

are expected

to address

in the

current environment.

We have

active Board

and senior

oversight

and

risk

limits;

risk

and

and

information systems; and comprehensive internal controls

to address these various risks.

Permissible Activities and Investments

Banking laws

generally restrict

of the

engage in

activities other

than those

determined by

the

Federal Reserve to

be so closely

related to banking as

to be a

proper incident thereto. The

Federal Reserve has determined

by regulation

that certain

activities are

closely related

to banking

including operating a

mortgage company, finance company,

credit

card

factoring

trust

company

or

savings

association;

performing

certain

data

processing

limited

brokerage

services;

acting

as

an

or

advisor;

acting

as

an

insurance agent for

certain types of

credit-related insurance; leasing

personal property on

a full-payout, non-operating

basis;

providing tax

planning and

preparation services;

operating a

collection agency;

and providing

certain courier

services. In

the

Gramm-Leach-Bliley

Act

(the

“GLB

Act”)

expanded

the

scope

of

permissible

for

a

bank

holding

company that qualifies as a financial

holding company. Under the regulations implementing the GLB Act, a financial holding

company may engage in additional activities that

are financial in nature or

incidental or complementary to a financial

such

as

underwriting,

and

merchant

banking.

The

Company

is

not

a

holding

In addition, as a general matter,

the establishment or acquisition by

the Company of a non-bank entity,

or the initiation

of a

non-banking activity, requires prior

regulatory approval. In

approving acquisitions or

the addition

of activities,

Reserve considers, among

other things, whether

the acquisition or

the additional activities

can reasonably be

produce benefits

to the

public, such

as greater

or gains

in

efficiency,

that outweigh

such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts

of interest or

unsound banking practices.

Regulatory Capital Requirements

The federal banking

regulators have adopted

risk-based capital adequacy

guidelines for bank

holding companies and

their subsidiary banks

and banks without bank

holding companies based on

the Basel III

standards. Under these guidelines,

assets and off-balance sheet items are assigned to specific risk categories, each with designated risk weightings. The risk-

based capital guidelines are designed to make regulatory

capital requirements more sensitive to differences

in risk profiles

among banks and bank holding

companies, to account for off-balance sheet

exposure, to minimize disincentives for

holding

liquid assets, and

to achieve greater

consistency in

evaluating the capital

adequacy of

major banks throughout

the world.

The resulting

capital ratio requirements

represent capital as

a percentage of

total risk-weighted assets

and off-balance sheet

items. Final

rules implementing the

capital adequacy guidelines

became effective, with

various phase-in periods,

on January

1, 2015

for

banks

such

as us.

All

of

the

rules

were

fully

phased

in

as of

January

1,

These

final

rules

represent a significant change to the prior general risk-based capital rules and are

designed to substantially conform to the

Basel III international standards.

In computing

total risk-weighted

assets, bank

and bank

assets are

given risk-weights

of 0%,

20%,

50%, 100%

and 150%.

certain

sheet items

are given

similar credit

conversion

factors

to convert

them to asset

equivalent

amounts to which

an appropriate risk-weight

will apply.

Most loans will

be assigned to

the 100%

risk

category,

except

for

performing

first

loans

fully

secured

by

1-to-4

family

or

certain

multi-family

properties, which carry

a 50% risk

rating, and certain

past due loans

which are assigned

a 150% risk

rating. Most investment

securities (including,

primarily,

general obligation

claims on

states or

other political

subdivisions of

the United

States) will

be assigned to

the 20%

category,

except for

municipal or

state revenue bonds,

which have

a 50%

risk-weight, and

direct

obligations of the U.S. Treasury

or obligations backed by the full faith

and credit of the U.S. government,

which have a 0%

risk-weight. In covering off

-balance sheet items, direct

credit substitutes, including

general guarantees and standby

letters

of credit backing

financial obligations,

are given a

100% conversion

factor.

Transaction-related

contingencies such

as bid

bonds, standby

letters of

credit backing

nonfinancial obligations,

and undrawn

commitments (including

commercial credit

lines with an

initial maturity

of more than

one year) have

a 50% conversion

factor.

Short-term commercial

letters of credit

are converted at 20% and certain short-term unconditionally

cancelable commitments have a 0% factor.

Under

the

final

rules,

minimum

for

both

the

quality

and

quantity

of

capital

held

by

banking

organizations. In this respect, the final rules

implement strict eligibility criteria for regulatory capital instruments and improve

the methodology for

calculating risk-weighted

assets to enhance

risk sensitivity.

Consistent with the

international Basel III

framework, the rules include a new

minimum ratio of Common Equity

Tier 1 Capital to Risk-Weighted

Assets of 4.5%. The

rules also create a Common Equity Tier 1 Capital conservation

buffer of 2.5% of risk-weighted assets. This buffer

is added

to each of the three risk-based capital

ratios to determine whether an institution

has established the buffer.

The rules raise

the minimum ratio of Tier 1 Capital to Risk-Weighted Assets from 4% to 6% and

include a minimum leverage ratio of 4% for

all banking

organizations. If

a financial

capital conservation

buffer

falls below

2.5% —

e.g., if

the institution’s

Common Equity

Tier

1 Capital

to Risk

-Weighted

Assets is

less than

7.0% —

then capital

and

discretionary

bonus payments will

be limited or

prohibited based on

the size of

the institution’s conservation buffer. The types

of payments

subject to this limitation include

dividends, share buybacks, discretionary payments on

Tier 1 instruments, and discretionary

bonus payments.

Common Equity Tier 1 capital is

generally defined as common stockholders’ equity and

retained earnings. Tier 1 capital

defined as

Common Equity

Tier 1

and additional

Tier 1

capital. Additional

Tier 1

capital includes

certain non-

cumulative

perpetual

preferred

stock

and

related

surplus

and

minority

in

equity

of

subsidiaries. Total

capital includes

Tier

(Common Equity

Tier

plus additional

Tier

1 capital)

and Tier

capital. Tier

2 capital

is comprised

of

capital

and

related

surplus,

meeting

and

may

include cumulative preferred stock and long-term

perpetual preferred stock, mandatory convertible securities,

intermediate

preferred stock and

subordinated debt. Also

included in Tier

2 capital is the

allowance for loan

and lease losses

limited to

a

maximum

of

1.25%

of

risk-weighted

assets.

Calculation

of

all

types

of

capital

is

subject

to

deductions

and

adjustments specified

in the

regulations. In

assessing an

institution’s capital

adequacy,

the FDIC takes

into consideration

not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements

for individual institutions where deemed necessary.

The

capital

may

also

impact

the

treatment

of

accumulated

other

income

(“AOCI”)

for

regulatory capital purposes. Under

the rules, AOCI generally

flows through to regulatory

capital;

however, community banks

and their holding companies (if any) were allowed to make a

one-time irrevocable opt-out election to continue to treat AOCI

as under

the old

regulations for

regulatory capital

purposes. This

election was

be made

on the

first

call report

filed after

January 1,

2015. We

made the

opt-out election.

the rules

also permit

community banks

with less than $15.0 billion in total assets to continue to count certain non-qualifying capital instruments issued prior to May

19, 2010 as Tier 1 capital, including trust preferred securities

and cumulative perpetual preferred stock (subject to a limit of

25% of Tier 1 capital). However, non-qualifying

capital instruments issued on or after May 19, 2010 do not qualify for Tier 1

capital treatment. At December 31, 2025, we had no

such investments.

In May 2016,

amendments to the

Federal Reserve’s SBHC Policy

became effective which increased

the asset threshold

to qualify to utilize the

provisions of the SBHC

Policy from $500.0

million to $1.0 billion.

Subsequently,

as part of the

threshold

was

to

$3.0

Bank

holding companies

which

to the

SBHC

Policy

are not

subject to compliance with

the regulatory capital requirements

described above until they

exceed $3.0 billion in

assets. As

a consequence, as of December 31, 2025, the Company was not required

to comply with the requirements set forth above

and

will

not

be

subject

to

such

until

such

time

that

its consolidated

total

assets

exceed

$3.0

billion

or the

Federal Reserve determines

that the Company is

no longer deemed to

be a small bank

holding company.

However, if

the

Company had been subject to the requirements, it would have

been in compliance with such requirements.

In

September

2019,

the

federal

banking

jointly

finalized

a

rule

to

simplify

the

capital

requirements described above for qualifying community banking organizations

that opt into the Community Bank Leverage

Ratio, or

CBLR,

framework,

as required

by Section

201 of

the Regulatory

Relief

Act. The

final rule

became

on

January 1,

2020,

and the

CBLR framework

became

available for

banks to

use beginning

with

their

March

31, 2020

call

reports. Under

rule, if

a qualifying

banking organization

opts into

the CBLR

framework and

meets all

requirements under the

framework, it will

be considered to

have met

the well-capitalized ratio

requirements under the

prompt

described below

in this

Form 10-K

and will

not be

report or

calculate

risk-based

capital. In order to

qualify for the CBLR

framework, a community

banking organization must

have a tier 1

leverage ratio of

9%, less

than $10.0

billion in

total consolidated

assets, off

-balance

sheet exposures

of 25%

or less

consolidated assets,

and trading

liabilities of

5% or

less of

total consolidated

assets. In

November 2025,

the

federal banking

FDIC, proposed

a lower

CBLR requirement

of 8%.

Community banks

that fail

to

meet the qualifying

criteria after

opting into the

CBLR framework would

have four reporting

periods to meet

the qualifying

criteria again, provided they maintain a leverage ratio above 7%

and have not used the grace period for more than eight of

the prior 20 quarters. The federal banking agencies

also proposed removing the provisions under the CBLR framework that

provided temporary relief for qualifying community

banks during the COVID-19 outbreak.

Although the Bank is a qualifying

community banking organization, the Bank has elected not to opt in to the CBLR framework at this time and will

follow the Basel III capital requirements as described above.

As of

and 2024,

the U.S.

Century

Bank qualified

as a

“well capitalized”

institution. See

Note 16

“Regulatory Matters”

of the Consolidated

Financial Statements

of this

on Form

10-K for

further details.

Prompt Corrective Action

Under the Federal

Deposit Insurance Act

(“FDIA”), the

federal bank regulatory

agencies must take

"prompt corrective

action"

against

undercapitalized

U.S.

The

capital-based

five

categories

of

with

capital

"well

capitalized,"

"adequately

capitalized,"

"undercapitalized,"

"significantly

undercapitalized,"

and

"critically

undercapitalized,"

and

are

subjected

to

differential

regulation corresponding to the capital category within

which the institution falls.

An insured depository

institution is deemed

to be "well

capitalized" if

it has a

total risk-based

capital ratio

of 10.0% or

greater, a

tier 1 risk-based

capital ratio of 8.0%

or greater,

a Common Equity

Tier 1

risk-based capital ratio

of 6.5% and a

leverage ratio of 5.0%

or greater, and the institution is

not subject to

an order, written agreement, capital directive, or

prompt

directive to

meet and

maintain a

specific level

for any

capital measure.

Under certain

a

well-capitalized, adequately

capitalized or

undercapitalized institution

may be

treated as

if the

institution were

in the

next

lower capital category if it is determined that the institution is in an unsafe or unsound condition or is engaging in an unsafe

or unsound practice.

The degree of

regulatory scrutiny

of a financial

institution will increase,

and the permissible

of

the

will

decrease,

as

it

moves

downward

through

the

capital

categories.

Under

a

federal

banking

agency

may

reclassify

a

as

and

may

require

an

adequately capitalized institution or an

undercapitalized institution to comply with

supervisory actions as if

it were in

the next

lower

(except

that

the

FDIC

may

not

reclassify

a

significantly

undercapitalized

as

critically

undercapitalized).

A banking

institution that

is undercapitalized

is required

to submit

a capital

plan. Failure

to

meet

capital

could

subject

the

to

a

variety

of

remedies

by

federal

bank

including:

of

deposit

by

the

FDIC,

on

certain

activities,

and

appointment of the FDIC as conservator or receiver.

At As

31,

2025,

the

Bank was

deemed

to be

a “well-capitalized”

institution for

purposes

of the

prompt

corrective action regulations and as such is not subject

to the above mentioned restrictions.

Commercial Real Estate Concentration Guidelines

The federal

banking regulators

have implemented

guidelines to

address increased

concentrations in

estate

loans.

These

describe

the

criteria

will

use

as

indicators

to

potentially

exposed

to

real

estate

risk.

An

that

has

(i)

experienced

rapid

growth

in

estate lending,

(ii) notable

exposure to

a specific

type of

estate, (iii)

total reported

loans

for construction, land development,

and other land representing

100% or more of

total capital, or (iv) total

estate

construction)

loans,

as

defined

in

the

banking

representing

300%

or

more

of

total

capital and the outstanding balance of the

institution’s commercial real estate portfolio has increased by 50% or

more in the

prior 36 months, may be identified for further supervisory

analysis of a potential concentration

risk.

As of As

of December 31,

2025, our ratio

of construction

loans to total

risk-based capital was

31%, and therefore,

we

were under the

100% threshold

set forth in

clause (iii)

in the paragraph

above. However,

with respect to

clause (iv)

in the

paragraph above,

our ratio

of total commercial

loans to total

risk-based capital

was

370%. As

we are

deemed to

have a concentration

in commercial

lending under

applicable regulatory

guidelines.

If a

concentration is

present, under

the federal

banking regulator’

guidance, management

should employ

heightened

risk management practices that address key elements,

including board and management oversight and strategic

planning,

portfolio management,

of underwriting

standards,

risk assessment

and monitoring

through

market analysis

and stress

testing, and

maintenance of

increased capital

levels as

needed to

support the

estate

lending.

To

address the commercial

real estate lending

concentration, the Bank

has previously established

real estate lending framework to

monitor specific exposures and

limits by types within the commercial

real estate portfolio,

including, among other things,

annual stress testing of

the commercial real estate

portfolio, and takes

appropriate actions,

as necessary.

Payment of Dividends and Share Repurchases

The ability of

the board of

directors of an

institution to declare

a cash dividend

or other distribution

with respect to capital is subject

to federal and state statutory

and regulatory restrictions that

limit the amount available

for

such

depending

upon

earnings,

whether

the

has

earnings, and cash needs of the institution,

as well as general business conditions.

Insured depository institutions are also

from

paying

fees

to

any

controlling

persons

or,

with

certain

limited

exceptions,

making

capital

distributions, including dividends, if after such transaction the institution would be

less than adequately capitalized. We may

generally declare a dividend

from retained net profits

which accrued prior to

the preceding two

years, but we must,

before

the

declaration

of

a

on

our

common

stock,

under

Florida

law,

carry

20%

of

our

net

profits

for

such

preceding period

as is

covered by

the dividend

to our

surplus fund,

until the

same shall

at least

equal the

our

common stock and preferred stock,

if any, then issued and outstanding. Under Florida law, we are

prohibited from declaring

a

at

any

time

at

which

our

net

income

from

the

current

year

with

the

net

income

from

the

preceding two years is a loss or which would cause our capital accounts to

fall below the minimum amount required by law,

regulation, order,

or any written agreement

with a state or

federal regulatory agency.

Furthermore, under applicable

FDIC

and

policy,

because

the

Bank

has

earnings,

it

must

obtain

the

prior

of

the

FDIC

before effecting a cash dividend or other capital distribution.

A Federal Reserve policy statement on the payment

of cash dividends states that a bank holding

company should pay

cash dividends only to the

extent that the holding company’s net

income for the past year

is sufficient to cover both the

cash

dividends and

a rate

of earnings

retention that

is consistent

holding company’s

capital needs,

asset quality

and

overall

condition.

The

Federal

Reserve’s

policy

also

that

it

would

be

inappropriate

for

a

company experiencing serious financial problems to borrow funds to pay dividends.

Furthermore, under the federal prompt

regulations, the

may prohibit

a bank

from paying

any dividends

if the

holding company’s bank subsidiary is classified

as “undercapitalized.” See “- Prompt Corrective Action”

above.

Section 225.4(b)(1) of Regulation

Y promulgated by the Federal

Reserve requires that a bank

holding company that is not

or

“well-managed”,

or

that

is

subject

to

any

unresolved

issues,

provide

prior

notice

to

the

Federal Reserve for

any repurchase or

redemption of

its equity securities

for cash or

other value that

would reduce by

percent or more the bank

holding company’s consolidated

net worth aggregated over

the preceding 12-month period.

The

Federal

Reserve

may

disapprove

such

a

or

redemption

if

it

determines

that

the

proposal

would

constitute

an

unsafe or

unsound practice

or would

violate any

law,

regulation, Federal

Reserve order

or any

condition imposed

by,

or

written

agreement

with,

the

Federal

Reserve.

As

of

2025,

the

Company

was

not

subject

to

any

formal

supervisory restrictions on

its ability

to pay dividends

but will

notify the

Federal Reserve in

advance of any

proposed dividend

to the Company's shareholders in

light of the Bank's

negative retained earnings. In addition,

we will provide prior

notification

to the Federal Reserve prior to effecting proposed share

repurchases.

Incentive Compensation

Guidelines adopted by

the federal

banking agencies pursuant

to the

FDIA prohibit

excessive compensation as

an unsafe

and

unsound

practice

and

describe

as

excessive

when

the

amounts

paid

are

unreasonable

or

disproportionate to the services performed by an executive

officer, employee, director

or principal shareholder.

In June 2010,

the federal banking

agencies jointly

adopted the

Guidance on Sound

Incentive Compensation

Policies,

or GSICP.

The GSICP was

intended to ensure

that banking organizations

do not undermine

the safety and

soundness of

such organizations

by encouraging

excessive risk-taking.

This guidance,

which covers

all employees

that have

to expose the organization

to material amounts

of risk, either

individually or as

part of a group,

is based upon a

set of key

principles relating to

a banking organization’s

incentive compensation arrangements.

Specifically,

incentive compensation

arrangements should (i)

provide employee incentives

that appropriately balance risk

in a manner that does

not encourage

employees to expose their

organizations to imprudent risk,

(ii) be compatible with

effective controls and risk

and (iii) be supported by

strong corporate governance,

including active and effective

oversight by the organization’s

board

of directors. Any deficiencies in our compensation

practices could lead to supervisory or enforcement

actions by the FDIC.

The GSICP

provides that

enforcement actions

may be

taken against a

banking organization

if its

incentive compensation

arrangements

or related

risk-management

control

or governance

pose

a risk

to the

organization’s

safety and

soundness and the organization is not taking prompt and

effective measures to correct the deficiencies.

The

Dodd-Frank

Act

the

federal

banking

and

the

SEC

to

establish

joint

or

prohibiting incentive-based payment arrangements at specified regulated entities, such as us, having at least $1.0 billion in

total

assets

that

encourage

inappropriate

risk-taking

by

an

officer,

employee,

director

or

shareholder

with

excessive

compensation,

fees,

or

or

that

could

lead

to

loss

to

the

entity.

In

addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-

based compensation

arrangements. The

federal banking

agencies proposed

such regulations

in April

and issued

a

second proposed

rule in

April 2016.

The second

proposed rule

would apply

to all

banks, among

other institutions,

with at

least $1.0

billion in

average total

consolidated assets.

in May

2024, a

re-proposed rule

was published

that is

to

prohibit

certain

from

establishing

or

incentive-based

arrangements that encourage inappropriate risk taking by providing covered persons with excessive compensation, fees or

benefits that could

lead to material

financial loss at

the financial institution.

Final regulations

have not been

adopted as of

the date of

this Form 10-K.

If adopted, these

or other similar

regulations would impose

manner in which

we may structure

compensation for

our executives

and other employees

that go beyond

the requirements

of GSICP.

The

scope and content

of the federal

banking agencies’

policies on incentive

compensation are continuing

to develop and

are

likely to continue evolving, but the timeframe for finalization,

if finalized, of such policies is not known at this time.

Limits on Transactions with Affiliates and

Insiders

Transactions

between

insured

and

any

affiliate

are

governed

by

Sections

23A

and

23B

of

the

Federal Reserve Act. An affiliate

of an insured financial institution

is any company or entity which

controls, is controlled by

or

is

under

common

control

with

the

insured

In

a

bank

holding

company

context,

the

bank

holding

company of an insured financial institution

(such as the Company) and any

companies which are controlled by such holding

company

are

affiliates

of

the

insured

Generally,

Section

23A

limits

the

extent

to

which

the

insured

financial institution or its

subsidiaries may engage in

“covered transactions” with any one

affiliate to an amount equal

to 10%

of such institution’s

capital stock

and surplus, and

contains an

aggregate limit

on all such

transactions with

all affiliates

to

an amount equal to 20% of such capital stock and surplus. Section 23B applies to “covered transactions” as well as certain

other

and

that

all

be

on

terms

the

same,

or

at

least

as

favorable

to

the

insured financial institution, as

those provided to

a non-affiliate. The term “covered

transaction” includes the making

of loans

to, purchase of

assets from

and issuance of

a guarantee to

an affiliate

and similar

transactions. Section

23B transactions

also include

the provision

of services

and the

sale of

assets by

an insured

institution to

an affiliate.

loans or other

extensions of

credit by the

financial institution

to the affiliate

are to be

collateralized in

accordance with the

requirements set forth in Section 23 of the Federal Reserve

Act.

Sections 22(g)

and (h)

of the

Act place

restrictions on

executive officers, directors

and principal

shareholders. Under

Section 22(h),

a director,

an executive

officer

and to

a greater

than 10%

stockholder

of an

insured

institution,

and

certain

affiliated

of

either,

may

not

exceed,

together

with

all

other

loans to such

person and

affiliated interests,

the insured financial

institution’s loans

to one borrower

limit (generally

equal

to 15%

of

the

unimpaired capital

and

surplus).

Section

22(h) also

that

loans

to directors,

officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other

persons unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees

of the

institution and

(ii) does

not give

preference to

any director, executive

officer or

principal stockholder, or

certain affiliated

interests thereof, over other employees

of the insured financial institution.

Section 22(h) also requires prior board

for the issuance of certain loans. In addition, the aggregate amount of

extensions of credit by an insured financial institution

to all insiders cannot

exceed the institution’s

unimpaired capital and

surplus. Furthermore, Section

22(g) places additional

restrictions on loans to executive officers. At December

31, 2025, the Bank was in compliance with the above restrictions.

FDIC Deposit Insurance

The FDIC is

an independent

federal agency

that insures the

deposits of federally

institutions up

to

applicable limits. The FDIC also has certain regulatory,

examination and enforcement powers with respect to FDIC-insured

The

are

insured

by

the

FDIC

up

to

limits.

As

a

general

matter,

the

maximum

deposit

insurance amount is $250 thousand per depositor.

FDIC-insured depository institutions are required

to pay deposit insurance assessments

to the FDIC. The

a particular

institution's deposit

insurance assessment

is based

on that

institution's risk

classification under

an

FDIC risk-based assessment system. An institution's

risk classification is assigned based on

its capital levels and the level

of supervisory concern the institution poses to the regulators.

Under the current

system, deposit

insurance assessments

are based

on a bank’s

assessment base,

which is

defined

as average total assets minus

average tangible equity.

For established small institutions,

such as the Bank, the

FDIC sets

deposit

rates

based

on

the

Ratios

Method,

which

takes

into

account

several

ratios

that

reflect

leverage, asset quality,

and earnings at

each individual institution

and then applies

a pricing multiplier that

is the same for

all institutions. An

institution’s rate

must be within

a certain minimum

and a certain

maximum, and the

range varies based

on the

composite CAMELS

rating. The

is calculated

by multiplying

the bank’s

assessment base

by the

total base

assessment rate.

Assessment rates

for most

institutions with

less

than $10.0 billion of assets range from 2.5 to 32 basis points

of each institution’s total assets less tangible

capital.

In October 2022, the FDIC finalized a

rule that increased the initial base deposit insurance

assessment rates by 2 basis

points, beginning with the first

quarterly assessment period of 2023

(January 1, 2023 through

March 31, 2023). The FDIC,

as required under the FDIA, established a plan in

September 2020 (the “Restoration Plan”) to restore the DIF

reserve ratio

to meet or exceed

the statutory minimum

of 1.35% within eight

years. The Restoration

Plan did not

include an increase

in

the deposit

insurance assessment

rate. Based

on the

FDIC’s recent

projections,

determined that

the

DIF reserve ratio

is at risk

of not reaching the

statutory minimum by

the statutory deadline

of September 30,

2028 without

increasing the

assessment rates.

The increased

assessment would

improve the

likelihood that

the DIF

reserve ratio would reach the required minimum by the statutory deadline, consistent with the

FDIC’s amended Restoration

Plan. The

FDIC

is maintain

ing the

Designated

Reserve

Ratio (“DRR”)

for the

DIF at

2% for

The assessment

rate

schedules will remain in effect unless and until the reserve ratio meets or exceeds 2% in order to support growth in the DIF

in progressing

toward the

FDIC’s long-term

goal of

a 2%

DRR. Progressively

lower assessment

rate schedules

will take

effect

when

the

reserve

ratio

reaches

2%, and

again

when

it reaches

2.5%.

The

revised

rate

schedule

will

remain in effect unless and until the reserve ratio

meets or exceeds 2%, absent further action by the FDIC.

Under the

FDIA, the

FDIC may

terminate deposit

insurance upon

a finding

that the

institution has

engaged in

unsafe

and unsound

practices,

is in

an unsafe

or unsound

to continue

or has

violated any

law,

regulation, rule, order, or condition

imposed by the FDIC.

Brokered Deposits

The FDIA

and FDIC

regulations generally

limit the

ability of

an insured

depository institution

to accept,

renew or

roll-

over any brokered deposit

unless the institution's capital

category is "well capitalized"

or, upon

application to and a

waiver

from

the

FDIC,

“adequately

capitalized."

Less-than-well-capitalized

banks

are

also

subject

to

on

the

rates that they

may pay on

deposits. The characterization

of deposits as

"brokered" may result

in the imposition

of higher

deposit assessments

on such deposits.

As mandated

by the 2018

Act, the FDIC's

brokered deposit

regulations provide

a

limited exception for reciprocal

deposits for banks that

are well-managed and well

capitalized (or adequately capitalized and

have obtained

a waiver

FDIC as

mentioned above).

Under the

limited exception,

qualified banks

are eligible

for

exemption from

treatment as

"brokered" deposits

up to

$5.0 billion,

or 20%

of the

institution's total

liabilities in

reciprocal

deposits. In

2021, the

FDIC clarified

and modernized

its brokered

deposit regulations

by establishing

clear standards

for

determining whether an

entity qualifies as a

deposit broker,

identifying business relationships

that automatically qualify

for

the

“primary

purpose

exception,”

creating

a

transparent

process

for

seeking

that

exception,

and

confirming that third parties with exclusive deposit

-placement arrangements with one institution are

not considered deposit

brokers.

Depositor Preference

The FDIA provides

that, in the

event of the

"liquidation or other

resolution" of an

insured depository institution, the

claims

of depositors

of the institution

(including the

claims of

the FDIC as

subrogee of

insured depositors)

and certain claims

for

of

the

FDIC

as

a

receiver

will

have

priority

over

other

general

unsecured

claims

against

the

institution. Insured and

uninsured depositors,

along with the

FDIC, will have

priority in payment

ahead of unsecured,

non-

deposit creditors,

Bank, with

respect to

any extensions

of credit they

have made to

such insured

Overdraft Fee Regulation

The Electronic Fund Transfer Act prohibits

financial institutions from charging consumers fees

for paying overdrafts on

automated teller machines, or

ATMs,

and one-time debit card transactions,

unless a consumer consents,

or opts in, to the

overdraft service for those types

of transactions. If a consumer

does not opt in,

any ATM transaction or debit that overdraws

the consumer’s account

will be denied.

Overdrafts on

the payment

of checks

and regular

electronic bill

payments are

not

covered

by

this

new

rule.

Before

opting

in,

the

must

be

with

a

notice

that

explains

the

overdraft

the

fees

with

the

service,

and

the

consumer’s

choices.

must

provide

who

do

not

opt

in

with

the

same

account

terms,

and

features

pricing) that they provide to consumers who do opt in.

Federal Reserve System and Federal Home Loan

Bank System

We are a member of the Federal Home Loan Bank (“FHLB”) of Atlanta, which is one of 11 regional FHLBs. Each FHLB

serves as

a quasi-reserve

bank for

its members

within its

assigned region.

It is

funded primarily

from funds

deposited by

member institutions

and proceeds

from the sale

of consolidated

obligations of

system. A

FHLB makes

members (i.e., advances) in accordance with policies

and procedures established by the Board of Trustees

of the FHLB.

As a member

of the FHLB

of Atlanta, we are

required to own

capital stock in

the FHLB in

an amount at

least equal to

0.07% (or

7 basis

points), which

is subject

to annual

adjustments, of

total assets

at the

end of

each calendar

year (up

to a

maximum of

$18.0 million),

plus 4.75%

of our

outstanding advances

(borrowings) from

of Atlanta

and

0.10%

of

the

amount

of

letters

of

credit

under

the

activity-based

stock

As

of

December 31, 2025, the Bank was in compliance with

such requirements.

Anti-Money Laundering Regulation

As a financial

institution, we

must maintain

programs that

include established

internal policies,

and

controls,

a

officer,

an

ongoing

program,

and

testing

of

the

program by an independent audit function in accordance with the

Bank Secrecy Act of 1970, as amended (“BSA”), and the

regulations issued

by the

Department of

the Treasury

in 31

CFR Chapter

X, Section

326.8 of

the FDIC’s

and

the

Florida

Control

of

Money

Laundering

and

Terrorist

Financing

in

Institutions

Act.

are

prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards

for due

diligence and

“knowing

your

customer”

in their

dealings

with

foreign financial

foreign customers

and

other high-risk customers.

Financial institutions must

also take reasonable

steps to conduct

enhanced scrutiny of

account

relationships to

guard against

money laundering

and to

report transactions

that meet

certain dollar

amount thresholds

as

well as any

suspicious transactions.

Laws, such

as the

Act enacted

in 2001,

as described

below,

provide

law enforcement authorities with increased access to financial

information maintained by banks.

Anti-money laundering

obligations have

been substantially

strengthened

as a

the USA

PATRIOT

Act. Bank

regulators routinely examine institutions for compliance with these obligations, and this area has become a particular focus

of

the

in

recent

years.

In

the

are

to

in

with

the

review

of

certain

applications.

In

recent

years,

have

expressed

concern

over

banking

institutions’

with

and,

in

some

cases,

have

delayed

of

their

expansionary

proposals. The regulators and other

governmental authorities have been

active in imposing “cease

and desist” orders and

significant money penalty sanctions against institutions

found to be in violation of the anti-money laundering regulations.

Act

The USA

PATRIOT

Act became

in October

2001 and

amended the

BSA. The

Act requires

banks to establish anti-money laundering programs that

include, at a minimum:

•

a bank

program

that

and

to

and

maintain the

bank’s compliance

with all

of the

requirements of

the USA

PATRIOT

BSA and

related laws

and regulations;

bank wide

systems

and procedures

for monitoring

and reporting

of suspicious

and

activities;

•

a designated compliance officer;

•

employee training for bank employees;

•

an independent audit function to test the efficacy

of the bank’s anti-money laundering program;

•

procedures to verify the identity of each bank customer upon

the opening of accounts;

•

heightened due diligence policies,

procedures and controls applicable to

certain foreign accounts and

relationships;

and

•

required reports to law enforcement and/or financial regulators to assist in the deterrence and prevention of money

laundering activities.

the USA PATRIOT

Act requires each financial

institution to develop a

customer identification program,

or

CIP, as part of its anti-money

laundering program. The

key components of

the CIP are

identification verification, government

list comparison,

notice and

record retention.

The purpose

of the

CIP is

to enable

institution to

determine the

true identity

and anticipated

account activity

of each

customer.

To

make this

determination, the

financial institution

must,

among other things, collect certain information from customers at the time they enter

into the customer relationship with the

financial institution.

This information must

be verified within

a reasonable time.

Furthermore, all customers

must be

screened

against any CIP-related government

lists of known or suspected

terrorists or other “sanctioned”

persons. In May 2018, the

U.S. Treasury’s

Financial Crimes

Enforcement Network,

or FinCEN,

issued a

final rule

BSA requiring

banks to

identify and verify

the identity of

the natural persons

behind their customers

that are legal

entities—the beneficial

owners.

The

Anti-Money

Laundering

Act

of

(the

“AML

Act”)

and

within

the

AML

Act,

the

Corporate

Transparency

Act

(the

“CTA”),

was enacted in

January 2021. The

AML Act is

intended to be

a comprehensive

reform and modernization

of U.S.

bank

secrecy

and

laws.

Among

other

things,

it

codifies

a

risk-based

approach

to

laundering compliance

for financial

institutions; requires the

development of

standards for evaluating

technology and

for BSA

compliance;

expands

enforcement-

and investigation

-related

authority,

sanctions

for

certain

BSA

violations

and

instituting

BSA

whistleblower

incentives

and

protections.

The

CTA

establishes

uniform beneficial

ownership reporting

requirements for

corporations, limited

liability companies,

and other similar

formed or registered to do business in the United States. The CTA

authorizes FinCEN to collect that information and share

it with

authorized government authorities

and financial institutions,

effective safeguards and

controls. In December

2023,

FinCEN

issued

access

to

the

beneficial

collected

under

the

CTA.

In

March

2025,

as

a

result

of

various

legal

challenges

to

the

CTA,

the

U.S.

Treasury

announced

that

it

was

suspending

enforcement of the

CTA

against domestic reporting

companies and their

beneficial owners. Later

in March 2025,

the U.S.

Treasury issued

a final interim

rule that formally

excepted domestic

reporting companies

and their beneficial

owners from

the

Under

the

interim

final

rule,

only

foreign

would

need

to

provide

foreign

beneficial ownership information. We and our affiliates have adopted

policies, procedures and controls designed to comply

with the BSA, the AML Act, the CTA

and the USA PATRIOT

Act.

The Office of Foreign Assets Control

The Office of Foreign Assets Control (the “OFAC”)

is responsible for helping to ensure that U.S. entities do not engage

in transactions with

“enemies” of

the United States,

as defined by

various Executive

Orders and Acts

of Congress.

OFAC

publishes lists of

names of

persons and organizations

suspected of aiding,

harboring or

engaging in terrorist

acts; owned

or

controlled

by,

or

acting

on

behalf

of

target

countries;

and

narcotics

traffickers.

Such

persons

are

referred

to

as

“sanctioned” persons.

If a bank finds

a name on

any transaction, account

or wire transfer

that is on

an OFAC

list, it must

freeze the account

and/or block the transaction or wire transfer. We utilize an outside vendor to oversee

the inspection of our accounts and the

filing of any notifications.

We also monitor

high-risk OFAC

areas such as new

accounts, wire transfers

and customer files.

These checks are performed using software that is updated each time

a modification is made to the lists provided by

OFAC

and other agencies of Specially Designated Nationals

and Blocked Persons.

Consumer Laws and Regulations

Our activities

to a

variety

of federal

statutes and

protect consumers

in

transactions with

banks. Interest

charges collected

or contracted

for by

us are

state usury

laws and

federal laws concerning interest rates. Our loan

operations are also subject to federal laws

applicable to credit transactions,

such as:

•

the

Truth-In-Lending

Act,

and

Regulation

Z,

governing

of

credit

and

servicing

terms

to

and

new

for

lending

and

servicing,

as

mandated

by

the

Dodd-Frank Act

•

the Home Mortgage Disclosure Act of 1975 and Regulation C, requiring

financial institutions to provide information

to enable the

public and public

officials to

determine whether

a financial institution

is fulfilling its

obligation to help

meet the housing needs of the communities they serve;

•

the Equal Credit

Opportunity Act

and Regulation

B, prohibiting

discrimination on

the basis

of race,

color,

religion,

or other prohibited factors in extending credit;

•

Credit Reporting Act

of 1978,

as amended by

and Accurate Credit

Transactions Act, and Regulation

V, as well as the rules and

regulations of the FDIC governing the

use and provision of information

to credit reporting

agencies, certain identity theft protections and certain

credit and other disclosures;

•

Debt Collection

Practices Act

and Regulation

F,

governing the

manner in

which consumer

debts may

be

collected by collection agencies; and

•

the Real Estate Settlement Procedures Act, and

Regulation X, which governs aspects of the settlement process for

residential mortgage loans.

Our deposit operations are also subject to federal laws,

such as:

•

the FDIA, which, among other things, limits the amount of

deposit insurance available per account to $250,000 and

imposes other limits on deposit-taking;

•

the Right to

Financial Privacy Act,

which imposes a

duty to maintain

the confidentiality of

consumer financial records

and prescribes procedures for complying with administrative subpoenas

of financial records;

•

Check Clearing for

the 21st Century

Act (also known

as “Check 21”),

which gives “substitute

checks,” such as

digital

check images and copies made from that image, the

same legal standing as the original paper check;

•

the Electronic

Funds Transfer

Act and

Regulation E,

which governs

automatic deposits

to and

withdrawals

from

deposit accounts

and customers’

rights and

liabilities arising

use of

ATMs

electronic banking

services; and

•

the Truth

in Savings

Act and

Regulation DD,

which requires

depository institutions

disclosures so

that

consumers can make meaningful comparisons about depository

institutions and accounts.

These

laws

and

mandate

certain

and

regulate

the

manner

in

which

institutions must deal with clients when

taking deposits or making loans to

such clients. We must comply with the applicable

provisions of these consumer protection laws and regulations as part of both

our ongoing client relations and our regulatory

compliance obligations.

Financial Privacy and Cybersecurity

Banking organizations

are

many federal

laws and

governing the

collection,

use and

protection of customer information.

Under the privacy protection

provisions of the GLB

Act and related laws

and regulations,

including Florida laws, we are limited in our ability

to disclose non-public information about consumers

to nonaffiliated third

parties. These

require

of

privacy

policies to

and,

in

some

require

us to

allow

to

prevent

of

certain

to

a

non-affiliated

third

party

and

to

not

disclose

account numbers or

access codes to

non-affiliated third parties for

marketing purposes. Federal

banking agencies, including

the

FDIC,

have

adopted

for

establishing

standards

and

for

implementing safeguards. These guidelines,

along with related

regulatory materials, increasingly focus

on risk management

and processes related to information technology and the use

of third parties in the provision of financial services.

In

the

federal

banking

have

adopted

a

rule

to

establish

computer-security

incident

notification

for

bank

holding

banks

and

their

service

providers.

Under

the

rule,

banking

organizations

are

required to notify their primary

federal regulators within 36 hours

of any incident that has materially

disrupted or degraded,

or is

reasonably

likely to

materially disrupt

or degrade,

the banking

organization’s

deliver banking

services to

a

material portion of

its client base,

jeopardize the

viability of key

operations, or

impact the financial

stability of

sector. The rule also imposes

certain notification requirements on third-party bank

service providers when they experience

a computer-security

incident that

has caused,

or is

likely to

cause a

material service

disruption or

degradation for

four or

more hours. In such case, the service provider is required to notify its bank-designated point of contact as soon as possible

upon discovery of the incident.

In addition to federal laws and regulations, we are subject

to state laws governing customer privacy and cybersecurity.

The Florida Information Protection Act of 2014 (“Florida Act”) requires notification of

the Florida Department of Legal Affairs

of any breach involving

personal information that

affects more than

500 people as

well as requiring notification

of affected

individuals of

a breach.

The Florida

Act also

requires us to

take reasonable

measures to protect

and secure

data in

electronic

form containing personal information and take all reasonable measures to dispose, or arrange for the disposal, of

records containing

personal information

within our

custody or

control when

the records

are no

longer to

be retained.

We

incur

costs

and

in

order

to

address

with

the

federal

and

state

privacy

and

cybersecurity laws and regulations, and we expect such

costs and expenses will continue into the future.

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (“CFPB”) is

an independent regulatory authority housed within the

Federal

Reserve Board. The CFPB has broad authority to regulate the offering and provision of consumer financial products and to

prevent institutions subject to its authority from engaging in “unfair

and deceptive or abusive acts or practices” with respect

to their

offering of consumer

financial products or

services. The CFPB

has the

authority to

supervise and examine

institutions with more than $10.0 billion

in assets for compliance with federal

consumer laws. The authority to supervise

and

examine depository institutions with $10.0 billion or less in assets, such as the Bank, for compliance with federal consumer

laws remains largely with those institutions’ primary federal

regulators. However, the CFPB may participate in examinations

of these smaller institutions

on a “sampling basis”

and may refer potential

enforcement actions

against such institutions

to

their primary regulators.

As such, the

CFPB may participate

in examinations of

the Bank. In

addition, states are

to adopt consumer

protection laws and

regulations that are stricter

than the regulations promulgated

by the CFPB,

attorneys general are permitted to enforce consumer protection

rules adopted by the CFPB against certain

The Volcker Rule

The Dodd-Frank Act

prohibits (subject to

certain exceptions) us

and our

affiliates from engaging

in short term

proprietary

trading in securities and derivatives and from investing

in and sponsoring certain investment companies defined

in the rule

as “covered

funds” (including

not only

hedge funds,

commodity pools

and private

equity funds,

but also

a range

of asset

securitization structures

that do not

meet exemptive

criteria in the

final rules). This

statutory provision

is commonly

called

the “Volcker Rule.” At December 31, 2025, we are not

subject to the Volcker Rule because of our asset

size, which is below

the $10.0 billion Volcker Rule

threshold.

Community Reinvestment Act and Fair Lending Requirements

As

previously

noted,

we

are

subject

to

certain

fair

lending

and

involving

home

lending

We

are

also

subject

to

certain

and

under

the

federal

Community Reinvestment Act (“CRA”).

The CRA and

its corresponding regulations are

intended to encourage banks

to help

meet the credit needs of

the communities they serve,

including low- and moderate

-income neighborhoods, consistent with

safe and sound banking practices.

the

CRA

federal

banking

to

evaluate

the

record

of

a

in

meeting applicable

CRA requirements.

The CRA

further requires

the agencies

to take

into account

our record

of meeting

credit

needs

when

applications

for,

among

other

things,

new

branches

or

mergers.

We

are

also

subject to analogous state CRA requirements

in Florida and certain other states

in which we may establish branch

offices.

In

with

their

of

CRA

the

FDIC

and

FOFR

assign

a

rating

of

“outstanding,”

“satisfactory,”

“needs to

improve,” or

“substantial

noncompliance.”

We received

a “satisfactory”

CRA Assessment

Rating

from

both

in

our

most

recent

CRA

examinations

in

In

to

substantive

and

corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take

compliance with such laws and CRA

into account when regulating and supervising

other activities of the bank, including

in

acting

on

expansionary

proposals

such

as when

a bank

submits

an

to establish

bank

branches,

merge

with

another bank,

or acquire

and assume

the liabilities

of another bank.

An unsatisfactory

CRA and/or

fair lending

record could

substantially delay or

block any

such transaction.

The regulatory agency's

assessment of

the institution's

record

is made available to

the public at

www.ffiec.gov/craratings.

Following its most

recent CRA performance

evaluation in April

2023, the Bank received an overall rating of "Satisfactory."

In October 2023, the federal

banking agencies jointly issued

a final rule to modernize

CRA, but in light of litigation,

the

agencies issued a joint proposal

in July 2025 to rescind this

rule and reinstate the CRA framework

that existed prior to the

2023 final rule.

Call Reports and Examination Cycle

All institutions, regardless of size, submit

a quarterly call report that includes

data used by federal banking agencies

to

monitor the condition, performance, and

risk profile of individual institutions

and the industry as a whole.

In June 2019, the

federal banking agencies issued a

final rule to permit insured

depository institutions with total assets of

less than $5.0 billion

that

do

not

engage

in

certain

complex

or international

to

file

the

most

streamlined

version

of the

call

report, and to reduce data reportable on certain streamlined

call report submissions.

Effect of Governmental Monetary Policies

The commercial banking

business is affected

not only by

general economic conditions,

but also by

the monetary policies

of the Federal Reserve. Changes in the discount rate

on member bank borrowing, availability of borrowing

at the “discount

window,”

open

market

changes

in

the

Fed

Funds

target

rate,

the

of

changes

in

reserve

requirements against member banks’ deposits

and assets of foreign banking centers

and the imposition of and changes in

reserve requirements against certain

borrowings by banks and

their affiliates are

some of the

instruments of monetary

policy

available to the Federal Reserve. These

monetary policies are used in

varying combinations to influence overall growth and

distributions of bank loans, investments and deposits, which may affect interest rates charged

on loans or paid on deposits.

The monetary

policies of

Reserve have

had a significant

the operating

results of

commercial banks

and are

to do

so in

the future.

The

Federal Reserve’s

policies are

influenced

by the

dual

mandate

of

price

stability

and

full

employment,

and

to

a

lesser

degree

by

short-term

and

changes

in

the

international trade

balance and

in the

fiscal policies

of the

U.S. government.

Future changes

in monetary

policy and

the

effect of such changes on our business and earnings

in the future cannot be predicted.

Future Legislation and Regulation

Congress may enact legislation from time to time that affects

the regulation of the financial services industry,

legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating

in those states.

Federal and state

regulatory agencies

also periodically propose

and adopt changes

to their regulations

or

change the manner

in which existing

regulations are

applied or

interpreted. The

substance or

impact of pending

or future

legislation or regulation, or

the application thereof, cannot

be predicted, although enactment

of proposed legislation has

in

the past

and may

in the

future affect

structure under

which we

operate and

may significantly

increase our

costs, impede the efficiency

of our internal business

processes, require us to

increase our regulatory

capital or modify our

or

limit

our

ability

to

pursue

in

an

efficient

manner.

Our

condition, results

or prospects

may be

adversely affected,

perhaps materially,

as a

any such

new

legislation or regulations.

Federal Securities Laws and the Sarbanes-Oxley Act

The

Company

Class

A

common

stock

is

with

the

SEC

under

Section

12(b)

of

the

Exchange

Act.

The

Company is subject to the

proxy and tender offer

rules, insider trading reporting

requirements and restrictions,

and certain

other requirements under the Exchange Act.

As a public

is also subject

to the Sarbanes-Oxley

Act of 2002

(“SOA”), which

is applicable to

all companies, both U.S. and non-U.S., that file

periodic reports under the Exchange Act. The stated

goals of the SOA were

to increase corporate responsibility,

to provide for enhanced penalties

for accounting and auditing

improprieties at publicly

traded companies and to protect investors by

improving the accuracy and reliability of corporate

disclosures pursuant to the

securities laws. The

SEC is responsible

for establishing rules

to implement various

provisions of the

SOA. The SOA

and

rules,

the

SEC

and

exchanges

to

adopt

extensive additional disclosure,

corporate governance and

other related rules

and mandates further

studies of certain

issues

by the SEC.

The SOA represents

significant regulation

of the accounting

profession and

corporate governance

practices,

such as

the relationship

between a

board of

directors and

management and

between a

board of

directors and

its committees.

As directed by the

SOA, the Company’s

principal executive officer

and principal financial

officer are required

to certify

that the Company’s quarterly and annual

reports do not contain any untrue statement

of a material fact. The rules adopted

by the SEC under the SOA have

several requirements, including having these

officers certify that: they are

responsible for

establishing, maintaining and regularly evaluating

the effectiveness of our internal

control over financial reporting; they

have

made certain disclosures to

the Company’s auditors and the

audit committee of the

Board of Directors about

internal control over financial reporting;

and they have included information

in the Company’s quarterly

and annual reports

about their evaluation

and whether there

have been changes

in the

Company’s internal

or

in other factors that could materially affect the Company’s

internal control over financial reporting.

In March 2020, the SEC issued

a final rule, effective

April 27, 2020, under the

SOA – Amendments to the Accelerated

Filer and

Large Accelerated

Filer Definitions.

As a

the amendments,

certain low

revenue and/or

low public

float

filers, while they remained obligated to provide a

report by management assessing the effectiveness of their internal control

over financial reporting (“ICFR”), were

not required to provide

an attestation report from

their independent auditor assessing

the effectiveness

of their ICFR.

The Company meets

the amended definition

of an accelerated

filer as of

January 1, 2026

and would normally be required to provide an attestation report from its independent auditor assessing

the effectiveness of

its ICFR. However, as long as it is an eligible emerging growth company, such auditor attestation requirement will not apply

to the Company.

The Company will no

longer be an emerging

growth company as of

December 31, 2026 and

is expected

to

be

to

comply

with

the

ICFR

independent

auditor

report.

In

the

Bank

remains

subject

to

independent auditor attestation required under FDIC regulations

set forth at 12 C.F.R.

§363.3(b).

Available Information

Our website

address is

www.uscentury.com.

Our electronic

filings with

(prior to

the bank

reorganization) and the SEC (including

all Annual Reports on

Form 10-K, Quarterly Reports on

Form 10-Q, Current Reports

on

Form

8-K,

and

if

amendments

to

those

reports)

are

free

of

charge

on

the

website

as

soon

as

reasonably practicable after

they are electronically

filed with, or furnished

to, the FDIC

or SEC. The information

posted on

our website is

not incorporated into

this Annual Report

on Form 10-K.

In addition, the

FDIC and the

SEC each maintain

a

website that contains reports and other information that

is filed.