USCB FINANCIAL HOLDINGS, INC.USCB
USCB FINANCIAL HOLDINGS, INC. New Standards Disclosure
Recently Issued Accounting Standards
Issued and Adopted
Guidance on Accounting for Credit Losses on Financial Instruments
On January 1, 2023, the Company implemented Accounting Standard Update (“ASU”) 2016-13 Financial Instruments -
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended. This update replaces the
incurred loss methodology with the CECL methodology. The CECL methodology measures expected credit losses and
applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It
also applies to off-balance sheet credit exposures not accounted for as insurance (e.g., loan commitments, standby letters
of credit, financial guarantees, and similar instruments), as well as net investments in leases recognized by lessors in
accordance with Topic 842 on leases. Furthermore, ASC 326 amended the accounting treatment for available-for-sale debt
securities. One notable change is the requirement for credit losses to be reported as an allowance rather than as a write-
down on available-for-sale debt securities that management does not intend to sell or believes it is more likely than not they
will not need to sell. CECL requires a loss reserve for securities classified as held-to-maturity (HTM). The reserve should
reflect historical credit performance as well as the impact of projected economic forecast.
At adoption of CECL,
84
% or $
1.3
Flow (“DCF)” method and
16
% or $
251.0
method. The remaining $
7.9
The impact of adoption of the ASU 2016-13 in January 1, 2023, was an increase to ACL on loans receivables of $
1.1
million and an increase to the reserve for unfunded commitments of $
259
adjustment resulted in a increase of $
1.0
CECL on the Company’s Consolidated Balance Sheet (in thousands):
See “Allowance for Credit Losses” section in Note 3 for more information on the ACL.
Guidance on Accounting for Trouble Debt Restructuring and Vintage Disclosures
In March 2022, the FASB issued ASU 2022-02, which eliminates creditor accounting guidance for troubled debt
restructurings (“TDR”) for entities that have adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and
enhances Vintage Disclosures of Gross Write-offs. This ASU eliminates Subtopic 310-40 guidance for TDRs and requires
creditors to apply the loan refinancing and restructuring guidance in Subtopic 310-20 when evaluating modifications granted
to borrowers experiencing financial difficulty to determine whether the modification is considered a continuation of an
existing loan or a new loan. The vintage disclosure component of the ASU requires entities to disclose current-period gross
write-offs by origination year for financing receivables and investment leases within the scope of Subtopic 326-20. The
Company adopted ASU 2022-02 concurrently with the adoption of ASU 2016-13.
Reference
Rate Reform
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform
(Topic 848), aiming to facilitate the impacts of reference rate reform on financial reporting. This initiative was subsequently
clarified in January 2021 through ASU 2021-01, providing optional directives for a designated timeframe to alleviate
challenges associated with accounting for, or acknowledging the effects of, reference rate reform on financial reporting.
These amendments offer discretionary guidance for a defined period to alleviate potential accounting complexities
associated with reference rate reform in financial reporting. The expedients and exceptions provided by these amendments
are not applicable to contract modifications executed and hedging relationships initiated or reviewed after December 31,
2022, except for pre-existing hedging relationships as of December 31, 2022, for which an entity has opted for specific
optional expedients, and which are retained until the conclusion of the hedging relationship. Additionally, the amendments
permit entities to make a one-time choice to divest, transfer, or both divest and transfer debt securities categorized as held
to maturity, referencing a rate impacted by reference rate reform, and classified as held to maturity prior to January 1, 2020.
In December 2022, the FASB issued new guidance extending the expiration date of this guidance from December 31, 2022,
to December 31, 2024, after which entities will no longer be authorized to apply the relief provided under this guidance.
Before this recent guidance, these amendments were effective for all entities from March 12, 2020 to December 31, 2022.
The Company executed its transition strategy in preparation for the cessation of the London Intrabank Offered Rate
(“LIBOR”) and the adjustment of its existing financial instruments affecte d by LIBOR, whether directly or indirectly. LIBOR-
based originations were ceased as of June 30, 2023, and for existing LIBOR-based transactions, the Company substituted
Secured Overnight Financing Rate (“SOFR”) for LIBOR. The Company has completed its transition away from LIBOR for
its loan and other financial instruments.
Improvements to Reportable Segment Disclosures
In November 2023, FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), aiming to augments reportable
segment disclosure requirements, it enhances significant segment expenses disclosures. Additionally, this amendment
enhances interim disclosure requirements, clarifies multiple segment measures of profit or loss, provides new segment
disclosure requirements for entities with a single reportable segment and requires other disclosure requirements. The
Company adopted this ASU in December 2024. The adoption of this guidance did not have a material impact on the
consolidated financial statements.
Issued and Not Yet Adopted
Improvements to Income Tax Disclosures
In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures. This ASU pertains to disclosures regarding effective tax rates and cash income
taxes paid with the goal of providing stakeholders with more transparent and relevant information. This ASU is effective for
public business entities for annual periods beginning after December 15, 2024. The Company is currently assessing the
potential impact of this ASU on its financial reporting and has not yet concluded whether the changes will materially affect
its business operations or consolidated financial statements.
January 1, 2023
As Reported Under ASC
326
Pre - ASC 326 Adoption
Impact of ASC 326
Adoption
Assets
Allowance for credit losses
$
18,553
$
17,487
$
1,066
Deferred tax asset, net
42,696
42,360
336
Liabilities
Reserve for unfunded credit commitments
516
257
259
Stockholder's Equity
Retained earnings
$
(105,093)
$
(104,104)
$
(989)
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 14, 2025 | Showing above |
| 2023 | Mar 22, 2024 | |
| 2021 | Mar 24, 2022 | |
About New Standards Disclosures
New accounting standards disclosures describe recently adopted pronouncements and those not yet effective, along with management's assessment of their expected impact. This section provides an early warning system for upcoming changes to how a company reports its financial results, often years before the new rules take effect.
Key signals: when management describes a not-yet-adopted standard's impact as "material" or "still being evaluated," it signals potential significant changes to reported metrics upon adoption. Watch for standards that affect a company's core operations — for example, revenue recognition changes for software companies or lease accounting changes for retailers with large store footprints. The transition method chosen (full retrospective versus modified retrospective) affects comparability with prior periods. Companies that delay adoption to the latest permitted date may be struggling with implementation complexity. Compare the disclosed impact assessments against peers in the same industry to gauge whether management's expectations are reasonable.