Q2 2026 United Bancorporation of Alabama Inc Earnings Call Transcript
Key Points
- Strong earnings growth: Net income up 21.5% year-to-date and EPS up 33.1%, with Q2 net income up 26.1% and EPS up 40.4%.
- Robust net interest margin of 4.42% year-to-date, well above peers, supported by a one-time recovery.
- Healthy loan growth of 5.6% year-over-year, driven by multifamily, non-farm non-residential, and consumer installment loans.
- Improved asset quality: Non-accrual loans down 23% quarter-over-quarter, and 30-90 day past due loans reduced from 79 bps to 35 bps.
- Strong capital position with tangible book value up 11.2% year-over-year, and a 16% return on tangible common equity.
- Consistent deposit growth for six consecutive quarters, with a 5.5% year-over-year increase.
- Active shareholder returns: $41 million returned over the last 12-18 months, including share repurchases and dividends.
- Diversified revenue from UB Community Development, including $1.2 million in fee revenue from loan closings and consulting.
- Stable expense base at $11.5 million, with one-time conversion costs behind them.
- Strategic focus on M&A and ESIP opportunities, with disciplined approach to create long-term value.
- Net interest margin was slightly inflated by a one-time recovery; core margin is closer to 4.28%.
- Cost of funds continues to rise, up to 1.39%, and may increase further with more competitive CD rates.
- Loan growth is concentrated in multifamily and construction, which may carry higher risk.
- Non-performing assets remain elevated at $14.6 million, though down from the prior quarter.
- Capital ratios have trended down slightly due to dividends and share repurchases.
- M&A opportunities are limited, with deal pricing considered unattractive for shareholder value.
- ESIP disposition remains uncertain, with no clear timeline for action and potential restrictions.
- Deposit concentrations and variability from new markets tax credit transactions require higher liquidity, impacting balance sheet flexibility.
- The bank faces competitive pressure in its markets, leading to higher deposit costs.
- Expense ratio of 2.98% of average assets is still above some peers, though management expects to grow into it.
Good morning, and thank you for joining us for the second quarter earnings call of United Bancorporation. My name is Brooke Marsh, and joining me this morning are President and CEO, Mike Vincent; Chief Credit Officer, David Stewart; and Chief Financial Officer, Leigh Ann Jones. They will be serving as our panelists for the call this morning. We'll also be taking questions through Zoom's Q&A feature. You can locate that on your Zoom toolbar, either at the top or bottom of your screen.
And I'll turn it over to Mike so we can get started. Thank you.
Great. Thank you, Brooke. And good morning, everyone. We appreciate you joining our quarterly call. We look forward to presenting some results that we're very pleased with from the second quarter.
Just to kind of get us kicked off, our year-to-date numbers, year-to-date '26 net income of $11.3 million and earnings
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