United Bancshares Delivers Strong Q1 2025 Results, Reinforcing Dividend Strength and Growth Momentum

United Bancshares, Inc. (OTCQX: UBOH) has kicked off 2025 with a robust earnings report, showcasing a 55.6% year-over-year surge in net income to $2.8 million, or $0.94 per share, while announcing a 4.5% dividend hike. The results underscore the bank’s ability to capitalize on rising interest rates, prudent risk management, and disciplined growth strategies. For investors seeking stability and income in the banking sector, UBOH’s performance merits close attention.

Financial Performance: A Multi-Faceted Improvement

The first quarter’s results were driven by strong net interest margin (NIM) expansion, which rose to 3.59% from 3.03% a year earlier. This increase reflects the bank’s success in optimizing its balance sheet amid a higher rate environment, as loans repriced upward faster than deposits. The NIM expansion, combined with a 9.4% annualized loan growth since December 2024, highlights effective asset deployment.

Operational efficiency also shone through: Return on average assets (ROA) jumped to 0.94% from 0.69%, while return on average tangible equity (ROTE) surged to 15.78%, up from 11.33%. These metrics signal a healthier capital structure and better resource utilization, critical for sustaining profitability.

Loan Growth and Deposit Stability

The $17.9 million rise in loans since late 2024 demonstrates strong demand for credit, particularly in commercial and consumer lending. This growth, however, was accompanied by modest deposit expansion of $3.9 million. While deposit growth lagged loan growth, the bank’s liquidity remains robust, with a loan-to-deposit ratio well within prudent levels.

Asset Quality: A Conservative Stance Pays Off

United Bancshares maintained its reputation for cautious underwriting, with non-performing loans (NPLs) stable and charge-offs near historical lows. This discipline is vital in an environment where economic headwinds could pressure loan portfolios. The bank’s asset quality metrics provide a safety buffer, allowing it to navigate potential downturns without significant write-downs.

Dividend Sustainability: A 3.23% Yield Anchored by Strength

The $0.23 quarterly dividend—yielding ~3.23% based on recent stock prices—reflects management’s confidence in the bank’s earnings power. With a payout ratio of approximately 24% (based on Q1 EPS of $0.94), the dividend appears sustainable. The 4.5% increase over the prior dividend further signals financial resilience, even as regional banks face scrutiny over deposit flows and credit quality.

Investment Implications: A Solid Play on Regional Banking Recovery

For income-focused investors, UBOH’s dividend yield stands out in a low-yield environment. However, the stock’s OTCQX listing may limit liquidity compared to NYSE-listed peers, so investors should monitor trading volumes.

The bank’s strategy of emphasizing loan growth while maintaining asset quality positions it to benefit from rising rates and economic activity. Should the Federal Reserve pause rate hikes, the bank’s already re-priced loan books could sustain margins. Meanwhile, the lack of major operational risks and a fortress-like balance sheet reduce downside exposure.

Conclusion: A Strong Foundation for Long-Term Gains

United Bancshares’ Q1 results paint a clear picture of a bank executing its strategy effectively. With a 55% net income jump, a 3.23% dividend yield, and strong asset quality, UBOH offers a compelling combination of income and growth. The bank’s focus on disciplined lending and capital management—evident in its ROA and ROTE improvements—suggests it can sustain this momentum.

Investors should note that the stock’s valuation is reasonable: at a price-to-book ratio of ~1.3 (based on trailing earnings and book value trends), it’s attractively priced relative to its peers. While regional banks face macroeconomic risks, UBOH’s conservative approach and strong fundamentals make it a reliable choice for those seeking stability in the sector. The dividend hike, coupled with its financial metrics, reinforces that UBOH is a bank to watch in 2025 and beyond.