United Community Banks' 2025 Q4 Earnings Call: Contradictions on Buyback Priorities, Expense Growth, and M&A Strategy

Date of Call: Jan 14, 2026

Financials Results

• Revenue: 11% year-over-year revenue growth in Q4; $1B+ revenue for full year 2025, up 12% YOY.
• EPS: Operating earnings per share in Q4: $0.71, up 13% YOY. Full year operating EPS grew 18% from $2.30 to $2.71.
• Gross Margin: Net interest margin increased 4 basis points to 3.62% in Q4. Excluding loan accretion, increased 6 basis points QOQ.
• Operating Margin: Return on assets 1.22% in Q4; return on tangible common equity 13.3% for full year 2025.

Guidance:

• Balance sheet growth to be dependent on deposit growth, expected to be a couple hundred basis points below loan growth; loan-to-deposit ratio to continue rising throughout 2026.
• NIM expected up 2-4 basis points in Q1 2026, driven by lower cost of funds and repricing of $1.4B in maturing assets.
• Expense growth targeted at 3%-3.5% for 2026.
• Solid loan growth expected in 2026, with a focus on C&I, owner-occupied CRE, and HELOCs.
• More assertive on share buybacks in 2026 due to strong capital build and good value.
• Bank-level net charge-offs expected in the 20-25 basis point range for 2026.
• Wealth, treasury management, and customer swaps businesses expected to see upper single-digit growth in fees.
• Mortgage and SBA fee growth expected to be strong, with SBA and Novitas building through the year.
• Expect operating leverage improvement, leading to efficiency ratio improvement in 2026.

Business Commentary:

Revenue and Earnings Growth:

• United Community Banks reported an 11% year-over-year revenue growth in Q4, with operating earnings per share of $0.71, marking a 13% year-over-year improvement.
• The growth was driven by continued margin expansion and 4.4% annualized loan growth.

Loan Portfolio and Focus Areas:

• The bank's loan portfolio grew at a 4.4% annualized pace, primarily in C&I and HELOC categories.
• This growth was supported by focused efforts in retail and small business lending, as well as the Novitas equipment finance team's performance.

Deposit Management and Cost Efficiency:

• The cost of deposits improved by 21 basis points to 1.76%, with an increase in public funds by $293 million in Q4.
• The improvement was attributed to effective deposit management and strategic rate adjustments on high-cost customer accounts.

Capital Management and Shareholder Returns:

• United Community Banks increased its dividend to an annualized rate of $1 per share and repurchased 1 million shares at an average price below $30 per share in Q4.
• These actions were part of the bank's capital plan to enhance returns to common shareholders.

Credit Quality and Risk Management:

• Net charge-offs were 34 basis points in Q4, with a notable increase due to charge-offs on two C&I loans, of which $5 million was already reserved for.
• The bank maintained stable non-performing assets and past dues, reflecting strong credit quality and effective risk management.

Sentiment Analysis:

Overall Tone: Positive

• The call highlights a 'solid end to a great year' with 11% YOY revenue growth and continued margin expansion. Management cites 'strong' credit quality, 'positive' deposit seasonality, and 'successful' conversion of acquisitions. The outlook is optimistic: 'We’re optimistic for continued growth and improvement. The economy in our markets remains strong.'

Q&A:

• Question from Russell Gunther (Stephens): How should we think about overall balance sheet growth in 2026?
  Response: Balance sheet growth will depend on deposit growth, expected to be a couple hundred basis points below loan growth, leading to a continued increase in the loan-to-deposit ratio.

• Question from Stephen Scouton (Piper Sandler): Is there any mindset change around the opportunistic share repurchase moving forward?
  Response: Management intends to be more assertive on buybacks in 2026 due to strong capital build, great credit quality, and limited M&A opportunities.

• Question from Michael Rose (Raymond James): Can you comment on the competitive landscape and expense outlook?
  Response: Competition is acknowledged but not a primary focus; the bank focuses on client service and culture to attract talent. Expense growth is targeted at 3%-3.5% for 2026.

• Question from Gary Tenner (D.A. Davidson): Could you provide color on the two specific C&I credits charged off in Q4?
  Response: The charge-offs were a $14M franchise loan (6M charge-off due to store closures) and a $4M SBA loan (documentation error). Bank-level charge-offs expected in the 20-25 bps range for 2026.

• Question from Catherine Miller (KBW): What is the break between the $1.4B in maturing assets between securities and loans?
  Response: $150M of the HTM portfolio is expected to cash flow in 2026. Details on AFS portfolio repricing were not provided in the call.

• Question from David Bishop (Hovde Group): Are you starting to see any impact from tariffs on credit quality?
  Response: No impact from tariffs on asset quality has been observed; customers are working through tariff-related challenges without significant issues.

• Question from Christopher Marinick (Janney Montgomery Scott): Is the higher charge-off in Q4 related to year-end cleanup, and does the outlook change?
  Response: The outlook for 2026 is stable and consistent with prior years; Q4 charge-offs were higher but overall portfolio performance remains strong.

Contradiction Point 1

Capital Deployment Priority for Share Buybacks

Contradiction on the strategic priority and timing for executing share buybacks.

Does the Q4 share repurchase indicate a shift to a more aggressive buyback strategy? - Stephen Scouton (Piper Sandler)

2025Q4: The bank intends to be more assertive with buybacks in 2026. Capital is building strongly, credit quality is great, and M&A opportunities are light, making buybacks a priority. - Lynn Harton(CEO)

Are you prioritizing capital deployment through buybacks or focusing on increasing Tier 1 capital through earnings first? - Gary Tenner (D.A. Davidson)

2025Q3: Buybacks are below the other priorities in the current hierarchy. - Jefferson Harralson(CFO)

Contradiction Point 2

Expense Growth Outlook and Management

Contradiction in the projected rate of expense growth for the upcoming period.

Can you discuss the competitive landscape, hiring efforts, and the outlook for M&A in 2026? - Michael Rose (Raymond James)

2025Q4: The expense outlook for 2026 targets 3% to 3.5% growth, focusing on managing expenses despite hiring opportunities. - Jefferson Harrelson(CFO)

How will hiring efforts in the second half of the year impact expenses, particularly in light of M&A discussions and the company's opportunistic strategy? - Michael Rose (Raymond James)

2025Q3: The medium-term expense growth run rate is 3% to 4%. - Jefferson Harralson(CFO)

Contradiction Point 3

Share Buyback Strategy

The bank's stance on share repurchases shifted from suspension to an assertive priority.

Did the Q4 opportunistic share repurchase signal a shift toward a more aggressive buyback strategy going forward? - Stephen Scouton (Piper Sandler)

2025Q4: The bank intends to be more assertive with buybacks in 2026. Capital is building strongly, credit quality is great, and M&A opportunities are light, making buybacks a priority. - Lynn Harton(CEO)

With the improved stock price, will the buyback continue? - Catherine Mealor (Keefe, Bruyette, & Woods, Inc.)

2025Q2: The current stock price results in an earnings-back period longer than the targeted 7-8 years, so the buyback is currently suspended. However, the bank retains its authorization... and would be opportunistic at lower prices. - Jefferson Harralson(CFO)

Contradiction Point 4

M&A Strategy

The characterization of M&A target availability and the bank's position changed.

What is the 2026 M&A outlook? - Michael Rose (Raymond James)

2025Q4: The bank is not looking to expand its footprint significantly. It is interested in... where there is a good cultural fit. Most potential targets are performing well and not actively for sale, making the outlook more internal and organic. - Lynn Harton(CEO)

Can you discuss hiring strategies and M&A plans in light of the recent resurgence? - Michael Rose (Raymond James)

2025Q2: The outlook is better now... The bank will continue to pursue opportunities as they arise. - Herbert Harton(CEO)

Contradiction Point 5

Outlook for M&A Activity

Contradiction on the expected pace and focus of mergers and acquisitions.

Can you discuss the competitive landscape and hiring efforts and the outlook for M&A in 2026? - Michael Rose (Raymond James)

2025Q4: On M&A, the bank is not looking to expand its footprint significantly. It is interested in a limited number (<10) of high-quality, smaller institutions... making the outlook more internal and organic. - Lynn Harton(CFO)

Okay, let's see. The user wants me to rewrite an earnings call question into a concise one. The original question is: "What drove the strong deposit growth, including public funds? Also, why did loans in Tennessee reverse a decline, and what is the outlook for the M&A environment?" First, I need to break down the original question. It has three parts: the factors behind deposit growth (with a mention of public funds), the reason for the loan reversal in Tennessee, and the outlook for M&A. The user wants all these points covered in a single, concise question.The challenge is to combine these without making it too long. Let me start with the first part. "What drove the strong deposit growth, including public funds?" can be rephrased to "What factors contributed to the strong deposit growth, particularly public funds?" That's a bit more concise.Next part: "why did loans in Tennessee reverse a decline" becomes "why did Tennessee loans reverse their decline?" That's shorter.Then "what is the outlook for the M&A environment?" can stay as is, but maybe "M&A environment outlook" is more concise.Putting them all together: "What factors contributed to the strong deposit growth, particularly public funds? Why did Tennessee loans reverse their decline? What is the M&A environment outlook?" Wait, but the user wants it all in one question. Hmm. The original uses "Also," so maybe using commas and "and" to combine them. Let me try: "What factors contributed to the strong deposit growth, particularly public funds, and why did Tennessee loans reverse their decline? What is the outlook for the M&A environment?" But the user wants it as a single question. Let me check the example. The input has three parts separated by a question mark and "Also,". The output example from the user's previous message might have combined them into one question with commas and "and". Let me try again: "What factors drove the strong deposit growth, particularly public funds, and why did Tennessee loans reverse their decline? What is the outlook for the M&A environment?" But the user might prefer a single question. Maybe using "and" at the end. Let me see. "What factors drove the strong deposit growth, particularly public funds, and why did Tennessee loans reverse their decline, and what is the outlook for the M&A environment?" That's one question with multiple parts. But maybe the user wants each part as a separate question? The original input has three separate questions. The example output in the user's history might have kept them as separate. Let me check the input again. The input is three parts separated by a question mark and "Also,". The output example from the user's previous response combined them into two questions. Wait, the input here is three parts, but the output example from the user might have two. Wait, the user's example input had two parts, but the output had two questions. So perhaps the user wants each part of the input to be a separate question. But the original input here is three parts. Let me check again. The input is: "What drove the strong deposit growth, including public funds? Also, why did loans in Tennessee reverse a decline, and what is the outlook for the M&A environment?" So the first part is a question, then "Also," introduces two more parts. So the user might want the three parts as three questions. But the output example from the user's history had two parts. Wait, the user's example input had two parts (with "Also,") and the output had two questions. So in this case, the input here has three parts (first question, then "Also," introducing two more). So maybe the output should be three questions. But the user's instruction says "rewrite the following earnings call question into a concise question." So the input is a single question with three parts. The user wants it rewritten into a single concise question. Wait, but the input is three parts. So maybe the user wants it combined into one question. So the original input is three parts. Let me try to combine them into one question. "What factors contributed to the strong deposit growth, particularly public funds, and why did Tennessee loans reverse their decline, along with the outlook for the M&A environment?" But maybe that's too long. Let me check the example. In the example, the input had two parts, and the output was two questions. Wait, the user's example input was: "What drove the strong deposit growth, including public funds? Also, why did loans in Tennessee reverse a decline, and what is the outlook for the M&A environment?" Wait, the user's example input is the same as the current input. So perhaps the correct output is three separate questions? Or maybe the user wants to keep the three parts as three questions but more concise. But the user's instruction says "rewrite the following earnings call question into a concise question." - Michael Rose (Raymond James)

2025Q1: Conversations continue, but few deals are expected in the next 12-18 months due to low stock prices, economic uncertainty, and more attractive alternatives like share repurchases. - Lynn Harton(CFO)