United Community Banks (NYSE:UCB) closed its fourth quarter of 2025 with what management described as a “solid end to a great year,” citing revenue growth, margin expansion, steady credit quality, and improving profitability metrics. Executives also highlighted actions taken during the year to return capital to shareholders and reposition the balance sheet for multiple interest rate scenarios.
Quarter and full-year performance highlights
Chairman and CEO Lynn Harton said fourth quarter revenue rose 11% year over year, driven by continued net interest margin expansion and 4.4% annualized loan growth. United reported operating earnings per share of $0.71, up 13% year over year. For the quarter, return on assets was 1.22% and return on tangible common equity was 13.3%.
Loan growth and business lines in focus
Chief Financial Officer Jefferson Harrelson said loan growth continued at a 4.4% annualized pace during the quarter, with growth “primarily in the C&I and HELOC categories,” which management identified as current focus areas. President and Chief Banking Officer Rich Bradshaw added that the quarter represented the “largest bank production quarter ever,” while noting “senior care headwinds” and a couple of large loans the bank chose not to defend.
Bradshaw said Florida led production, supported by the bank’s two newest acquisitions. He noted C&I grew 12% and said owner-occupied CRE performed well. He also highlighted record commitment activity in SBA, stating that even with a government shutdown, SBA had “the largest quarter in commitments that they’ve ever had.”
On Novitas equipment finance, management said 2025 originations exceeded $1 billion for the first time. In the Q&A, Harrelson said Novitas loans represented 9.5% of total loans and the bank wants to keep that exposure “at 10% or under.” He said Novitas growth ran 18% annualized in the quarter before sales, which “translated into us selling more,” and added that selling more Novitas loans was the “most likely outcome” in 2026.
Net interest margin, deposits, and balance sheet positioning
Harrelson said deposit seasonality played out as expected in the fourth quarter, driven by an increase of $293 million in public funds. He also reported that cost of deposits improved 21 basis points to 1.76%, and cumulative total deposit beta increased to 40% from 37% as discussed in the prior quarter.
Excluding public funds, Harrelson said average balances were down slightly in the quarter, and end-of-period balances declined more meaningfully due partly to seasonality and partly to a strategy of lowering rates for some “highest-cost single service customers.” For the year, management said deposits grew 1% while the bank continued to add customers and accounts.
United’s net interest margin increased four basis points to 3.62% in the quarter. Excluding loan accretion, Harrelson said margin was up six basis points compared with the third quarter, primarily due to lower funding costs and a higher loan-to-deposit ratio (82% versus 80% the prior quarter). He said the bank continued to see a tailwind from “backbook repricing” and mix changes toward loans and away from securities.
Looking ahead to the first quarter, Harrelson said he expected net interest margin to rise another two to four basis points, while noting that outcomes would depend in part on repricing $1.4 billion of CDs maturing in the first quarter at a rate of 3.32%. He also said CD retention has been in the “90% range.”
On the asset side, Harrelson said the bank had approximately $1.4 billion of assets paying down in the 4.90% range in 2026 “using just maturities.” In response to a follow-up, management later broke out that $285 million and $355 million of that total related to AFS and HTM securities, respectively. Harrelson also said that excluding Novitas, the bank had $6 billion of fixed-rate loans at 5.19% and that the fixed book increased nine basis points in the fourth quarter, rising about six to eight basis points per quarter. He said new fixed-rate loans were being booked at 6.45% in the fourth quarter (excluding Novitas), though he noted spread compression.
Harrelson said the bank’s balance sheet remained positioned with “very limited broker deposits” and “very limited wholesale borrowings.” The loan-to-deposit ratio increased for the third quarter in a row to 82%. He reported a common equity tier 1 (CET1) ratio of 13.4%, and said tangible common equity (TCE) increased 21 basis points to 9.92%.
Expenses, fees, credit quality, and capital actions
Non-interest income was $40.5 million, down $2.8 million from the prior quarter’s elevated level. Harrelson said wealth management grew and treasury management and customer swaps remained strong within the “other” category, while mortgage softened as expected due to seasonality. Bradshaw said mortgage typically sees “one more weak seasonal quarter” before stronger results in the second and third quarters, and he noted a pickup in applications as rates moved down modestly. He said SBA fees tend to build throughout the year and expressed confidence the bank could do “the same or better” on SBA fees in 2026.
Operating expenses were $151.4 million, up $4 million on an operating basis, which Harrelson attributed mainly to $1.5 million of higher group health insurance costs. In the Q&A, he said he did not expect that item to remain at that level next quarter and noted incentives rose about $1 million versus the prior quarter tied to record loan production. He said the run-rate of expenses was “a little less than we printed” in the fourth quarter, but also cited first-quarter seasonality such as the “FICA restart” of about $1.5 million, concluding that expenses should be flat in the first quarter. Management said it was targeting 3% to 3.5% expense growth in 2026 and budgeting for continued operating leverage and efficiency ratio improvement.
On credit, Harrelson reported net charge-offs of 34 basis points in the quarter, driven by charge-offs tied to two C&I loans. Chief Risk Officer Rob Edwards provided additional detail, citing:
- A $6 million charge-off on a $14 million franchise loan, where struggling units ultimately closed after the franchisee and franchisor could not agree on a path forward.
- A $4 million owner-occupied SBA loan charge-off tied to a documentation error in underwriting, with the bank deciding not to pursue the guarantee.
Edwards said the bank conducted an after-action review and implemented “tweaks” to the SBA program. For 2026, he said he expected the loss rate to fall in the 20 to 25 basis point range, noting that the full-year loss rate was 22 basis points in 2025. He also said the bank was not seeing credit quality impacts from tariffs, though it continues to discuss tariff impacts with customers.
On capital return, Harton said the bank increased its dividend in the third quarter to an annualized rate of $1 per share and repurchased 1 million shares in the fourth quarter at an average price below $30. He also said the bank redeemed its preferred stock during the year. In the Q&A, management said it intended to be “more assertive” on buybacks in 2026, citing capital build, strong credit quality, and what it described as a light M&A environment.
Discussing M&A, Harton said the bank likes its current footprint and is not seeking to expand geographically. He described a limited set of potential targets—“less than 10” in its markets—that would meet United’s standards, noting that most are quality institutions expecting to perform well in 2026 and not eager to sell in the near term.
Looking into 2026, Harton said management was optimistic for continued growth and improvement, citing strong market economies, ongoing investments in talent and systems for interest rate risk and deposit pricing, and continued emphasis on organic growth initiatives.
About United Community Banks (NYSE:UCB)
United Community Banks, Inc (NYSE: UCB) is a bank holding company headquartered in Blairsville, Georgia. It operates primarily through its subsidiary, United Community Bank, providing a broad range of banking and financial services to individual, business and governmental customers. The company’s core offerings include deposit accounts, commercial and consumer lending, mortgage origination, treasury and cash management services, and wealth management.
In addition to traditional banking products such as checking, savings and money market accounts, United Community Bank specializes in commercial real estate financing, small business administration (SBA) loans, equipment financing and agricultural lending.
See Also
- Five stocks we like better than United Community Banks
- The Crash Has Already Started (Most Just Don’t See It Yet)
- Trump Planning to Use Public Law 63-43: Prepare Now
- “Ominous day” coming to stocks…
- If You Keep Cash In A U.S. Bank Account… Read This NOW
- Punch these codes into your ordinary brokerage account
