United Bancorporation of Alabama, Inc.

thank you once again for joining us for one of our quarterly investor updates as is typical. I'm joined by David Stewart, our chief credit officer, Leanne Jones, our CFO. And just as an aside, if you're, if you're wondering, I've also got one of our board members here sitting here with us, Dale Ash. So thank you guys for joining. And a special thanks to any of y'all that, that attended or, or, are called regarding our annual shareholder meeting that we had last week. It was a good session. Enjoyed talking with a few of y'all regarding what's going on around the bank. Without further ado, let me kind of get into some of the results for the quarter. Q1 income was at $6.3 million or an earnings per share of $1.75 on the quarter. That is versus $6.7 million with an EPS of $1.87 for same period last year. So right on line with what we had done in prior years. One thing that we've talked about in here a number of times, and Leanne may speak to it a little bit later, is regarding our net interest margin. It does remain stable and fairly steady. Q1 NIM was 454 versus 4.6 last year, so we're pretty steady. We'll talk a little bit about cost of funds, the loan book, and kind of what rates we're seeing, but I will just tell you that first quarter was kind of a right down the fairway kind of quarter. It was nothing Nothing extraordinary, no treasury programs really to report on for the quarter. It was just kind of your basic blocking and tackling standard banking business. So let's get into the balance sheet and the loan book a little bit. So, David, I'll turn it over to you. Sure. Good morning, everyone.

Good to speak with you again. Year-over-year growth was right at 8.2% for $62.3 million. So that's pretty good. Last year, our first quarter was very strong. We had some transactions at the beginning of Q1 2023. So us to come be over and above of that by 8.2% we're real proud of. Q1 growth is a little more normal than before. Compared to last year, total growth was at 1.6% or $13.4 million. Most of that has been funded coming out of commercial real estate, some CNI transactions. And as we've covered in the past, multifamily, we did have a lot of multifamily construction transactions that closed the last portion of 2023, and we're just now starting to see those construction loans fund up. We're projecting that those will continue to grow. As you guys know, we're pretty active in the affordable housing space and low-income housing tax credit space as part of our CDFI mission. We have a substantial network within that community and have a lot of opportunity there for growth. So we'll continue to see those multifamily construction loans fund up as those projects come online. One item I'm happy to report that we've chased for quite some time, our loan-to-deposit ratio is a little higher, so we're putting our dollars to work. So historically speaking, we've had a lower loan-to-deposit ratio, so we've pushed that a little higher, up to 75.53%. Touching on... Kind of problem assets, special assets, if you will. Non-accruals at the end of the quarter totaled 3.1 million. So we had a couple of participations that went on non-accrual that we're working through resolution right now and hopefully have those resolved by mid-year. Also, another number I did want to mention is non-performing assets is ticked up. That's coupled with non-accruals. We've had some modifications to borrowers experiencing financial difficulty, formerly troubled debt restructures. That's a mouthful. We've got to come up with some kind of acronym that shortens that down for us all. Then, of course, Oreos in that bucket as well. Those three Oreos not ticked up, but the first two have non-accruals in those modifications to borrowers experiencing financial difficulty. That's just working through borrowers with some interest-only periods and terms within the loan book. Past use and non-accruals, it's still a little over 1% at 1.18% is where we finished the quarter. So it's seen a little tick up, particularly there in TCUB, Town & Country, United Bank, That, if you guys are familiar with that area, it's in Wilcox County of Alabama. It's a historically economically depressed area, so we've seen past use tick up there, of course, with elevated interest rates and seeing unemployment rate, particularly in that county, tick up, which is sort of out of balance with what we're seeing with some of our other markets. Texas ratio is good at 5.12%. That's on the consolidated basis. And then we're still carrying a strong allowance. So consolidated, we're at 1.45% on the allowance or $11.9 million. So we've continued to be conservative with our reserving. So elevated rates are going to create some pressure in the market. We acknowledge that, and we want to make sure we're prepared for anything that may come up. That's all I have for the loan book.

Before we, I guess, transition, David, while we're covering the loan portfolio, there is one question that's out there in the queue for you. Some of this you've touched on, but some not. So what are your trends on criticized and classified as of March 31st? Do you expect deterioration this year? And how are borrowers' debt service coverage from higher interest rates? What are you seeing as far as the trends on that?