United Bancorporation of Alabama, Inc.

Good morning and welcome to our second quarter 2025 earnings discussion. I'm Brian Bruley and we're here with Mike Benson, Leanne Jones, and David Stewart. We'll be discussing our second quarter results. We'll be taking questions through the Q&A function that's on your toolbar of your Zoom application, either at the top of your screen or at the bottom. So just look for the question mark or the Q&A icon. So we'll be monitoring that throughout the call. So if you have any questions, put those in there. So with that, I'll turn it over to you, Mike.

Great. Thank you, Brian. Once again, thank you guys for spending just a few minutes with us here this morning as we talk about second quarter results. So I guess I'll kick it off looking at Q2 net income. We were reporting $4.6 million and earnings per share of $1.36. That is compared to $8.3 million and EPS of $2.33 for the same period last year. On a year to date basis for 2025, net income of nine point three million dollars, earnings per share of two seventy eight. And that is compared to last year's same period, fourteen point eight million dollars in EPS of four fifteen a share. One of the things that's been a strength for us, continues to be a strength for us, is a strong and stable net interest margin, staying at right around 4.6. That's largely unchanged. It has been a source of strength for us as we manage that. We've benefited from pretty low cost of funds as compared to peers, so we're happy that we can keep that going. A couple of things that I'll highlight before I turn it over to David. As many of you or most of you are probably aware, we have been repurchasing shares. We announced that a little while ago. Thus far, we have repurchased a little over 96,000 shares of stock during the quarter. So we're happy to see that there's been some success in that space, as we believe that it is a good use of capital for the bank. As well, recapping, a dividend of $0.70 a share that was paid. As we've talked about before, we're constantly looking and reevaluating the dividend. knowing that we probably want to continue to to push it where we can, where it makes sense. So we were pleased that we were able to announce that dividend. And basically, most shareholders are all shareholders that I've heard from. We're very pleased and appreciative of that. So I guess with that, David, I'll turn it over to you and maybe you can talk a little bit about the loan book. Sure. Thank you, Mike.

Good morning, everyone. Glad to be here with you. So it's kind of zip through year over year growth. was right at 5.6% or $47.2 million. So quarter growth for Q2 was at 1% or 8.5%. Still seeing good growth in the multifamily construction. We've talked many times in the past about our progress and lending into the affordable housing space. That's going well. Also seeing good traction in commercial real estate. So, you know, a little quieter. I think everybody in the banking industry is seeing a little less growth in Q2 than perhaps they had forecasted. So I think that's kind of industry-wide, some of the things going on in the national economy today. Tariff talk and various other things, interest rates, that kind of thing. So I wanted to discuss non-accruals with everyone. That's a little elevated at $8.7 million. So that's a little down from where we had been. So kind of tell you, walk through what's going on there. We do have one legacy participation loan right at 3.4 that makes up a good chunk of that. We've got three smaller loans. ish farm loans. We've talked about the struggles within the farming community over the last couple of years, particularly from crop season 2023. So we do have FSA guarantees on roughly half of that amount. those amount of loans there for the farming community that are in non-accruals. And then also, uh, we have a pretty strong concentration of non-accruals in our Camden branch. That's a large, uh, consumer book of loans, uh, one of the poorest parts of the state. And, uh, we're, we're just working through some credit challenges there as, uh, think, you know, inflation and, uh, fixed incomes in that area have affected those, that book in total. So, um, Also wanted to mention the charge-off that was realized during the quarter. You guys had seen non-performing sort of balloon. We had a large CNI-related transaction that was a participation that we had been a part of that – We wrote down during quarter two roughly of $3.4 million. So that kind of rippled through a few different things that brought down non-accruals. That also was a drawdown on our allowance. So you'll see a reduction there in the allowance for credit loss. And also you'll see an increase in other real estate. So that was a drawdown. a transaction that had a direct loan component associated with it to the project and then a source loan associated with a new market structure. So, uh, that, that direct loan being written down and booking over to real estate is what caused the Oreo to increase, uh, on the balance sheet. Um, In general, past views are a little elevated. That was concentrated to one large relationship of about $5.2 million. They did make a payment second week of the month, so that's current, and they're looking to exit that investment and pay us off here hopefully fairly soon. Other things of note is I will mention that the CECL allowance coverage is at $1.36 time or $12.1 million. We spend a lot of time working on the CECL model, validating it, and getting comfort level with what we have in the allowance. I think we're in a good spot right now and looking to finish out the year. So that's all I have. So I'll pass it over to Leanne and let her discuss securities.