United Community Banks (UCB)

Regional banking company United Community Banks (NYSE:UCB) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 10.5% year on year to $278.4 million. Its non-GAAP profit of $0.71 per share was in line with analysts’ consensus estimates.

Company Overview

Starting as a small community bank in 1950 and expanding through strategic acquisitions across the Southeast, United Community Banks (NYSE:UCB) is a regional bank holding company that provides financial services including loans, deposits, wealth management, and merchant services across the southeastern United States.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

United Community Banks competes with other regional banks operating in the southeastern United States, including Truist Financial (NYSE:TFC), Regions Financial (NYSE:RF), First Horizon (NYSE:FHN), and Synovus Financial (NYSE:SNV), as well as national banks with significant regional presence like Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Unfortunately, United Community Banks’s 10% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the banking sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. United Community Banks’s recent performance shows its demand has slowed as its annualized revenue growth of 6% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, United Community Banks reported year-on-year revenue growth of 10.5%, and its $278.4 million of revenue exceeded Wall Street’s estimates by 1.5%.

Net interest income made up 83.4% of the company’s total revenue during the last five years, meaning United Community Banks barely relies on non-interest income to drive its overall growth.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, United Community Banks’s efficiency ratio couldn’t build momentum, hanging around 54.6%.

In Q4, United Community Banks’s efficiency ratio was 54.4%, falling short of analysts’ expectations by 59.3 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects United Community Banks to maintain its trailing one-year ratio with a projection of 54%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

United Community Banks’s EPS grew at an unimpressive 6.7% compounded annual growth rate over the last five years, lower than its 10% annualized revenue growth. However, its efficiency ratio didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For United Community Banks, its two-year annual EPS growth of 13.3% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, United Community Banks reported adjusted EPS of $0.71, up from $0.63 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects United Community Banks’s full-year EPS of $2.71 to grow 7.2%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

United Community Banks’s TBVPS grew at a mediocre 4.7% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 10.1% annually over the last two years from $18.34 to $22.24 per share.

Over the next 12 months, Consensus estimates call for United Community Banks’s TBVPS to grow by 8.7% to $24.18, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, United Community Banks has averaged a Tier 1 capital ratio of 13.1%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, United Community Banks has averaged an ROE of 9.3%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was good to see United Community Banks narrowly top analysts’ revenue expectations this quarter. We were also happy its net interest income narrowly outperformed Wall Street’s estimates. On the other hand, its EPS was in line. Overall, this quarter could have been better. The stock traded down 3.4% to $31.37 immediately following the results.

Updated: January 14, 2026 at 7:45 AM EST

Before deciding whether to buy United Community Banks or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

United Community Banks isn’t a terrible business, but it isn’t one of our picks. For starters, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its net interest income growth was solid over the last five years, the downside is its unimpressive EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its estimated sales for the next 12 months are weak.

United Community Banks’s P/B ratio based on the next 12 months is 1x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $35.42 on the company (compared to the current share price of $31.37).