Investors Push United Bancorporation of Alabama for Major Buybacks

The activist investors argue that despite the bank's unique advantages—including a low-cost deposit franchise—recent financial performance has lagged significantly behind peers. While the bank’s capital ratios remain among the highest in the industry, largely due to a 2022 preferred investment from the U.S. Treasury, this excess capital has become a drag on the return on equity. The investors contend that management’s strategy of holding capital for potential mergers has failed to yield results, noting that the firm has completed only one acquisition in its history.

Operational concerns are equally pressing. Since 2022, the bank’s deposit growth has contracted, while operating expenses have surged by 46%. The investors point to a lack of transparency in expense forecasting, with quarterly run-rate guidance rising from $8.5 million in late 2023 to $12 million by early 2026. To restore shareholder confidence, the group is demanding a modified Dutch auction tender offer to retire shares, a clear plan to curb costs, and the appointment of independent directors with specific expertise in capital markets and mergers and acquisitions.