UBS Group (NYSE:UBS) Q4 2025 Earnings call February 04, 2026 05:15 AM ET Company ParticipantsAriane Lüthi - JournalistChristian Kolbe - JournalistDaniel Zulauf - JournalistHolger Alich - Deputy Chief EditorMargot Patrick - JournalistMercedes Ruehl - JournalistMyriam Balezou - JournalistOliver Hart - EconomistSergio Ermotti - Group CEOSteve Slater - Associate EditorTodd Tuckner - Group CFOYoung-Sun Sohn - Senior CorrespondentSergio ErmottiGood morning, and thank you for joining our media call. As usual, we'r ...

On deposits, Pharr said Pathward’s issuing partnerships generally provide “stable deposits,” and he emphasized the company’s role in enabling financial inclusion for underserved or unbanked consumers and businesses. On lending, he said Pathward specializes in serving businesses that may not be able to borrow from traditional banks and, in some cases, originates commercial finance loans through partners.Pharr said the company’s value proposition is anchored in four pillars: seasoned leadership in payments an ...

Financial Data and Key Metrics Changes - Columbia Banking System reported a third-quarter operating PP&R increase of 12% from the second quarter and 22% year-over-year, reflecting strong profitability and balance sheet optimization [6][12] - The operating return on average tangible equity was 18.2%, with a tangible book value per share increasing to $18.57, a 4% rise since Q1 2025 [12][14] - The net interest margin expanded by nine basis points to 3.84%, driven by customer deposit growth and a reduction in reliance on higher-cost wholesale funding [15][16] Business Line Data and Key Metrics Changes - New loan originations reached $1.2 billion, up 36% quarter-over-quarter and 21% year-to-date, with a 5% annualized increase in the commercial portfolio [18][19] - Customer deposits increased nearly $800 million organically during the quarter, with approximately 30% of this growth attributed to new customers [18][19] - Non-interest income for the quarter was $77 million, with operating non-interest income increasing by $6 million due to the contribution from Pacific Premier Bancorp [16][19] Market Data and Key Metrics Changes - The acquisition of Pacific Premier Bancorp has enhanced Columbia's competitive position in the Pacific Northwest, with nearly 10% deposit market share in the region [3][4] - The company is focusing on organic growth opportunities in dynamic markets such as Arizona, Colorado, Nevada, and Utah, leveraging its expanded footprint [4][5] Company Strategy and Development Direction - Columbia Banking System aims to optimize its balance sheet while focusing on organic growth and enhancing customer relationships, particularly in Southern California [4][5] - The company has initiated a $700 million share repurchase program, reflecting confidence in its balance sheet and long-term shareholder value creation [21][22] - Management emphasizes a disciplined approach to lending and profitability over growth for the sake of growth, with a focus on relationship-driven loans [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate capital beyond what is required for growth, with a focus on delivering top-tier performance and capital returns [21][34] - The integration of Pacific Premier Bancorp is expected to enhance customer relationships and drive revenue synergies, with management committed to a disciplined, cost-conscious culture [9][20] - The company anticipates continued strong profitability and capital generation, with a focus on optimizing its balance sheet and enhancing long-term shareholder value [21][22] Other Important Information - The company reported a GAAP provision expense of $70 million due to purchase accounting from the acquisition, with an overall allowance for credit losses at 1.1% of total loans [12][16] - Management announced that Ron Farnsworth, the CFO, will be stepping down, with Ivan Shetta appointed as the new CFO [10][11] Q&A Session Summary Question: Insights on the buyback program and balance sheet optimization - Management indicated that the buyback program is a 12-month initiative, balancing capitalizing on valuation and maintaining flexibility for macroeconomic uncertainties [25][26] Question: Thoughts on recent activist investor presentations - Management acknowledged awareness of the presentation and reiterated their focus on consistent performance, capital returns, and the successful integration of Pacific Premier Bancorp [32][34] Question: Drivers behind strong deposit growth - Approximately 30% of the $800 million organic deposit growth came from new customers, with significant contributions from commercial and retail banking [38][39] Question: Outlook on loan growth and balance sheet optimization - Management expects to achieve around 5% annual loan growth while remixing the balance sheet to focus on higher-quality, relationship-based loans [51][52] Question: Expectations for net interest margin in the upcoming quarter - Management provided a range for net interest margin expectations, indicating stability with modest upside in Q4 [56][58]

Financial Data and Key Metrics Changes - The company reported earnings per diluted share of $7.87 for the year, representing a year-over-year growth of 9% [5] - Net income for the year was $185.9 million, driven primarily by a 10% increase in non-interest income compared to last year [5] - The full-year net interest margin and adjusted net interest margin were expanded to 7.34% and 5.92% respectively [5] - Return on average assets for the year was 2.46% and return on average tangible equity was 38.75% [5][22] Business Line Data and Key Metrics Changes - In the consumer segment, the company announced three new agreements, including partnerships with Trustly and Stripe, enhancing their product offerings [6] - In credit solutions, the company partnered with Upstart to offer personal loans, aligning with their goal of financial inclusion [7] - The commercial finance segment saw total loans and leases grow by 14%, with significant improvements in origination dollars per FTE and reduced days to fund [8] Market Data and Key Metrics Changes - Deposits held on the company's balance sheet totaled $5.9 billion, a modest increase of $12 million year-over-year [18] - Loans and leases at September 30th were $4.7 billion compared to $4.1 billion last year, with growth primarily from commercial finance verticals [19] - Non-performing loans increased in the quarter, primarily driven by one working capital loan, but the company believes they are well collateralized [21] Company Strategy and Development Direction - The company is focused on maintaining an optimized balance sheet and investing in technology to facilitate evolution and scalability [9][10] - The 2026 strategy includes enhancing the client experience and continuing to evaluate new opportunities for partnerships [14] - The company aims to sustain momentum in its culture and talent acquisition efforts, emphasizing remote working as a recruitment tool [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the groundwork laid in 2025 for future growth, despite challenges faced [4] - The company reiterated its fiscal year 2026 guidance for earnings per diluted share of $8.25-$8.75, assuming no rate cuts and an effective tax rate of 18%-22% [23] - Management acknowledged the potential impact of tax code changes on consumer behavior in the tax preparation market [8] Other Important Information - The company repurchased approximately 181,000 shares at an average price of $82.95 during the quarter, bringing full-year repurchases to almost 2.1 million shares [22] - The sale of the majority of the held-for-investment consumer portfolio is expected to put downward pressure on pre-tax income and net interest margin in 2026 [23] Q&A Session Summary Question: Details on the Upstart program and its financial impact - Management confirmed that the Upstart program is similar to other marketplace lending products, with credit indemnifications in place [28] Question: Duration of loans on the balance sheet and exclusivity of the Upstart partnership - Loans are typically held for 30 days or less, and the partnership with Upstart is not exclusive [30][31] Question: Demand for early wage access loans and impact of government shutdown - Management indicated that the impact of the government shutdown has not yet been seen, but expects significant volume from the Claire's contract with Intuit [39] Question: Growth expectations for the tax business in fiscal year 2026 - Management expects solid growth in the tax business, influenced by recent tax law changes, but does not have huge growth expectations due to a strong prior year [40][41] Question: Insights on non-performing loans and their resolution - Management explained that non-performing loans can spike without warning but emphasized their ability to manage collateral effectively [42][44] Question: Future pace of share repurchases - Management indicated that the buyback ratio will return to historic norms, targeting an 80%-90% payout ratio [47]

Financial Data and Key Metrics Changes - The company reported earnings per diluted share of $7.87 for the fiscal year, representing a year-over-year growth of 9% [8] - Net income for the year was $185.9 million, driven primarily by a 10% increase in non-interest income compared to the previous year [8] - The net interest margin for the quarter was 7.46%, while the adjusted net interest margin was 6.04% [23] - Return on average assets for the year was 2.46%, and return on average tangible equity was 38.75% [8][29] Business Line Data and Key Metrics Changes - In the Consumer segment, the company announced three new agreements, including partnerships with Trustly and Stripe, which are expected to enhance their product offerings [9][11] - The Commercial segment saw total loans and leases grow by 14%, with significant growth in structured finance and asset-based lending [13][26] - The company shifted more than half of its held-for-investment consumer portfolio to held-for-sale, generating a $14.3 million release of credit provision [23] Market Data and Key Metrics Changes - Deposits held on the balance sheet totaled $5.9 billion, a modest increase of $12 million year-over-year [25] - Loans and leases at September 30 were $4.7 billion, compared to $4.1 billion last year, with growth primarily from commercial finance verticals [26] - Non-performing loans increased in the quarter, primarily driven by one working capital loan, but the company believes they are well collateralized [27][29] Company Strategy and Development Direction - The company is focused on maintaining an optimized balance sheet and investing in technology to facilitate evolution and scalability [15][16] - The 2026 strategy includes enhancing the client experience and continuing to build strategic partnerships to drive financial inclusion [14][20] - The company aims to sustain its momentum in talent acquisition and culture, having received recognition as one of the best companies to work for [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the groundwork laid in 2025 for future growth, maintaining guidance for 2026 earnings per diluted share of $8.25 to $8.75 [21][30] - The company anticipates a solid tax year due to recent tax law changes, although growth expectations are moderate following a strong previous year [50][52] - Management noted that the increase in non-performing loans does not correlate with the annual net charge-off rate, emphasizing their collateral management approach [29][56] Other Important Information - The company repurchased approximately 181,000 shares at an average price of $82.95 during the quarter, with full-year repurchases totaling almost 2.1 million shares [30] - The liquidity position remains strong with $2.3 billion available, higher than the previous year [30] Q&A Session Summary Question: Details on the Upstart program and its financial impact - The Upstart program is similar to other marketplace lending products, with credit indemnifications in place and a balance sheet management approach [35][36] Question: Demand for early wage access loans and impact of government shutdown - Management indicated that the government shutdown's impact on demand is not significant, but the partnership with Intuit is expected to bring substantial volume [48][49] Question: Growth expectations in the tax business due to tax law changes - Management expects a solid tax year but does not have huge growth expectations due to a strong previous year, with historic growth rates in mid-single digits [50][52] Question: Insights on non-performing loans and their management - Management clarified that non-performing loans do not correlate with past due loans and emphasized their ability to manage and resolve these loans effectively [53][56] Question: Future pace of share repurchases - The company plans to return to historic norms for share repurchases, targeting an 80% to 90% payout ratio [59]

Financial Data and Key Metrics Changes - The company reported earnings per diluted share of $7.87 for the year, representing a year-over-year growth of 9% [6] - Net income for the year was $185.9 million, driven primarily by a 10% increase in non-interest income compared to last year [6] - The full-year net interest margin expanded to 7.34%, while the adjusted net interest margin was 5.92% [6] - Return on average assets for the year was 2.46%, and return on average tangible equity was 38.75% [6][23] Business Line Data and Key Metrics Changes - In the consumer segment, the company announced three new agreements, including partnerships with Trustly and Stripe, enhancing their service offerings [7] - In credit solutions, the company partnered with Upstart to offer personal loans, aligning with their financial inclusion goals [8] - The commercial finance segment saw total loans and leases grow by 14%, with significant improvements in origination dollars per FTE and a decrease in days to fund [9] Market Data and Key Metrics Changes - Deposits held on the company's balance sheet totaled $5.9 billion, a modest increase of $12 million year-over-year [19] - Loans and leases at September 30 were $4.7 billion, up from $4.1 billion last year, with growth primarily from commercial finance verticals [20] - Non-performing loans increased in the quarter, but the company believes they are well collateralized and manageable [21] Company Strategy and Development Direction - The company is focused on maintaining an optimized balance sheet and investing in technology to facilitate growth and scalability [10][11] - The 2026 strategy emphasizes the importance of people and culture, with a commitment to remote working and talent development [12] - The company aims to mature its risk and compliance framework to support partner success and enhance client experience [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the groundwork laid in 2025 for future growth, despite challenges in the operating environment [5] - The company reiterated its fiscal year 2026 guidance for earnings per diluted share of $8.25 to $8.75, assuming no rate cuts and an effective tax rate of 18% to 22% [24] - Management highlighted the potential positive impact of tax code changes on the tax preparation market [9] Other Important Information - The company repurchased approximately 181,000 shares at an average price of $82.95 during the quarter, bringing full-year repurchases to almost 2.1 million shares [23] - The sale of the majority of the held-for-investment consumer portfolio is expected to put downward pressure on pre-tax income and net interest margin in 2026 [24] Q&A Session Summary Question: Details on the Upstart program and financial statement impact - The Upstart program is similar to other marketplace lending products, with credit indemnifications in place [27][28] Question: Duration of loans on the balance sheet - Loans are typically held for 30 days or less before being moved off the balance sheet [29] Question: Demand for early wage access loans and impact of government shutdown - Current demand is not significantly impacted by the government shutdown, but the partnership with Intuit is expected to drive volume [34] Question: Growth expectations in the tax business due to tax law changes - The company expects solid growth in the tax business, but not huge expectations due to a strong prior year [35][36] Question: Non-performing loans and portfolio concentration - Non-performing loans are managed effectively, and the company expects resolution of major NPLs in the coming quarters [39][41] Question: Share repurchase pace in 2026 - The buyback ratio is expected to return to historic norms, targeting an 80% to 90% payout ratio [42]