United Bancorporation of Alabama (OTCQX: UBAB), a small community development bank in Atmore, Alabama, holds $123.75 million of low-cost preferred stock sold to the U.S. Treasury under the Emergency Capital Investment Program (ECIP). Tim Eriksen, a microcap fund manager, says he has been buying UBAB after the first ECIP preferred was bought back from the Treasury at a discount. Two activist investors are pushing the bank to return capital, and third-quarter earnings of $1.53 a share came out on October 30, 2026.
This is journalism and commentary, not investment advice. We hold no position unless stated.
Key facts
- Ticker: UBAB, quoted on the OTCQX market; thinly traded.
- Situation type: Overcapitalized bank with a possible one-time ECIP gain and an activist campaign.
- The call: Tim Eriksen of Cedar Creek Partners said on October 27, 2026 that he has been buying UBAB.
- Price: $62.08 at the November 3, 2026 close, or about $190 million on 3,055,357 shares by our math.
- Capital: total equity of $276.9 million at June 30, 2026, including the $123.75 million ECIP preferred, which carries a 2.0% dividend.
- Earnings: third-quarter 2026 net income of $4.7 million, or $1.53 a share, up from $1.29 a year earlier but below $1.91 in the second quarter, per the October 30 release.
- Catalyst: M&F Bancorp repurchased its $80 million of ECIP preferred from the Treasury on October 22, according to Triad Business Bank, a rival bidder for M&F.
Is UBAB a good bet right now?
It depends on whether the ECIP preferred can be retired cheaply, and when. On ordinary measures UBAB is not deeply cheap. By our math, common equity after the preferred was about $153.2 million at June 30, roughly $50 a share, so the stock trades near 1.2 times book. Trailing four-quarter earnings of about $6.39 a share, after the third-quarter report, put it near 9.7 times earnings.
The case rests on the preferred. If United could repurchase it at a fraction of face value, the gap would flow to common holders.
Why are investors bullish on United Bancorporation of Alabama?
- The ECIP math. Eriksen estimates that higher Treasury yields have cut the cost: "For banks paying 2% dividend on Preferred it should be about 25.5% of face." By our math, that would mean about $31.6 million for UBAB's $123.75 million, a pre-tax gain near $92 million, or about $30 a share.
- A precedent. M&F Bancorp agreed in January 2025 on an option to repurchase its ECIP preferred at present value, and M&F says $6.73 a share of its merger price depends on that preferred being redeemed.
- Lots of capital. The bank's tier one leverage ratio was about 19.5% at June 30, per its second-quarter release.
- Buybacks. United repurchased 8,500 shares at $54.80 in the quarter and says it has returned more than $41.6 million over two years.
Who's making this call and why?
Tim Eriksen is chief executive of Solitron Devices and manages Cedar Creek Partners, a microcap fund. On October 27 he posted that the first ECIP repurchase had occurred and listed UBAB among banks to watch. Asked which he liked most, he replied: "Been buying $UBAB lately."
Track record. In our tracking, Eriksen is 15-6 (a .714 win rate) on 21 calls scored at 180 days against the S&P 500, with an average edge of +21.8 points. His last 10 scored calls went 9-1, and his longs are 14-6. His October 27 UBAB call, made at $60.50, is provisional and leads the index by about 5 points through November 3. See the scoreboard.
Other supporters: Merion Road Capital and Blue Hill Advisors, which together own about 2% of the stock, urged a $40 million tender offer in a July 7 letter. At $55.36 they put UBAB at 0.71 times an adjusted tangible book of $77.92 a share, which assumes a repurchase near 0.5% of par. On September 8 they asked for two board seats.
Who disagrees?
We did not find a reasoned short case on X. The pushback is on timing and on the activists.
- Timing. Even the activists wrote that meeting the Treasury's repurchase conditions "will take several years."
- Management. United called the board request unreasonable and cited total stockholder returns of more than 129% over five years.
- Costs. The activists say operating expenses rose 46% from 2022 to early 2026 while deposits were roughly flat.
- Credit. Nonaccrual loans were $12.2 million at June 30, up 26.6% from a year earlier.
- Liquidity. UBAB trades over the counter, and Eriksen said some ECIP banks are very illiquid.
What are the key facts to verify?
- The second-quarter release for equity, shares and capital ratios.
- The M&F Bancorp statement on the ECIP-linked merger payment.
- The full third-quarter report. The short October 30 earnings release gave only net income and earnings per share and did not mention the ECIP preferred or repurchase timing.
What would prove it right or wrong?
Right: United discloses a path to repurchase the ECIP preferred at a deep discount, launches a large tender, or adds a director the activists support.
Wrong: the repurchase stays years away, expenses keep rising, credit worsens, and the stock drifts back toward book value.
This is journalism and commentary, not investment advice. We hold no position unless stated.
