Exhibit 99.1



December 11, 2017

Dear Shareholder:

We are pleased to report a successful third quarter of operations and continued development for Uwharrie Capital Corp and its subsidiaries. Our company reported total assets of $592 million as of September 30, 2017, compared to $548 million as of December 31, 2016. This represents 8% growth year-to-date, and is the best growth period we have experienced since the period following the 2007-2008 crisis.

We are now nine years into an economic recovery that has simultaneously become one of the longest and most complex recoveries in modern history. While our local communities are recovering and providing some lending opportunities, deposit growth continues to outpace the supply of quality loans.

Our net interest margin is improving, but we still have more liquidity than needed. We desire to put the deposit growth we have recently experienced to work in our communities by pursuing more quality loans that will continue to perform in what we consider to be a risky environment. Our September 30, 2017, balance sheet reflects the lowest level of risky assets with the best asset quality in our company’s history.

While we remain cautious with regard to the state of the economy, we continue to look to, and plan for, the future. Our decision to open an office in Charlotte and to upgrade our data processing systems are two examples of our efforts toward that end. These decisions will affect our short-term earnings, but will also position us to remain competitive for the long-term.

In the third quarter 2017, we expensed one-time non-recurring period cost associated with these investments in our future of $250 thousand. On another note, the nine months of earnings for 2016 reflect a one-time securities gain of $544 thousand taken in the second quarter. While reported earnings for the nine-month period ended September 30, 2017, were $1.8 million, the same as 2016, the earnings for 2017 are all from core operations, not including any one-time non-recurring items, which result in a $639 thousand improvement in ongoing operations through the nine-month period.

Net income for the three-month period ended September 30, 2017, was $588 thousand, as opposed to $540 thousand for the same period in 2016. For the quarter ended September 30, 2017, net income available to common shareholders was $440 thousand or $0.06 per share, compared to $391 thousand or $0.06 per share for September 30, 2016.

In closing, we are pleased to share with you that your Board of Directors declared a 2% stock dividend to be paid to common stock shareholders on December 27, 2017. We choose to pay a stock dividend as it represents an efficient method for dividend payment to our shareholders. This methodology is proposed by Professor Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. The method allows our company to retain capital to support growth, while allowing you to choose when to recognize the income and pay taxes on the dividend. Shareholders desiring or needing current income can sell their shares, and shareholders desiring to defer income and taxes to a future date can do so by retaining the dividend shares.



Those who hold Uwharrie Capital Corp common stock as of the December 15, 2017, record date will receive the dividend, which will be paid electronically via book entry. No stock certificates will be issued. Going to a paperless book entry system will save our shareholders a significant amount of annual operating expense, while also saving a lot of trees and being more environmentally friendly. Shareholders will receive a Direct Registration System (DRS) statement from our Stock Transfer Agent, Broadridge, indicating the new shares gained. If the stock is held in a brokerage account, shares will be electronically delivered directly to the appropriate account. Only whole shares of stock will be issued. If applicable, a check for payment of a fractional share may also be issued or deposited electronically.

We hope you are pleased with the direction and continued growth of our company. The need for a community bank that is focused on people and Main Street has never been greater. Thank you for being part of building an institution that is making a difference in our communities and our lives.

In keeping with tradition, we enclose the 2018 Uwharrie Capital Corp Commemorative Calendar, which gives a glimpse into the past with scenes from neighborhood grocery stores once found in the communities we serve. We wish you and your family a blessed holiday.




/s/ Roger L. Dick


/s/ Brendan P. Duffey

President and Chief Executive Officer


Chief Operating Officer

This Report may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of the Company’s goals and expectations with respect to earnings, income per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words “may,” ”could,” ”should,” “would,” “believe,” ”anticipate,” “estimate,” “expect,” “intend,” ”plan,” ”projects,” ”outlook,” or similar expressions. These statements are based upon the current belief and expectations of the Company‘s management and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control).



Uwharrie Capital Corp and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(Amounts in thousands except share and per share data)

   September 30,
    September 30,



Cash and due from banks

   $ 6,826     $ 7,400  

Interest-earning deposits with banks

     85,757       49,187  

Securities available for sale

     97,717       100,513  

Securities held to maturity (fair value $11,575 and $11,934, respectively)

     11,493       12,023  

Loans held for sale

     2,725       2,538  

Loans held for investment

     349,919       344,542  

Less: Allowance for loan losses

     (2,448     (2,849







Net loans held for investment

     347,471       341,693  







Interest receivable

     1,516       1,520  

Premises and equipment, net

     14,302       14,224  

Restricted stock

     1,068       1,052  

Bank-owned life insurance

     8,514       6,861  

Other real estate owned

     2,681       4,435  

Other assets

     11,882       10,766  







Total assets

   $ 591,952     $ 552,212  











Demand, noninterest-bearing

   $ 118,459     $ 104,877  

Interest checking and money market accounts

     295,330       274,591  

Savings accounts

     45,075       41,865  

Time deposits, $250,000 and over

     10,408       7,337  

Other time deposits

     57,981       60,385  







Total deposits

     527,253       489,055  







Interest payable

     151       150  

Short-term borrowed funds

     1,788       1,786  

Long-term debt

     9,534       9,537  

Other liabilities

     8,066       6,884  







Total liabilities

     546,792       507,412  







Shareholders' Equity


Common stock, $1.25 par value: 20,000,000 shares authorized; shares issued and outstanding 6,978,263 and 6,925,408 shares, respectively Book value per share $4.95 in 2017 and $4.94 in 2016. (1)

     8,723       8,830  

Additional paid-in capital

     12,258       12,571  

Undivided profits

     14,262       12,586  

Accumulated other comprehensive income (loss)

     (726     197  







Total Uwharrie Capital Corp shareholders' equity

     34,517       34,184  

Noncontrolling interest

     10,643       10,616  







Total shareholders' equity

     45,160       44,800  







Total liabilities and shareholders' equity

   $ 591,952     $ 552,212  








(1) Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2016.

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Income (Unaudited)


     Three Months Ended
September 30,
    Nine Months Ended
September 30,

(Amounts in thousands except share and per share data)

   2017     2016     2017     2016  

Interest Income


Interest and fees on loans

   $ 4,214     $ 4,025       12,336     $ 11,820  

Interest on investment securities

     495       449       1,511       1,348  

Interest-earning deposits with banks and federal funds sold

     258       78       520       236  













Total interest income

     4,967       4,552       14,367       13,404  













Interest Expense


Interest paid on deposits

     192       167       521       563  

Interest paid on borrowed funds

     139       142       424       444  













Total interest expense

     331       309       945       1,007  













Net Interest Income

     4,636       4,243       13,422       12,397  

Provision for (recovery of) loan losses

     (136     240       (309     70  

Net interest income after provision (recovery of) for loan losses

     4,772       4,003       13,731       12,327  













Noninterest Income


Service charges on deposit accounts

     299       309       874       904  

Other service fees and commissions

     1,003       1,055       3,206       3,330  

Gain (loss) on sale of securities

     (12     2       (12     544  

Income from mortgage loan sales

     790       1,111       2,539       2,769  

Other income

     218       116       570       386  













Total noninterest income

     2,298       2,593       7,177       7,933  













Noninterest Expense


Salaries and employee benefits

     3,647       3,626       10,987       10,792  

Occupancy expense

     327       327       938       850  

Equipment expense

     151       159       451       488  

Data processing

     429       161       789       529  

Other operating expenses

     1,669       1,555       5,077       5,096  













Total noninterest expense

     6,223       5,828       18,242       17,755  













Income before income taxes

     847       768       2,666       2,505  

Provision for income taxes

     259       228       829       745  













Net Income

   $ 588     $ 540     $ 1,837     $ 1,760  













Consolidated net income

   $ 588     $ 540     $ 1,837     $ 1,760  

Less: Net income attributable to noncontrolling interest

     (148     (149     (442     (444













Net income attributable to Uwharrie Capital

     440       391       1,395       1,316  

Dividends – preferred stock

     —         —         —         —    













Net income available to common shareholders

   $ 440     $ 391     $ 1,395     $ 1,316  













Net Income Per Common Share (1)



   $ 0.06     $ 0.06     $ 0.20     $ 0.19  

Assuming dilution

   $ 0.06     $ 0.06     $ 0.20     $ 0.19  

Weighted Average Common Shares Outstanding (1)



     6,979,137       7,095,112       7,008,240       7,111,733  

Assuming dilution

     6,979,985       7,095,112       7,008,845       7,111,733  

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