Exhibit 99.1

 

 

 

August 21, 2017

 

Dear Shareholders:

 

We are pleased to report to you another successful quarter of growth and development for your company.  Uwharrie Capital Corp and its subsidiaries reported total assets of $586 million as of June 30, 2017.  This is an increase of 11.5% over the $525 million reported as of June 30, 2016.  Total deposits grew $60 million or 13%, for the same twelve-month period ending June 30, 2017, for a total of $522 million.  The growth in our deposits allowed us to fund an improving demand for loans, which also showed good growth, ending June 30, 2017, with a balance of $356 million, reflecting a 7.1% growth over the $333 million in loans outstanding reported as of June 30, 2016.

 

This momentum in both deposit and loan growth, along with interest rate increases coming from the Federal Reserve, was the primary contributor to greater earnings on a recurring operating basis.  Earnings for the second quarter ending June 30, 2017, of $632 thousand are slightly less than the $710 thousand reported second quarter 2016.  Earnings year-to-date have improved.  For the six-month period ending June 30, 2017, earnings were $1.25 million as compared to $1.22 million reported for the six months ending June 30, 2016.  Here is the rest of the story: the earnings reported for the first six months of 2016 included one-time security gains of $542 thousand. As stated previously, 2017 earnings-to-date reflect a stronger level of recurring earnings reported, as 2017 earnings are all from operations.

 

All of our key performance measurements are moving in the right direction. Asset quality continues to improve, and progress is being made on our first full-service banking office in Mecklenburg County. Uwharrie Bank Mortgage and Uwharrie Investment Advisors, as key contributors to our fee based strategy, continue to make progress toward adding diversification to our earnings base while permitting us to take a holistic approach in meeting the needs of our customers.  The value proposition that we bring to our community is being realized and better reflected in our stock price.   Uwharrie Capital Corp common stock traded on the Over-The-Counter Market on June 30, 2017, at $5.40, up from the $5.28 price traded on March 31, 2017.  The outlook for the economy near-term is still good, although not robust. We are confident we will be in an environment that will support continued progress toward our strategic long-term goals, as we go into the second half of 2017.

 

We hope you are pleased with the progress that has been made the first half of 2017.  Please remember to refer your friends and neighbors to your company as customers and shareholders.  We are more than just a good investment; we are a good investment in our communities. Working together, we can build strong local economies and improve the quality of our lives … We can make a difference. Thank you for your continued support.

 

 

 

 

 

1

 


Sincerely,

 

UWHARRIE CAPITAL CORP

 

 

 

/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).

 

 

 

 

 

2

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

 

 

June 30,

 

 

June 30,

 

(Amounts in thousands except share and per share data)

2017

 

 

2016

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

8,368

 

 

$

6,207

 

Interest-earning deposits with banks

 

68,539

 

 

 

44,914

 

Securities available for sale

 

102,209

 

 

 

93,023

 

Securities held to maturity (fair value $11,863 and $12,444, respectively)

 

11,780

 

 

 

12,145

 

Loans held for sale

 

3,112

 

 

 

2,270

 

Loans held for investment

 

353,179

 

 

 

330,295

 

     Less: Allowance for loan losses

 

2,551

 

 

 

2,706

 

     Net loans held for investment

 

350,628

 

 

 

327,589

 

Interest receivable

 

1,603

 

 

 

1,473

 

Premises and equipment, net

 

14,051

 

 

 

14,477

 

Restricted stock

 

1,068

 

 

 

1,052

 

Bank-owned life insurance

 

8,481

 

 

 

6,820

 

Other real estate owned

 

2,801

 

 

 

4,356

 

Other assets

 

12,957

 

 

 

10,925

 

     Total assets

$

585,597

 

 

$

525,251

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

122,003

 

 

$

106,071

 

     Interest checking and money market accounts

 

285,731

 

 

 

243,999

 

     Savings accounts

 

45,428

 

 

 

42,287

 

     Time deposits, $250,000 and over

 

11,490

 

 

 

7,033

 

     Other time deposits

 

57,468

 

 

 

62,679

 

          Total deposits

 

522,120

 

 

 

462,069

 

Interest payable

 

149

 

 

 

153

 

Short-term borrowed funds

 

1,454

 

 

 

1,931

 

Long-term debt

 

9,534

 

 

 

9,540

 

Other liabilities

 

7,656

 

 

 

6,766

 

     Total liabilities

 

540,913

 

 

 

480,459

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

Common stock, $1.25 par value:  20,000,000 shares authorized;

 

 

 

 

 

 

 

     issued and outstanding or in process of issuance

 

 

 

 

 

 

 

     6,979,244 and 6,972,154 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $4.88 in 2017 and $4.81 in 2016 (1)

 

8,724

 

 

 

8,715

 

Additional paid-in capital

 

12,263

 

 

 

12,273

 

Undivided profits

 

13,822

 

 

 

12,818

 

Accumulated other comprehensive income (loss)

 

(761

)

 

 

376

 

     Total Uwharrie Capital Corp shareholders' equity

 

34,048

 

 

 

34,182

 

Noncontrolling interest

 

10,636

 

 

 

10,610

 

     Total shareholders' equity

 

44,684

 

 

 

44,792

 

     Total liabilities and shareholders' equity

$

585,597

 

 

$

525,251

 

 

 

 

 

 

 

 

 

(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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

(Amounts in thousands except share and per share data)

2017

 

2016

 

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

4,132

 

$

3,897

 

 

$

8,122

 

$

7,795

 

Interest on investment securities

 

507

 

 

449

 

 

 

1,016

 

 

899

 

Interest-earning deposits with banks and federal funds sold

 

158

 

 

70

 

 

 

262

 

 

158

 

     Total interest income

 

4,797

 

 

4,416

 

 

 

9,400

 

 

8,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid on deposits

 

175

 

 

182

 

 

 

329

 

 

396

 

Interest paid on borrowed funds

 

143

 

 

145

 

 

 

285

 

 

302

 

     Total interest expense

 

318

 

 

327

 

 

 

614

 

 

698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

4,479

 

 

4,089

 

 

 

8,786

 

 

8,154

 

Provision for (recovery of) loan losses

 

(114

)

 

(112

)

 

 

(173

)

 

(170

)

Net interest income after provision (recovery of)

 

 

 

 

 

 

 

 

 

 

 

 

 

     for loan losses

 

4,593

 

 

4,201

 

 

 

8,959

 

 

8,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

286

 

 

289

 

 

 

575

 

 

595

 

Other service fees and commissions

 

1,006

 

 

1,147

 

 

 

2,203

 

 

2,275

 

Gain (loss) on sale of securities

 

-

 

 

337

 

 

 

-

 

 

542

 

Income from mortgage loan sales

 

878

 

 

958

 

 

 

1,749

 

 

1,658

 

Other income

 

66

 

 

128

 

 

 

352

 

 

270

 

     Total noninterest income

 

2,236

 

 

2,859

 

 

 

4,879

 

 

5,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

3,642

 

 

3,603

 

 

 

7,340

 

 

7,166

 

Occupancy expense

 

307

 

 

266

 

 

 

611

 

 

523

 

Equipment expense

 

148

 

 

160

 

 

 

300

 

 

329

 

Data processing

 

178

 

 

188

 

 

 

360

 

 

368

 

Other operating expenses

 

1,609

 

 

1,789

 

 

 

3,408

 

 

3,541

 

     Total  noninterest expense

 

5,884

 

 

6,006

 

 

 

12,019

 

 

11,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

945

 

 

1,054

 

 

 

1,819

 

 

1,737

 

Provision for income taxes

 

313

 

 

344

 

 

 

570

 

 

517

 

Net Income

$

632

 

$

710

 

 

$

1,249

 

$

1,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

$

632

 

$

710

 

 

$

1,249

 

$

1,220

 

  Less: Net income attributable to noncontrolling interest

 

(148

)

 

(148

)

 

 

(294

)

 

(295

)

Net income attributable to Uwharrie Capital

 

484

 

 

562

 

 

 

955

 

 

925

 

Dividends - preferred stock

 

-

 

 

-

 

 

 

-

 

 

-

 

Net income available to common shareholders

$

484

 

$

562

 

 

$

955

 

$

925

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$

0.07

 

$

0.08

 

 

$

0.14

 

$

0.13

 

     Assuming dilution

$

0.07

 

$

0.08

 

 

$

0.14

 

$

0.13

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

7,001,216

 

 

7,117,490

 

 

 

7,023,032

 

 

7,120,083

 

     Assuming dilution

 

7,001,541

 

 

7,117,490

 

 

 

7,023,513

 

 

7,120,083

 

 

4

 

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