Exhibit 99.1

 

 

 

May 30, 2018

 

Dear Shareholder:

 

There are some very important developments underway in your company. If you attended our Shareholders’ Meeting on May 8, you heard about them in considerable detail. If you were not able to attend, we want to briefly highlight those changes.

Your company reported total assets of $601 million at March 31, 2018, compared to $576 million on December 31, 2017. This represents a new milestone for our company and a 4.3% growth year-to-date (17.4% annualized). This is the best growth period we have experienced since the 2007-2008 crisis. In addition, this growth is being accomplished with excellent asset quality.

Your management is being thoughtful, careful and opportunistic in growing your company. To that end, we must make some strategically vital investments in technology, new markets and expansion of product lines in order for Uwharrie Capital Corp to remain relevant and preserve our competitiveness in the markets we serve. It is not our desire to get bigger just for the sake of getting bigger. We desire to be no larger than we need to be to cover the cost of doing business, while providing our stakeholders fair returns. Management began the growth initiative approximately 2 years ago, in what appeared to be a favorable economic environment that would continue for the next few years. This year is a pivotal point to accelerate growth not only in 2018 but for years to come.

A major and expensive initiative to support and create the needed growth involves converting our “core bank processing system” to a new platform that will allow us to considerably improve the customer and associate experience in our delivery of financial services.  We have been on the same core processing system for the past 15 years. The new core system will go live on August 13 of this year.

Additionally, in the first quarter, a new team of Small Business Administration/United States Department of Agriculture Rural Development (SBA/USDA) lending specialists was added to our staff of banking professionals as a new niche market that will allow us to better serve the small business community while providing an important new source of income.

Also in the first quarter this year, we made the investment to enter into new markets with our opening of a full-service banking office on Rea Road in Ballantyne and a new mortgage office in Rock Hill, SC as well as adding dedicated wealth management personnel in Charlotte and Ballantyne. We also expanded our market presence in late 2017 with a new wealth management office in Asheboro, NC.

As a result of our growth initiatives, earnings for the first quarter 2018 compare less favorably to last year. Earnings were $234 thousand versus $617 thousand for the same period in 2017. For the three months ended March 31, 2018, net income available to common shareholders, which includes dividends

1

 


paid to preferred shareholders, was $91 thousand or $ 0.01 per share compared to $471 thousand or $0.07 per share for March 2017.

While our growth strategy is essential, growing the company requires significant financial investments before we can recognize the full benefits – that means, we have to endure some short-term financial pain in the interest of long-term gain. There will be a period of ramping costs before the new business revenue and improved operating efficiencies associated with our efforts will be realized. This is an aggressive growth strategy, one, we think, dictated by the radical change and disruption we see in financial services.  We are cognizant of the significant challenges and financial consequences we are undertaking and are being diligent in the management of these initiatives and their expenses. Each strategic initiative has its own detailed budget and project management team to keep us on plan.

While our short-term earnings are going to be impacted, the creation of wealth cannot be effectively measured by calendar quarters or the amount of time it takes the earth to rotate through a calendar year. In fact, managing for short-term profits, as opposed to long-term sustainable earnings, has the effect of destroying company value by not staying competitive and relevant in the market place.

Thank you for your patience and confidence as we navigate your company to a more sustainable future and greater value for all of our stakeholders. We will give you quarterly progress reports on these strategic projects as we go forward in 2018.

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

March 31,

 

(Amounts in thousands except share and per share data)

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

$

7,276

 

 

$

7,012

 

Interest-earning deposits with banks

 

 

 

85,453

 

 

 

57,375

 

Securities available for sale

 

 

 

92,914

 

 

 

103,650

 

Securities held to maturity (fair value $11,022 and $11,853, respectively)

 

 

 

11,153

 

 

 

11,814

 

Loans held for sale

 

 

 

2,149

 

 

 

1,315

 

Loans held for investment

 

 

 

365,154

 

 

 

344,182

 

     Less: Allowance for loan losses

 

 

 

2,547

 

 

 

2,677

 

     Net loans held for investment

 

 

 

362,607

 

 

 

341,505

 

Interest receivable

 

 

 

1,705

 

 

 

1,599

 

Premises and equipment, net

 

 

 

14,934

 

 

 

14,154

 

Restricted stock

 

 

 

1,094

 

 

 

1,067

 

Bank-owned life insurance

 

 

 

8,584

 

 

 

8,450

 

Other real estate owned

 

 

 

1,733

 

 

 

3,428

 

Prepaid assets

 

 

 

1,233

 

 

 

1,120

 

Other assets

 

 

 

11,153

 

 

 

10,658

 

     Total assets

 

 

$

601,988

 

 

$

563,147

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

     Demand, noninterest-bearing

 

 

$

132,119

 

 

$

118,679

 

     Interest checking and money market accounts

 

 

 

297,165

 

 

 

270,852

 

     Savings accounts

 

 

 

47,703

 

 

 

44,478

 

     Time deposits, $250,000 and over

 

 

 

7,562

 

 

 

7,478

 

     Other time deposits

 

 

 

53,357

 

 

 

58,225

 

          Total deposits

 

 

 

537,906

 

 

 

499,712

 

Interest payable

 

 

 

147

 

 

 

148

 

Short-term borrowed funds

 

 

 

2,279

 

 

 

2,631

 

Long-term debt

 

 

 

9,534

 

 

 

9,534

 

Other liabilities

 

 

 

8,375

 

 

 

7,112

 

     Total liabilities

 

 

 

558,241

 

 

 

519,137

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

     issued and outstanding 7,107,520 and 7,004,547 shares, respectively

 

 

 

 

 

 

 

 

 

     Book value per share $4.66 in 2018 and $4.67 in 2017 (1)

 

 

 

8,884

 

 

 

8,756

 

Additional paid-in capital

 

 

 

12,793

 

 

 

12,356

 

Undivided profits

 

 

 

13,373

 

 

 

13,338

 

Accumulated other comprehensive income (loss)

 

 

 

(1,956

)

 

 

(1,069

)

     Total Uwharrie Capital Corp’s shareholders' equity

 

 

 

33,094

 

 

 

33,381

 

Noncontrolling interest

 

 

 

10,653

 

 

 

10,629

 

     Total shareholders' equity

 

 

 

43,747

 

 

 

44,010

 

     Total liabilities and shareholders' equity

 

 

$

601,988

 

 

$

563,147

 

 

 

 

 

 

 

 

 

 

 

(1)   Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2017.

 

 

 

 

 

 

 

 

 

 

3

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

(Amounts in thousands except share and per share data)

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

 

 

 

$

4,256

 

$

3,990

 

 

Interest on investment securities

 

 

 

 

 

511

 

 

509

 

 

Interest-earning deposits with banks and federal funds sold

 

 

 

 

 

277

 

 

104

 

 

     Total interest income

 

 

 

 

 

5,044

 

 

4,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

Interest paid on deposits

 

 

 

 

 

217

 

 

154

 

 

Interest on borrowed funds

 

 

 

 

 

138

 

 

142

 

 

     Total interest expense

 

 

 

 

 

355

 

 

296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

 

 

 

4,689

 

 

4,307

 

 

Provision for (recovery of) loan losses

 

 

 

 

 

78

 

 

(59

)

 

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

 

 

 

 

 

4,611

 

 

4,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

 

 

 

283

 

 

289

 

 

Interchange and card transaction fees

 

 

 

 

 

142

 

 

136

 

 

Other service fees and commissions

 

 

 

 

 

661

 

 

814

 

 

Income from mortgage loan sales

 

 

 

 

 

662

 

 

871

 

 

Other income

 

 

 

 

 

169

 

 

286

 

 

     Total noninterest income

 

 

 

 

 

1,917

 

 

2,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 

 

 

3,946

 

 

3,698

 

 

Occupancy expense

 

 

 

 

 

364

 

 

304

 

 

Equipment expense

 

 

 

 

 

170

 

 

152

 

 

Data processing

 

 

 

 

 

250

 

 

182

 

 

Other operating expenses

 

 

 

 

 

1,506

 

 

1,552

 

 

     Total noninterest expense

 

 

 

 

 

6,236

 

 

5,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

 

 

 

292

 

 

874

 

 

Provision for income taxes

 

 

 

 

 

58

 

 

257

 

 

Net Income

 

 

 

 

$

234

 

$

617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

 

 

 

$

234

 

$

617

 

 

    Less: Net income attributable to noncontrolling interest

 

 

 

 

 

(143

)

 

(146

)

 

Net income attributable to Uwharrie Capital Corp and common shareholders

 

 

 

 

$

91

 

$

471

 

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

 

 

 

$

0.01

 

$

0.07

 

 

     Assuming dilution

 

 

 

 

$

0.01

 

$

0.07

 

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

 

 

 

 

7,112,347

 

 

7,185,992

 

 

     Assuming dilution

 

 

 

 

 

7,112,347

 

 

7,186,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

View differences made from one to another to evaluate Uwharrie Capital Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Uwharrie Capital Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account