Exhibit 99.1

 

 

 

August 13, 2018

 

Dear Shareholder:

 

Your company, Uwharrie Capital Corp, ended the second quarter, June 30, 2018, with total assets of $614 million, an annualized increase of 13.19% compared to December 31, 2017. The asset quality of our balance sheet remains very strong with non-performing assets and past due loans at historically low levels and well below our state banking peers. Uwharrie Bank’s liquidity is also very strong by industry standards. Our balance sheet is comprised of excellent quality assets, funded by a solid base of core deposits and strong capital levels.

Balance sheet strength, along with the momentum of a robust economy, gave us the strategic runway and platform we needed to launch our investments into new technologies, product lines and markets that will keep our company viable and relevant long-term; however, investing in our future involves a higher level of cost short-term. Our core processing system is the heart of our ability to provide financial services. The current system is 15 years old and not able to efficiently support our operations and growth going forward. A project team began working on this conversion over a year ago, and we will convert to the new system during third quarter of 2018. Transitioning to this new core system has taken countless hours of work from our dedicated team and includes over $250 thousand of one-time expenses through June 30, 2018. This new core system will allow us to achieve new operational efficiencies while, at the same time, improving our customers’ experience.

The new team of Small Business Administration/United States Department of Agriculture Rural Development (SBA/USDA) lending specialists, which was discussed in our first quarter letter, has continued to grow and develop new business relationships for our company. Over the course of 2018, the team expects to break even and begin producing a net income contribution in 2019; however, it has taken an investment of $175 thousand in the first six months of 2018.

Our new full-service banking office on Rea Road in Ballantyne (Charlotte) is out-performing expected goals, though it is still in the initial start-up phase. The 2018 year-to-date investment impact is $370 thousand in additional operating cost. As new relationships develop and this office grows, it will become a net income contributor to the company. In the financial services industry, it is normal for a new branch to take 24 to 36 months to reach breakeven. Similarly, by our increasing the number of dedicated wealth management personnel in Charlotte and Asheboro, NC, we have impacted the company $50 thousand in 2018 year-to-date; however, this strategy allows our personalized financial services footprint to expand beyond Anson, Stanly and Cabarrus counties.

All four of our investment strategies totaled approximately $845 thousand in incremental one-time costs through June 2018 (pre-tax), or $670 thousand after adjusting for tax. When comparing June 30, 2018 to the same period in 2017, and adjusting for these one-time expenses, the company’s Net Income

1

 


The following information was filed by Uwharrie Capital Corp (UWHR) on Tuesday, August 14, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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