Exhibit 99.1

 

 

November 13, 2019

 

Dear Shareholder:

 

Financial results so far year-to-date are beating our expectations and reflect a lot of hard work on the behalf of our dedicated staff as they continue working together to fulfill our mission.  

 

We are pleased to report to you that net income for the first nine months of 2019 was $2.6 million, as compared to $1.3 million for the same nine month period in 2018.   This equates to $2.2 million in net income available to common shareholders or $0.31 cents per share, compared to $961 thousand in net income available to common shareholders or $0.13 per share that we reported in 2018 for the same period.   This represents an earnings growth of 138% in income per share year-to-date compared to the first nine of months of 2018.

 

In these times of global economic anxieties and trade disruptions that have put pressure on bank margins, we benefited from strong noninterest income sources.  Our mortgage division production increased in the third quarter with the decline in rates and our wealth management division continued to grow its assets under management, both of which improves net income.  Additionally, service charges and credit card fee income continue to achieve new highs due to growth in our business and consumer customer relationships.  

 

Our balance sheet continues to grow and leverage the fixed costs of new investments in technology, product offerings and our expansion into Mecklenburg County. We successfully completed an oversubscribed reissuance of $9.9 million of Junior Subordinated Debt at 5.25%, providing growth capital to your Company as well as providing an option for investors to put their money back to work in their local economies.  Our loan production goals have been reached, although somewhat offset by unexpected pay-downs in the commercial portfolio. Two key additions to the staff were also accomplished in the third quarter, a  new commercial loan executive to lead our expansion in the Charlotte market focusing on developing business relationships and a new community development banker with expertise in home mortgage counseling to help us better address the home mortgage needs of our communities.   We have momentum and good energy with our team which has contributed to Uwharrie Capital Corp (OTC: UWHR) and its subsidiary, Uwharrie Bank, reporting consolidated total assets of $661 million at September 30, 2019, versus $637 million at September 30, 2018.  

 

Our capital has benefited from increased earnings, as well as price appreciation of our bond portfolio, which increased the book value of Uwharrie Capital Corp common stock to $5.48 per share as of September 30, 2019. The current over-the-counter trading price of Uwharrie Capital Corp stock is below the current book value indicating that it is undervalued. Management has taken advantage of this opportunity and repurchased 2.16% of outstanding shares year-to-date, further increasing value to shareholders. We believe the current price-to-book ratio indicates an attractive buying opportunity of our stock.

 

As a result of this continuing progress of your company, your Board of Directors has declared a 2% stock dividend.  All shareholders of record on November 25, 2019, will receive the dividend payable on December 9, 2019.  The stock dividend will be paid electronically via book-entry (no stock certificates


will be issued).  Once again, we chose to pay a stock dividend as opposed to cash to provide our shareholders with options to suit their needs.  Those shareholders still in peak earning years have the option of holding the dividend shares, which defers income, and paying taxes in later years at the lower capital gains rate.  For our shareholders desiring current income, these new shares can be sold for cash.  The stock dividend gives you the shareholder the option of deciding when you want to recognize the income and whether you pay ordinary income tax or capital gains.  If you wish to buy or sell shares, please contact our Investor Relations department and we can facilitate the transactions.   Shareholders are also reminded to turn in all stock certificates from prior years (which are still valid) for exchange to electronic form.  Our Investor Relations team can also assist you with this process (704-982-4415).

 

Historically, we have enclosed our community calendar in our third quarter mailing.  With the proliferation of smart phones, demand of our printed calendars has waned and we have chosen not to continue with the calendar this year. Instead we will redeploy those dollars spent to support the community calendars of various non-profits and agencies that provide much needed services to our communities.

 

We have had a great year so far, made possible by great associates, customers and shareholders.  We are accomplishing our strategic goals, which will continue to assure our relevance and long-term success and for that, we are thankful.

  

May your holiday season be blessed and we look forward to serving you and the needs of our communities in the year to come.

 

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).

 

 

 

 

 

 

 

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

 

 

September 30,

 

 

September 30,

 

(Amounts in thousands except share and per share data)

2019

 

 

2018

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

5,003

 

 

$

6,629

 

Interest-earning deposits with banks

 

141,926

 

 

 

110,097

 

Securities available for sale

 

92,538

 

 

 

92,471

 

Securities held to maturity (fair value $10,533 and $10,728, respectively)

 

10,461

 

 

 

10,871

 

Loans held for sale

 

3,240

 

 

 

1,946

 

Loans held for investment

 

369,475

 

 

 

377,738

 

     Less: Allowance for loan losses

 

2,071

 

 

 

2,365

 

     Net loans held for investment

 

367,404

 

 

 

375,373

 

Interest receivable

 

1,510

 

 

 

1,681

 

Premises and equipment, net

 

16,733

 

 

 

14,849

 

Restricted stock

 

1,144

 

 

 

1,094

 

Bank-owned life insurance

 

8,758

 

 

 

8,642

 

Other real estate owned

 

718

 

 

 

1,086

 

Other assets

 

11,424

 

 

 

12,651

 

     Total assets

$

660,859

 

 

$

637,390

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

149,835

 

 

$

137,203

 

     Interest checking and money market accounts

 

265,903

 

 

 

322,730

 

     Savings accounts

 

57,018

 

 

 

56,802

 

     Time deposits, $250,000 and over

 

57,649

 

 

 

6,848

 

     Other time deposits

 

58,848

 

 

 

49,959

 

          Total deposits

 

589,253

 

 

 

573,542

 

Interest payable

 

53

 

 

 

12

 

Short-term borrowed funds

 

503

 

 

 

1,305

 

Long-term debt

 

10,360

 

 

 

9,934

 

Other liabilities

 

11,783

 

 

 

8,888

 

     Total liabilities

 

611,952

 

 

 

593,681

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

     issued and outstanding or in process of issuance

 

 

 

 

 

 

 

     6,975,734 and 7,019,604 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $5.48 in 2019 and $4.59 in 2018 (1)

 

8,720

 

 

 

8,774

 

Additional paid-in capital

 

12,323

 

 

 

12,414

 

Undivided profits

 

16,608

 

 

 

14,198

 

Accumulated other comprehensive income (loss)

 

601

 

 

 

(2,332

)

     Total Uwharrie Capital Corp shareholders' equity

 

38,252

 

 

 

33,054

 

Noncontrolling interest

 

10,655

 

 

 

10,655

 

     Total shareholders' equity

 

48,907

 

 

 

43,709

 

     Total liabilities and shareholders' equity

$

660,859

 

 

$

637,390

 

 

 

 

 

 

 

 

 

(1)   Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

(Amounts in thousands except share and per share data)

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

4,840

 

$

4,680

 

 

$

14,242

 

$

13,405

 

Interest on investment securities

 

532

 

 

435

 

 

 

1,518

 

 

1,430

 

Interest-earning deposits with banks and federal funds sold

 

678

 

 

539

 

 

 

2,158

 

 

1,181

 

     Total interest income

 

6,050

 

 

5,654

 

 

 

17,918

 

 

16,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid on deposits

 

811

 

 

372

 

 

 

2,170

 

 

858

 

Interest paid on borrowed funds

 

147

 

 

143

 

 

 

440

 

 

423

 

     Total interest expense

 

958

 

 

515

 

 

 

2,610

 

 

1,281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

5,092

 

 

5,139

 

 

 

15,308

 

 

14,735

 

Provision for (recovery of) loan losses

 

(80

)

 

(24

)

 

 

(508

)

 

92

 

Net interest income after provision for (recovery of)

 

 

 

 

 

 

 

 

 

 

 

 

 

     for loan losses

 

5,172

 

 

5,163

 

 

 

15,816

 

 

14,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

335

 

 

292

 

 

 

1,003

 

 

865

 

Interchange and card transaction fees

 

229

 

 

190

 

 

 

627

 

 

476

 

Other service fees and commissions

 

658

 

 

650

 

 

 

1,987

 

 

1,940

 

Income from mortgage loan sales

 

1,197

 

 

730

 

 

 

2,776

 

 

2,261

 

Other income

 

169

 

 

119

 

 

 

150

 

 

504

 

     Total noninterest income

 

2,588

 

 

1,981

 

 

 

6,543

 

 

6,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,284

 

 

4,074

 

 

 

12,669

 

 

12,141

 

Occupancy expense

 

422

 

 

447

 

 

 

1,245

 

 

1,207

 

Equipment expense

 

187

 

 

220

 

 

 

546

 

 

555

 

Data processing

 

163

 

 

206

 

 

 

557

 

 

739

 

Other operating expenses

 

1,541

 

 

1,442

 

 

 

4,078

 

 

4,455

 

     Total  noninterest expense

 

6,597

 

 

6,389

 

 

 

19,095

 

 

19,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1,163

 

 

755

 

 

 

3,264

 

 

1,592

 

Provision for income taxes

 

195

 

 

112

 

 

 

655

 

 

248

 

Net Income

$

968

 

$

643

 

 

$

2,609

 

$

1,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

$

968

 

$

643

 

 

$

2,609

 

$

1,344

 

  Less: Net income attributable to noncontrolling interest

 

(142

)

 

(144

)

 

 

(422

)

 

(428

)

Net income attributable to Uwharrie Capital Corp and common shareholders

$

826

 

$

499

 

 

$

2,187

 

$

916

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$

0.12

 

$

0.07

 

 

$

0.31

 

$

0.13

 

     Assuming dilution

$

0.12

 

$

0.07

 

 

$

0.31

 

$

0.13

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

7,041,505

 

 

7,237,022

 

 

 

7,087,176

 

 

7,246,938

 

     Assuming dilution

 

7,041,505

 

 

7,237,022

 

 

 

7,087,176

 

 

7,246,938

 

 

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