Exhibit 99.1

 

 

May 15, 2020

 

 

Dear Shareholder:

 

The first quarter of 2020 will permanently be remembered as a period of change. Covid-19 has brought many changes to our communities, affecting the ways we live, work and interact. Roughly 40% of our team is currently working from home, and we have become more accustomed to online meetings and conference calls. While our customers are adapting to accessing our branches predominately with our drive-thru facilities, we have seen a significant increase in online account opening and mobile banking activity. Our efforts to provide electronic services, compared to traditional brick and mortar services, have allowed us to social distance and continue to meet our customers’ needs while sustaining business operations.

 

A large focus during the first quarter and into the second quarter of 2020 for Uwharrie Bank, has been to help provide capital to the businesses that make up our local economies with the help of the Small Business Administration (SBA) Paycheck Protection Program (PPP). As a Preferred SBA lender, our team has been able to react quickly to the program’s requirements. This has helped our Main Street businesses gain access to funds they so badly need and put payroll dollars into the hands of families that depend on them. Additionally, we are providing various payment deferrals for current consumer and business customers to help them bridge the interruption of income they are experiencing during these financially turbulent times.

 

During the first quarter of 2020, the United States experienced a near overnight drop in short-term interest rates of 150 basis points and historical low interest rates all across the US Treasury yield curve. This has fueled a refinance boom for our mortgage division as families take advantage of both the decline in interest rates and lower home ownership cost. Income from mortgage production increased from $492,000 at March 31, 2019 to $1.1 million at March 31, 2020, a 116% improvement.

 

Uwharrie Investment Advisors (UIA), our wealth management division, showed improvement in revenue, as well as expense reductions in the first quarter of 2020, as compared to the same period last year. Our advisors are staying in close contact with our clients to help them manage the risk of their portfolios in these challenging markets. For the third consecutive year, UIA has been recognized by the Centre for Fiduciary Excellence (CEFEX) for demonstrating adherence to professional practices and remains in good standing.

 

As of the end of first quarter 2020, your Company’s earnings from all divisions before income tax and loan loss provisions were $1.0 million, an increase of $285,000 or 38% when compared to the same period in 2019. However, due to the increased risk and uncertainty associated with the effects of COVID-19, your Company added $632,000 to its provision for loan losses. The resulting Net Income Available to Common Shareholders after dividends for the first quarter 2020 was $187,000, compared to $550,000 reported for the same quarter 2019, a decrease of 66%. The Company grew assets from $656.8 million at December 31, 2019 to $674.7 million at March 31, 2020.

 

 


 

 

 

Although the damage of COVID-19 is wreaking havoc and changing our world, it has been good to see the many acts of kindness throughout our communities, and I am sure we will continue to see our neighbors and friends step up where there are needs. In the words of Winston Churchill, “Don’t let a good crisis go to waste,” so maybe we can find some good in all the chaos. For many of us, who are spending more time with loved ones, we know that the world is creating less pollution, and the sounds of the breeze and of birds are being heard in our cities as nature reclaims some of the space that we have occupied. Spiritually, we are witnessing an awakening, as we watch and listen to accounts of human caring and kindness.

 

It is unclear when a recovery will take place and what type of normalcy will resume when the economy returns and the pandemic is over; however, just know that your Company will continue to do its part in relief efforts and provide financial services for long term sustainability in our communities … we are all in this together!

 

Thank you for your continued support.

 

Sincerely,

 

UWHARRIE CAPITAL CORP

 

 

 

/s/ Roger L. Dick

 

President and Chief Executive 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

 

 

 

 

 

 

 

 

March 31,

 

 

March 31,

 

(Amounts in thousands except share and per share data)

2020

 

 

2019

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

6,364

 

 

$

8,518

 

Interest-earning deposits with banks

 

132,644

 

 

 

134,878

 

Securities available for sale

 

108,204

 

 

 

90,737

 

Securities held to maturity (fair value $15,864 and $10,677, respectively)

 

15,798

 

 

 

10,673

 

Equity security, at fair value

 

1,132

 

 

 

-

 

Loans held for sale

 

5,142

 

 

 

3,567

 

Loans held for investment

 

368,252

 

 

 

367,962

 

     Less: Allowance for loan losses

 

2,627

 

 

 

2,233

 

     Net loans held for investment

 

365,625

 

 

 

365,729

 

Interest receivable

 

1,759

 

 

 

1,649

 

Premises and equipment, net

 

16,965

 

 

 

16,467

 

Restricted stock

 

1,166

 

 

 

1,144

 

Bank-owned life insurance

 

8,832

 

 

 

8,699

 

Other real estate owned

 

438

 

 

 

781

 

Other assets

 

10,584

 

 

 

12,139

 

     Total assets

$

674,653

 

 

$

654,981

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

153,962

 

 

$

145,279

 

     Interest checking and money market accounts

 

323,638

 

 

 

277,609

 

     Savings accounts

 

57,521

 

 

 

57,568

 

     Time deposits, $250,000 and over

 

12,160

 

 

 

53,200

 

     Other time deposits

 

57,045

 

 

 

52,856

 

          Total deposits

 

604,326

 

 

 

586,512

 

Interest payable

 

38

 

 

 

41

 

Short-term borrowed funds

 

525

 

 

 

1,403

 

Long-term debt

 

9,992

 

 

 

9,974

 

Other liabilities

 

9,735

 

 

 

10,738

 

     Total liabilities

 

624,616

 

 

 

608,668

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

     issued and outstanding or in process of issuance

 

 

 

 

 

 

 

     6,984,582 and 7,097,227 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $5.64 in 2020 and $4.93 in 2019 (1)

 

8,731

 

 

 

8,871

 

Additional paid-in capital

 

12,311

 

 

 

12,776

 

Undivided profits

 

16,413

 

 

 

14,971

 

Accumulated other comprehensive income (loss)

 

1,927

 

 

 

(960

)

     Total Uwharrie Capital Corp shareholders' equity

 

39,382

 

 

 

35,658

 

Noncontrolling interest

 

10,655

 

 

 

10,655

 

     Total shareholders' equity

 

50,037

 

 

 

46,313

 

     Total liabilities and shareholders' equity

$

674,653

 

 

$

654,981

 

 

 

 

 

 

 

 

 

(1)   Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2019.

 

 

 

 

 

 

 

 

 

 

 


Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

Consolidated Statements of Income

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

(Amounts in thousands except share and per share data)

2020

 

2019

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

Interest and fees on loans

$

4,553

 

$

4,667

 

Interest on investment securities

 

591

 

 

496

 

Interest-earning deposits with banks and federal funds sold

 

552

 

 

793

 

     Total interest income

 

5,696

 

 

5,956

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

Interest paid on deposits

 

728

 

 

597

 

Interest paid on borrowed funds

 

132

 

 

147

 

     Total interest expense

 

860

 

 

744

 

 

 

 

 

 

 

 

Net Interest Income

 

4,836

 

 

5,212

 

Provision for (recovery of) loan losses

 

632

 

 

(113

)

Net interest income after provision (recovery of)

 

 

 

 

 

 

     for loan losses

 

4,204

 

 

5,325

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

Service charges on deposit accounts

 

313

 

 

327

 

Interchange and card transaction fees

 

192

 

 

194

 

Other service fees and commissions

 

765

 

 

756

 

Gain (loss) on sale of securities

 

58

 

 

-

 

Unrealized gain on equity security

 

231

 

 

-

 

Income from mortgage loan sales

 

1,065

 

 

492

 

Other income (loss)

 

382

 

 

(21

)

     Total noninterest income

 

3,006

 

 

1,748

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

Salaries and employee benefits

 

4,424

 

 

4,133

 

Occupancy expense

 

415

 

 

405

 

Equipment expense

 

183

 

 

176

 

Data processing

 

158

 

 

222

 

Other operating expenses

 

1,617

 

 

1,264

 

     Total  noninterest expense

 

6,797

 

 

6,200

 

 

 

 

 

 

 

 

Income before income taxes

 

413

 

 

873

 

Provision for income taxes

 

85

 

 

183

 

Net Income

$

328

 

$

690

 

 

 

 

 

 

 

 

Consolidated net income

$

328

 

$

690

 

  Less: Net income attributable to noncontrolling interest

 

(141

)

 

(140

)

Net income attributable to Uwharrie Capital Corp and common shareholders

$

187

 

$

550

 

Net Income Per Common Share (1)

 

 

 

 

 

 

     Basic

$

0.03

 

$

0.08

 

     Assuming dilution

$

0.03

 

$

0.08

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

     Basic

 

7,067,752

 

 

7,268,075

 

     Assuming dilution

 

7,067,752

 

 

7,268,075

 

 

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