Exhibit 99.1

 

 

August 18, 2020

 

 

Dear Shareholder:

 

Your Company continues to evolve and adapt to forced changes from COVID-19. We like to equate the current planning and forecasting environment to driving a car through fog: you move carefully and re-evaluate the situation frequently so you are able to adjust as needed to uncontrollable factors as they present themselves.

 

During the second quarter of 2020, Uwharrie Capital Corp and subsidiaries ensured that our customers had sufficient financial support and access to our services as needed. Our electronic platforms of online banking, mobile banking and telephone banking provide the ease of banking at customers’ fingertips, on their time. [Online operations allow for a safer environment for our team and our customers who may need to physically access our branches by appointment.]

 

Uwharrie Bank has become a significant alliance to our customers and non-customers through the Small Business Administration (SBA) Paycheck Protection Program (PPP). As a Preferred SBA Lender, our team reacted quickly to the Program’s requirements and this allowed our Main Street businesses, as well as businesses outside of our standard footprint that had not gotten help from their banks, to access available funds and put payroll dollars into the hands of families that depend on them. So far, we have secured funding for over 1,000 businesses for nearly $80 million in government funds, impacting over 10,000 families. Additionally, we continue to provide 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.

 

The mortgage division of your Company continues to provide an important service to our customers with the refinance boom that has extended over the second quarter from the first quarter’s significant rate drop. This division has worked non-stop to aid our current and new customer base in savings by refinancing their mortgages and securing home purchases, taking advantage of the much lower rate environment. Over 500 households have been served this year through June 30, 2020. Strong production has resulted in income for the first six months of 2020 of $4.8 million, an increase of $3.2 million or 200% over the same period in 2019.

 

For the first six months of 2020, your Company’s earnings from all divisions before income tax and loan loss provisions was $3.8 million, an increase of $2.2 million or 130% when compared to the same period in 2019. Due to the increased risk and uncertainty associated with the effects of COVID-19, your Company added $1.4M to its provision for loan losses. The resulting Net Income Available to Common Shareholders after dividends for June 30, 2020 was $1.6 million, compared to $1.4 million reported for the same period in 2019, an increase of 21%. The Company grew assets from $656.8 million at December 31, 2019 to $748.2 million at June 30, 2020. The growth is a reflection of increased deposits from current and new customers due, in part, to PPP loan funds. In addition, natural growth has occurred as a result of the flight to safety embedded in an unfavorable market and the impact of slowed or halted spending from consumers.

 


While we are still unsure of the lasting impacts of the pandemic on the economy and life in general, we will continue to do our part by providing financial services and supporting the long-term sustainability in the communities we serve. We view the “COVID impact” as an opportunity to adapt and create new value. In the words of Joshua J. Marine, “Challenges are what make life interesting and overcoming them is what makes life meaningful.”

 

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 (Unaudited)

 

 

 

 

 

 

 

 

June 30,

 

 

June 30,

 

(Amounts in thousands except share and per share data)

2020

 

 

2019

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

5,922

 

 

$

5,314

 

Interest-earning deposits with banks

 

106,010

 

 

 

107,544

 

Securities available for sale

 

110,593

 

 

 

87,741

 

Securities held to maturity (fair value $28,357 and $10,704, respectively)

 

27,344

 

 

 

10,639

 

Equity security, at fair value

 

1,234

 

 

 

-

 

Loans held for sale

 

4,369

 

 

 

2,517

 

Loans held for investment

 

454,856

 

 

 

374,566

 

     Less: Allowance for loan losses

 

(3,426

)

 

 

(2,179

)

     Net loans held for investment

 

451,430

 

 

 

372,387

 

Interest receivable

 

2,284

 

 

 

1,733

 

Premises and equipment, net

 

16,728

 

 

 

16,823

 

Restricted stock

 

1,166

 

 

 

1,144

 

Bank-owned life insurance

 

8,866

 

 

 

8,726

 

Other real estate owned

 

359

 

 

 

686

 

Other assets

 

11,941

 

 

 

12,109

 

     Total assets

$

748,246

 

 

$

627,363

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

205,643

 

 

$

148,930

 

     Interest checking and money market accounts

 

338,508

 

 

 

237,723

 

     Savings accounts

 

66,221

 

 

 

56,782

 

     Time deposits, $250,000 and over

 

9,678

 

 

 

57,759

 

     Other time deposits

 

54,048

 

 

 

55,722

 

          Total deposits

 

674,098

 

 

 

556,916

 

Interest payable

 

29

 

 

 

47

 

Short-term borrowed funds

 

499

 

 

 

839

 

Long-term debt

 

10,992

 

 

 

9,974

 

Other liabilities

 

9,973

 

 

 

11,534

 

     Total liabilities

 

695,591

 

 

 

579,310

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

     issued and outstanding or in process of issuance

 

 

 

 

 

 

 

     6,970,141 and 7,072,062 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $6.03 in 2020 and $5.18 in 2019 (1)

 

8,713

 

 

 

8,840

 

Additional paid-in capital

 

12,250

 

 

 

12,683

 

Undivided profits

 

17,874

 

 

 

15,782

 

Accumulated other comprehensive income (loss)

 

3,163

 

 

 

93

 

     Total Uwharrie Capital Corp shareholders' equity

 

42,000

 

 

 

37,398

 

Noncontrolling interest

 

10,655

 

 

 

10,655

 

     Total shareholders' equity

 

52,655

 

 

 

48,053

 

     Total liabilities and shareholders' equity

$

748,246

 

 

$

627,363

 

 

 

 

 

 

 

 

 

(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 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

(Amounts in thousands except share and per share data)

2020

 

2019

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

5,031

 

$

4,735

 

 

$

9,584

 

$

9,402

 

Interest on investment securities

 

764

 

 

490

 

 

 

1,355

 

 

986

 

Interest-earning deposits with banks and federal funds sold

 

38

 

 

687

 

 

 

590

 

 

1,480

 

     Total interest income

 

5,833

 

 

5,912

 

 

 

11,529

 

 

11,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid on deposits

 

372

 

 

762

 

 

 

1,100

 

 

1,359

 

Interest paid on borrowed funds

 

145

 

 

146

 

 

 

277

 

 

293

 

     Total interest expense

 

517

 

 

908

 

 

 

1,377

 

 

1,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

5,316

 

 

5,004

 

 

 

10,152

 

 

10,216

 

Provision for (recovery of) loan losses

 

767

 

 

(315

)

 

 

1,399

 

 

(428

)

Net interest income after provision for (recovery of)

 

 

 

 

 

 

 

 

 

 

 

 

 

     for loan losses

 

4,549

 

 

5,319

 

 

 

8,753

 

 

10,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

209

 

 

341

 

 

 

522

 

 

668

 

Interchange and card transaction fees

 

182

 

 

204

 

 

 

374

 

 

398

 

Other service fees and commissions

 

558

 

 

573

 

 

 

1,323

 

 

1,329

 

Gain (loss) on sale of securities

 

-

 

 

-

 

 

 

58

 

 

-

 

Unrealized gain on equity security

 

102

 

 

-

 

 

 

333

 

 

-

 

Income from mortgage loan sales

 

3,701

 

 

1,087

 

 

 

4,766

 

 

1,579

 

Other income

 

(324

)

 

2

 

 

 

58

 

 

(19

)

     Total noninterest income

 

4,428

 

 

2,207

 

 

 

7,434

 

 

3,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,030

 

 

4,252

 

 

 

9,454

 

 

8,385

 

Occupancy expense

 

416

 

 

418

 

 

 

831

 

 

823

 

Equipment expense

 

179

 

 

183

 

 

 

362

 

 

359

 

Data processing

 

162

 

 

172

 

 

 

320

 

 

394

 

Other operating expenses

 

1,159

 

 

1,273

 

 

 

2,776

 

 

2,537

 

     Total  noninterest expense

 

6,946

 

 

6,298

 

 

 

13,743

 

 

12,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

2,031

 

 

1,228

 

 

 

2,444

 

 

2,101

 

Provision for income taxes

 

429

 

 

277

 

 

 

514

 

 

460

 

Net Income

$

1,602

 

$

951

 

 

$

1,930

 

$

1,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated net income

$

1,602

 

$

951

 

 

$

1,930

 

$

1,641

 

  Less: Net income attributable to noncontrolling interest

 

(141

)

 

(140

)

 

 

(282

)

 

(280

)

Net income attributable to Uwharrie Capital Corp and common shareholders

$

1,461

 

$

811

 

 

$

1,648

 

$

1,361

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$

0.21

 

$

0.11

 

 

$

0.23

 

$

0.19

 

     Assuming dilution

$

0.21

 

$

0.11

 

 

$

0.23

 

$

0.19

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

6,983,493

 

 

7,237,290

 

 

 

7,025,622

 

 

7,252,598

 

     Assuming dilution

 

6,983,493

 

 

7,237,290

 

 

 

7,025,622

 

 

7,252,598

 

 

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