Exhibit 99.1

 

 

May 17, 2021

 

 

Dear Shareholder:

 

A year ago, we wrote to you in the midst of a new pandemic, economic uncertainty and during a period that has forever changed us all. We quoted Winston Churchill in saying “Don’t let a good crisis go to waste” and we are pleased to report that your Company has walked that talk and continues to make a difference in our communities. It is times like this that Uwharrie Capital Corp is uniquely positioned to provide much needed support to our customers, associates and community partners. Yet, we remain committed to providing a financial return to you, our shareholders, who have entrusted us with the use of your capital.  That capital has allowed us to build an economic engine that helps those around us while being a good investment to our investors. This double bottom line has been the intent of your Company since inception; not only focusing on financial performance but also positive social impact performance.

Net income for the first three months of 2021 was $4.6 million, as compared to $328 thousand for the same three month period in 2020.  This equates to $4.4 million in net income available to common shareholders or $0.63 cents per share, compared to $187 thousand in net income available to common shareholders or $0.03 per share that we reported in 2020 for the same period.  

The main driver of our earnings increase is income from mortgage loan production, a direct result of the low interest rate environment that began over one year ago.   Although rates have slightly increased from their lowest point, the economy has remained strong during the first quarter and we have continued with record mortgage production topping $114 million, nearly the same production in one quarter as we have done in many of the past several years.  Our mortgage team has been working long hard hours and provides the best level of service, from start to finish, to our customers.  In providing help to their fellow neighbors and building trust and long-standing relationships, more than 400 households were assisted with their home financing needs in first quarter.

In April of 2020, your Company participated in providing funding, through the Small Business Administration (SBA), to small businesses in the form of Paycheck Protection Program (PPP) loans. The purpose of this program was to provide fully forgivable loans to small businesses, which represent the backbone of America and create more than 60% of the new jobs in our nation.

During the first round of funding in 2020, Uwharrie Bank (an SBA Preferred Lender since the late 1980s) saved over 12,000 paychecks of businesses in our region.  As of March 31, 2021, $47 million of the original $81 million in PPP loans had been forgiven by the SBA, at which time fee income is recognized as interest income. This accounts for the $1.5 million increase in interest income for the first three months in 2021 compared to the same time period in 2020. During 2021, the second round of PPP began with similar structure and your Company has funded $42 million, impacting more than 5,500 additional paychecks.

Your Company maintains a strong core deposit portfolio with many long-term relationships and new ones developed as a result of our community impact efforts.  Deposits have grown from $604 million at March 31, 2020 to $744 million at March 31, 2021, a 23% annual growth. In addition to new deposit relationships that have come as the value of a community bank proved important during the global pandemic, customers continue to hold more funds on deposit than they have historically (nearly 20%) from increased savings, government stimulus, and reduced travel and leisure.


Our customers’ and associates’ health and well-being remain one of our top priorities as we continue to follow the guidelines established by state and federal health officials regarding COVID-19.  Carefully considering those guidelines, we have reopened our branch lobbies.  Now, in addition to our drive-thru, ATM, mobile and online options, you may again bank inside any of our branch locations. It is our intent to keep our lobbies fully open and each of our branches has procedures in place for your safety and the safety of our associates.

For updates on branch activity, product offerings and our involvement in community activities, please check our website at www.uwharrie.com and be sure to follow us on Facebook, Instagram and Twitter.

In an effort to enhance shareholder value and highlight your Company’s long-term commitment to the communities we serve, your Company transitioned to OTC Markets Group’s OTCQX® Best Market (“OTCQX”) during March of 2021. The QX is a platform for highly regulated and smaller companies to be able to trade more efficiently and enables banks and bank holding companies to maximize the value of being a public company by providing transparent trading and easy access to company information for shareholders. The common stock of Uwharrie Capital Corp trades on OTCQX under the symbol “UWHR.”

As a company, we have been blessed with a special mission and philosophy that has brought us through challenging times.  God bless you and we pray that you and your families remain safe and healthy.  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)

 

 

 

 

 

 

 

 

March 31,

 

 

March 31,

 

(Amounts in thousands except share and per share data)

2021

 

 

2020

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

5,144

 

 

$

6,364

 

Interest-earning deposits with banks

 

91,916

 

 

 

132,644

 

Securities available for sale

 

190,083

 

 

 

108,204

 

Securities held to maturity (fair value $28,818 and $15,864, respectively)

 

27,802

 

 

 

15,798

 

Equity securities, at fair value

 

404

 

 

 

1,132

 

Loans held for sale

 

14,213

 

 

 

5,142

 

Loans held for investment

 

460,441

 

 

 

368,252

 

     Less: Allowance for loan losses

 

4,252

 

 

 

2,627

 

     Net loans held for investment

 

456,189

 

 

 

365,625

 

Interest receivable

 

2,344

 

 

 

1,759

 

Premises and equipment, net

 

16,698

 

 

 

16,965

 

Restricted stock

 

921

 

 

 

1,166

 

Bank-owned life insurance

 

8,968

 

 

 

8,832

 

Other real estate owned

 

-

 

 

 

438

 

Other assets

 

17,915

 

 

 

10,584

 

     Total assets

$

832,597

 

 

$

674,653

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

240,651

 

 

$

153,962

 

     Interest checking and money market accounts

 

347,962

 

 

 

323,638

 

     Savings accounts

 

82,336

 

 

 

57,521

 

     Time deposits, $250,000 and over

 

22,981

 

 

 

12,160

 

     Other time deposits

 

50,219

 

 

 

57,045

 

          Total deposits

 

744,149

 

 

 

604,326

 

Interest payable

 

16

 

 

 

38

 

Short-term borrowed funds

 

1,338

 

 

 

525

 

Long-term debt

 

11,242

 

 

 

9,992

 

Other liabilities

 

16,026

 

 

 

9,735

 

     Total liabilities

 

772,771

 

 

 

624,616

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

     issued and outstanding

 

 

 

 

 

 

 

     7,039,942 and 6,984,582 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $6.98 in 2021 and $5.53 in 2020 (1)

 

8,800

 

 

 

8,731

 

Additional paid-in capital

 

12,539

 

 

 

12,311

 

Undivided profits

 

27,444

 

 

 

16,413

 

Accumulated other comprehensive income (loss)

 

388

 

 

 

1,927

 

     Total Uwharrie Capital Corp shareholders' equity

 

49,171

 

 

 

39,382

 

Noncontrolling interest

 

10,655

 

 

 

10,655

 

     Total shareholders' equity

 

59,826

 

 

 

50,037

 

     Total liabilities and shareholders' equity

$

832,597

 

 

$

674,653

 

 

 

 

 

 

 

 

 

(1) Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2020.

 

 

 

 

 

 

 


 

Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

(Amounts in thousands except share and per share data)

2021

 

2020

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

Interest and fees on loans

$

6,062

 

$

4,553

 

 

Interest on investment securities

 

1,079

 

 

591

 

 

Interest-earning deposits with banks and federal funds sold

 

16

 

 

552

 

 

     Total interest income

 

7,157

 

 

5,696

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

Interest paid on deposits

 

211

 

 

728

 

 

Interest paid on borrowed funds

 

137

 

 

132

 

 

     Total interest expense

 

348

 

 

860

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

6,809

 

 

4,836

 

 

Provision for (recovery of) loan losses

 

(34

)

 

632

 

 

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

 

6,843

 

 

4,204

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

Service charges on deposit accounts

 

242

 

 

313

 

 

Interchange and card transaction fees

 

219

 

 

192

 

 

Other service fees and commissions

 

630

 

 

765

 

 

Gain on sale of securities

 

940

 

 

58

 

 

Realized/unrealized gain (loss) on equity securities

 

(19

)

 

231

 

 

Income from mortgage banking

 

5,106

 

 

1,065

 

 

Other income (loss)

 

(11

)

 

382

 

 

     Total noninterest income

 

7,107

 

 

3,006

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,389

 

 

4,424

 

 

Occupancy expense

 

426

 

 

415

 

 

Equipment expense

 

172

 

 

183

 

 

Data processing

 

165

 

 

158

 

 

Other operating expenses

 

1,993

 

 

1,617

 

 

     Total  noninterest expense

 

8,145

 

 

6,797

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

5,805

 

 

413

 

 

Provision for income taxes

 

1,222

 

 

85

 

 

Net Income

$

4,583

 

$

328

 

 

 

 

 

 

 

 

 

 

Consolidated net income

$

4,583

 

$

328

 

 

  Less: Net income attributable to noncontrolling interest

 

(139

)

 

(141

)

 

Net income attributable to Uwharrie Capital Corp and common shareholders

$

4,444

 

$

187

 

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

     Basic

$

0.63

 

$

0.03

 

 

     Assuming dilution

$

0.63

 

$

0.03

 

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

     Basic

 

7,050,790

 

 

7,209,107

 

 

     Assuming dilution

 

7,050,790

 

 

7,209,107

 

 

 

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