Exhibit 99.1
First Quarter Report
March 31, 2011
June 7, 2011
Dear Shareholder:
We are living in a different time. For many years North Carolina has been a banking leader in the Southeast. In this, what is now being called The Great Recession, our state has been one of the hardest hit, in particular, the Charlotte region. Almost half of the banking organizations in the state have been losing money for the last three years.
Uwharrie Capital Corp maintains an enviable position in that we remain profitable and continue to experience growth in our balance sheet. Assets were $528 million for the period ending March 31, 2011, an increase of 8.6% from the same period last year. Net loans held increased to $369.4 million from $357.1 million, up 3.4% and deposits increased to $430.4 million from $380.3 million, up 13.2%.
Net income for the period ending March 31, 2011 was $209 thousand compared to $539 thousand for the same period of 2010. For each of the three months ended March 31, 2011 and March 31, 2010, net income available to shareholders was $48 thousand and $378 thousand, respectively. Net income available to shareholders takes into consideration the payment of dividends on preferred stock issued by the Company. There are a number of factors that impact bank earnings and our operating results during the first quarter. As we continue to identify and head off any potential troubled credits, we expensed $1.4 million for loan loss provision during the first quarter of 2011, compared to $213 thousand during the first quarter of 2010. Additionally, we had an increase in expenses in our personnel costs related to the interpretation and implementation of the new regulations that were heaped on us in the last year.
While net interest income remained relatively flat, non-interest income increased notably during the first quarter. This is a result of gains realized in the investment portfolio and an increase in income from the efforts of our Wealth Management area and Mortgage Banking.
Asset quality continues to be a major concern for all financial institutions and we are gaining good ground. Our diligent focus on working out under-performing loans over the last several quarters generated positive results in the first quarter of 2011. Our capital level continues to exceed regulatory definitions of “well-capitalized.”
There are a number of reports showing up in the media these days about the future of community banks. There is talk of further consolidation in the industry, speculating that the approximately 7,000 community banks in the United States will be reduced by half in the coming years as community bankers become increasingly overwhelmed by regulation, technology, lack of scale and complexity. They say that bankers, especially community bankers, are exhausted, disheartened and their companies lack the talent
required to succeed. That is not the case at Uwharrie Capital Corp. We have developed the people, the technology and the other resources to remain competitive in this new environment. Our Mission remains our strength. With the collective efforts of our people, customers, shareholders and the communities we serve our future and our returns are promising. Together, we continue to“make a difference!”
Sincerely, |
UWHARRIE CAPITAL CORP |
/s/ Roger L. Dick |
Roger L. Dick |
President and Chief Executive Officer |
Uwharrie Capital Corp and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands except share and per share data) | March 31, 2011 | March 31, 2010 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 36,750 | $ | 10,314 | ||||
Investment securities available for sale | 79,548 | 77,355 | ||||||
Federal funds sold | — | — | ||||||
Loans held for sale | 1,017 | 1,459 | ||||||
Loans held for investment | 378,463 | 362,538 | ||||||
Less: Allowance for loan losses | 9,030 | 5,401 | ||||||
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Net loans held for investment | 369,433 | 357,137 | ||||||
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Interest receivable | 1,940 | 2,086 | ||||||
Premises and equipment, net | 14,608 | 13,885 | ||||||
Federal Home Loan Bank stock | 3,281 | 3,221 | ||||||
Bank-owned life insurance | 6,026 | 5,762 | ||||||
Goodwill | 987 | 987 | ||||||
Other real estate owned | 2,103 | 3,894 | ||||||
Prepaid assets | 1,933 | 2,606 | ||||||
Other assets | 10,581 | 7,629 | ||||||
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Total assets | $ | 528,207 | $ | 486,335 | ||||
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Liabilities | ||||||||
Deposits: | ||||||||
Demand, noninterest-bearing | $ | 58,220 | $ | 46,238 | ||||
Interest checking and money market accounts | 178,371 | 139,089 | ||||||
Savings accounts | 39,560 | 33,354 | ||||||
Time deposits, $100,000 and over | 59,993 | 67,995 | ||||||
Other time deposits | 94,230 | 93,604 | ||||||
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Total deposits | 430,374 | 380,280 | ||||||
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Interest payable | 330 | 411 | ||||||
Short-term borrowed funds | 26,570 | 22,822 | ||||||
Long-term debt | 25,118 | 35,641 | ||||||
Other liabilities | 2,884 | 2,570 | ||||||
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Total liabilities | 485,276 | 441,724 | ||||||
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Shareholders’ Equity | ||||||||
Preferred stock, no par value: 10,000,000 shares authorized; | ||||||||
10,000 shares of series A issued and outstanding | 10,000 | 10,000 | ||||||
500 shares of series B issued and outstanding | 500 | 500 | ||||||
Discount on preferred stock | (275 | ) | (375 | ) | ||||
Common stock, $1.25 par value: 20,000,000 shares authorized; issued and outstanding or in process of issuance 7,593,929 and 7,593,929 shares, respectively. | ||||||||
Book value per share $4.31 in 2011 and $4.54 in 2010 | 9,492 | 9,492 | ||||||
Additional paid-in capital | 14,035 | 14,031 | ||||||
Unearned ESOP compensation | (672 | ) | (648 | ) | ||||
Undivided profits | 10,172 | 10,434 | ||||||
Accumulated other comprehensive income (loss) | (321 | ) | 1,177 | |||||
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Total shareholders’ equity | 42,931 | 44,611 | ||||||
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Total liabilities and shareholders’ equity | $ | 528,207 | $ | 486,335 | ||||
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Uwharrie Capital Corp and Subsidiaries
Consolidated Statements of Income
Three Months Ended March 31, | ||||||||
(Amounts in thousands except share and per share data) | 2011 | 2010 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 5,342 | $ | 5,302 | ||||
Interest on investment securities | 597 | 744 | ||||||
Other interest income | 7 | 8 | ||||||
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Total interest income | 5,946 | 6,054 | ||||||
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Interest Expense | ||||||||
Interest paid on deposits | 899 | 1,084 | ||||||
Interest on borrowed funds | 379 | 408 | ||||||
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Total interest expense | 1,278 | 1,492 | ||||||
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Net Interest Income | 4,668 | 4,562 | ||||||
Provision for loan losses | 1,369 | 213 | ||||||
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Net interest income after provision for loan losses | 3,299 | 4,349 | ||||||
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Noninterest Income | ||||||||
Service charges on deposit accounts | 444 | 566 | ||||||
Other service fees and commissions | 857 | 661 | ||||||
Gain (loss) on sale of securities | 576 | (98 | ) | |||||
Income from mortgage loan sales | 383 | 346 | ||||||
Other income | 117 | 128 | ||||||
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Total noninterest income | 2,377 | 1,603 | ||||||
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Noninterest Expense | ||||||||
Salaries and employee benefits | 3,045 | 2,828 | ||||||
Occupancy expense | 301 | 266 | ||||||
Equipment expense | 206 | 182 | ||||||
Data processing | 209 | 202 | ||||||
Other operating expenses | 1,678 | 1,694 | ||||||
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Total noninterest expense | 5,439 | 5,172 | ||||||
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Income before income taxes | 237 | 780 | ||||||
Provision for income taxes | 28 | 241 | ||||||
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Net Income | $ | 209 | $ | 539 | ||||
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Net Income | $ | 209 | $ | 539 | ||||
Dividends—preferred stock | (161 | ) | (161 | ) | ||||
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Net income available to common shareholders | $ | 48 | $ | 378 | ||||
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Net Income Per Common Share | ||||||||
Basic | $ | 0.01 | $ | 0.05 | ||||
Assuming dilution | $ | 0.01 | $ | 0.05 | ||||
Weighted Average Common Shares Outstanding | ||||||||
Basic | 7,478,231 | 7,484,586 | ||||||
Assuming dilution | 7,478,231 | 7,484,586 |