Exhibit 99.1
June 13, 2017
Dear Shareholder:
Your company continues positive trends in growth and profitability while maintaining our commitment to enhance the well-being of the communities we serve through local investment, job creation and capital deployment. Uwharrie Capital Corp and its subsidiaries reported total assets of $563 million at March 31, 2017, an 8.6% increase over the $518 million reported for March 31, 2016. The primary source of growth during this twelve-month period was in the loan portfolio, which grew $17.8 million or 5.4%.
A further positive development in our balance sheet is reflected in the continued growth of our core deposits. Deposits grew $45.2 million or 10% during the most recent twelve months, and $14 million or 2.9% just during the first quarter of 2017. This growth in core deposits reduced the cost of funds by $75 thousand in the first quarter of 2017 when compared to the same period in 2016. As a result of the growth in loans outstanding and core deposits, the Company’s net interest margin improved by $242 thousand for the first quarter compared to the same period in 2016.
As part of our 5-Year Strategic Plan, your company has also been focused on enhancing revenue through fee income sources, which produced additional fee income of $162 thousand.
Uwharrie Capital Corp’s stock price has returned to trading above book value. Price-to-Book is a market metric commonly viewed by shareholders and analysts to determine if the market has undervalued or overvalued an equity. At the end of 2014, Uwharrie Capital stock traded at 75% of book value; at the end of 2015, the stock traded at 91% of book value; as of March 31, 2017, Uwharrie Capital stock was traded at 111% of its book value. We are happy to report as of March 31, 2017, Uwharrie Capital Corp stock was trading at $5.28 per share compared to $4.43 per share as of March 31, 2016, $0.85 per share, or a 19.2% year-over-year improvement.
At our Annual Meeting of Shareholders in May, we announced our first full-service Charlotte office on Rea Road at Stonecrest (I-485 and Rea Road) where we will offer business and consumer banking, mortgage banking and wealth management services.
We see the need in a market inundated with much larger financial service providers to fulfill a void of community banks from continued bank consolidation. We have remained independent and continue to improve our operations to remain sustainable and viable to carry out our vision.
As we expand our services into new growth markets and add new programs and products to meet our customers’ needs, we will continue to focus on our core banking, asset quality, and improving the overall return for all our stakeholders. Thank you for your investment as a shareholder. We hope you are doing business with your company and are inviting your friends and business associates to do
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the same. Together, we continue to make a difference as we go about building a great community banking organization that is helping to build stronger local economies, businesses, and communities.
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).
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Uwharrie Capital Corp and Subsidiaries |
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Consolidated Balance Sheets (Unaudited) |
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| March 31, |
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| March 31, | ||
(Amounts in thousands except share and per share data) | 2017 |
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| 2016 | ||
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Assets |
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Cash and due from banks | $ | 7,012 |
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| $ | 5,802 |
Interest-earning deposits with banks |
| 57,375 |
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| 40,693 |
Securities available for sale |
| 103,650 |
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| 94,829 |
Securities held to maturity (fair value $11,853 and $12,371, respectively) |
| 11,814 |
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| 12,179 |
Loans held for sale |
| 1,315 |
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| 5,278 |
Loans held for investment |
| 344,182 |
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| 322,428 |
Less: Allowance for loan losses |
| 2,677 |
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| 2,810 |
Net loans held for investment |
| 341,505 |
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| 319,618 |
Interest receivable |
| 1,599 |
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| 1,548 |
Premises and equipment, net |
| 14,154 |
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| 14,584 |
Restricted stock |
| 1,067 |
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| 1,052 |
Bank-owned life insurance |
| 8,450 |
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| 6,792 |
Other real estate owned |
| 3,428 |
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| 4,944 |
Other assets |
| 11,778 |
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| 11,074 |
Total assets | $ | 563,147 |
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| $ | 518,393 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 118,679 |
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| $ | 101,353 |
Interest checking and money market accounts |
| 270,852 |
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| 236,305 |
Savings accounts |
| 44,478 |
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| 40,639 |
Time deposits, $250,000 and over |
| 7,478 |
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| 7,945 |
Other time deposits |
| 58,225 |
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| 68,227 |
Total deposits |
| 499,712 |
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| 454,469 |
Interest payable |
| 148 |
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| 164 |
Short-term borrowed funds |
| 2,631 |
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| 3,519 |
Long-term debt |
| 9,534 |
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| 9,543 |
Other liabilities |
| 7,112 |
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| 6,530 |
Total liabilities |
| 519,137 |
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| 474,225 |
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Shareholders' Equity |
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Common stock, $1.25 par value: 20,000,000 shares authorized; |
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issued and outstanding or in process of issuance |
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7,004,547 and 6,981,817 shares, respectively |
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Book value per share $4.77 in 2017 and $4.71 in 2016 (1) |
| 8,756 |
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| 8,727 |
Additional paid-in capital |
| 12,356 |
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| 12,304 |
Undivided profits |
| 13,338 |
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| 12,256 |
Accumulated other comprehensive income (loss) |
| (1,069 | ) |
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| 278 |
Total Uwharrie Capital shareholders' equity |
| 33,381 |
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| 33,565 |
Noncontrolling interest |
| 10,629 |
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| 10,603 |
Total shareholders' equity |
| 44,010 |
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| 44,168 |
Total liabilities and shareholders' equity | $ | 563,147 |
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| $ | 518,393 |
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(1) Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2016. |
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Uwharrie Capital Corp and Subsidiaries |
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Consolidated Statements of Income (Unaudited) |
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| Three Months Ended | |||||||
| March 31, | |||||||
(Amounts in thousands except share and per share data) | 2017 |
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| 2016 |
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Interest Income |
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Interest and fees on loans | $ | 3,990 |
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| $ | 3,898 |
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Interest on investment securities |
| 509 |
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| 450 |
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Interest-earning deposits with banks and federal funds sold |
| 104 |
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| 88 |
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Total interest income |
| 4,603 |
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| 4,436 |
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Interest Expense |
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Interest paid on deposits |
| 154 |
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| 214 |
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Interest on borrowed funds |
| 142 |
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| 157 |
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Total interest expense |
| 296 |
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| 371 |
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Net Interest Income |
| 4,307 |
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| 4,065 |
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Provision for (recovery of) loan losses |
| (59 | ) |
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| (58) |
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Net interest income after provision (recovery of) |
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for loan losses |
| 4,366 |
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| 4,123 |
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Noninterest Income |
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Service charges on deposit accounts |
| 289 |
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| 306 |
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Other service fees and commissions |
| 1,197 |
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| 1,128 |
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Gain (loss) on sale of securities |
| - |
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| 205 |
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Income from mortgage loan sales |
| 871 |
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| 700 |
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Other income |
| 286 |
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| 142 |
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Total noninterest income |
| 2,643 |
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| 2,481 |
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Noninterest Expense |
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Salaries and employee benefits |
| 3,698 |
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| 3,563 |
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Occupancy expense |
| 304 |
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| 257 |
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Equipment expense |
| 152 |
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| 169 |
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Data processing |
| 182 |
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| 180 |
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Other operating expenses |
| 1,799 |
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| 1,752 |
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Total noninterest expense |
| 6,135 |
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| 5,921 |
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Income before income taxes |
| 874 |
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| 683 |
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Provision for income taxes |
| 257 |
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| 173 |
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Net Income | $ | 617 |
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| $ | 510 |
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Consolidated net income | $ | 617 |
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| $ | 510 |
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Less: Net income attributable to noncontrolling interest | $ | (146 | ) |
| $ | (147) |
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Net income attributable to Uwharrie Capital |
| 471 |
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| 363 |
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Dividends - preferred stock |
| - |
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| - |
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Net income available to common shareholders | $ | 471 |
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| $ | 363 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.07 |
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| $ | 0.05 |
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Assuming dilution | $ | 0.07 |
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| $ | 0.05 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 7,045,090 |
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| 7,122,677 |
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Assuming dilution |
| 7,045,730 |
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| 7,122,677 |
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