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 |
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President and Chief Executive Officer |
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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 |
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Consolidated Balance Sheets (Unaudited) |
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| June 30, |
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| June 30, |
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(Amounts in thousands except share and per share data) | 2020 |
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| 2019 |
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Assets |
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Cash and due from banks | $ | 5,922 |
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| $ | 5,314 |
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Interest-earning deposits with banks |
| 106,010 |
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| 107,544 |
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Securities available for sale |
| 110,593 |
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| 87,741 |
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Securities held to maturity (fair value $28,357 and $10,704, respectively) |
| 27,344 |
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| 10,639 |
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Equity security, at fair value |
| 1,234 |
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| - |
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Loans held for sale |
| 4,369 |
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| 2,517 |
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Loans held for investment |
| 454,856 |
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| 374,566 |
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Less: Allowance for loan losses |
| (3,426 | ) |
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| (2,179 | ) |
Net loans held for investment |
| 451,430 |
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| 372,387 |
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Interest receivable |
| 2,284 |
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| 1,733 |
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Premises and equipment, net |
| 16,728 |
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| 16,823 |
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Restricted stock |
| 1,166 |
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| 1,144 |
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Bank-owned life insurance |
| 8,866 |
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| 8,726 |
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Other real estate owned |
| 359 |
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| 686 |
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Other assets |
| 11,941 |
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| 12,109 |
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Total assets | $ | 748,246 |
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| $ | 627,363 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 205,643 |
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| $ | 148,930 |
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Interest checking and money market accounts |
| 338,508 |
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| 237,723 |
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Savings accounts |
| 66,221 |
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| 56,782 |
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Time deposits, $250,000 and over |
| 9,678 |
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| 57,759 |
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Other time deposits |
| 54,048 |
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| 55,722 |
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Total deposits |
| 674,098 |
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| 556,916 |
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Interest payable |
| 29 |
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| 47 |
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Short-term borrowed funds |
| 499 |
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| 839 |
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Long-term debt |
| 10,992 |
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| 9,974 |
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Other liabilities |
| 9,973 |
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| 11,534 |
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Total liabilities |
| 695,591 |
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| 579,310 |
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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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6,970,141 and 7,072,062 shares, respectively. |
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Book value per share $6.03 in 2020 and $5.18 in 2019 (1) |
| 8,713 |
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| 8,840 |
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Additional paid-in capital |
| 12,250 |
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| 12,683 |
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Undivided profits |
| 17,874 |
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| 15,782 |
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Accumulated other comprehensive income (loss) |
| 3,163 |
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| 93 |
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Total Uwharrie Capital Corp shareholders' equity |
| 42,000 |
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| 37,398 |
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Noncontrolling interest |
| 10,655 |
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| 10,655 |
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Total shareholders' equity |
| 52,655 |
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| 48,053 |
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Total liabilities and shareholders' equity | $ | 748,246 |
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| $ | 627,363 |
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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 2019. |
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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 |
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| Six Months Ended |
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| June 30, |
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| June 30, |
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(Amounts in thousands except share and per share data) | 2020 |
| 2019 |
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| 2020 |
| 2019 |
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Interest Income |
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Interest and fees on loans | $ | 5,031 |
| $ | 4,735 |
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| $ | 9,584 |
| $ | 9,402 |
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Interest on investment securities |
| 764 |
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| 490 |
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| 1,355 |
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| 986 |
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Interest-earning deposits with banks and federal funds sold |
| 38 |
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| 687 |
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| 590 |
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| 1,480 |
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Total interest income |
| 5,833 |
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| 5,912 |
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| 11,529 |
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| 11,868 |
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Interest Expense |
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Interest paid on deposits |
| 372 |
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| 762 |
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| 1,100 |
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| 1,359 |
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Interest paid on borrowed funds |
| 145 |
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| 146 |
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| 277 |
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| 293 |
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Total interest expense |
| 517 |
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| 908 |
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| 1,377 |
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| 1,652 |
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Net Interest Income |
| 5,316 |
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| 5,004 |
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| 10,152 |
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| 10,216 |
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Provision for (recovery of) loan losses |
| 767 |
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| (315 | ) |
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| 1,399 |
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| (428 | ) |
Net interest income after provision for (recovery of) |
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for loan losses |
| 4,549 |
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| 5,319 |
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| 8,753 |
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| 10,644 |
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Noninterest Income |
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Service charges on deposit accounts |
| 209 |
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| 341 |
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| 522 |
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| 668 |
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Interchange and card transaction fees |
| 182 |
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| 204 |
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| 374 |
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| 398 |
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Other service fees and commissions |
| 558 |
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| 573 |
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| 1,323 |
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| 1,329 |
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Gain (loss) on sale of securities |
| - |
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| - |
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| 58 |
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| - |
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Unrealized gain on equity security |
| 102 |
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| - |
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| 333 |
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| - |
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Income from mortgage loan sales |
| 3,701 |
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| 1,087 |
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| 4,766 |
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| 1,579 |
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Other income |
| (324 | ) |
| 2 |
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| 58 |
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| (19 | ) |
Total noninterest income |
| 4,428 |
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| 2,207 |
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| 7,434 |
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| 3,955 |
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Noninterest Expense |
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Salaries and employee benefits |
| 5,030 |
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| 4,252 |
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| 9,454 |
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| 8,385 |
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Occupancy expense |
| 416 |
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| 418 |
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| 831 |
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| 823 |
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Equipment expense |
| 179 |
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| 183 |
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| 362 |
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| 359 |
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Data processing |
| 162 |
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| 172 |
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| 320 |
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| 394 |
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Other operating expenses |
| 1,159 |
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| 1,273 |
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| 2,776 |
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| 2,537 |
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Total noninterest expense |
| 6,946 |
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| 6,298 |
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| 13,743 |
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| 12,498 |
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Income before income taxes |
| 2,031 |
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| 1,228 |
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| 2,444 |
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| 2,101 |
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Provision for income taxes |
| 429 |
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| 277 |
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| 514 |
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| 460 |
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Net Income | $ | 1,602 |
| $ | 951 |
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| $ | 1,930 |
| $ | 1,641 |
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Consolidated net income | $ | 1,602 |
| $ | 951 |
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| $ | 1,930 |
| $ | 1,641 |
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Less: Net income attributable to noncontrolling interest |
| (141 | ) |
| (140 | ) |
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| (282 | ) |
| (280 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 1,461 |
| $ | 811 |
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| $ | 1,648 |
| $ | 1,361 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.21 |
| $ | 0.11 |
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| $ | 0.23 |
| $ | 0.19 |
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Assuming dilution | $ | 0.21 |
| $ | 0.11 |
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| $ | 0.23 |
| $ | 0.19 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 6,983,493 |
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| 7,237,290 |
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| 7,025,622 |
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| 7,252,598 |
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Assuming dilution |
| 6,983,493 |
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| 7,237,290 |
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| 7,025,622 |
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| 7,252,598 |
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