Exhibit 99.1
August 20, 2021
Dear Shareholder:
The second quarter of 2021 has come to a close and Uwharrie Capital Corp’s continued growth and strong earnings has allowed our mission of making a difference® to continue in the communities we serve. Those communities are defined by more than geography, they are defined by people who share our values. Our mission is to empower ourselves with the financial literacy and capital resources necessary to sustain our desired future of economic prosperity.
While 2020 was a year of endurance and adaptation, 2021 has been a year of positioning for the future. For the first six months of 2021, your Company’s earnings were $6.2 million, an increase of $4.3 million or 221% when compared to the same period in 2020. Several factors contributed to this large variance. The risk and uncertainty associated with the effects of COVID-19 in early 2020 required a $1.4 million increase in provision for loan losses. Your Company, during 2021, recognized an increase in interest income from the forgiveness of the Small Business Administration (SBA) Paycheck Protection Program (PPP) loans. Further, cost of funds for Uwharrie Bank remain low, relative to peers, as a result of our strong base of core deposits. Additionally, our other strategic business units, Uwharrie Bank Mortgage and Uwharrie Investment Advisors experienced increases in revenue from growth in their customer base and favorable markets.
Net Income Available to Common Shareholders after dividends for June 30, 2021 was $5.9 million, compared to $1.6 million reported for the same period in 2020, an increase of 258%. Earnings per share of common stock for the six months ended June 30, 2021 was $0.84 compared to $0.23 for the same period in 2020.
Assets increased from $748.2 million at June 30, 2020 to $845.3 million at June 30, 2021, a 12.98% growth in assets. The strong growth in both our balance sheet and earnings contributed to higher levels of capital, which better prepares your Company for any future uncertainties.
Henry Ford reminds us not to be complacent with current thinking in his famous quote, “If I had asked people what they wanted, they would have said faster horses.” We work hard to understand the needs of our communities and the people we serve. However, just like the mode of transportation changed at the turn of the 20th Century, so is the mode of financial services delivery at the turn of the 21st Century. While our founding purpose remains unchanged, our methods have evolved so that we remain relevant in fulfilling our mission now and in the future. Working together with a common set of values we are making a difference®.
Thank you for being a part of our family, as together we continue to work to make the communities we serve a better place.
For more information on Uwharrie Capital Corp and its subsidiaries and to find out how we are making a difference® please visit us at www.uwharrie.com or follow us on Facebook, Instagram and Twitter.
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) | 2021 |
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| 2020 |
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Assets |
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Cash and due from banks | $ | 5,069 |
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| $ | 5,922 |
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Interest-earning deposits with banks |
| 122,001 |
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| 106,010 |
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Securities available for sale |
| 200,148 |
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| 110,593 |
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Securities held to maturity (fair value $29,282 and $28,357, respectively) |
| 27,803 |
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| 27,344 |
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Equity securities, at fair value |
| 411 |
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| 1,234 |
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Loans held for sale |
| 10,394 |
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| 4,369 |
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Loans held for investment |
| 438,053 |
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| 454,856 |
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Less: Allowance for loan losses |
| (4,174 | ) |
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| (3,426 | ) |
Net loans held for investment |
| 433,879 |
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| 451,430 |
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Interest receivable |
| 2,171 |
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| 2,284 |
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Premises and equipment, net |
| 16,451 |
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| 16,728 |
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Restricted stock |
| 921 |
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| 1,166 |
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Bank-owned life insurance |
| 9,000 |
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| 8,866 |
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Other real estate owned |
| - |
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| 359 |
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Other assets |
| 17,012 |
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| 11,941 |
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Total assets | $ | 845,260 |
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| $ | 748,246 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 235,335 |
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| $ | 205,643 |
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Interest checking and money market accounts |
| 368,870 |
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| 338,508 |
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Savings accounts |
| 87,074 |
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| 66,221 |
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Time deposits, $250,000 and over |
| 19,979 |
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| 9,678 |
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Other time deposits |
| 48,035 |
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| 54,048 |
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Total deposits |
| 759,293 |
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| 674,098 |
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Interest payable |
| 12 |
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| 29 |
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Short-term borrowed funds |
| 1,271 |
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| 499 |
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Long-term debt |
| 9,992 |
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| 10,992 |
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Other liabilities |
| 13,132 |
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| 9,973 |
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Total liabilities |
| 783,700 |
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| 695,591 |
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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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6,964,242 and 6,970,141 shares, respectively. |
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Book value per share $7.31 in 2021 and $5.91 in 2020 (1) |
| 8,705 |
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| 8,713 |
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Additional paid-in capital |
| 12,030 |
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| 12,250 |
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Undivided profits |
| 28,907 |
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| 17,874 |
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Accumulated other comprehensive income (loss) |
| 1,263 |
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| 3,163 |
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Total Uwharrie Capital Corp shareholders' equity |
| 50,905 |
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| 42,000 |
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Noncontrolling interest |
| 10,655 |
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| 10,655 |
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Total shareholders' equity |
| 61,560 |
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| 52,655 |
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Total liabilities and shareholders' equity | $ | 845,260 |
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| $ | 748,246 |
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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 2020. |
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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) | 2021 |
| 2020 |
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| 2021 |
| 2020 |
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Interest Income |
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Interest and fees on loans | $ | 5,335 |
| $ | 5,031 |
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| $ | 11,397 |
| $ | 9,584 |
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Interest on investment securities |
| 922 |
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| 764 |
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| 2,001 |
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| 1,355 |
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Interest-earning deposits with banks and federal funds sold |
| 27 |
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| 38 |
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| 43 |
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| 590 |
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Total interest income |
| 6,284 |
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| 5,833 |
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| 13,441 |
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| 11,529 |
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Interest Expense |
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Interest paid on deposits |
| 175 |
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| 372 |
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| 386 |
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| 1,100 |
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Interest paid on borrowed funds |
| 133 |
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| 145 |
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| 270 |
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| 277 |
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Total interest expense |
| 308 |
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| 517 |
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| 656 |
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| 1,377 |
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Net Interest Income |
| 5,976 |
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| 5,316 |
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| 12,785 |
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| 10,152 |
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Provision for (recovery of) loan losses |
| (141 | ) |
| 767 |
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| (175 | ) |
| 1,399 |
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Net interest income after provision for (recovery of) loan losses |
| 6,117 |
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| 4,549 |
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| 12,960 |
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| 8,753 |
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Noninterest Income |
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Service charges on deposit accounts |
| 240 |
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| 209 |
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| 482 |
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| 522 |
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Interchange and card transaction fees |
| 339 |
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| 182 |
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| 558 |
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| 374 |
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Other service fees and commissions |
| 800 |
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| 558 |
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| 1,430 |
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| 1,323 |
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Gain on sale of securities |
| 51 |
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| - |
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| 991 |
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| 58 |
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Realized/unrealized gain (loss) on equity securities |
| 7 |
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| 102 |
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| (12 | ) |
| 333 |
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Income from mortgage banking |
| 2,069 |
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| 3,701 |
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| 7,175 |
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| 4,766 |
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Other income (loss) |
| 668 |
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| (324 | ) |
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| 657 |
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| 58 |
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Total noninterest income |
| 4,174 |
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| 4,428 |
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| 11,281 |
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| 7,434 |
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Noninterest Expense |
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Salaries and employee benefits |
| 5,233 |
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| 5,030 |
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| 10,622 |
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| 9,454 |
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Occupancy expense |
| 460 |
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| 416 |
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| 886 |
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| 831 |
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Equipment expense |
| 165 |
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| 179 |
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| 337 |
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| 362 |
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Data processing |
| 165 |
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| 162 |
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| 330 |
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| 320 |
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Other operating expenses |
| 2,229 |
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| 1,159 |
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| 4,222 |
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| 2,776 |
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Total noninterest expense |
| 8,252 |
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| 6,946 |
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| 16,397 |
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| 13,743 |
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Income before income taxes |
| 2,039 |
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| 2,031 |
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| 7,844 |
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| 2,444 |
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Provision for income taxes |
| 435 |
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| 429 |
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| 1,657 |
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| 514 |
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Net Income | $ | 1,604 |
| $ | 1,602 |
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| $ | 6,187 |
| $ | 1,930 |
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Consolidated net income | $ | 1,604 |
| $ | 1,602 |
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| $ | 6,187 |
| $ | 1,930 |
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Less: Net income attributable to noncontrolling interest |
| (141 | ) |
| (141 | ) |
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| (280 | ) |
| (282 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 1,463 |
| $ | 1,461 |
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| $ | 5,907 |
| $ | 1,648 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.21 |
| $ | 0.21 |
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| $ | 0.84 |
| $ | 0.23 |
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Assuming dilution | $ | 0.21 |
| $ | 0.21 |
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| $ | 0.84 |
| $ | 0.23 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 7,014,214 |
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| 7,123,163 |
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| 7,032,401 |
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| 7,166,134 |
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Assuming dilution |
| 7,014,214 |
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| 7,123,163 |
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| 7,032,401 |
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| 7,166,134 |
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