Exhibit 99.1
November 13, 2019
Dear Shareholder:
Financial results so far year-to-date are beating our expectations and reflect a lot of hard work on the behalf of our dedicated staff as they continue working together to fulfill our mission.
We are pleased to report to you that net income for the first nine months of 2019 was $2.6 million, as compared to $1.3 million for the same nine month period in 2018. This equates to $2.2 million in net income available to common shareholders or $0.31 cents per share, compared to $961 thousand in net income available to common shareholders or $0.13 per share that we reported in 2018 for the same period. This represents an earnings growth of 138% in income per share year-to-date compared to the first nine of months of 2018.
In these times of global economic anxieties and trade disruptions that have put pressure on bank margins, we benefited from strong noninterest income sources. Our mortgage division production increased in the third quarter with the decline in rates and our wealth management division continued to grow its assets under management, both of which improves net income. Additionally, service charges and credit card fee income continue to achieve new highs due to growth in our business and consumer customer relationships.
Our balance sheet continues to grow and leverage the fixed costs of new investments in technology, product offerings and our expansion into Mecklenburg County. We successfully completed an oversubscribed reissuance of $9.9 million of Junior Subordinated Debt at 5.25%, providing growth capital to your Company as well as providing an option for investors to put their money back to work in their local economies. Our loan production goals have been reached, although somewhat offset by unexpected pay-downs in the commercial portfolio. Two key additions to the staff were also accomplished in the third quarter, a new commercial loan executive to lead our expansion in the Charlotte market focusing on developing business relationships and a new community development banker with expertise in home mortgage counseling to help us better address the home mortgage needs of our communities. We have momentum and good energy with our team which has contributed to Uwharrie Capital Corp (OTC: UWHR) and its subsidiary, Uwharrie Bank, reporting consolidated total assets of $661 million at September 30, 2019, versus $637 million at September 30, 2018.
Our capital has benefited from increased earnings, as well as price appreciation of our bond portfolio, which increased the book value of Uwharrie Capital Corp common stock to $5.48 per share as of September 30, 2019. The current over-the-counter trading price of Uwharrie Capital Corp stock is below the current book value indicating that it is undervalued. Management has taken advantage of this opportunity and repurchased 2.16% of outstanding shares year-to-date, further increasing value to shareholders. We believe the current price-to-book ratio indicates an attractive buying opportunity of our stock.
As a result of this continuing progress of your company, your Board of Directors has declared a 2% stock dividend. All shareholders of record on November 25, 2019, will receive the dividend payable on December 9, 2019. The stock dividend will be paid electronically via book-entry (no stock certificates
will be issued). Once again, we chose to pay a stock dividend as opposed to cash to provide our shareholders with options to suit their needs. Those shareholders still in peak earning years have the option of holding the dividend shares, which defers income, and paying taxes in later years at the lower capital gains rate. For our shareholders desiring current income, these new shares can be sold for cash. The stock dividend gives you the shareholder the option of deciding when you want to recognize the income and whether you pay ordinary income tax or capital gains. If you wish to buy or sell shares, please contact our Investor Relations department and we can facilitate the transactions. Shareholders are also reminded to turn in all stock certificates from prior years (which are still valid) for exchange to electronic form. Our Investor Relations team can also assist you with this process (704-982-4415).
Historically, we have enclosed our community calendar in our third quarter mailing. With the proliferation of smart phones, demand of our printed calendars has waned and we have chosen not to continue with the calendar this year. Instead we will redeploy those dollars spent to support the community calendars of various non-profits and agencies that provide much needed services to our communities.
We have had a great year so far, made possible by great associates, customers and shareholders. We are accomplishing our strategic goals, which will continue to assure our relevance and long-term success and for that, we are thankful.
May your holiday season be blessed and we look forward to serving you and the needs of our communities in the year to come.
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).
Uwharrie Capital Corp and Subsidiaries |
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Consolidated Balance Sheets (Unaudited) |
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| September 30, |
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| September 30, |
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(Amounts in thousands except share and per share data) | 2019 |
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| 2018 |
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Assets |
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Cash and due from banks | $ | 5,003 |
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| $ | 6,629 |
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Interest-earning deposits with banks |
| 141,926 |
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| 110,097 |
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Securities available for sale |
| 92,538 |
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| 92,471 |
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Securities held to maturity (fair value $10,533 and $10,728, respectively) |
| 10,461 |
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| 10,871 |
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Loans held for sale |
| 3,240 |
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| 1,946 |
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Loans held for investment |
| 369,475 |
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| 377,738 |
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Less: Allowance for loan losses |
| 2,071 |
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| 2,365 |
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Net loans held for investment |
| 367,404 |
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| 375,373 |
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Interest receivable |
| 1,510 |
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| 1,681 |
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Premises and equipment, net |
| 16,733 |
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| 14,849 |
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Restricted stock |
| 1,144 |
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| 1,094 |
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Bank-owned life insurance |
| 8,758 |
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| 8,642 |
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Other real estate owned |
| 718 |
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| 1,086 |
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Other assets |
| 11,424 |
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| 12,651 |
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Total assets | $ | 660,859 |
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| $ | 637,390 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 149,835 |
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| $ | 137,203 |
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Interest checking and money market accounts |
| 265,903 |
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| 322,730 |
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Savings accounts |
| 57,018 |
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| 56,802 |
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Time deposits, $250,000 and over |
| 57,649 |
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| 6,848 |
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Other time deposits |
| 58,848 |
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| 49,959 |
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Total deposits |
| 589,253 |
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| 573,542 |
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Interest payable |
| 53 |
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| 12 |
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Short-term borrowed funds |
| 503 |
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| 1,305 |
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Long-term debt |
| 10,360 |
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| 9,934 |
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Other liabilities |
| 11,783 |
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| 8,888 |
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Total liabilities |
| 611,952 |
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| 593,681 |
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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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6,975,734 and 7,019,604 shares, respectively. |
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Book value per share $5.48 in 2019 and $4.59 in 2018 (1) |
| 8,720 |
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| 8,774 |
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Additional paid-in capital |
| 12,323 |
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| 12,414 |
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Undivided profits |
| 16,608 |
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| 14,198 |
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Accumulated other comprehensive income (loss) |
| 601 |
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| (2,332 | ) |
Total Uwharrie Capital Corp shareholders' equity |
| 38,252 |
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| 33,054 |
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Noncontrolling interest |
| 10,655 |
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| 10,655 |
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Total shareholders' equity |
| 48,907 |
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| 43,709 |
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Total liabilities and shareholders' equity | $ | 660,859 |
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| $ | 637,390 |
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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 2018. |
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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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| Nine Months Ended |
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| September 30, |
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| September 30, |
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(Amounts in thousands except share and per share data) | 2019 |
| 2018 |
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| 2019 |
| 2018 |
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Interest Income |
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Interest and fees on loans | $ | 4,840 |
| $ | 4,680 |
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| $ | 14,242 |
| $ | 13,405 |
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Interest on investment securities |
| 532 |
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| 435 |
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| 1,518 |
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| 1,430 |
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Interest-earning deposits with banks and federal funds sold |
| 678 |
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| 539 |
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| 2,158 |
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| 1,181 |
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Total interest income |
| 6,050 |
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| 5,654 |
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| 17,918 |
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| 16,016 |
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Interest Expense |
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Interest paid on deposits |
| 811 |
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| 372 |
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| 2,170 |
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| 858 |
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Interest paid on borrowed funds |
| 147 |
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| 143 |
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| 440 |
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| 423 |
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Total interest expense |
| 958 |
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| 515 |
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| 2,610 |
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| 1,281 |
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Net Interest Income |
| 5,092 |
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| 5,139 |
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| 15,308 |
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| 14,735 |
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Provision for (recovery of) loan losses |
| (80 | ) |
| (24 | ) |
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| (508 | ) |
| 92 |
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Net interest income after provision for (recovery of) |
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for loan losses |
| 5,172 |
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| 5,163 |
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| 15,816 |
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| 14,643 |
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Noninterest Income |
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Service charges on deposit accounts |
| 335 |
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| 292 |
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| 1,003 |
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| 865 |
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Interchange and card transaction fees |
| 229 |
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| 190 |
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| 627 |
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| 476 |
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Other service fees and commissions |
| 658 |
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| 650 |
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| 1,987 |
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| 1,940 |
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Income from mortgage loan sales |
| 1,197 |
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| 730 |
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| 2,776 |
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| 2,261 |
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Other income |
| 169 |
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| 119 |
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| 150 |
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| 504 |
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Total noninterest income |
| 2,588 |
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| 1,981 |
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| 6,543 |
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| 6,046 |
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Noninterest Expense |
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Salaries and employee benefits |
| 4,284 |
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| 4,074 |
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| 12,669 |
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| 12,141 |
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Occupancy expense |
| 422 |
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| 447 |
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| 1,245 |
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| 1,207 |
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Equipment expense |
| 187 |
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| 220 |
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| 546 |
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| 555 |
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Data processing |
| 163 |
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| 206 |
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| 557 |
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| 739 |
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Other operating expenses |
| 1,541 |
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| 1,442 |
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| 4,078 |
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| 4,455 |
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Total noninterest expense |
| 6,597 |
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| 6,389 |
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| 19,095 |
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| 19,097 |
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Income before income taxes |
| 1,163 |
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| 755 |
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| 3,264 |
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| 1,592 |
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Provision for income taxes |
| 195 |
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| 112 |
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| 655 |
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| 248 |
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Net Income | $ | 968 |
| $ | 643 |
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| $ | 2,609 |
| $ | 1,344 |
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Consolidated net income | $ | 968 |
| $ | 643 |
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| $ | 2,609 |
| $ | 1,344 |
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Less: Net income attributable to noncontrolling interest |
| (142 | ) |
| (144 | ) |
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| (422 | ) |
| (428 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 826 |
| $ | 499 |
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| $ | 2,187 |
| $ | 916 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.12 |
| $ | 0.07 |
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| $ | 0.31 |
| $ | 0.13 |
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Assuming dilution | $ | 0.12 |
| $ | 0.07 |
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| $ | 0.31 |
| $ | 0.13 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 7,041,505 |
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| 7,237,022 |
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| 7,087,176 |
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| 7,246,938 |
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Assuming dilution |
| 7,041,505 |
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| 7,237,022 |
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| 7,087,176 |
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| 7,246,938 |
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