Exhibit 99.1
November 16, 2021
Dear Shareholder:
We are pleased to report to you year-to-date results, a record year in the making. By the end of the third quarter of 2021, we have surpassed the total earnings of 2020. Net income for the first nine months of 2021 was $8.9 million, as compared to $3.5 million for the same nine month period in 2020. This equates to $8.4 million in net income available to common shareholders, or $1.17 per share, compared to $3.1 million in net income available to common shareholders, or $0.42 per share, that we reported in 2020 for the same period. This represents an earnings growth of 179% in income per share year-to-date compared to the first nine of months of 2020. In addition, your Company has grown $129 million, or 16%, to total assets of $921 million.
These outstanding results come from your Company developing new relationships with businesses and families in our communities, creating new wealth and prosperity. The reputation of Uwharrie Capital Corp and all of its financial service subsidiaries: Uwharrie Bank, Uwharrie Investment Advisors, and Uwharrie Bank Mortgage is becoming known in our region as a trusted financial services partner. Our ability to adapt and fit our financial programs to individual needs is setting us apart.
Our purpose-driven mission, executed by a group of committed associates, is “Making a Difference.” Our focus on Main Street America and families is to the heart of what builds sustainable communities. The ability to bring to bear the resources so we might pursue our purpose would not be possible without your belief in our mission and investment of your capital. Capitalism is at its best when it is also a public virtue. By this we mean that satisfying a public need for local financial services, we are rewarded with a fair profit. Profit is not our purpose, but rather the results of doing a good job in meeting the financial needs of the communities we serve. As of 9/30/2021, our return on equity of 20% was reflected in the stock price of $9.65, as quoted on the OTCQX system.
As a result of these record earnings, the Board of Directors has declared a stock dividend of 3%, up from the recent 2% dividend that has been paid the last several years. All shareholders of record on November 9, 2021, will receive the dividend on November 23, 2021. The stock dividend will be paid electronically via book-entry (no stock certificates will be issued). Consistent with prior years, we choose to pay a stock dividend as opposed to cash to provide our shareholders with options to suit their specific financial needs. Shareholders still in peak earning years may choose to hold the dividend shares, which defers income, and paying taxes in later years could be at a lower capital gains rate. For our shareholders desiring current income, these new shares can be sold for cash. The stock dividend gives you the flexibility of when to recognize the income and address the tax considerations based on your individual needs.
As we approach the holiday season we express our gratitude to you, our shareholders, for your continued support. We also give thanks for the blessings we have received by working together to make our communities better places to live and we pray for your health and safety through the holidays!
Sincerely,
UWHARRIE CAPITAL CORP
/s/ Roger L. Dick |
|
President and Chief Executive 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 |
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) |
|
|
|
|
|
|
|
| September 30, |
|
| September 30, |
| ||
(Amounts in thousands except share and per share data) | 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Cash and due from banks | $ | 4,015 |
|
| $ | 6,494 |
|
Interest-earning deposits with banks |
| 112,059 |
|
|
| 63,955 |
|
Securities available for sale |
| 291,049 |
|
|
| 178,582 |
|
Securities held to maturity (fair value $29,687 and $27,373, respectively) |
| 28,588 |
|
|
| 26,244 |
|
Equity securities, at fair value |
| 409 |
|
|
| 1,335 |
|
Loans held for sale |
| 9,737 |
|
|
| 7,812 |
|
Loans held for investment |
| 432,335 |
|
|
| 467,726 |
|
Less: Allowance for loan losses |
| (3,670 | ) |
|
| (4,494 | ) |
Net loans held for investment |
| 428,665 |
|
|
| 463,232 |
|
Premises and equipment, net |
| 16,149 |
|
|
| 16,392 |
|
Interest receivable |
| 2,679 |
|
|
| 2,447 |
|
Restricted stock |
| 921 |
|
|
| 1,166 |
|
Bank-owned life insurance |
| 9,033 |
|
|
| 8,901 |
|
Other real estate owned |
| - |
|
|
| 359 |
|
Prepaid assets |
| 879 |
|
|
| 1,000 |
|
Loan servicing assets |
| 5,125 |
|
|
| 3,155 |
|
Mortgage banking derivatives |
| 1,196 |
|
|
| 252 |
|
Other assets |
| 10,482 |
|
|
| 10,578 |
|
Total assets | $ | 920,986 |
|
| $ | 791,904 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
Demand, noninterest-bearing | $ | 243,686 |
|
| $ | 200,764 |
|
Interest checking and money market accounts |
| 404,484 |
|
|
| 379,108 |
|
Savings accounts |
| 93,290 |
|
|
| 71,194 |
|
Time deposits, $250,000 and over |
| 24,363 |
|
|
| 9,051 |
|
Other time deposits |
| 47,501 |
|
|
| 53,570 |
|
Total deposits |
| 813,324 |
|
|
| 713,687 |
|
Interest payable |
| 69 |
|
|
| 27 |
|
Short-term borrowed funds |
| 1,130 |
|
|
| 635 |
|
Long-term debt |
| 29,511 |
|
|
| 10,992 |
|
Other liabilities |
| 14,791 |
|
|
| 12,271 |
|
Total liabilities |
| 858,825 |
|
|
| 737,612 |
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
Common stock, $1.25 par value: 20,000,000 shares authorized; |
|
|
|
|
|
|
|
issued and outstanding or in process of issuance |
|
|
|
|
|
|
|
6,949,634 and 6,961,230 shares, respectively. |
|
|
|
|
|
|
|
Book value per share $7.20 in 2021 and $5.97 in 2020 (1) |
| 8,687 |
|
|
| 8,702 |
|
Common stock dividend distributable |
| 261 |
|
|
| 174 |
|
Additional paid-in capital |
| 13,550 |
|
|
| 12,756 |
|
Undivided profits |
| 29,558 |
|
|
| 18,600 |
|
Accumulated other comprehensive income (loss) |
| (550 | ) |
|
| 3,405 |
|
Total Uwharrie Capital Corp shareholders' equity |
| 51,506 |
|
|
| 43,637 |
|
Noncontrolling interest |
| 10,655 |
|
|
| 10,655 |
|
Total shareholders' equity |
| 62,161 |
|
|
| 54,292 |
|
Total liabilities and shareholders' equity | $ | 920,986 |
|
| $ | 791,904 |
|
|
|
|
|
|
|
|
|
(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 and the 3% stock dividend in 2021. |
|
Uwharrie Capital Corp and Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
| ||
| Three Months Ended |
| Nine Months Ended |
| ||||||||
| September 30, |
| September 30, |
| ||||||||
(Amounts in thousands except share and per share data) | 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans | $ | 6,242 |
| $ | 5,190 |
| $ | 17,639 |
| $ | 14,774 |
|
Interest on investment securities |
| 1,054 |
|
| 960 |
|
| 3,055 |
|
| 2,315 |
|
Interest-earning deposits with banks and federal funds sold |
| 53 |
|
| 26 |
|
| 96 |
|
| 616 |
|
Total interest income |
| 7,349 |
|
| 6,176 |
|
| 20,790 |
|
| 17,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid on deposits |
| 176 |
|
| 312 |
|
| 562 |
|
| 1,412 |
|
Interest paid on borrowed funds |
| 191 |
|
| 142 |
|
| 461 |
|
| 419 |
|
Total interest expense |
| 367 |
|
| 454 |
|
| 1,023 |
|
| 1,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income |
| 6,982 |
|
| 5,722 |
|
| 19,767 |
|
| 15,874 |
|
Provision for (recovery of) loan losses |
| (1,057 | ) |
| 1,066 |
|
| (1,232 | ) |
| 2,465 |
|
Net interest income after provision for (recovery of) loan losses |
| 8,039 |
|
| 4,656 |
|
| 20,999 |
|
| 13,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
| 253 |
|
| 241 |
|
| 735 |
|
| 763 |
|
Interchange and card transaction fees |
| 261 |
|
| 266 |
|
| 819 |
|
| 640 |
|
Other service fees and commissions |
| 842 |
|
| 588 |
|
| 2,272 |
|
| 1,911 |
|
Gain on sale of securities |
| - |
|
| 19 |
|
| 991 |
|
| 77 |
|
Realized/unrealized gain (loss) on equity securities |
| (2 | ) |
| 101 |
|
| (14 | ) |
| 434 |
|
Income from mortgage banking |
| 2,323 |
|
| 3,961 |
|
| 9,498 |
|
| 8,727 |
|
Other income |
| 883 |
|
| 370 |
|
| 1,540 |
|
| 428 |
|
Total noninterest income |
| 4,560 |
|
| 5,546 |
|
| 15,841 |
|
| 12,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
| 5,833 |
|
| 5,254 |
|
| 16,455 |
|
| 14,708 |
|
Occupancy expense |
| 433 |
|
| 430 |
|
| 1,319 |
|
| 1,261 |
|
Equipment expense |
| 192 |
|
| 202 |
|
| 529 |
|
| 564 |
|
Data processing |
| 170 |
|
| 171 |
|
| 500 |
|
| 491 |
|
Loan costs |
| 192 |
|
| 155 |
|
| 689 |
|
| 409 |
|
Professional fees and services |
| 239 |
|
| 313 |
|
| 707 |
|
| 716 |
|
Marketing and donations |
| 215 |
|
| 294 |
|
| 1,036 |
|
| 705 |
|
Software amortization and maintenance |
| 335 |
|
| 352 |
|
| 1,058 |
|
| 916 |
|
Other operating expenses |
| 1,574 |
|
| 831 |
|
| 3,287 |
|
| 1,975 |
|
Total noninterest expense |
| 9,183 |
|
| 8,002 |
|
| 25,580 |
|
| 21,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
| 3,416 |
|
| 2,200 |
|
| 11,260 |
|
| 4,644 |
|
Provision for income taxes |
| 732 |
|
| 618 |
|
| 2,389 |
|
| 1,132 |
|
Net Income | $ | 2,684 |
| $ | 1,582 |
| $ | 8,871 |
| $ | 3,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income | $ | 2,684 |
| $ | 1,582 |
| $ | 8,871 |
| $ | 3,512 |
|
Less: Net income attributable to noncontrolling interest |
| (142 | ) |
| (142 | ) |
| (422 | ) |
| (424 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 2,542 |
| $ | 1,440 |
| $ | 8,449 |
| $ | 3,088 |
|
Net Income Per Common Share (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic | $ | 0.35 |
| $ | 0.20 |
| $ | 1.17 |
| $ | 0.42 |
|
Assuming dilution | $ | 0.35 |
| $ | 0.20 |
| $ | 1.17 |
| $ | 0.42 |
|
Weighted Average Common Shares Outstanding (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| 7,168,405 |
|
| 7,319,100 |
|
| 7,218,109 |
|
| 7,360,295 |
|
Assuming dilution |
| 7,168,405 |
|
| 7,319,100 |
|
| 7,218,109 |
|
| 7,360,295 |
|