Exhibit 99.1
May 20, 2022
Dear Shareholder:
We are pleased to report to you the continued growth in your Company through March 31, 2022. Assets have reached an all-time high of $974 million compared to $833 million for the same period in 2021, a 17% increase year-over-year. Asset quality continues to be strong and we remain diligent in our underwriting standards as we head into a period of uncertainty. Deposits have increased $139 million since March 31, 2021. As the Federal Reserve Bank increases its overnight funds rate, we have many assets that will reprice up to improve our margins.
Net income for the first three months of 2022 was $801 thousand, as compared to $4.6 million for the same three-month period in 2021, which equates to $662 thousand in net income available to common shareholders or $0.10 per share, compared to $4.4 million in net income available to common shareholders or $0.61 per share we reported in 2021 for the same period. The primary factor to the reduction in net income for the first quarter is from reduced production in our mortgage division. With the significant increase in long-term interest rates, mortgage production activity has slowed drastically, driving the substantial reduction reported in non-interest income for the first quarter of 2022. The Mortgage Bankers Association expects overall originations to decline 35.5% in 2022 compared to 2021.
Focusing forward, your Company plans to continue to strengthen its diversity of revenue streams, which we believe is the key to long-term sustainability in the industry as margins are commoditized. Our people remain among our most important assets, and we are developing plans to attract and retain associates with values that are in line with our mission...values that we think will continue to contribute to our long-term success.
There are many things beyond our control contributing to the uncertainty today: the return of inflation, tight labor markets, wage pressure, and the Russia-Ukraine war. Your Company remains focused on our values and mission to guide us in our efforts to Make a Difference in the communities we serve.
God bless you and your families and 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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| March 31, |
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| March 31, |
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(Amounts in thousands except share and per share data) | 2022 |
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| 2021 |
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Assets |
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Cash and due from banks | $ | 6,705 |
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| $ | 5,144 |
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Interest-earning deposits with banks |
| 109,005 |
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| 91,916 |
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Securities available for sale |
| 322,268 |
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| 190,083 |
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Securities held to maturity (fair value $29,909 and $28,818, respectively) |
| 30,722 |
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| 27,802 |
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Equity security, at fair value |
| 383 |
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| 404 |
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Loans held for sale |
| 11,910 |
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| 14,213 |
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Loans held for investment |
| 445,924 |
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| 460,441 |
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Less: Allowance for loan losses |
| 4,156 |
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| 4,252 |
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Net loans held for investment |
| 441,768 |
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| 456,189 |
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Premises and equipment, net |
| 15,716 |
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| 16,698 |
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Interest receivable |
| 2,731 |
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| 2,344 |
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Restricted stock |
| 1,428 |
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| 921 |
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Bank-owned life insurance |
| 9,095 |
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| 8,968 |
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Prepaid assets |
| 1,179 |
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| 1,218 |
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Loan servicing assets |
| 5,240 |
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| 4,511 |
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Other assets |
| 15,590 |
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| 12,186 |
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Total assets | $ | 973,740 |
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| $ | 832,597 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 268,574 |
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| $ | 240,651 |
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Interest checking and money market accounts |
| 436,397 |
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| 347,962 |
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Savings accounts |
| 109,535 |
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| 82,336 |
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Time deposits, $250,000 and over |
| 21,809 |
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| 22,981 |
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Other time deposits |
| 47,183 |
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| 50,219 |
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Total deposits |
| 883,498 |
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| 744,149 |
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Short-term borrowed funds |
| 1,344 |
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| 1,338 |
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Long-term debt |
| 29,549 |
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| 11,242 |
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Other liabilities |
| 12,191 |
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| 16,042 |
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Total liabilities |
| 926,582 |
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| 772,771 |
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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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6,930,717 and 7,039,942 shares, respectively. |
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Book value per share $5.27 in 2022 and $6.78 in 2021 (1) |
| 8,664 |
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| 8,800 |
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Additional paid-in capital |
| 11,814 |
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| 12,539 |
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Undivided profits |
| 31,213 |
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| 27,444 |
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Accumulated other comprehensive income (loss) |
| (15,188 | ) |
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| 388 |
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Total Uwharrie Capital Corp shareholders' equity |
| 36,503 |
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| 49,171 |
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Noncontrolling interest |
| 10,655 |
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| 10,655 |
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Total shareholders' equity |
| 47,158 |
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| 59,826 |
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Total liabilities and shareholders' equity | $ | 973,740 |
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| $ | 832,597 |
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(1) Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 3% stock dividend in 2021. |
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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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| March 31, |
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(Amounts in thousands except share and per share data) | 2022 |
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| 2021 |
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Interest Income |
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Interest and fees on loans | $ | 5,107 |
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| $ | 6,062 |
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Interest on investment securities |
| 1,378 |
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| 1,079 |
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Interest-earning deposits with banks and federal funds sold |
| 40 |
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| 16 |
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Total interest income |
| 6,525 |
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| 7,157 |
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Interest Expense |
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Interest paid on deposits |
| 177 |
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| 211 |
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Interest paid on borrowed funds |
| 316 |
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| 137 |
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Total interest expense |
| 493 |
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| 348 |
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Net Interest Income |
| 6,032 |
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| 6,809 |
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Provision for (recovery of) loan losses |
| 118 |
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| (34 | ) |
Net interest income after provision for (recovery of) loan losses |
| 5,914 |
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| 6,843 |
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Noninterest Income |
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Service charges on deposit accounts |
| 243 |
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| 242 |
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Interchange and card transaction fees |
| 238 |
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| 219 |
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Other service fees and commissions |
| 901 |
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| 630 |
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Gain (loss) on sale of securities |
| (91 | ) |
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| 940 |
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Realized/unrealized loss on equity securities |
| (9 | ) |
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| (19 | ) |
Income from mortgage banking |
| 1,267 |
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| 5,106 |
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Other income (loss) |
| 80 |
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| (11 | ) |
Total noninterest income |
| 2,629 |
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| 7,107 |
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Noninterest Expense |
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Salaries and employee benefits |
| 5,016 |
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| 5,389 |
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Occupancy expense |
| 425 |
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| 426 |
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Equipment expense |
| 188 |
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| 172 |
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Data processing |
| 212 |
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| 165 |
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Loan costs |
| 169 |
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| 306 |
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Professional fees and services |
| 212 |
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| 236 |
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Marketing and donations |
| 334 |
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| 621 |
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Software amortization and maintenance |
| 311 |
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| 390 |
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Other operating expenses |
| 707 |
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| 440 |
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Total noninterest expense |
| 7,574 |
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| 8,145 |
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Income before income taxes |
| 969 |
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| 5,805 |
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Provision for income taxes |
| 168 |
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| 1,222 |
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Net Income | $ | 801 |
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| $ | 4,583 |
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Consolidated net income | $ | 801 |
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| $ | 4,583 |
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Less: Net income attributable to noncontrolling interest |
| (139 | ) |
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| (139 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 662 |
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| $ | 4,444 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.10 |
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| $ | 0.61 |
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Assuming dilution | $ | 0.10 |
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| $ | 0.61 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 6,951,961 |
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| 7,262,313 |
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Assuming dilution |
| 6,951,961 |
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| 7,262,313 |
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