Exhibit 99.1
August 19, 2022
Dear Shareholder:
As talks of recession grow, your Company continues to maintain a healthy balance sheet with a strong base of core earnings. Our assets have continued to grow, reaching $991 million as of June 30, 2022, compared to $845 million for the same period in 2021, a 17% increase year-over-year.
The loan portfolio has grown $26 million year-over-year, which includes replacing the $50 million in outstanding Small Business Administration Paycheck Protection Program (SBA PPP) loans present in 2021 (most of which have now been forgiven.) This represents $76 million in new loan production. It is important to note the Bank has maintained its asset quality standards, while continuing to provide capital in the form of loans to the businesses and families we serve.
Net income year-to-date as of June 30, 2022 is $2.5 million compared to $6.2 million reported last year for the same period. The major difference represents non-recurring earnings that are not a part of our normal operations. Examples of non-recurring earnings include $1 million of one-time SBA PPP income and $991 thousand of one-time bond gains. Further, we just came through a historical refinancing boom in the housing sector, which contributed $4.7 million in additional mortgage revenue for 2021.
We have now moved into a new era with the Federal Reserve raising rates in an effort to address inflation concerns. This is drastically impacting the home mortgage industry. Nationally, mortgage originations are down 30-40%. While core earnings from the Bank have improved, they have not offset the decline in mortgage revenue, the one-time earnings of SBA PPP and bond gains recorded in 2021.
Net income for the second quarter in 2022 was $1.7 million, as compared to $1.6 million for the same three month period in 2021, which equates to $1.5 million in net income available to common shareholders for both periods. This is reported as $0.22 per share and $0.20 per share, for the respective periods.
As we navigate through the remainder of 2022 and into 2023, we continue to find ourselves in a world of change and challenges. We remain focused on our purpose and mission of making a difference wherever we serve and being a helpful partner to our customers, associates, communities and our shareholders. We 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) | 2022 |
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| 2021 |
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Assets |
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Cash and due from banks | $ | 5,244 |
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| $ | 5,069 |
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Interest-earning deposits with banks |
| 117,112 |
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| 122,001 |
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Securities available for sale |
| 315,101 |
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| 200,148 |
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Securities held to maturity (fair value $28,396 and $29,282, respectively) |
| 30,381 |
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| 27,803 |
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Equity securities, at fair value |
| 327 |
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| 411 |
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Loans held for sale |
| 13,261 |
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| 10,394 |
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Loans held for investment |
| 461,091 |
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| 438,053 |
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Less: Allowance for loan losses |
| (4,194 | ) |
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| (4,174 | ) |
Net loans held for investment |
| 456,897 |
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| 433,879 |
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Interest receivable |
| 2,656 |
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| 2,171 |
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Premises and equipment, net |
| 15,728 |
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| 16,451 |
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Restricted stock |
| 1,428 |
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| 921 |
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Bank-owned life insurance |
| 9,125 |
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| 9,000 |
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Mortgage banking derivatives |
| 806 |
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| 1,589 |
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Other assets |
| 22,932 |
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| 15,423 |
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Total assets | $ | 990,998 |
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| $ | 845,260 |
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Liabilities |
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Deposits: |
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Demand, noninterest-bearing | $ | 288,887 |
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| $ | 235,335 |
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Interest checking and money market accounts |
| 444,529 |
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| 368,870 |
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Savings accounts |
| 112,846 |
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| 87,074 |
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Time deposits, $250,000 and over |
| 16,900 |
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| 19,979 |
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Other time deposits |
| 46,968 |
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| 48,035 |
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Total deposits |
| 910,130 |
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| 759,293 |
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Short-term borrowed funds |
| 1,132 |
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| 1,271 |
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Long-term debt |
| 29,569 |
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| 9,992 |
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Mortgage banking derivatives |
| - |
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| 78 |
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Other liabilities |
| 10,982 |
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| 13,066 |
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Total liabilities |
| 951,813 |
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| 783,700 |
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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 6,964,242 shares, respectively. |
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Book value per share $4.12 in 2022 and $7.10 in 2021 (1) |
| 8,664 |
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| 8,705 |
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Additional paid-in capital |
| 11,814 |
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| 12,030 |
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Undivided profits |
| 32,754 |
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| 28,907 |
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Accumulated other comprehensive income (loss) |
| (24,702 | ) |
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| 1,263 |
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Total Uwharrie Capital Corp shareholders' equity |
| 28,530 |
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| 50,905 |
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Noncontrolling interest |
| 10,655 |
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| 10,655 |
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Total shareholders' equity |
| 39,185 |
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| 61,560 |
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Total liabilities and shareholders' equity | $ | 990,998 |
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| $ | 845,260 |
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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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| 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) | 2022 |
| 2021 |
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| 2022 |
| 2021 |
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Interest Income |
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Interest and fees on loans | $ | 5,297 |
| $ | 5,335 |
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| $ | 10,404 |
| $ | 11,397 |
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Interest on investment securities |
| 1,603 |
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| 922 |
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| 2,981 |
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| 2,001 |
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Interest-earning deposits with banks and federal funds sold |
| 247 |
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| 27 |
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| 287 |
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| 43 |
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Total interest income |
| 7,147 |
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| 6,284 |
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| 13,672 |
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| 13,441 |
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Interest Expense |
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Interest paid on deposits |
| 213 |
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| 175 |
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| 390 |
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| 386 |
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Interest paid on borrowed funds |
| 337 |
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| 131 |
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| 674 |
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| 270 |
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Total interest expense |
| 550 |
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| 306 |
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| 1,064 |
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| 656 |
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Net Interest Income |
| 6,597 |
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| 5,978 |
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| 12,608 |
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| 12,785 |
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Provision for (recovery of) loan losses |
| (13 | ) |
| (141 | ) |
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| 105 |
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| (175 | ) |
Net interest income after provision for (recovery of) loan losses |
| 6,610 |
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| 6,119 |
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| 12,503 |
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| 12,960 |
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Noninterest Income |
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Service charges on deposit accounts |
| 261 |
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| 240 |
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| 504 |
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| 482 |
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Interchange and card transaction fees |
| 303 |
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| 339 |
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| 541 |
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| 558 |
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Other service fees and commissions |
| 801 |
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| 800 |
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| 1,702 |
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| 1,430 |
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Gain on sale of securities |
| - |
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| 51 |
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| (91 | ) |
| 991 |
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Realized/unrealized gain (loss) on equity securities |
| (56 | ) |
| 7 |
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| (65 | ) |
| (12 | ) |
Income from mortgage banking |
| 1,172 |
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| 2,069 |
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| 2,439 |
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| 7,175 |
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Other income (loss) |
| (229 | ) |
| 668 |
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| (149 | ) |
| 657 |
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Total noninterest income |
| 2,252 |
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| 4,174 |
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| 4,881 |
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| 11,281 |
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Noninterest Expense |
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Salaries and employee benefits |
| 4,912 |
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| 5,233 |
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| 9,928 |
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| 10,622 |
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Occupancy expense |
| 427 |
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| 460 |
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| 852 |
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| 886 |
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Equipment expense |
| 193 |
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| 165 |
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| 381 |
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| 337 |
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Data processing |
| 194 |
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| 165 |
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| 406 |
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| 330 |
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Loan costs |
| 95 |
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| 191 |
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| 264 |
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| 497 |
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Professional fees and services |
| 204 |
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| 232 |
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| 416 |
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| 468 |
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Marketing and donations |
| 205 |
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| 200 |
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| 539 |
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| 821 |
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Software amortization and maintenance |
| 308 |
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| 333 |
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| 619 |
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| 723 |
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Other operating expenses |
| 332 |
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| 1,275 |
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| 1,018 |
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| 1,713 |
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Total noninterest expense |
| 6,870 |
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| 8,254 |
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| 14,423 |
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| 16,397 |
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Income before income taxes |
| 1,992 |
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| 2,039 |
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| 2,961 |
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| 7,844 |
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Provision for income taxes |
| 310 |
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| 435 |
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| 478 |
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| 1,657 |
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Net Income | $ | 1,682 |
| $ | 1,604 |
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| $ | 2,483 |
| $ | 6,187 |
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Consolidated net income | $ | 1,682 |
| $ | 1,604 |
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| $ | 2,483 |
| $ | 6,187 |
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Less: Net income attributable to noncontrolling interest |
| (141 | ) |
| (141 | ) |
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| (280 | ) |
| (280 | ) |
Net income attributable to Uwharrie Capital Corp and common shareholders | $ | 1,541 |
| $ | 1,463 |
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| $ | 2,203 |
| $ | 5,907 |
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Net Income Per Common Share (1) |
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Basic | $ | 0.22 |
| $ | 0.20 |
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| $ | 0.32 |
| $ | 0.82 |
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Assuming dilution | $ | 0.22 |
| $ | 0.20 |
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| $ | 0.32 |
| $ | 0.82 |
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Weighted Average Common Shares Outstanding (1) |
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Basic |
| 6,930,717 |
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| 7,224,640 |
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| 6,941,280 |
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| 7,243,373 |
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Assuming dilution |
| 6,930,717 |
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| 7,224,640 |
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| 6,941,280 |
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| 7,243,373 |
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