Form 8-K UWHARRIE CAPITAL CORP For: May 20

May 20, 2022 12:53 PM EDT

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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

 

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)

 

 

 

 

 

 

 

 

March 31,

 

 

March 31,

 

(Amounts in thousands except share and per share data)

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

6,705

 

 

$

5,144

 

Interest-earning deposits with banks

 

109,005

 

 

 

91,916

 

Securities available for sale

 

322,268

 

 

 

190,083

 

Securities held to maturity (fair value $29,909 and $28,818, respectively)

 

30,722

 

 

 

27,802

 

Equity security, at fair value

 

383

 

 

 

404

 

Loans held for sale

 

11,910

 

 

 

14,213

 

Loans held for investment

 

445,924

 

 

 

460,441

 

     Less: Allowance for loan losses

 

4,156

 

 

 

4,252

 

     Net loans held for investment

 

441,768

 

 

 

456,189

 

Premises and equipment, net

 

15,716

 

 

 

16,698

 

Interest receivable

 

2,731

 

 

 

2,344

 

Restricted stock

 

1,428

 

 

 

921

 

Bank-owned life insurance

 

9,095

 

 

 

8,968

 

Prepaid assets

 

1,179

 

 

 

1,218

 

Loan servicing assets

 

5,240

 

 

 

4,511

 

Other assets

 

15,590

 

 

 

12,186

 

     Total assets

$

973,740

 

 

$

832,597

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

     Demand, noninterest-bearing

$

268,574

 

 

$

240,651

 

     Interest checking and money market accounts

 

436,397

 

 

 

347,962

 

     Savings accounts

 

109,535

 

 

 

82,336

 

     Time deposits, $250,000 and over

 

21,809

 

 

 

22,981

 

     Other time deposits

 

47,183

 

 

 

50,219

 

          Total deposits

 

883,498

 

 

 

744,149

 

Short-term borrowed funds

 

1,344

 

 

 

1,338

 

Long-term debt

 

29,549

 

 

 

11,242

 

Other liabilities

 

12,191

 

 

 

16,042

 

     Total liabilities

 

926,582

 

 

 

772,771

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

Common stock, $1.25 par value:  20,000,000 shares authorized;

 

 

 

 

 

 

 

     issued and outstanding or in process of issuance

 

 

 

 

 

 

 

     6,930,717 and 7,039,942 shares, respectively.

 

 

 

 

 

 

 

     Book value per share $5.27 in 2022 and $6.78 in 2021 (1)

 

8,664

 

 

 

8,800

 

Additional paid-in capital

 

11,814

 

 

 

12,539

 

Undivided profits

 

31,213

 

 

 

27,444

 

Accumulated other comprehensive income (loss)

 

(15,188

)

 

 

388

 

     Total Uwharrie Capital Corp shareholders' equity

 

36,503

 

 

 

49,171

 

Noncontrolling interest

 

10,655

 

 

 

10,655

 

     Total shareholders' equity

 

47,158

 

 

 

59,826

 

     Total liabilities and shareholders' equity

$

973,740

 

 

$

832,597

 

 

 

 

 

 

 

 

 

(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.

 

 


 

 

Uwharrie Capital Corp and Subsidiaries

 

 

 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

(Amounts in thousands except share and per share data)

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Interest Income

 

 

 

 

 

 

 

Interest and fees on loans

$

5,107

 

 

$

6,062

 

Interest on investment securities

 

1,378

 

 

 

1,079

 

Interest-earning deposits with banks and federal funds sold

 

40

 

 

 

16

 

     Total interest income

 

6,525

 

 

 

7,157

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

Interest paid on deposits

 

177

 

 

 

211

 

Interest paid on borrowed funds

 

316

 

 

 

137

 

     Total interest expense

 

493

 

 

 

348

 

 

 

 

 

 

 

 

 

Net Interest Income

 

6,032

 

 

 

6,809

 

Provision for (recovery of) loan losses

 

118

 

 

 

(34

)

Net interest income after provision for (recovery of) loan losses

 

5,914

 

 

 

6,843

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

Service charges on deposit accounts

 

243

 

 

 

242

 

Interchange and card transaction fees

 

238

 

 

 

219

 

Other service fees and commissions

 

901

 

 

 

630

 

Gain (loss) on sale of securities

 

(91

)

 

 

940

 

Realized/unrealized loss on equity securities

 

(9

)

 

 

(19

)

Income from mortgage banking

 

1,267

 

 

 

5,106

 

Other income (loss)

 

80

 

 

 

(11

)

     Total noninterest income

 

2,629

 

 

 

7,107

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,016

 

 

 

5,389

 

Occupancy expense

 

425

 

 

 

426

 

Equipment expense

 

188

 

 

 

172

 

Data processing

 

212

 

 

 

165

 

Loan costs

 

169

 

 

 

306

 

Professional fees and services

 

212

 

 

 

236

 

Marketing and donations

 

334

 

 

 

621

 

Software amortization and maintenance

 

311

 

 

 

390

 

Other operating expenses

 

707

 

 

 

440

 

     Total noninterest expense

 

7,574

 

 

 

8,145

 

 

 

 

 

 

 

 

 

Income before income taxes

 

969

 

 

 

5,805

 

Provision for income taxes

 

168

 

 

 

1,222

 

Net Income

$

801

 

 

$

4,583

 

 

 

 

 

 

 

 

 

Consolidated net income

$

801

 

 

$

4,583

 

  Less: Net income attributable to noncontrolling interest

 

(139

)

 

 

(139

)

Net income attributable to Uwharrie Capital Corp and common shareholders

$

662

 

 

$

4,444

 

Net Income Per Common Share (1)

 

 

 

 

 

 

 

     Basic

$

0.10

 

 

$

0.61

 

     Assuming dilution

$

0.10

 

 

$

0.61

 

Weighted Average Common Shares Outstanding (1)

 

 

 

 

 

 

 

     Basic

 

6,951,961

 

 

 

7,262,313

 

     Assuming dilution

 

6,951,961

 

 

 

7,262,313

 

 



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