uwhr-8k_20220520.htm

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.

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

/s/ Roger L. Dick
President and Chief Executive Officer