10-Q 1 uwhr-10q_20180331.htm 10-Q uwhr-10q_20180331.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

COMMISSION FILE NUMBER 000-22062

 

UWHARRIE CAPITAL CORP

(Exact name of registrant as specified in its charter)

 

 

NORTH CAROLINA

 

56-1814206

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

132 NORTH FIRST STREET

ALBEMARLE, NORTH CAROLINA

 

28001

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone number, including area code: (704) 983-6181

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

☐ (Do not check if a smaller reporting company.)

 

Smaller reporting company

 

Emerging growth company

 

☐ 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 7,107,520 shares of common stock outstanding as of April 27, 2018.

 

 


 

 

Table of Contents

 

 

 

 

 

Page No.

 

 

 

 

 

Part I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1 -

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets March 31, 2018 and December 31, 2017

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017

 

5

 

 

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2018

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017

 

7

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2 -

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

 

 

 

 

Item 3 -

 

Quantitative and Qualitative Disclosures about Market Risk

 

31

 

 

 

 

 

Item 4 -

 

Controls and Procedures

 

31

 

 

 

 

 

Part II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

Item 1 -

 

Legal Proceedings

 

32

 

 

 

 

 

Item 1A -

 

Risk Factors

 

32

2

 

 

 

 

Item 2 -

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

32

 

 

 

 

 

Item 3 -

 

Defaults Upon Senior Securities

 

32

 

 

 

 

 

Item 4 -

 

Mine Safety Disclosures

 

32

 

 

 

 

 

Item 5 -

 

Other Information

 

32

 

 

 

 

 

Item 6 -

 

Exhibits

 

33

 

 

 

 

 

 

 

Exhibit Index

 

34

 

 

 

Signatures

 

35

 

-2-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Balance Sheets

 

Part I. Financial Information

Item 1.

Financial Statements.

 

 

 

March 31, 2018 (Unaudited)

 

 

December 31, 2017*

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

7,276

 

 

$

7,538

 

Interest-earning deposits with banks

 

 

85,453

 

 

 

62,865

 

Securities available for sale, at fair value

 

 

92,914

 

 

 

95,743

 

Securities held to maturity, at amortized cost (fair value $11,022 and $11,461, respectively)

 

 

11,153

 

 

 

11,458

 

Loans held for sale

 

 

2,149

 

 

 

4,414

 

Loans:

 

 

 

 

 

 

 

 

Loans held for investment

 

 

365,154

 

 

 

356,871

 

Less allowance for loan losses

 

 

(2,547

)

 

 

(2,458

)

Net loans held for investment

 

 

362,607

 

 

 

354,413

 

Premises and equipment, net

 

 

14,934

 

 

 

14,728

 

Interest receivable

 

 

1,705

 

 

 

1,709

 

Restricted stock

 

 

1,094

 

 

 

1,067

 

Bank owned life insurance

 

 

8,584

 

 

 

8,546

 

Other real estate owned

 

 

1,733

 

 

 

2,349

 

Prepaid assets

 

 

1,233

 

 

 

786

 

Other assets

 

 

11,153

 

 

 

10,742

 

Total assets

 

$

601,988

 

 

$

576,358

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Demand noninterest-bearing

 

$

132,119

 

 

$

113,762

 

Interest checking and money market accounts

 

 

297,165

 

 

 

289,953

 

Savings deposits

 

 

47,703

 

 

 

45,698

 

Time deposits, $250,000 and over

 

 

7,562

 

 

 

7,933

 

Other time deposits

 

 

53,357

 

 

 

55,282

 

Total deposits

 

 

537,906

 

 

 

512,628

 

Short-term borrowed funds

 

 

2,279

 

 

 

1,752

 

Long-term debt

 

 

9,534

 

 

 

9,534

 

Interest payable

 

 

147

 

 

 

148

 

Other liabilities

 

 

8,375

 

 

 

7,756

 

Total liabilities

 

 

558,241

 

 

 

531,818

 

 

 

 

 

 

 

 

 

 

Off balance sheet items, commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

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

   outstanding 7,107,520 and 7,112,853

 

 

8,884

 

 

 

8,891

 

Preferred stock, 10,000,000 shares authorized; none issued and outstanding

 

 

 

 

 

 

Additional paid-in capital

 

 

12,793

 

 

 

12,824

 

Undivided profits

 

 

13,373

 

 

 

13,282

 

Accumulated other comprehensive income (loss)

 

 

(1,956

)

 

 

(1,107

)

Total Uwharrie Capital shareholders’ equity

 

 

33,094

 

 

 

33,890

 

Noncontrolling interest

 

 

10,653

 

 

 

10,650

 

Total shareholders’ equity

 

 

43,747

 

 

 

44,540

 

Total liabilities and shareholders’ equity

 

$

601,988

 

 

$

576,358

 

 

(*)

Derived from audited consolidated financial statements

See accompanying notes  

 

 

-3-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Income (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands, except share and per share data)

 

Interest Income

 

 

 

 

 

 

 

 

Loans, including fees

 

$

4,256

 

 

$

3,990

 

Investment securities

 

 

 

 

 

 

 

 

US Treasury

 

 

 

 

 

11

 

US Government agencies and corporations

 

 

387

 

 

 

375

 

State and political subdivisions

 

 

124

 

 

 

123

 

Interest-earning deposits with banks and federal funds sold

 

 

277

 

 

 

104

 

Total interest income

 

 

5,044

 

 

 

4,603

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

Interest checking and money market accounts

 

 

144

 

 

 

84

 

Savings deposits

 

 

12

 

 

 

12

 

Time deposits, $250,000 and over

 

 

16

 

 

 

11

 

Other time deposits

 

 

45

 

 

 

47

 

Short-term borrowed funds

 

 

3

 

 

 

7

 

Long-term debt

 

 

135

 

 

 

135

 

Total interest expense

 

 

355

 

 

 

296

 

Net interest income

 

 

4,689

 

 

 

4,307

 

Provision for (recovery of) loan losses

 

 

78

 

 

 

(59

)

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

 

 

4,611

 

 

 

4,366

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

283

 

 

 

289

 

Interchange and card transaction fees

 

 

142

 

 

 

136

 

Other service fees and commissions

 

 

661

 

 

 

814

 

Income from mortgage loan sales

 

 

662

 

 

 

871

 

Other income

 

 

169

 

 

 

286

 

Total noninterest income

 

 

1,917

 

 

 

2,396

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,946

 

 

 

3,698

 

Net occupancy expense

 

 

364

 

 

 

304

 

Equipment expense

 

 

170

 

 

 

152

 

Data processing costs

 

 

250

 

 

 

182

 

Office supplies and printing

 

 

36

 

 

 

25

 

Foreclosed real estate expense

 

 

39

 

 

 

88

 

Professional fees and services

 

 

248

 

 

 

176

 

Marketing and donations

 

 

211

 

 

 

258

 

Electronic banking expense

 

 

93

 

 

 

78

 

Software amortization and maintenance

 

 

213

 

 

 

181

 

FDIC insurance

 

 

66

 

 

 

45

 

Other noninterest expense

 

 

600

 

 

 

701

 

Total noninterest expense

 

 

6,236

 

 

 

5,888

 

Income before income taxes

 

 

292

 

 

 

874

 

Income taxes

 

 

58

 

 

 

257

 

Net income

 

$

234

 

 

$

617

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

$

234

 

 

$

617

 

Less: net income attributable to noncontrolling interest

 

 

(143

)

 

 

(146

)

Net income attributable to Uwharrie Capital Corp and common shareholders

 

 

91

 

 

 

471

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

0.07

 

Diluted

 

$

0.01

 

 

$

0.07

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

7,112,347

 

 

 

7,185,992

 

Diluted

 

 

7,112,347

 

 

 

7,186,645

 

 

 

See accompanying notes  

 

 

-4-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

234

 

 

$

617

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available for sale securities

 

 

(1,099

)

 

 

377

 

Related tax effect

 

 

250

 

 

 

(128

)

 

 

 

 

 

 

 

 

 

Total other comprehensive income

 

 

(849

)

 

 

249

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

(615

)

 

 

866

 

 

 

 

 

 

 

 

 

 

Less: Comprehensive income attributable to noncontrolling

   interest

 

 

(143

)

 

 

(146

)

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to Uwharrie Capital

 

$

(758

)

 

$

720

 

 

See accompanying notes

 

 

-5-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

 

 

 

 

Number of

Common

Shares

Issued

 

 

Common

Stock

 

 

Additional

Paid-in

Capital

 

 

Undivided

Profits

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non

Controlling

Interest

 

 

Total

 

 

 

(dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

 

7,112,853

 

 

$

8,891

 

 

$

12,824

 

 

$

13,282

 

 

$

(1,107

)

 

$

10,650

 

 

$

44,540

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

 

 

 

143

 

 

 

234

 

Repurchase of common stock

 

 

(18,711

)

 

 

(23

)

 

 

(80

)

 

 

 

 

 

 

 

 

 

 

 

(103

)

Stock options exercised

 

 

13,378

 

 

 

16

 

 

 

49

 

 

 

 

 

 

 

 

 

 

 

 

65

 

Other comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(849

)

 

 

 

 

 

(849

)

Record preferred stock dividend Series B

   (noncontrolling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103

)

 

 

(103

)

Record preferred stock dividend Series C

   (noncontrolling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(37

)

Balance, March 31, 2018

 

 

7,107,520

 

 

$

8,884

 

 

$

12,793

 

 

$

13,373

 

 

$

(1,956

)

 

$

10,653

 

 

$

43,747

 

 

See accompanying notes

 

 

-6-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(dollars in thousands)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

234

 

 

$

617

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 

 

Provided (used) by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

240

 

 

 

217

 

Provision for (recovery of) loan losses

 

 

78

 

 

 

(59

)

Gain on sale of OREO

 

 

9

 

 

 

(7

)

Net amortization of premium on investment securities AFS

 

 

170

 

 

 

230

 

Net amortization of premium on investment securities HTM

 

 

40

 

 

 

38

 

Net amortization of mortgage servicing rights

 

 

167

 

 

 

179

 

OREO write downs

 

 

 

 

 

48

 

Net change in:

 

 

 

 

 

 

 

 

Originations and purchases of mortgage loans for sale

 

 

(18,608

)

 

 

(22,007

)

Proceeds from sales of mortgage loans for sale

 

 

20,706

 

 

 

26,336

 

Accrued interest receivable

 

 

4

 

 

 

30

 

Prepaid Assets

 

 

(447

)

 

 

(294

)

Cash surrender value of life insurance

 

 

(38

)

 

 

(28

)

Miscellaneous other assets

 

 

(158

)

 

 

(105

)

Accrued interest payable

 

 

(1

)

 

 

(3

)

Miscellaneous other liabilities

 

 

619

 

 

 

485

 

Net cash provided by operating activities

 

 

3,015

 

 

 

5,677

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Proceeds from maturities, calls & paydowns of investment securities held to maturity

 

 

265

 

 

 

138

 

Proceeds from maturities, calls & paydowns of investment securities available for sale

 

 

1,560

 

 

 

2,396

 

Purchase of life insurance investment

 

 

 

 

 

(1,525

)

Net change in restricted stock

 

 

(27

)

 

 

(15

)

Net decrease (increase) in loans

 

 

(8,272

)

 

 

(2,435

)

Purchase of premises and equipment

 

 

(446

)

 

 

(198

)

Proceeds from sale of OREO

 

 

607

 

 

 

818

 

Net cash used by investing activities

 

 

(6,313

)

 

 

(821

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net increase in deposit accounts

 

 

25,278

 

 

 

13,993

 

Net increase (decrease) in federal funds purchased

 

 

 

 

 

 

 

 

and securities sold under agreements to repurchase and other short-term borrowings

 

 

527

 

 

 

(41

)

Repayment of other borrowings

 

 

 

 

 

(2

)

Common stock repurchased

 

 

(103

)

 

 

(241

)

Exercise of stock options

 

 

65

 

 

 

 

Dividends paid on preferred stock

 

 

(143

)

 

 

(146

)

Net cash provided by financing activities

 

 

25,624

 

 

 

13,563

 

Increase in cash and cash equivalents

 

 

22,326

 

 

 

18,419

 

Cash and cash equivalents, beginning of period

 

 

70,403

 

 

 

45,968

 

Cash and cash equivalents, end of period

 

$

92,729

 

 

$

64,387

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

 

 

 

 

Interest paid

 

$

296

 

 

$

299

 

Income taxes paid

 

 

 

 

 

 

Supplemental Schedule of Non-Cash Activities

 

 

 

 

 

 

 

 

Net change in fair value securities available for sale, net of tax

 

$

849

 

 

$

249

 

Loans transferred to foreclosed real estate

 

 

 

 

 

111

 

Mortgage servicing rights capitalized

 

 

74

 

 

 

179

 

 

 

See accompanying notes

 

 

-7-


 

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

 

 

Note 1 – Basis of Presentation

The financial statements and accompanying notes are presented on a consolidated basis including Uwharrie Capital Corp (the “Company”) and its subsidiaries, Uwharrie Bank (the “Bank”), Uwharrie Investment Advisors, Inc. (“UIA”), and Uwharrie Mortgage, Inc. The Bank consolidates its subsidiaries, the Strategic Alliance Corporation, BOS Agency, Inc. and Gateway Mortgage, Inc., each of which is wholly-owned by the Bank.

The information contained in the consolidated financial statements is unaudited. In the opinion of management, the consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and material adjustments necessary for a fair presentation of results of interim periods, all of which are of a normal recurring nature, have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for an entire year. Management is not aware of economic events, outside influences or changes in concentrations of business that would require additional clarification or disclosure in the consolidated financial statements.

The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to consolidated financial statements filed as part of the Company’s 2017 Annual Report on Form 10-K. This Quarterly Report should be read in conjunction with such Annual Report.

Use of Estimates

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (“GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses.

Accounting Changes, Reclassifications and Restatements

Certain items in prior financial statements have been reclassified to conform to the current presentation. ASU 2014-09. “Revenue from Contracts with Customers (Topic 606)” was adopted as of January 1, 2018. ASU 2014-09 requires us to report network costs associated with debit card and credit card transactions netted against the related fees from such transactions. Previously, such network costs were reported as a component of other non-interest expense. For the three months ended March 31, 2018, gross interchange and card transaction fees totaled $379,000 while related network costs totaled $237,000. On a net basis, we reported $142,000 as interchange and card transaction fees in the accompanying Consolidated Statement of Income for the three months ended March 31, 2018. For the three months ended March 31, 2017, we reported interchange and card transaction fees totaling $383,000 on a gross basis in the accompanying Consolidated Statement of Income while related network costs totaling $247,000 were reported as a component of other non-interest expense. 2017 was reclassed in 2018 to report net $136,000 in interchange and card transaction fees.

Under ASU 2014-09, for revenue not associated with financial instruments, guarantees and lease contracts, we apply the following steps when recognizing revenue from contracts with customers: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when the performance obligation is satisfied. Our contracts with customers are generally short-term in nature, typically due within one year or less or cancellable by us or our customer upon a short notice period. Performance obligations for our customer contracts are generally satisfied at a single point in time, typically when the transaction is complete, or over time. For performance obligations satisfied over time, we primarily use the output method, directly measuring the value of the products/services transferred to the customer, to determine when performance obligations have been satisfied. We typically receive payment from customers and recognize revenue concurrent with the satisfaction of our performance obligations. In most cases, this occurs within a single financial reporting period. For payments received in advance of the satisfaction of performance obligations, revenue recognition is deferred until such time as the performance obligations have been satisfied. In cases where we have not received payment despite satisfaction of our performance obligations, we accrue an estimate of the amount due in the period our performance obligations have been satisfied. For contracts with variable components, only amounts for which collection is probable are accrued. We generally act in a principal capacity, on our own behalf, in most of our contracts with customers. In such transactions, we recognize revenue and the related costs to provide our services on a gross basis in our financial statements. In some cases, we act in an agent capacity, deriving revenue through assisting other entities in transactions with our customers. In such transactions, we recognized revenue and the related costs to provide our services on a net basis in our financial statements. These transactions primarily relate to insurance and brokerage commissions and fees derived from our customers' use of various interchange and ATM/debit card/credit card networks.

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Note 2 – Comprehensive Income

The Company reports as comprehensive income all changes in shareholders’ equity during the year from sources other than shareholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income. The Company’s only component of other comprehensive income is unrealized gains and losses, net of income tax, on investment securities available for sale.

The following table presents the changes in accumulated other comprehensive income for the three months ended March 31, 2018 and 2017:

 

 

 

Unrealized holding gains on available-for-sale securities (net)

 

 

 

For the Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Beginning Balance

 

$

(1,107

)

 

$

(1,318

)

 

 

 

 

 

 

 

 

 

Other Comprehensive income (loss) before reclassifications,

   net of ($250,000) and $128,000

   tax effect, respectively

 

 

(849

)

 

 

249

 

 

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net current-period other comprehensive income (loss)

 

 

(849

)

 

 

249

 

 

 

 

 

 

 

 

 

 

Ending Balance

 

$

(1,956

)

 

$

(1,069

)

 

 

Note 3 – Noncontrolling Interest

In January 2013, the Company’s subsidiary banks issued a total of $7.9 million of Fixed Rate Noncumulative Perpetual Preferred Stock, Series B. The preferred stock qualified as Tier 1 capital at each bank and pays dividends at an annual rate of 5.30%. The preferred stock has no voting rights. This capital is presented as noncontrolling interest in the consolidated balance sheets. Dividends declared on this preferred stock are presented as earnings allocated to the noncontrolling interest in the consolidated statements of income. Effective September 1, 2013, the Fixed Rate Noncumulative Perpetual Preferred Stock, Series B was rolled into one issue under Uwharrie Bank in connection with the consolidation and name change.

During 2013, the Company’s subsidiary bank, Uwharrie Bank, raised $2.8 million of Fixed Rate Noncumulative Perpetual Preferred Stock, Series C. The preferred stock qualifies as Tier 1 capital at the bank and pays dividends at an annual rate of 5.30%. The preferred stock has no voting rights.

 

 

Note 4 – Per Share Data

 

Basic and diluted net income per common share is computed based on the weighted average number of shares outstanding during each period after retroactively adjusting for stock dividends. Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income of the Company. The Company had no stock options outstanding at March 31, 2018 but there were 13,116 shares of common stock at December 31, 2017. All of these options were dilutive at December 31, 2017 because the strike price was lower than the market price.

Basic and diluted net income per common share have been computed based upon net income available to common shareholders as presented in the accompanying consolidated statements of income divided by the weighted average number of common shares outstanding or assumed to be outstanding.

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The computation of basic and diluted earnings per share is summarized below:

 

 

 

For the Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

7,112,347

 

 

 

7,185,992

 

 

 

 

 

 

 

 

 

 

Effect of dilutive stock options

 

 

 

 

 

653

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares and dilutive

   potential common shares used in computing diluted net

   income per common share

 

 

7,112,347

 

 

 

7,186,645

 

 

 

Note 5 – Investment Securities

Carrying amounts and fair values of securities available for sale and held to maturity are summarized below:

 

March 31, 2018

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

 

(dollars in thousands)

 

Securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

$

55,856

 

 

$

49

 

 

$

1,409

 

 

$

54,496

 

GSE - Mortgage-backed securities and CMO’s

 

 

20,238

 

 

 

5

 

 

 

636

 

 

 

19,607

 

State and political subdivisions

 

 

14,322

 

 

 

18

 

 

 

508

 

 

 

13,832

 

Corporate bonds

 

 

5,039

 

 

 

8

 

 

 

68

 

 

 

4,979

 

Total securities available for sale

 

$

95,455

 

 

$

80

 

 

$

2,621

 

 

$

92,914

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

 

(dollars in thousands)

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

$

1,074

 

 

$

 

 

$

29

 

 

$

1,045

 

State and political subdivisions

 

 

6,913

 

 

 

1

 

 

 

82

 

 

 

6,832

 

Corporate bonds

 

 

3,166

 

 

 

 

 

 

21

 

 

 

3,145

 

Total securities held to maturity

 

$

11,153

 

 

$

1

 

 

$

132

 

 

$

11,022

 

 

December 31, 2017

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

 

(dollars in thousands)

 

Securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

$

56,522

 

 

$

33

 

 

$

940

 

 

$

55,615

 

GSE - Mortgage-backed securities and CMO’s

 

 

21,253

 

 

 

12

 

 

 

374

 

 

 

20,891

 

State and political subdivisions

 

 

14,368

 

 

 

27

 

 

 

196

 

 

 

14,199

 

Corporate bonds

 

 

5,042

 

 

 

7

 

 

 

11

 

 

 

5,038

 

Total securities available for sale

 

$

97,185

 

 

$

79

 

 

$

1,521

 

 

$

95,743

 

 

December 31, 2017

 

Amortized

Cost

 

 

Gross

Unrealized