10-Q 1 uwhr-10q_20190331.htm 10-Q uwhr-10q_20190331.htm

ing

 

 

 

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, 2019

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)

 

 

Securities registered pursuant to Section 12(b) of the Act: None

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

 

 

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: 7,097,227 shares of common stock outstanding as of April 26, 2019.


 

 

Table of Contents

 

 

 

 

 

Page No.

 

 

 

 

 

Part I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1 -

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months Ended March 31, 2019 and 2018

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018

 

5

 

 

 

 

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2019 and 2018

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018

 

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

 

31

 

 

 

 

 

Item 1A -

 

Risk Factors

 

32

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Signatures

 

34

 

-2-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Balance Sheets

 

Part I. Financial Information

Item 1.

Financial Statements.

 

 

 

March 31, 2019 (Unaudited)

 

 

December 31, 2018*

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

8,518

 

 

$

4,473

 

Interest-earning deposits with banks

 

 

134,878

 

 

 

113,461

 

Securities available for sale, at fair value

 

 

90,737

 

 

 

91,299

 

Securities held to maturity, at amortized cost (fair value $10,677 and $10,750, respectively)

 

 

10,673

 

 

 

10,837

 

Loans held for sale

 

 

3,567

 

 

 

4,800

 

Loans:

 

 

 

 

 

 

 

 

Loans held for investment

 

 

367,962

 

 

 

369,970

 

Less allowance for loan losses

 

 

(2,233

)

 

 

(2,374

)

Net loans held for investment

 

 

365,729

 

 

 

367,596

 

Premises and equipment, net

 

 

16,467

 

 

 

14,800

 

Interest receivable

 

 

1,649

 

 

 

1,763

 

Restricted stock

 

 

1,144

 

 

 

1,094

 

Bank owned life insurance

 

 

8,699

 

 

 

8,671

 

Other real estate owned

 

 

781

 

 

 

1,047

 

Prepaid assets

 

 

980

 

 

 

558

 

Other assets

 

 

11,159

 

 

 

11,905

 

Total assets

 

$

654,981

 

 

$

632,304

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Demand noninterest-bearing

 

$

145,279

 

 

$

129,714

 

Interest checking and money market accounts

 

 

277,609

 

 

 

324,391

 

Savings deposits

 

 

57,568

 

 

 

54,784

 

Time deposits, $250,000 and over

 

 

53,200

 

 

 

7,920

 

Other time deposits

 

 

52,856

 

 

 

50,092

 

Total deposits

 

 

586,512

 

 

 

566,901

 

Short-term borrowed funds

 

 

1,403

 

 

 

1,190

 

Long-term debt

 

 

9,974

 

 

 

9,974

 

Interest payable

 

 

41

 

 

 

16

 

Other liabilities

 

 

10,738

 

 

 

9,048

 

Total liabilities

 

 

608,668

 

 

 

587,129

 

 

 

 

 

 

 

 

 

 

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 7,097,227 and 7,126,541

 

 

8,871

 

 

 

8,908

 

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

 

 

 

 

 

 

Additional paid-in capital

 

 

12,776

 

 

 

12,885

 

Undivided profits

 

 

14,971

 

 

 

14,421

 

Accumulated other comprehensive loss

 

 

(960

)

 

 

(1,694

)

Total Uwharrie Capital shareholders’ equity

 

 

35,658

 

 

 

34,520

 

Noncontrolling interest

 

 

10,655

 

 

 

10,655

 

Total shareholders’ equity

 

 

46,313

 

 

 

45,175

 

Total liabilities and shareholders’ equity

 

$

654,981

 

 

$

632,304

 

 

(*)

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,

 

 

 

2019

 

 

2018

 

 

 

(in thousands, except share and per share data)

 

Interest Income

 

 

 

 

 

 

 

 

Loans, including fees

 

$

4,667

 

 

$

4,256

 

Investment securities

 

 

 

 

 

 

 

 

US Treasury

 

 

33

 

 

 

 

US Government agencies and corporations

 

 

348

 

 

 

387

 

State and political subdivisions non-taxable

 

 

106

 

 

 

113

 

State and political subdivisions taxable

 

 

9

 

 

 

11

 

Interest-earning deposits with banks and federal funds sold

 

 

793

 

 

 

277

 

Total interest income

 

 

5,956

 

 

 

5,044

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

Interest checking and money market accounts

 

 

425

 

 

 

144

 

Savings deposits

 

 

27

 

 

 

12

 

Time deposits, $250,000 and over

 

 

65

 

 

 

16

 

Other time deposits

 

 

80

 

 

 

45

 

Short-term borrowed funds

 

 

6

 

 

 

3

 

Long-term debt

 

 

141

 

 

 

135

 

Total interest expense

 

 

744

 

 

 

355

 

Net interest income

 

 

5,212

 

 

 

4,689

 

Provision for (recovery of) loan losses

 

 

(113

)

 

 

78

 

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

 

 

5,325

 

 

 

4,611

 

 

 

 

 

 

 

 

 

 

Noninterest Income

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

327

 

 

 

283

 

Interchange and card transaction fees, net

 

 

194

 

 

 

142

 

Other service fees and commissions

 

 

756

 

 

 

638

 

Income from mortgage loan sales

 

 

492

 

 

 

662

 

Other income (loss)

 

 

(21

)

 

 

169

 

Total noninterest income

 

 

1,748

 

 

 

1,894

 

 

 

 

 

 

 

 

 

 

Noninterest Expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,133

 

 

 

3,946

 

Net occupancy expense

 

 

405

 

 

 

364

 

Equipment expense

 

 

176

 

 

 

170

 

Data processing costs

 

 

222

 

 

 

250

 

Office supplies and printing

 

 

27

 

 

 

36

 

Foreclosed real estate expense

 

 

56

 

 

 

39

 

Professional fees and services

 

 

153

 

 

 

248

 

Marketing and donations

 

 

204

 

 

 

211

 

Electronic banking expense

 

 

99

 

 

 

101

 

Software amortization and maintenance

 

 

219

 

 

 

213

 

FDIC insurance

 

 

80

 

 

 

66

 

Other noninterest expense

 

 

426

 

 

 

569

 

Total noninterest expense

 

 

6,200

 

 

 

6,213

 

Income before income taxes

 

 

873

 

 

 

292

 

Income taxes

 

 

183

 

 

 

58

 

Net income

 

$

690

 

 

$

234

 

 

 

 

 

 

 

 

 

 

Consolidated net income

 

$

690

 

 

$

234

 

Less: net income attributable to noncontrolling interest

 

 

(140

)

 

 

(143

)

Net income attributable to Uwharrie Capital Corp and common shareholders

 

 

550

 

 

 

91

 

Net income per common share

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

0.01

 

Diluted

 

$

0.08

 

 

$

0.01

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

7,125,564

 

 

 

7,254,594

 

Diluted

 

 

7,125,564

 

 

 

7,254,594

 

 

 

See accompanying notes  

 

 

-4-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

690

 

 

$

234

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available for sale securities

 

 

953

 

 

 

(1,099

)

Related tax effect

 

 

(219

)

 

 

250

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

734

 

 

 

(849

)

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

 

1,424

 

 

 

(615

)

 

 

 

 

 

 

 

 

 

Less: Comprehensive income attributable to noncontrolling

   interest

 

 

(140

)

 

 

(143

)

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to Uwharrie Capital

 

$

1,284

 

 

$

(758

)

 

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 (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

7,126,541

 

 

$

8,908

 

 

$

12,885

 

 

$

14,421

 

 

$

(1,694

)

 

$

10,655

 

 

$

45,175

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

550

 

 

 

 

 

 

140

 

 

 

690

 

Repurchase of common stock

 

 

(29,314

)

 

 

(37

)

 

 

(109

)

 

 

 

 

 

 

 

 

 

 

 

(146

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

734

 

 

 

 

 

 

734

 

Record preferred stock dividend Series B

   (noncontrolling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103

)

 

 

(103

)

Record preferred stock dividend Series C

   (noncontrolling interest)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

(37

)

Balance, March 31, 2019

 

 

7,097,227

 

 

$

8,871

 

 

$

12,776

 

 

$

14,971

 

 

$

(960

)

 

$

10,655

 

 

$

46,313

 

 

See accompanying notes

 

 

-6-


 

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

690

 

 

$

234

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 

 

Provided (used) by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

271

 

 

 

240

 

Provision for (recovery of) loan losses

 

 

(113

)

 

 

78

 

Loss on sale of OREO

 

 

37

 

 

 

9

 

Net amortization of premium on investment securities AFS

 

 

162

 

 

 

170

 

Net amortization of premium on investment securities HTM

 

 

36

 

 

 

40

 

Net amortization of mortgage servicing rights

 

 

172

 

 

 

167

 

Originations and purchases of mortgage loans for sale

 

 

(19,115

)

 

 

(18,608

)

Proceeds from sales of mortgage loans for sale

 

 

20,180

 

 

 

20,706

 

Accrued interest receivable

 

 

114

 

 

 

4

 

Prepaid Assets

 

 

(422

)

 

 

(447

)

Cash surrender value of life insurance

 

 

(28

)

 

 

(38

)

Miscellaneous other assets

 

 

523

 

 

 

(158

)

Accrued interest payable

 

 

25

 

 

 

(1

)

Miscellaneous other liabilities

 

 

1,690

 

 

 

619

 

Net cash provided by operating activities

 

 

4,222

 

 

 

3,015

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

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

 

 

128

 

 

 

265

 

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

 

 

1,353

 

 

 

1,560

 

Net change in restricted stock

 

 

(50

)

 

 

(27

)

Net decrease (increase) in loans

 

 

1,980

 

 

 

(8,272

)

Purchase of premises and equipment

 

 

(1,938

)

 

 

(446

)

Proceeds from sale of OREO

 

 

229

 

 

 

607

 

Net cash provided (used) by investing activities

 

 

1,702

 

 

 

(6,313

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net increase in deposit accounts

 

 

19,611

 

 

 

25,278

 

Net increase in federal funds purchased

 

 

 

 

 

 

 

 

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

 

 

213

 

 

 

527

 

Common stock repurchased

 

 

(146

)

 

 

(103

)

Exercise of stock options

 

 

 

 

 

65

 

Dividends paid on preferred stock

 

 

(140

)

 

 

(143

)

Net cash provided by financing activities

 

 

19,538

 

 

 

25,624

 

Increase in cash and cash equivalents

 

 

25,462

 

 

 

22,326

 

Cash and cash equivalents, beginning of period

 

 

117,934

 

 

 

70,403

 

Cash and cash equivalents, end of period

 

$

143,396

 

 

$

92,729

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

 

 

 

 

Interest paid

 

$

719

 

 

$

296

 

Income taxes paid

 

 

 

 

 

 

Supplemental Schedule of Non-Cash Activities

 

 

 

 

 

 

 

 

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

 

$

(734

)

 

$

849

 

Loans transferred to foreclosed real estate

 

 

 

 

 

 

Mortgage servicing rights capitalized

 

 

83

 

 

 

74

 

 

 

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 2018 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.

Accounting Standards Update (“ASU”) 2016-02 Leases, Topic 842 was adopted January 1, 2019 and comparative periods have not been re-stated. This ASU increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The key difference between existing standards and this ASU is the requirement for lessees to recognize on their balance sheet all lease contracts with lease terms greater than 12 months, including operating leases. Both a right-of-use asset, representing the right to use the leased asset, and a lease liability, representing the contractual obligation, are required to be recognized on the balance sheet of the lessee at lease commencement. Further, this ASU requires lessees to classify leases as either operating or finance leases, which are substantially similar to the current operating and capital leases classifications. The distinction between these two classifications under the new standard does not relate to balance sheet treatment but relates to treatment in the statements of income and cash flows. Lessor guidance remains largely unchanged with the exception of how a lessor determines the appropriate lease classification for each lease to better align the lessor guidance with revised lessee classification guidance.  

Uwharrie Capital Corp currently has two properties that are considered in-scope for application of ASU 2016-02. The Company recognized a $1.9 million operating lease right-of-use asset (“ROU”), which is included in premises and equipment on the balance sheet, and a corresponding $1.9 million operating lease liability, recorded in other liabilities on the balance sheet. See Note 9 – Leases for additional information.

 

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.

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The following table presents the changes in accumulated other comprehensive income for the three months ended March 31, 2019 and 2018:

 

 

 

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

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

Beginning Balance

 

$

(1,694

)

 

$

(1,107

)

 

 

 

 

 

 

 

 

 

Other Comprehensive income (loss) before reclassifications,

   net of $219,000 and ($250,000)

   tax effect, respectively

 

 

734

 

 

 

(849

)

 

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net current-period other comprehensive income (loss)

 

 

734

 

 

 

(849

)

 

 

 

 

 

 

 

 

 

Ending Balance

 

$

(960

)

 

$

(1,956

)

 

 

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 of the Company’s subsidiary banks and corresponding 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, 2019 or December 31, 2018.

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.

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

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

7,125,564

 

 

 

7,254,594

 

 

 

 

 

 

 

 

 

 

Effect of dilutive stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares and dilutive

   potential common shares used in computing diluted net

   income per common share

 

 

7,125,564

 

 

 

7,254,594

 

 

 

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Note 5 – Investment Securities

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

 

March 31, 2019

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

 

(dollars in thousands)

 

Securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

4,952

 

 

$

21

 

 

$

 

 

$

4,973

 

U.S. Government agencies

 

 

52,260

 

 

 

35

 

 

 

765

 

 

 

51,530

 

GSE - Mortgage-backed securities and CMO’s

 

 

16,419

 

 

 

 

 

 

342

 

 

 

16,077

 

State and political subdivisions

 

 

13,326

 

 

 

6

 

 

 

127

 

 

 

13,205

 

Corporate bonds

 

 

5,027

 

 

 

5

 

 

 

80

 

 

 

4,952

 

Total securities available for sale

 

$

91,984

 

 

$

67

 

 

$

1,314

 

 

$

90,737

 

 

March 31, 2019

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair

Value

 

 

 

(dollars in thousands)

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agencies

 

$

724

 

 

$

 

 

$