8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 8, 2016

UWHARRIE CAPITAL CORP

(Exact name of Registrant as specified in its charter)

NORTH CAROLINA	000-22062	56-1814206
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification number)

132 NORTH FIRST STREET, ALBEMARLE, NORTH CAROLINA 28001

(Address of principal executive offices)

Registrant’s telephone number, including area code (704) 982-4415

N/A

(Former address of principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On November 8, 2016, Uwharrie Capital Corp (the “Registrant”) released a quarterly report to its shareholders that included a letter to the shareholders from President and CEO Roger L. Dick and Brendan P. Duffey, COO and unaudited financial information for the period ended September 30, 2016.

A copy of this report is attached hereto as Exhibit 99.1 and incorporated by reference herein.

This information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

This Current Report on Form 8-K (including information included or incorporated by reference herein) 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 Registrant’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 Registrant’s management and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Registrant’s control).

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

Exhibit No.	Description of Exhibit
99.1	Quarterly report to shareholders for the period ended September 30, 2016.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

UWHARRIE CAPITAL CORP
By:	/s/ R. David Beaver, III
	R. David Beaver, III
	Principal Financial Officer

Dated: November 10, 2016

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Quarterly report to shareholders for the period ended September 30, 2016.

EX-99.1

Exhibit 99.1

Third Quarter Report

November 8, 2016

Dear Shareholder:

Uwharrie Capital Corp and its subsidiaries, Uwharrie Bank and Uwharrie Investment Advisors, reported consolidated total assets of $552.2 million at September 30, 2016, versus $532.2 million at December 31, 2015, representing year-to-date growth of $20 million or an annualized growth rate of 5.01%.

Net income for the nine-month period ended September 30, 2016, was $1.8 million versus $1.9 million for the same period in 2015. For the nine months ended September 30, 2016, net income available to common shareholders was $1.3 million or $0.19 per share compared to $1.4 million or $0.20 per share for September 30, 2015. Net income available to common shareholders takes into consideration the payment of dividends on preferred stock issued by the Company.

The difference in earnings largely represents the additional Allowance for Loan and Lease Loss provisions associated with the strong growth in the loan portfolio — up $24.4 million or 10.16% annualized net of contractual paydowns. With each new loan produced, the bank must fund the full loan loss reserve for a loan the day it is funded; however, the interest earned on the loan is recognized as earned over the life of the asset. This results in a short-term negative impact on revenue for growing the loan portfolio in a substantial manner.

Through nine months ended September 30, 2016, Net Interest Margin (the difference in interest earned on loans and investments, less the interest paid on deposits and borrowings) has improved $352 thousand. This improvement is directly related to the growth in loans, as well as our core deposit mix. Non-interest Income increased $1.4 million, while Non-interest Expenses (our costs associated with building and growing our fee income strategies) increased by $1.2 million, providing a net improvement to income before taxes of $200 thousand.

We are pleased to inform you of your Board’s declaration of a 2% stock dividend payable to shareholders November 23, 2016. Growth opportunities demand capital and the payment of a stock dividend allows us to retain capital while providing the best value to our shareholders. Individuals who are still in their peak-earning years and do not want the additional tax burden will not have to recognize income generated by a stock dividend. Shareholders looking for income now can sell these new shares for cash.

The Board of Directors also voted to transition to “Book Entry,” which is a system of tracking the ownership of securities where no paper certificates are distributed to investors. Book Entry reduces the risks and costs associated with replacing lost or stolen certificated share(s), thus reducing your costs of ownership. Furthermore, it allows for faster buy/sell transactions, as well as quicker transfers of shares in brokerage accounts or gifting to other individuals.

In addition to the benefit direct to our shareholders, the corporation benefits from reduced costs associated with paper certificate(s). We believe this transition to Book Entry could save your company thousands of dollars per year, which improves the financial performance of the company, consequently increasing the value of your investment.

We are delighted to have delivered another solid quarter of financial performance. At Uwharrie Capital Corp, we remain committed to the values that brought a group of people together more than thirty years ago to create a community banking organization “For and By the People.” In order to be successful, we must be thoughtful, intentional and strategic in order to improve and sustain ourselves and our communities. We diligently strive to remain focused on both the financial bottom line and the people we serve, without compromising either.

In keeping with tradition, you will soon receive the Uwharrie Capital Corp 2017 Community Calendar. This year’s calendar highlights our community’s earliest diversification from agriculture, as our nation witnessed its first gold rush in the Piedmont region of North Carolina. We think you will enjoy this bit of history and collection of nostalgic photographs.

Warmest wishes to you and your family for the coming holiday season.

Sincerely,

UWHARRIE CAPITAL CORP

/s/ Roger L. Dick	/s/ Brendan P. Duffey
President and Chief Executive Officer	Chief Operating 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 Sheet (Unaudited)

	September 30,			September 30,
	2016			2015
	(Amounts in thousands, except share and per share data)
Assets
Cash and due from banks	$	7,400			6,685
Interest-earning deposits with banks		49,187			51,585
Securities available for sale		100,513			96,927
Securities held to maturity (fair value $12,289 and $11,276, respectively)		12,023			11,274
Loans held for sale		2,538			418
Loans held for investment		344,542			322,816
Less allowance for loan losses		(2,849	)		(2,961	)
Net loans held for investment		341,693			319,855
Interest receivable		1,520			1,466
Premises and equipment, net		14,224			14,752
Restricted stock		1,052			1,040
Bank owned life insurance		6,861			6,733
Other real estate owned		4,435			5,942
Other assets		10,766			10,419
Total assets	$	552,212		$	527,096
Liabilities
Deposits:
Demand, noninterest-bearing	$	104,877		$	92,753
Interest checking and money market accounts		274,591			243,638
Savings accounts		41,865			40,001
Time, $250,000 and over		7,337			8,139
Other time deposits		60,385			77,818
Total deposits		489,055			462,349
Interest payable		150			176
Short-term borrowed funds		1,786			5,232
Long-term debt		9,537			9,550
Other liabilities		6,884			5,860
Total liabilities		507,412			483,167
Shareholders’ Equity
Common stock, $1.25 par value: 20,000,000 shares authorized; shares issued and outstanding 6,925,408 and 6,875,586 shares, respectively Book value per share $4.84 in 2016 and $4.66 in 2015 (1)		8,657			8,594
Common stock dividend distributable		173			172
Additional paid-in capital		12,571			12,401
Undivided profits		12,586			11,874
Accumulated other comprehensive income (loss)		197			299
Total Uwharrie Capital Corp shareholders’ equity		34,184			33,340
Noncontrolling interest		10,616			10,589
Total shareholders’ equity		44,800			43,929
Total liabilities and shareholders’ equity	$	552,212		$	527,096

(1) Net income per share, book value per share and weighted average shares outstanding have been adjusted to reflect the 2% stock dividend in 2016.

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Income (Unaudited)

	For Three Months Ended						For Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Amounts in thousands, except share and per share data)
Interest Income
Interest and fees on loans	$	4,025		$	3,936			11,820		$	11,784
Interest on investment securities		449			485			1,348			1,465
Interest-earning deposits with banks and federal funds sold		78			47			236			126
Total interest income		4,552			4,468			13,404			13,375
Interest Expense
Interest paid on deposits		167			282			563			875
Interest paid on borrowed funds		142			156			444			455
Total interest expense		309			438			1,007			1,330
Net Interest Income		4,243			4,030			12,397			12,045
Provision for (recovery of) loan losses		240			(323	)		70			(620	)
Net interest income after provision (recovery of) for loan losses		4,003			4,353			12,327			12,665
Noninterest Income
Service charges on deposit accounts		309			338			904			979
Other service fees and commissions		1,055			1,040			3,330			3,055
Gain on sale of securities		2			0			544			502
Income from mortgage loan sales		1,111			706			2,769			1,699
Other income		116			166			386			309
Total noninterest income		2,593			2,250			7,933			6,544
Noninterest Expense
Salaries and employee benefits		3,626			3,460			10,792			9,778
Occupancy expense		327			272			850			824
Equipment expense		159			184			488			524
Data processing		161			194			529			553
Other noninterest expense		1,555			1,709			5,096			4,873
Total noninterest expense		5,828			5,819			17,755			16,552
Income before taxes		768			784			2,505			2,657
Provision for income taxes		228			223			745			799
Net Income	$	540		$	561			1,760		$	1,858
Consolidated net income	$	540		$	561			1,760		$	1,858
Less: Net income attributable to noncontrolling interest		(149	)		(149	)		(444	)		(442	)
Net income attributable to Uwharrie Capital		391			412			1,316			1,416
Dividends - preferred stock		—			—			—			—
Net income available to common shareholders	$	391		$	412			1,316		$	1,416
Net Income Per Common Share (1)
Basic	$	0.06		$	0.06			0.19		$	0.20
Assuming dilution	$	0.06		$	0.06			0.19		$	0.20
Weighted Average Common Shares Outstanding (1)
Basic		7,095,112			7,174,221			7,111,733			7,212,308
Assuming dilution		7,095,112			7,174,221			7,111,733			7,212,308